Ensuring Human Rights in the Supply Chain: An Eight-step Guide

Analyst Insight: Compliance with human rights standards is becoming increasingly important for companies to succeed, while failure to do so can result in financial and reputational damage. Here are eight strategies to mitigate human rights risks in the supply chain.

Sustainability has increasingly become a top priority for supply chain executives in recent years, especially in the wake of recent events highlighting the vulnerability of global supply chains. But how often do they think about their approach to identifying and assessing human rights risks across their operations and supply chains, or what measures are in place to integrate human rights considerations into their decision-making processes and operational practices? 

Human rights violations can occur at any stage in the supply chain. The Conference Board offers eight essential strategies for companies to mitigate human rights risks in operations and supply chains. 

1. Develop a formal human rights policy. While it may sound mundane, it is essential for companies to develop a comprehensive human rights policy that outlines their commitment to respecting human rights, and establishes expectations for all employees and business partners. 
2. Conduct risk assessments. Risk assessments can be used to determine which suppliers pose the greatest risks in terms of potential human rights violations. These assessments should include identifying vulnerable groups, mapping key stakeholders, and reviewing any past incidents or allegations of human rights abuses throughout the supply chain. 
3. Provide training and capacity building. This is essential for promoting ethical and sustainable practices throughout the supply chain. Companies should ensure that employees are trained in the company's code of conduct, human rights standards, and other policies and practices to identify and prevent human rights violations. 
4. Undertake due diligence. Human Rights Due Diligence (HRDD) offers a proactive and strategic approach to identify, prevent, and mitigate potential and actual human rights risks associated with a company's operations and business relationships. HRDD can take many forms, from risk assessments to supplier engagement. Conducting due diligence on suppliers is crucial. This involves researching potential suppliers to ensure they have a good reputation and no history of human rights violations. The due diligence process may also involve site visits, interviews, and inspections of supplier facilities to assess compliance with ethical sourcing requirements.   
5. Collaborate with suppliers and stakeholders. Rather than taking a punitive approach, companies can work with suppliers to identify areas for improvement, and provide training and support to promote compliance with human rights standards. Where appropriate, companies should partner and collaborate with other stakeholders, including industry associations and non-governmental organizations, to address systemic human rights issues in their sectors. 
6. Implement grievance mechanisms. Companies should establish effective grievance mechanisms that enable stakeholders to raise concerns about human rights violations in the company's operations and supply chains. The mechanisms should be accessible, transparent and responsive to stakeholder feedback. 
7. Monitor and report. Monitoring supplier compliance with ethical sourcing requirements is essential in order to identify and address potential human rights violations. Companies should have a system in place for reporting and investigating suspected violations. Reporting should be transparent, credible and accessible to all stakeholders. 
8. Leverage technology. The potential of technology to support efforts to prevent human rights violations in the supply chain must be considered. For example, blockchain technology can be used to create a tamper-proof record of transactions and supply chain activities, allowing for greater transparency and traceability. This can help to identify potential risks and enable more effective monitoring and auditing of suppliers.

A mandatory legal and social framework for respecting human rights is emerging. Human rights are rapidly becoming a core component of sustainability, not only for businesses but for the world around them as well. In the future, successful companies will be those that comply and thrive in this new legal and normative context. Companies that can demonstrate robust policies for the prevention of harm, or at least deal with any abuses quickly and effectively, will reap the rewards. Those that cannot stand to lose out financially and reputationally.