Remarks by Angel Gurría,
12 February 2020 - OECD, Paris
(As prepared for delivery)
Ladies and Gentlemen,
I am delighted to open the 6th OECD Forum on Due Diligence in the Garment and Footwear Sector, and to welcome leaders and experts from more than 50 countries and many different backgrounds. I am also pleased that we have more worker representatives participating at this year’s Forum than at any previous Forums.
A rapidly changing environment for the garment and footwear industry
The garment and footwear industry is operating in a rapidly shifting environment. Global supply chains are constantly changing. Let me point to three trends that are particularly pressing for the sector with respect to due diligence.
First, we are living in a time of economic uncertainty. Protectionist trade measures reduce and distort trade, disrupt global supply networks, lower productivity, and weigh on confidence, jobs and income. This economic uncertainty greatly influences cross-border trade. It is therefore not only one of the most pressing concerns for firms globally, but also causes a huge impact on the garment and footwear sector.
Second, we are facing a climate crisis. And the garment and footwear sector is greatly contributing to it. Total greenhouse gas emissions from textiles production is 1.2 billion tonnes annually. That’s more than the emissions of all international flights and maritime shipping combined. It is quite worrying to know that carbon emissions from the sector are expected to increase by 60% by 2030 to 2.8 billion tons. Clearly the industry has a huge role to play in tackling the climate crisis and developing innovative climate solutions to be implemented across the full supply chain.
There is one action that all of us can take: we must reassess our consumption patterns. Today, the average person buys 60% more items of clothing, compared to 15 years ago; yet keeps them for about half as long. We consume over 100 billion items of clothing a year and the global apparel and footwear industry is predicted to generate 102 million metric tons of products by 2030. At this rate, by 2050 the fashion industry will use up a quarter of the world’s carbon budget.
Third, supply chains are going digital. 27% of all fashion sales now take place online. The global online fashion market is predicted to reach USD 765 billion by 2022, that’s an increase of USD 281 billion, or 58%, from last year. In the United States alone, online apparel sales account for more than one-third of all apparel sales.
Digitalisation creates boundless opportunities, but it can also bring unintended consequences. For example, the digitalisation of the supply chain management may reduce lead times and shift production from one site to another more quickly. In this environment, more vigilant and systematic efforts to promote responsible purchasing practices are critical. Similarly, as consumers move online, companies will have to consider how to reconcile consumption patterns while trying to build circular economies.
While some aspects of supply chains are changing, others are not changing fast enough. Just two months ago, a fire in a Delhi-based factory killed over 40 people. In a study of factory workers in Cambodia, 22 percent reported being harassed. And while we have seen progress on responsible purchasing practices, we are still not paying enough for our clothes and workers are still not being paid enough to make them.
Key priorities going forward
Looking ahead, there are several priority actions that can be taken to tackle these challenges. Let me highlight some which you will be discussing over the next two days.
First, we need to reconcile due diligence with trade tensions and supply chain disruptions to ensure that companies can continue producing and sourcing responsibly. As tensions in global trade encourage companies to seek new markets, it is imperative to understand the impact that increased production has on the environment, on outsourcing and on the use of contract workers. Here, OECD guidance on responsible purchasing practices have never been more relevant.
Second, we need to re-think business models in the garment and footwear sector to ensure that it contributes to the circular economy. Companies are increasingly realising that if they do not take steps towards a circular economy, they will be left behind. In the garment and footwear sectors youth are increasingly concerned about the carbon footprint of the products they buy and wear. This is also a strategic move. Innovation in production processes can create value by helping to find alternatives to conventional chemical use, and reduce energy and water use, as well as waste.
Third, we need to continue strengthening the role of governments in driving sustainable and responsible supply chains and creating an enabling environment for RBC. Yesterday policymakers from across key economies in the garment and footwear sector met during the second Roundtable for Policy Makers to discuss policy options for promoting vibrant and responsible supply chains.
Tomorrow’s plenary will consider governments’ role in driving supply chain due diligence, with a focus on mandatory due diligence. You will be hearing from the government of Viet Nam how they are working with the OECD to integrate responsible business conduct considerations into industrial policy. We also believe in regional approaches and are happy to be collaborating with the EU and the ILO on promoting responsible supply chains in 15 Asian and Latin American countries.
Fourth, we must ensure that companies engage meaningfully with workers through due diligence. In this respect, social dialogue is integral to responsible business conduct. This is why we engage closely with trade unions through our Trade Union Advisory Committee (TUAC). Moreover, last week we hosted the Global Deal Conference with Swedish Prime Minister Stefan Löfven. We brought together over 100 Global Deal partners to share and shape novel solutions for renewed, stronger dialogue among companies, workers and governments.
Last but not least, to ensure the continued impact of our work, we must assess the alignment of industry and multi-stakeholder initiatives against the OECD due diligence guidance. Improved alignment will have multiple benefits, including: improved trust and credibility of initiatives; better understanding of how companies and governments can rely on them; and better mutual recognition. I am pleased that the assessment of the alignment of the Partnership for Sustainable Textiles in Germany will be launched during this Forum.
Ladies and Gentlemen,
The garment and footwear industry bears a great responsibility to our economies, to societies and to the planet. Only through deeper, more effective, more ambitious international co-operation on due diligence and responsible business conduct can we hope to multiply opportunities and to transform lives around the globe.
The OECD is committed to continue working with you in this endeavour. Today’s Forum is a unique opportunity to take our work forward to help design, develop and deliver better due diligence policies for better lives. Thank you.