Commentary: Corporate due diligence—it’s in short supply
...Calls for increased corporate accountability have been gaining momentum. In national and regional debates the demand for mandatory human-rights and environmental due diligence (mHREDD) across company operations has been coming to the fore. Particularly in Europe, governments have begun legislating—most recently in France, Germany and Norway—to require corporations to detect, and act upon, the risks faced by workers in their supply chains.
Companies will have to ramp up their efforts significantly. And while some European governments have taken action to introduce mHREDD, ambitious standards must be set at the regional level.
The delay in the European Commission’s initiative on sustainable corporate governance—a draft directive is finally anticipated later this month—must be used to ensure mHREDD legislation is effective in creating tangible impacts for workers, enhancing equality. Today more than 100 companies and investors have called for effective legislation. Should this opportunity be seized by policy-makers, it would transform the way companies operate.
...KnowTheChain’s research makes clear what this baseline must look like. First, companies must be required to ‘know and show’ their risks, with a focus on salient risks, and carry out human-rights due diligence across their whole supply chains.
It is also vital that due diligence incorporates meaningful engagement with stakeholders, including workers, from the assessment of risks to the remedy of abuse. Workers must be at the centre of companies’ due-diligence processes—involved in their design, implementation and evaluation.
Workers, whose daily reality is exposure to the risks, are the only ones in a position to depict the situation on the ground. As such, they should be involved in the assessment of risk, the design or performance of grievance mechanisms and monitoring for human-rights abuses.
Legislative measures must be designed to create tangible outcomes for workers. Due-diligence laws should compel companies to address irresponsible business models.Companies should adopt responsible purchasing practices, such as prompt payment and accurate forecasting, and ensure workers’ rights to organise are protected.
Finally, if legislation is to be effectively implemented, policy-makers must put in place a strong civil-liability regime, to hold companies accountable and ensure access to remedy for workers. Binding requirements, with the threat of penalty for non-compliance, must be put in place to ensure companies take risks seriously.
If we are to see transformational change for supply-chain workers, we first need to see transformative action by governments and companies. The status quo isn’t working: forced labour persists. The commission should take the opportunity to propose a directive that would enforce rigorous standards—beyond a box-ticking approach—and drive companies to rethink due diligence as a tool for addressing forced labour.