While hundreds of multinational companies have already publicly committed to implementing the UN Guiding Principles on Business and Human Rights (Guiding Principles) some have also taken significant steps over the last five years to implement the Principles and conduct Human Rights due diligence. There is no such thing as an ‘island of excellence’ when it comes to managing human rights in complex global supply chains. Collaboration with other actors including civil society representatives and governments is essential to making meaningful and sustainable progress.

© Business for Social Responsibility (BSR)
© Business for Social Responsibility (BSR)
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The Guiding Principles as a Starting Point

The Guiding Principles encourage companies to take a holistic approach to supply chain management that requires mapping their human rights impacts throughout their supply chains and implementing mitigation and remediation efforts that focus on the most severely impacted rights holders – direct and indirect workers or community members in particular. For many company representatives, this required a shift in their approach to supply chain management; from managing the performance of their direct business partners and the risks to their companies, to focusing on the human rights impacts on right holders resulting from their direct or indirect operations.

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This does not—and indeed cannot—happen all at once. As commentators have pointed out , the Guiding Principles are a pragmatic standard that embraces prioritization of addressing risks and taking a strategic approach to allocating limited resources. While all human rights risks and impacts must be addressed, the most severe should be addressed first, even if this means taking a long-term approach to tackling extremely difficult issues deep in the supply chain.

 

Stakeholder Collaboration as a Requirement

Despite improved management practices, many challenges remain for companies to effectively tackle entrenched human rights risks in global supply chains, where impacts on workers’ lives and communities and are the greatest and most complex. In many cases, human rights violations are the result of structural causes that will continue to produce violations if left unaddressed. In such settings, even the most robust compliance systems will ultimately be rendered ineffective in preventing and mitigating human rights violations.

The tragic building collapse at Rana Plaza in Bangladesh provides one example of how individual self-regulations by companies do not suffice to tackle systemic human rights risks. In this case, the regulatory and economic system was malfunctioning as  few laws were enacted or investments made by the government to improve working conditions, and commercial buildings were turned illegally into large factories without the sort of structural assessment or government oversight required to ensure safety. The relevant authorities in charge of delivering factory permits, ensuring fire and building safety or conducting labor inspection were notoriously under-funded and lacked capacity thus creating an environment conducive to bribery and corruption, negligence and unaccountability.

Following the collapse, it became clear that only a coordinated, long-term response of all actors involved in the sector would deliver a sustainable and effective solution to the problems. The ILO played a leading role in coordinating the response by sourcing companies, unions, civil society organizations, and the local authorities. The government of Bangladesh pledged to bring its regulations in line with international standards and started the complete overhaul of the labor inspectorate and the fire service department. Bangladeshi and international unions and over 190 international brands and retailers also established a binding Accord on Fire and Building Safety in Bangladesh to implement a comprehensive program of independent and transparent inspections and trainings focused on fire and building safety.

Beyond aligning their individual actions with the Guiding Principles, companies need to consider also measures and partnerships that seek to influence the broader political, social, economic and regulatory environments in which human rights violations take place, in particular within long and complex supply chain networks.

The OECD forum on responsible mineral supply chains offers another example of the value of multi-stakeholder collaboration. The Democratic Republic of Congo (DRC) is home to the deadliest conflict since World War II, which is largely financed by the extraction of natural resources – such as tin, tungsten, tantalum and gold – that are widely used in electrical and electronic products. Since the adoption of Section 1502 of the US Dodd Frank Act, a landmark regulation that requires companies to disclose the presence of conflict minerals in their global supply chains, several coalitions of actors have emerged, most based on the framework by the OECD. Built on the OECD Guidelines for Multinational Enterprises, the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas sets out a five-step risk-based due diligence framework to help companies identify and manage human rights risks and avoid contributing to conflict through their sourcing decisions. While the Guidance simply talks to companies, its implementation relies on also on governments and civil society actors; the former through the creation of an enabling environment for responsible mineral production and trade and the latter by monitoring the activities of companies and the security and human rights contexts in which mineral production and trade takes place.

 

Drawing lessons

These examples highlight the need for companies not only to develop more robust management systems on Human Rights, but to work together in industry-wide approaches and initiatives and collaborate with governments and civil society. Together, they can respond to challenges that companies would struggle to tackle on their own.

In this context, legislations that are increasing non-financial disclosure requirements and holding companies accountable for human rights infringements in the absence of implementation of adequate due diligence should be embraced. In addition to providing clarity on what is expected from companies, such legislations can foster harmonization of practices and a level playing field. In the minerals work for instance, it is clear that while much progress has been made through voluntary multi-stakeholder approaches, real company commitment was strongest when regulations required companies to take action.

But beyond this, companies should proactively engage with civil society organizations and governments to share their challenges in an attempt to inform meaningful reforms and regulatory frameworks and create a conducive environment for responsible supply chains. Along those lines, the World Economic Forum’s Global Agenda on Human Rights proposes the adoption of a model of Shared Responsibility, based on collective action to promote human rights in global supply chains. The Shared Responsibility model relies on four principles seeking industry wide collaboration of both public and private stakeholders, end to end visibility over the entire supply chain, cost accounting mechanisms to address the most serious risks, and finally cooperative approaches based on equitable sharing of responsibility for action among key stakeholders.

 

The opinions expressed on this blog are those of the authors and do not necessarily reflect the official position of their institutions or of AFD.

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