A new report from CSR Asia warns companies that they may be indirectly involved in human rights infringement cases unknowingly through their supply chains. Richard Welford, Chairman, CSR Asia, recommends proper due diligence for businesses that want to be involved in proactive human rights programmes.

A new report from CSR Asia – Engaging Business on Human Rights: Issues for Responsible and Inclusive Value Chains – outlines some of the human rights risks that are facing businesses which operate global value chains. It highlights, in particular, growing concerns about various forms of modern-day slavery that are often found deep down the supply chains of companies where traditional audits rarely reach. Here the challenges facing the private sector are enormous and the reputational and legal risks growing. But the report stresses that single businesses acting alone cannot deal with the problems and that cooperation with other businesses and other stakeholders is vital. Through a series of interviews with expert stakeholders the report outlines the issues that face businesses, the opportunities for responsible and inclusive business practices and some of the barriers to addressing human rights concerns.

Businesses that are committed to running their organisations in a responsible way and those interested in exploring how their value chains can be more inclusive will have an interest in ensuring that human rights are protected. They will recognise that their own employment practices should protect human rights. But more difficult are human rights abuses that happen outside the organisation itself, and are to be found in the value chains of businesses and within their sphere of influence rather than direct control.

One of the biggest challenges for responsible and inclusive businesses is that many human rights violations happen deep down supply chains where auditors and inspectors rarely go. They are found in agriculture, fishing, mining and other primary industries where single companies have limited control over their supply chains. Abuses include child labour, forced labour, bonded labour and a range of abuses inflicted on vulnerable and marginalised groups that can collectively be considered as modern-day slavery.

Companies are often found to be indirectly involved in human rights infringement cases unknowingly through their supply chains. This is why a willingness to undergo proper due diligence is crucial for businesses that want to be involved in proactive human rights programmes. Yet research shows few businesses have supplier codes of conduct that go beyond first-tier suppliers and lack specific requirements related to modern-day slavery and other human rights abuses throughout its supply chain.

With growing public attention and concern around recent media scandals about modern-day slavery, as well as more consumers asking questions about whether the products they buy are ‘slave free’ or not, responsible and inclusive businesses will prioritise human rights issues and risks that they could face along their value chains.

While problems associated with human rights abuses will not be solved easily, there needs to be greater transparency and collaboration within sectors and between different industries, involving a wide range of stakeholders. Engaging widely on emerging best practices and finding effective ways to tackle human rights abuses will reduce reputational and legal risks to companies.

Companies committed to responsible and inclusive businesses will work towards eradicating human rights abuses in their value chains and work with other stakeholders to encourage the wider private sector to increase their involvement in human rights assessments.

The basic principles that define the scope of human rights impact assessments require that:

• companies should be as transparent as possible about their findings (balancing the benefits and constraints of disclosure)

• an assessment should be grounded in a human rights approach by ensuring the participation of relevant stakeholders involved in the process, with a particular emphasis on marginalised or vulnerable groups, and ensuring accountability, and

• the methodology should be practical and effective from a business perspective.

In order to address human rights risks along the value chain and tackle the risks associated with modern-day slavery, the CSR Asia report argues that companies must consider what is feasible, what is possible and what is fair. An approach consistent with developing a responsible and inclusive value chain free from human rights abuses is the intended outcome. A strategy based on the following 10 elements is a good starting point.

1. Develop awareness within the organisation about human rights challenges, accepting that there is no easy solution to dealing with human rights violations deep down supply chains. Recognise that ignoring human rights risks is not an option because they can cause damage to brand, reputation and trust, and cause severe disruptions to value chain security and efficiency with implications for competitiveness.

2. Use human rights risk assessments to evaluate the issues along the whole value chain and how they can impact on sourcing, products, brands, reputation and legislative requirements. As part of this, engage with a range of stakeholders to better understand the dynamics of the value chain and the reality of operations on the ground. Ensure that any potential high-risk areas are monitored and engage with vulnerable and marginalised communities to tackle risks associated with exploitation.

3. Consider inclusive business approaches and work with smallholders, small businesses and cooperatives to ensure that they derive fair benefits from their outputs. Help to increase productivity and quality so that margins are enhanced and vulnerability to abuses reduced. Create initiatives that have the potential to increase the economic empowerment of poor people and communities more widely, reducing the potential for exploitation.

4. Recognise that certain groups of people will be more vulnerable to human rights abuses and work towards recognising the root causes of such potential abuses. Vulnerable groups will include the poor, women, indigenous peoples, children, migrant workers, refugees, the disabled, ethnic minorities and the displaced. Work alongside communities to address vulnerabilities.

5. Make value chains as transparent as possible, highlighting the sources of raw materials and production methods. Make it clear that the company has a policy and commitment to eliminate all forms of modern-day slavery. Provide accessible, reliable and independent whistleblowing procedures so that human rights abuses can be reported. Establish grievance mechanisms for those who believe the company is not abiding by its commitments.

6. Engage with industry-wide initiatives that can begin to examine the root causes of human rights abuses and begin to work on common standards and initiatives to mitigate the risks associated with modern-day slavery. Work alongside other businesses to address real and potential value chain risks associated with human rights abuses, recognising that a safe and responsible relationship with suppliers is in the long-term interest of value chain security and competitiveness.

7. Partner with the NGO community where significant expertise on human rights issues exists and begin working on solutions dealing with the underlying causes of modernday slavery (including poverty, discrimination, land rights, refugees and vulnerable groups). Engage with experts who understand different issues in different geographical locations and respect local cultures and traditions, whilst seeking to reduce human rights risks.

8. Develop even wider multistakeholder initiatives at the industry level to work towards solutions to human rights abuses along the value chain, whilst at the same time increasing benefits to the poor and protecting the environment. Develop joint initiatives to develop responsible and inclusive value chains and consider links to industry standards, certification schemes and labels where appropriate. Consider interventions along the value chain that can reduce risks associated with human rights abuses and remediation for those who are found to have been exploited.

9. Focus on developing responsible products and traceability initiatives so that consumers and other stakeholders can have a good degree of assurance that the products that they buy are free from human rights abuses. Encourage consumers to be part of the fight against modern-day slavery through education initiatives, influencing their purchasing decisions.

10. Join in a broader global movement to protect the human rights of vulnerable people and advocate for more effective responses from governments and other regulatory agencies. Demonstrate to other parts of the private sector that there is a business case associated with engaging with human rights relating to risk reduction and potential competitiveness gains associated with value chain security.

 

 

Richard Welford, Chairman, CSR Asia

The CSR Asia report ‘Engaging Business on Human Rights: Issues for Responsible and Inclusive Value Chains’ is available from the insights section of the CSR Asia website: www.csr-asia.com. Copyright: CSR Asia, 2015

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