Mar 23rd, 2016

How human rights are benefiting from legislation on supply chains

On 10 December, the international community pauses to reflect upon Human Rights Day and recommit to guaranteeing the rights which are inherent to all individuals, regardless of “nationality, residence, sex, ethnic origin, language or any other status.”

Human rights also include certain workers’ rights, such as the fight to fair and just working conditions and the prohibition of slavery. As such, businesses are critical actors who have the ability to support the protection of these rights by ensuring their operations to not undermine or violate them through the provision of effective and sustainable action.

However, solutions can be fraught with challenges given the often complex nature of a company’s supply chain. The supply chain is the system by which a product or service makes its way from a supplier to a customer, and can involve various people, activities and organizations. The supply chain becomes more complex the larger it becomes and due to the increasingly globalized nature of the world, global companies operations are often scattered around the world. Generally, this development has benefited many people: almost one billion people have been lifted out of poverty thanks to the generation of jobs in manufacturing, farming, fishing and other industries.

However, these larger supply chains also pose a risk, as without due diligence and transparent measures, it is possible for forced labor practices and human rights violations to be hidden within the complex chain.

Public scrutiny has brought new attention to these challenges, and discussions have moved towards best practices to ensure responsible procurement. A foundational framework advocated by the United Nations is the UN Principles on Business and Human Rights, more commonly referred to as the Ruggie Principles. It highlights the need for companies to show how they are identifying, managing and mitigating the risk of human rights violations across their supply chains.

Building on this, countries have started to implement their own reporting requirements for companies over a particular size. In 2015, the United Kingdom passed the Modern Slavery Act which requires commercial organizations with a turnover of 36mn or more to publicly disclose the steps they have taken to tackle modern slavery in their supply chains and businesses. The California Transparency in Supply Chains Act similarly demands companies with worldwide revenues to report on specific actions taken to eradicate slavery and human trafficking from its direct supply chain for the goods offered for sale.

The legislation works by “peer pressure”, pushing organizations to conduct due diligence and consider the risks their operations could pose to human rights. Governance experts have commented that while there is no legal requirement for companies to take action, pressure will come from a need to avoid reputational damage and to show stakeholders how they are combatting these acknowledged risks.

Legislation, along with other initiatives such as traceability, provide a transparent channel to look at how a company working to combat unethical and unsustainable practices. Compliance is demonstrative of commitment to protect the human rights of those who work for them. Additionally, it offers stakeholders a way to hold companies accountable to previously made promises, enhancing trust between consumers and a corporation as publically available statements make it easy to see who is making the right moves. It also provides the opportunity for companies to engage in dialogue and learn from others in their industry to better understand which practices are the most effective and how to implement them on a large scale.

Legislation should be seen as an important part of the journey towards the successful eradication of practices such as forced labor, and should be supported as such.