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In the last few years, several countries and regions have passed Human Rights Due Diligence regulations over industries and imports into their country. Laws range from issue specific to disclosure reports to national-level mandatory due diligence and reporting that cover all human rights.
A new era of socially responsible and sustainable business has taken shape and continues to build momentum. Many governments and businesses have used these principles to set regulations, policies, and set long-term goals. Recently we have seen several governments enact far-reaching laws and regulations in line with the Guiding Principles to help regulate businesses and their supply chains and ultimately protect workers.
While there are many human rights-related laws and regulations you may have to comply with (we encourage you to consult your legal team), most HRDD laws are based on the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, the OECD Due Diligence Guidance for Responsible Business Conduct, and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. As a result, there are several common requirements and principles that your business can put into place to ensure compliance across regimes and to help protect your businesses when practices are questioned.
Key to most human rights due diligence legislation is the effective identification and protection of human rights in the day-to-day operations of the business as well as within your suppliers’ (and potentially indirect suppliers’ and consumers’) operations. Unlike audits and other compliance checks, this is a continuous and ongoing obligation.
Businesses are required to;
What does that mean?
Implement an ongoing risk management system + policies for direct business activities + suppliers
Businesses must have human rights policies outlining the rights and responsibilities of all rightsholders, actions to be taken if issues are discovered, and an ongoing method and or mechanism to actively identify and prevent human rights issues.
Assess risks in your direct business + supply chain
Look at your supply chain, consult local rightsholders, and ask questions like: Are you sourcing from a country in conflict or with high rates of forced labor? Is there a commodity you use in your products that is hard to trace and could be sourced from areas that required people to be evicted from their homes, or that are protected lands or otherwise environmentally vulnerable?
Identify adverse human rights impacts + risks throughout your entire value chain
Rightsholders must have a way to bring forward human rights issues and risks. A grievance mechanism is considered a minimum requirement by most laws to ensure the active identification of risks is possible.
In addition, if you know there is a risk of your business having a negative human rights or environmental impact, you are required to take action on these issues.
Not all risks must be actioned. Most HRDD regimes include risk prioritization, where your company weighs the likelihood of harm, the magnitude of negative impact, and the importance of a supplier to your business.
Actively prevent human rights violations in direct business and supply chain
If something is a risk, or if you have identified an issue or rights violation, you are required to conduct countermeasures to prevent it from happening or reoccurring.
Remediate violations to an end
When an issue is discovered, through investigation, grievance mechanisms, or other systems, you are required to ensure the issue is remediated to a close. Remediation means engaging with affected people and restoring them to the situation they would have been in if the impact had not occurred and/or compensating and making amends for the harm caused.
Report + Track
Actions taken by the company under the above must be reported annually. All violations + identified risks + prevention & remediation actions taken throughout the entire supply chain must be tracked and reported.
Companies are required to review and assess the effectiveness of their tools and processes.
By implementing HRDD practices, companies can ensure that their products and services are created without harming the environment or violating human rights. This can help build trust with customers, stakeholders, and investors, while also minimizing legal and reputational risks. Furthermore, HRDD helps companies to promote sustainability and improve the overall well-being of their employees, suppliers, and communities where they operate. Overall, adopting HRDD is a critical step towards building a responsible and ethical supply chain, which is increasingly important for consumers and society as a whole.