How the G20 Can Make Globalization Work for All

With neoliberal globalization in crisis, so too appears to be the G20. In March, the leaders of the world’s twenty largest global economies failed for the first time in ten years to endorse a free trade agenda. However, while some prematurely mourn the rise of protectionism and the death of the G20, there remains numerous opportunities for the 2017 G20 summit to reverse course, and reclaim the globalization conversation. To do so, they should focus on making globalization work for all.

The response to the ‘problem’ of globalization is not binary: accept or reject it as is. State actors have the ability to reshape the current model of globalization. The widespread consensus built around the Sustainable Development Goals (SDGs) attest to this fact. The SDGs, as part of the 2030 Agenda for Sustainable Development, set ambitious goals and targets towards the pursuit of global development that works for all, and envision “’win-win’ cooperation which can bring huge gains to all countries and all parts of the world.” 

The G20 is a key forum to demonstrate that global trade and investment can lead to better living and working conditions worldwide, in line with the SDGs. In specific, as the current global economy depends heavily on the use and functioning of global supply chains, it is imperative to equitable growth and development that these supply chains be sustainable. This year’s G20 summit, with Germany holding the presidency, is well poised to make bold commitments in this regard.  

German Leadership on Responsible Supply Chains

The G20 has firmly supported Agenda 2030 since its inception. Through its G20 Action Plan on the 2030 Agenda, it commits to further aligning its works with the SDGs. Indeed, one of the three key aims of the 2017 G20 is “improving sustainability.” 

At the beginning of this year’s G20 process, the German government came out strongly seeking to address sustainable global supply chains. According to the Germany priorities for G20 2017, sustainable global supply chains can “help further global economic and social development” through “the inclusion of internationally active companies and adherence to fundamental labour, social and environmental standards.” 

This focus is part of the German government plan to carry over priority themes and commitments from its 2015 G7 presidency. In 2015, under German leadership, the G7 made a number of strong commitments towards promoting labor rights, decent work, and environmental protection in global supply chains, including through supporting the UNGPs, the creation of National Action Plans (NAPs) on business and human rights, voluntary supply chain due diligence, and the creation of industry-wide due diligence standards.  

While the G20 will “address this topic [of sustainable supply chains] intensively for the first time” in 2017, it has reflected on it in the past. In 2016, the LEMM Declaration, which was endorsed by the final 2016 G20 Leaders’ Communique, affirmed their commitment to “improve the realization of labour rights, maintaining decent work and promoting sustainability in global supply chains through better application of labour standards and principles.” What many are hoping from out of this year’s G20 is a clarification as to how the G20 will carry this preliminary commitment further. 

Broad Consensus from Stakeholders

Many stakeholder groups have been actively engaging with the G20 process, pushing for bold new and specific commitments on sustainable supply chains. These groups include civil society, labor organizations, businesses, and even the UN system. 

Civil Society

Global civil society has been strongly engaged in this year’s G20 process, pushing G20 governments to adopt strong commitments in relation to sustainable global supply chains. 
For example, the Responsible Investment Working Group of the Civil-20 (the civil society engagement group to the G20), in calling on the G20 to ensure that the private sector contributes to sustainable development, recommended that all G20 countries “require mandatory due diligence throughout supply chains to identify, prevent, mitigate, track and communicate possible human rights or labor rights violations, corruption, and adverse environmental impacts.” It also called on the G20 to implement the UN Guiding Principles on Business and Human Rights (UNGPs) and accede to the OECD Guidelines on Multinational Enterprises to ensure responsible business conduct. 

Similarly, a coalition of global civil society organizations working specifically on issues of business and human rights (BHR), the G20 BHR Task Force, submitted an open letter to the G20 Employment Working Group, calling for similar provisions to promote transparency and human rights due diligence in supply chains. Task Force members include the International Corporate Accountability Roundtable, OECD Watch, Accountability Counsel, Oxfam International, and the Institute for Human Rights and Business, to name a few. Human Rights Watch also issued similar recommendations to the German government in relation to human rights in global supply chains. 

Labor

Labor-20 (the labor engagement group to the G20), has consistently called on the G20 to coordinate action in relation to promoting decent work through labor rights and employment protections. According to L20 proposals for the 2017 G20, “responsible investment and rights in global supply chains must be a centerpiece of the global rule of law.” This can be achieved through, inter alia, (1) reaffirming commitment to the UNGPs; (2) endorsing the OECD Global Due Diligence Guidance; and (3) strengthening access to judicial and non-judicial grievance mechanism, such as the OECD National Contact Point system. 

Business

Within the B20 (the business engagement group to the G20), the Task Force on Employment and Education is tasked with addressing sustainability in global supply chains. As a B20 policy recommendation, the B20 advocates for the “creation of a global level playing field and the promotion of fair competition” in relation to sustainable global supply chains.  Similarly, the B20 Policy Recommendation to the G20, presented during the 2017 B20 Summit, calls on G20 countries to support the UNGPs, the OECD Guidelines, and the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.

International Organizations

The UN Working Group on Business and Human Rights, mandated by the Human Rights Council to promote the implementation and dissemination of the UNGPs, has also made a number of recommendations specifically to the Employment Working Group in relation to preventing and addressing business-related human rights impacts throughout supply chains. These include (1) supporting implementation of the UNGPs through NAPs; (2) ensuring State-owned or controlled enterprises respect human rights; (3) establishing clear expectations that business enterprises domiciled in a States’ territory, including through exercising human rights due diligence across value chains.

According to the UN Working Group on Business and Human Rights, G20 commitments in line with their recommendations “would be a game-changer to strengthen collective global efforts to achieve sustainable supply chains and a global economy founded on respect for human rights and dignity for all.”

Reforming Global Supply Chains

Global supply chains have embedded themselves as a staple of globalization over the past few decades.  However, unfair and unjust business practices are hallmarks of the current model —allowing large companies to profit off of cheap labor and production by spurring a race to the bottom in terms of human rights, labor, and environmental protections. 

In order to address, and ultimately reverse, this base inequality, and make globalization work for all, global supply chains must take into account human rights and environmental issues. 

The global community is hopeful that the G20 will deliver on bold commitments towards sustainable supply chains. On a broader note, the ability of the G20 to collectively tackle the externalities of globalization might prove to be what keeps economic globalization from teetering off the ledge.

Cindy Woods, Legal and Policy Associate