Limited funding for rightsholder-driven due diligence is undermining efforts to hold companies accountable, according to new Swedwatch report
"Funding rightsholder-driven due diligence"
A new Swedwatch report shows that limited funding for worker and community driven due diligence approaches is undermining efforts to hold companies accountable to human rights and environmental standards. The report outlines how funders and donors can better invest in these approaches to meet the opportunity posed by new mandatory due diligence laws. It features case studies showing how effective resourcing of these approaches can advance rightsholder priorities.
Key findings
1️⃣ Low and diminishing funding. A mere 0.62% of Official Development Assistance and philanthropy supports worker and community driven approaches to due diligence.
2️⃣ Quality of funding is essential for worker and community driven due diligence. Current funding is often short-term, inflexible, and inaccessible to the actors with trust and proximity to business impacted communities and workers.
3️⃣ Resources flooding to failed industry approaches reliant on self-disclosure. ESG ratings products, often marketed as tools to meet mandatory due diligence requirements, rely on company self-disclosure for 87% of their human rights data, and yet amount to over 80 times the size of human rights foundation funding for research and documentation. [...]
However, the era of mandatory due diligence legislation has risen at the same time as a sophisticated compliance industry which promises rigorous due diligence but delivers more of the same failed corporate self-regulation. If funders and donors want to meet the opportunity posed by mHREDD legislation and enable meaningful corporate accountability, they must mobilise funding to build power of workers and communities.
In our latest study, Swedwatch identified three core findings. First, the quantity of funding for worker and community driven approaches is low and diminishing. Second, the quality of funding has significant impact on the effectiveness of corporate accountability. Third, unless the ecosystem of actors supporting workers and communities are better resourced, mHREDD legislation risks resulting in more corporate self-regulation. [...]
What’s next?
This report has been produced at the time of a global funding crisis, which itself emerged in a time of a global poly-crisis. However, while this report did surface urgent funding needs, these needs do not compete with other funding priorities. Instead investing in worker and community driven due diligence should be seen as a strategic investment to reach the wide range of rightsholder priorities which are impacted by business activities. Several ideas emerged to help meet that opportunity.
✔️Increase coordination and collaboration between business and human rights funders and other thematic funders including those focusing on poverty, health, peace, climate and development.
✔️Invest in approaches including micro-levies and industry fees which ensure that companies pay their fair share but move beyond failed CSR approaches by centering independent governance with workers and communities.
✔️Push resources towards the funding models identified which are providing, accessible, flexible, long-term, and systems-oriented support.