Due Diligence: Blessing or Threat?

Regulatory frameworks and sustainability policies are essential to ensure that products sold at the European market are produced in a sustainable way and that companies are held accountable for meaningful implementation of sustainability frameworks and business models that create a positive impact for all stakeholders, not only for their shareholders. But they may have unintended side effects. One of the risks is the exclusion of high-risk actors or high-risk regions. Also, smaller producers may not be able to meet the bar and fall out of the sustainable supply chain all together. 

Ms. Dao Gabala used the Solidaridad pyramid of change to explain this: “Solidaridad is one of the founders of fair trade 30 years ago. We started fair trade by assuming that consumers would be willing to pay a fair price for their coffee. Unfortunately, this appeared to be only partly true.”

“So we moved to a second phase with companies as drivers. Assuming that if companies improved their due diligence and included fair trade principles, the impact would be more significant. This second assumption also appeared only partly true. In fact, while corporate social responsibility has become a strong movement, real systemic change has not occurred.” 

“So, despite all good intentions, due diligence legislation may result in a cleaned supply chain linked to Europe without addressing the issue in producing countries. From my African perspective, instead of only raising the bar, we will need to raise the floor too. We have to ensure that sustainability legislation is not a threat for producers, but that it safeguards continued market access, also for the vulnerable.”

Ms. Dao Gabala advocated for a smart mix of measures: mandatory sustainability requirements for companies, but with an eye on the bottom end of the supply chain: the millions of smallholder farmers, small-scale miners, and workers who are struggling to survive. She said: “Complementary measures and policies need to be in place to support producers and producing countries. To make this work, we need an effective interplay between the EU, supply chain partners, producers and consumers. Let’s work together to ensure that due diligence does what it is supposed to do in the first place: provide a better future for the producers of our daily food and other products we consume.”

The panel on due diligence can still be accessed through the SDG Europe conference page

To read more about inclusive due diligence