The Global Business Initiative on Business and Human Rights (GBI) published the summary outcomes of two recent sessions it convened with companies in India to discuss implementing strong human rights due diligence (HRDD) in the value chain and ensuring remedy (September 2024). The reports outline the challenges and priorities companies are facing and share practical solutions that businesses have adopted to respond.
Human Level’s Take
- Feeling stuck in your approach to HRDD across the value chain? You are not alone! In two recent roundtables convened by GBI, companies highlighted challenges and solutions to tackle the challenges of building supplier capacity, making the business case for why downstream due diligence matters and creating effective grievance mechanisms.
- Companies are using some tried-and-true approaches for bringing other stakeholders on board whether it’s executives, the sales and commercial teams or suppliers: (1) Convening opportunities for suppliers to learn from each other. Seeing the ‘art of the possible’ can help break down barriers to action. (2) Building a business case for the trickiest topics, as for the case of downstream due diligence, which is carved out of the EU CSDDD but still poses legal and reputational risks. (3) Measuring qualitative indicators of success, like worker satisfaction with your grievance process, instead of looking for surface-level data that might be easier to capture but doesn’t paint the whole picture, like number of claims received. More meaningful indicators also means better foresight of potential risks.
- You can use the examples in this report to craft concrete next steps in strengthening HRDD — in your own operations, with your suppliers and with your business partners. Learning from what others have done is also a good way to chart the direction of travel for businesses on these topics, especially as new regulations come into play.
For Further Reading
The companies at the roundtable highlighted both core challenges and approaches to take.
- Addressing limited supplier capacity on HRDD. Building supplier capacity and streamlining processes is a priority for companies, especially as new requirements arise on disclosing and addressing human rights and environmental impacts. To respond to this challenge, companies are enhancing supplier capacity by organising forums for suppliers to directly discuss human rights challenges and approaches. For example, one company established a supplier CEO forum to align expectations on human rights, while another is working to streamline reporting processes to reduce redundancy. Companies also reported that using ‘carrots’ has proven more effective than using ‘sticks.’ Companies are engaging and incentivising suppliers using measures like providing loans to help pass the benefits of compliance along to suppliers and their workers.
- Conducting effective downstream due diligence. Even though downstream due diligence has been left out of the EU Corporate Sustainability Due Diligence Directive, companies shared that this still matters for their bottom line. A lack of oversight on product use can pose legal risks, damage a company’s reputation, threaten its social license to operate, impede market growth and result in costly settlements or remediation efforts. Even with the added risk to business, some companies shared that it can be tricky to get the sales and commercial teams on board with conducting HRDD or turning down new business opportunities that pose heightened human rights risks. In response, companies are working to increase internal awareness about potential human rights risks, especially among the teams who hold the relationships with clients and customers. Companies shared that this can take time and found it was important to tailor conversations with colleagues to the local context. Some companies have developed policies or guidelines for contracts related to new business opportunities. This has made it possible to get company leadership on board with a decision not to pursue a particular sales opportunity due to the increased human rights risk.
- Meeting effectiveness criteria for operational-level grievance mechanisms. The UN Guiding Principles on Business and Human Rights set out eight criteria for ensuring access to remedy through grievance mechanisms. Companies shared that they face challenges in meeting these criteria, especially accessibility issues like a lack of awareness among affected stakeholders, fear of retaliation for reporting and gaps in implementation. Some companies noted that certain sensitive issues might not be reported, regardless of accessibility. Other challenges raised include tracking the effectiveness of the grievance mechanism and ensuring accountability. To ensure that vulnerable users access the mechanism, companies discussed the need to ensure their safety. If there are still gaps in reporting, companies recognised that they may need to tailor their approach, for example by looking to other sources to collect information on likely risks and impacts. To facilitate meaningful tracking, companies discussed developing KPIs that focus on measuring the outcomes rather than the number of grievances filed. This was seen as a way to shift the perception internally that fewer cases is necessarily a “positive” KPI and more cases is a “negative” KPI. Companies suggested that an escalation matrix for issues raised through the grievances mechanism could help increase accountability, fairness and transparency, especially for issues that need to be prioritised for action. Participants also flagged the need to build buy-in and awareness across all levels of the company that the grievance mechanism is an important early warning system for the business.
