Danish Institute publication demonstrates how businesses across a range of sectors conduct downstream human rights due diligence processes
"Due diligence in the downstream value chain: case studies of current company practice", 20. February 2023
Many companies are already conducting some form of due diligence in the downstream. While certain sectors at higher risk of impacts in this part of the value chain, such as tech, have more established practices on downstream due diligence,1 companies across a range of sectors are taking a full value chain approach which includes conducting due diligence on their downstream human rights impacts. As the case studies in this publication show, this can be done in a number of ways. Examples include conducting human rights impacts assessments (HRIAs) on the full value chain, enabling a company to become aware of and act on its downstream human rights impacts; adapting existing, well-understood processes, such as know your customer (KYC) checks or anti-bribery and corruption processes to consider human rights impacts; or developing responsible approaches to marketing of products.
These case studies have been developed based on company interviews, drawing from company processes and policy commitments, and informed by a closed roundtable for businesses convened by the Danish Institute for Human Rights in October 2022, which discussed common challenges and practical approaches to addressing downstream human rights impacts under Chatham House rules. [...]
4 WHAT IS NEEDED TO HELP ADDRESS HUMAN RIGHTS IMPACTS IN THE DOWNSTREAM?
As noted above, companies are seeing renewed impetus to more actively address adverse human rights impacts in the downstream. However, calls for companies to better address these impacts are hindered by the absence of clear guidance which builds on the strong foundation of the UNGPs and OECD GL. During a closed roundtable discussion convened by DIHR in October 2022 a number of company representatives expressed frustration at a lack of operational guidance or tools to further develop due diligence in this segment of the value chain. [...]
As a number of the case studies set out below note, the value chain approach has helped companies understand expectations and build internal buy-in to drive action in the downstream. In some cases this has been driven by the approach taken in forthcoming regulation. A consistent approach across regulatory initiatives is needed to ensure a coherent regulatory space which sets clear requirements and meets the current practice of companies which are already conducting human rights due diligence in the downstream part of the value chain. It should be noted that a number of statements on behalf of high profile companies have expressed support for any regulation in this area to take a full value chain approach.
5 COMPANY PRACTICE
Many companies are already undertaking some form of due diligence which covers human rights impacts in the downstream part of the value chain. Some do so explicitly, adopting policy commitments and taking a full value-chain approach to their human rights due diligence. Others do so through existing processes which, though not framed as such, nonetheless consider human rights impacts.
There are a range of strategies and processes which can be used to manage downstream human rights impacts, including:
- Making policy commitments to address human rights throughout their value chains;
- Mapping risks, including through undertaking human rights impact assessments, across the value chain and using the findings to inform action plans;
- Ensuring that products are designed responsibly through interventions at the research and development stage;
- Adapting sales processes and KYC checks or anti-bribery and corruption processes to include due diligence on human rights;
- Developing responsible marketing practices to manage human rights impacts;
- Ongoing engagement with business customers to address human rights risks, monitor effectiveness of mitigation measures, and encourage improvement;
- Exploring how to increase leverage, for example through design features, ongoing service contracts or collective action efforts;
- Ensuring that end-of-life disposal is conducted in a manner which respects rights;
- Engagement with rightsholders and affected communities;
- Ensuring that ongoing risk management processes allow for escalation of risk, both by employees and external stakeholders; and
- Making complaint and grievance mechanisms accessible to rightsholders affected by downstream human rights impacts.
As the case studies set out below show, these practices are employed across a range of sectors, country contexts, and business models, designed to address a range of human rights impacts.