A desktop review of research related to purchasing practices and factory-level non-compliance was conducted during November and December 2019, and updated in April through October 2022 due to the surge in relevant research conducted as a result of the COVID-19 pandemic.
Using Better Buying’s seven categories of purchasing practices from the Better Buying Purchasing Practices Index (plus two additional categories that emerged from the research) and Better Work’s eight clusters in its Compliance Assessment Tool, each research finding that connected a specific purchasing practice to a specific noncompliance was recorded.
Some findings indicated that buyer purchasing practices could lead directly to noncompliance (e.g., 4.1% of suppliers reported excessive overtime as a result of monthly order variations (BBI, Q2 2022 data)). Meanwhile, other findings specified mediating variables that occur “in-between” the purchasing practice and the non-compliance. For example, “For suppliers who abruptly lost buyer in-process contracts with no compensation . . . 80.4% said they were unable to provide severance pay when order cancellations resulted in worker dismissals”.
For such findings, the purchasing practice (in this case, abrupt cancellation and nonpayment of an in-process order) caused an impact (worker dismissals), which in turn led to noncompliance (non-payment of severance pay). These indirect findings were included in the matrix because a purchasing practice was identified as the root cause of the noncompliance.
Better Buying Institute wants brands to use the evidence to guide ’ human rights due diligence efforts.
“The evidence identifies “starting points” for retroactively investigating the root causes of persistent noncompliances, and highlights opportunities to proactively prevent adverse human rights impacts,” reads the report.
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“This research evidence links purchasing practices to human rights violations. Furthermore, emerging human rights due diligence legislation outlines companies’ obligations for engaging with such known risks. For example, under the German Act on Corporate Due Diligence Obligations in Supply Chains, which came into effect January 1 2023, companies must identify risks to workers in their supply chains and take preventive measures to ensure that their purchasing practices minimise those risks. Buyer companies can leverage this research to guide the investigation of human rights risks within their own supply chains, with the aim of complying with the new law and both addressing existing impacts and preventing future ones,” it adds.
In a blog post supporting the launch of the report, and in response to the recent launch of Germany’s Supply Chain Due Diligence Act, Marsha Dickson, Better Buying Institute’s president and co-founder said: “If companies gain “substantiated knowledge” of a potential human rights violation or environmental destruction, the law requires them to take action and to document the actions they have taken with the Federal Office for Economic Affairs and Export Control. Those that fail to do so risk being fined up to 2% of annual global turnover, and being excluded from winning public contracts in Germany for three years.
“The requirements of the new law might seem onerous, but the reality is that brands and retailers who are already accessing supplier data and insights on their purchasing practices, and who are partnering with their suppliers to drive improvements, will be ahead of the game in terms of complying with many of the requirements of the Act.
“Research published today by Better Buying Institute looks at the available research that documents the connection between purchasing practices and noncompliance, and finds that buyer purchasing practices have the most known impacts on noncompliances related to working time, workers’ contracts, and workers’ compensation.
“If history is an example, there will be a tendency for brands and retailers to push the requirements of supply chain due diligence onto their suppliers. But they need to take responsibility too. And they must own the responsibility for the impacts of their purchasing practices. By being better buyers, brands and retailers will support human rights within their supply chains and drive better wages and working conditions for workers.”
At the end of December, the Better Buying Institute published the results of its Better Buying Purchasing Practices Index noting workers benefit when global brands and retailers accept standardised audits from garment factories.