Are India’s supply chains ready for the movement towards human rights due diligence?
The movement towards corporate human rights due diligence (HRDD) is picking up pace globally. As we attempt to address the converging effects of the Covid-19 pandemic, the climate crisis and vulnerabilities in our increasingly interconnected and interdependent global economies (reliant on global value chains), vulnerable stakeholders—whose categorisation varies from region to region—often bear the brunt of the worst impacts of crises.
Adoption of the globally-acknowledged United Nations Guiding Principles on Business and Human Rights (UNGPs), and with them a commitment to corporate human rights due diligence, is increasingly on the agenda—more countries are announcing National Action Plans on Business and Human Rights (based on the UNGPs) and mandatory human rights due diligence laws and requirements. Japan is the latest to join the growing list of countries taking steps towards mandatory due diligence (including the UK and Australia Modern Slavery Acts, Dutch Child Labour Due Diligence Act, French Duty of Vigilance law, and Indian Business Responsibility Reporting Requirement) with its draft guidelines on respect for human rights in responsible supply chains.
It is becoming increasingly important that companies’ actions to protect and respect human rights extend beyond their home country, to all regions where it manufactures, sources and sells its products and services. Protection of human rights across supply chains is also one of the key principles in UNGPs. Global companies which either operate in India or are linked to India through their manufacturing and supply chains must follow both the law of both their home countries and laws and regulations applicable in India. India has several local laws and regulations which aim to ensure protection of and respect for human rights. Central and state-level remedy mechanisms are available in the country for those affected by human rights violations.
India’s National Guidelines on Responsible Business Conduct (NGRBC) is based on nine principles, including corporate actions on human rights. The guidelines advise a holistic approach for companies, starting with adoption and implementation of a human rights policy, human rights awareness and training of employees and supply chain partners, grievance channels and remedy mechanisms. The guidelines also focus on monitoring of human rights concerns and incidents both in operations and supply chains, as well as HRDD. The country’s top 1,000 listed companies are subject to mandatory sustainability disclosure as part of Business Responsibility Sustainability Reporting (BRSR) framework, based on the nine principles of the NGRBC.
Japanese companies with supply chains in India may be required to fulfil the requirement of BRSR if they fall within the mandated top 1,000 listed companies. Even if they are not part of the mandate, it is advised that the BRSR framework and NGRBC are followed as good practice. Japan’s draft guidelines on responsible supply chains can help companies take necessary steps to protect and respect human rights. Indian suppliers to Japanese companies can also look to these guidelines to inform their actions. Since these guidelines are also based on the UNGPs, there is a common ground between Japan’s guidelines on responsible supply chains and India’s NGRBC. Some of the common areas include:
- Both are guidelines, and are voluntary in nature.
- Both take a value chain approach to respect for human rights, guiding companies to go beyond their manufacturing setup and examine their supply chains, both upstream and downstream, to ensure respect for human rights.
- Both advise companies on Human Rights Policy, HRDD and Remedy mechanisms
Although due diligence is gaining traction, companies still have a long way to go to respect human rights. While some have started to establish human rights policies, they are struggling on the next steps. India’s NGRBC serves as a model for companies to take action beyond human rights policies. It takes a broad approach, extending its scope beyond human rights to responsible business conduct on issues including environment, ethics, transparency, economics and communities. Japan’s guidelines on responsible supply chains—which focus exclusively on human rights—can provide deep insights to companies, including companies in Indian supply chains, to take specific actions to respect human rights.
Japan’s supply chains in India can take advantage of both the NGRBC and Japan’s draft guidelines to take steps in designing and deploying systems and processes to respect human rights.