The Sustainable Sourcing Code (1st edition) was published by The Tokyo Organizing Committee of the Olympic and Paralympic Games (“Tokyo 2020”) in March 2017. The Sourcing Code requires their supplier and licensee companies to comply with sustainability standards through their supply chains.
The Code aims to comply with international agreements and codes of conduct including the UN Guiding Principles (UNGP) on Business and Human Rights (BHR). The Code also targets to achieve the goal 12 of the Sustainable Development Goals (SDGs), “Responsible production and consumption”.
Salient Sustainability and BHR Issues Addressed under the Code
The sustainability standards under the Code cover areas including: environment; human rights; labor; and economy. These standards address broad range of salient sustainability and BHR issues pointed out in the mega sport events and in the context of Japan. The standards include:
Ban on use of illegally collected or cultivated raw materials
Ban on violation of the rights of local residents, etc.
Respect for the rights of persons with vulnerable and marginalized group including women, child, disabilities and social minorities,
Ban on forced labour and child labour
Ban on long working hours
Ban on mistreatment of foreign and migrant workers (including technical interns)
Use of raw materials with no involvement with a conflict or crime
Human Right Due Diligence (HRDD) Embedded into the Code
In Japan, human rights (“jinken”) issues for business, tend to be understood in a very narrow sense (e.g. discrimination and harassment). In order to overcome this challenge and encourage companies to conduct HRDD under the UNGP, the Code requires them to assess and manage “sustainability related risks” through their operations and supply chains. In addition, the Code explicitly mentions the importance of HRDD.
The Endnote v for Article 5.3. states: “To check and assess risks concerning sustainability, and address the risks, human rights due diligence, which the UN Guiding Principles on Business and Human Rights requires companies to put
into practice, is useful as a model.”
Aligning International Standands with Japanese & Asian Culture
The Sourcing Code tries to balance the elements of “engagement” and “enforcement” for supply chain management, considering Japanese and Asian corporate culture.
The Code emphasizes dialogues and engagement among supply chains based on “the principle of harmonious coexistence and co-prosperity (kyozon-kyoei)”. A bottom-up approach (not immediately eliminating controversial suppliers, but involving suppliers through engagement) can be an effective way in some cases for business to use their leverage on supply chains. The commentary to UNGP 19 also implies that ending the relationship with suppliers is the last option.
At the same time, the Code encourages an introduction of a model clause of “sustainability provision” for supply chain agreements. Such contractual arrangements may be useful for ensuring the compliance of the Code through supply chains and for facilitating communications among supply chains. The model clause is also in line with Japanese legal practices. Most of Japanese companies have embedded "Yakuza Elimination Clause" into their contracts in order to elimnate Yakuza from their business relationship. Guidance on HRDD published by Japan Federation of Bar Associations also proposed a model CSR cluase for supply chain agreements, comparing it with "Yakuza Elimination Clause".
One of the common challenges for grievance mechanisms have been in the lack of legitimacy and trust of mechanism operators. According to the Tokyo 2020's outline, in order to overcome the challenge, the Tokyo 2020 will appoint Advisory Group Members as supervisors of the dialogue facilitation process, in addition to the contractor in charge of the administrative operation. Experts in different areas will be appointed as Advisory Group Members upon consultation with the multi-stakeholder working group. For each individually reported case, at least one person in charge (which must include a lawyer) is to be selected from the Advisory Group, after obtaining the consent of the majority of the Working Group members.
Another serious issue for the remedy is that many of the grievance mechanisms do not provide enough solutions when mutual agreements are not reached by the parties. In order to tackle this issues, the Tokyo 2020 will provide a semi-binding, legitimate resolutions in case of disagreements. In case of disagreement among parties, Tokyo 2020 will determine resolutions respecting opinions (replies) published by the legitimate, independent third-party Advisory Group Members. This process can increase leverages for the Advisory Group Members even in the dialogue facilitation process.They can guide the parties to reach mutual agreements by sharing their professional analysis on each case.
Challenges Ahead for All the Team Players in Japan
As of 2017, the Sourcing Code and the Grievance Mechanism have not be implemented yet. The Tokyo 2020 are facing challenges on how to translate their efforts into performance.
Challenges also exist for Japanese business and civil society. Not all Japanese companies are not familiar with HRDD and Grievance mechanism in their legal compliance practices.
How can business can effectively develop HRDD and their own grievance mechanism in line with the Sourcing Code? How can business can properly engage with supply chains? Not many complaints have not been brought yet from Japanese CSOs to any BHR grievance mechanisms including the NCP for OECD Guidelines. How can CSOs effectively help victims access to the remedy by making the most of the Grievance Mechanism for Tokyo 2020?
Lawyers also need to help different key players by representing Business or CSOs and by serving as facilitators under the Grievance Mechanism. How can lawyers facilitate constructive discussions among parties for leading to the pragmatic but rights-based solutions?
All the team players need to make their best efforts in order to turn challenges into opportunities.