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Respecting human rights in supply chains

The global standard on business and human rights the UN Guiding Principles on Business and
Human Rights makes it clear that companies need to respect human rights throughout their
operations and value chains.

From the smallest domestic companies to the biggest multinationals, every single company has a supply chain and the
vast majority of them have a multinational supply chain. | What is the difference between a supply chain and a value
chain? For the purposes of this course, were focusing on how products are made: supply chains. If you are very
interested in human rights impacts on end-users (e.g., right to privacy and freedom of expression), please contact the
course organizers we are happy to provide reading suggestions on that topic.
The Guiding Principles recognize this situation by making clear that companies need to respect human rights throughout
their operations and value chains. For some companies that may sound strange the behavior of our business partners is
not our responsibility, much less the behavior of their business partners who we dont even know.
Learn more: Shift
offers an entire section
in their resource
library on this topic.

But growing reputational and operational costs, as well as regulatory requirements like the
Modern Slavery Act in the UK and US federal government procurement requirements, show
that such views are out of step with societys expectations. The Guiding Principles affirm that
businesses need to do what they can to influence their business partners to prevent harm to
people but they also set some boundaries on what can reasonably be expected of companies
in this regard.

So what are companies supposed to do to demonstrate respect for human rights in their supply chains?

1. Identify who is in their supply chain

This may sound obvious, but most companies do not know the
entire picture of where their products come from. They may
know their first tier suppliers (suppliers with which they have a
direct business relationships) and perhaps even some second tier
suppliers. But far fewer companies can identify supply chain
partners beyond the second tier relationship, let alone the
ultimate sources of the raw materials or other inputs that go into
what they produce.
Given the interconnected and overlapping nature of many value
chains, leading companies often map their value chains together,
to make the information gathering more efficient and accurate.
This publication from the UN Global Compact provides
extensive examples of initiatives doing just that.

Risk to people, risk to business

The activity of mapping the value chain value
chain mapping or traceability is not just an issue
of human rights its also critical for the stability of
business operations (this is sometimes called
business continuity). For example, in one
electronics company, the supply chain business
continuity manager and the supply chain sustainability
manager share office space and continually exchange
information, because they are both concerned with
managing supply chain risks. | Learn more about how
business risks can converge with risks to people (point
5 on the linked page)

2. Prioritize where to conduct due

Overview: Respecting human rights in supply chains

Shift Project Ltd. 2016

Once companies map their supply chains, where do they begin to identify and address human rights risks?
The Guiding Principles take a pragmatic approach to this challenge: they understand that companies typically need to
prioritize which risks to address first especially those with complex global supply chains.
The critical element here is how risks are prioritized. Priority risks those risks that the company addresses first need to
be those risks where the impact on people could be the most severe. These are called salient human rights issues, as
referenced earlier in this course.
Prioritizing human rights risks is significant area of work for companies. For the purposes of this course, whats important
to understand is that where it is necessary, due to legitimate resource constraints, a) its perfectly acceptable to prioritize
risks according to the Guiding Principles; b) prioritization needs to happen based on risk to people, not just risk to the
business. Where companies have to make difficult choices about which impacts to focus on first, the best way to make the
process more robust, and your decisions more credible, is to test them with stakeholders that have insight into the
companys human rights risks. | Learn more: Human rights due diligence in high risk circumstances from Shift

3. Taking action: use your leverage!

Graphic courtesy of Shift

Where companies have identified human rights risks that they

are not directly causing, they will need to influence those who
are causing the impact their business relationships to
change their behavior. This influencing is referred to as
leverage in the Guiding Principles.
Companies have a wide variety of ways to exercise their
leverage, ranging from one-on-one conversations with
business partners to joining multistakeholder collaborative
initiatives that lobby governments, other companies and other
influential groups in order to create change on the ground.
Leverage is all about being creative with what you have,
engaging in dialogue with others who can help you see opportunities to use or build leverage that you werent aware of,
and collaborating with third parties where you cant change another partys behavior on your own. | Learn more: Using
leverage in business relationships to reduce human rights risks from Shift

Beyond auditing
Many companies are reliant on audits for monitoring and addressing human rights risks in their supply
chain. But the limitations of audits are also well documented indeed, some of the worlds worst
corporate human rights impacts happened at sites that had social audits, like the Rana Plaza disaster.
While audits can be one tool companies can use to get a snapshot of a situation at a moment in time, they
do not constitute a management system for dealing with human rights impacts. Leading companies are
using a range of approaches beyond audit alone to better manage human rights in their supply chains.
Learn more in Shifts From Audit to Innovation: Advancing Human Rights in Global Supply Chains.

4. Take an honest look at your own demands of suppliers

Overview: Respecting human rights in supply chains

Many companies require their suppliers to sign code of conduct or other agreements related to their treatment of workers
and communities. When those codes are violated, companies may say, well, they broke our agreement! Its not our
But companies own practices when it comes to dealing with suppliers also needs close scrutiny as a potential contributor
to harms to peoples human rights.
For example, a company may require a tier 1 or even tier 2 supplier to sign a code of conduct on workers rights. But then
the company places an order very late perhaps citing consumer demands or last-minute design changes. Whats the
supplier to do? In a rush to meet the orders new conditions, the supplier may demand its workers work excessive
overtime, or it may use a third-party labor broker to provide last-minute workers whose conditions of employment may
constitute forced labor.
In this case, it was the companys own practices that helped to push the supplier to violate its own code of conduct. Of
course companies sometimes need to make changes to orders. But what matters is honest communication with suppliers
and a recognition by companies they may need to pay suppliers more, or be open to alternative solutions, rather than just
demanding a different product for the same price on the same timeline.

5. Consider how you can support suppliers grievance mechanisms and access
to remedy
If things do go wrong in companies value chains, what is expected of companies? Is the brand that placed an order with a
tier 1 supplier responsible to make things right for something that happened at a tier 4 supplier?
This is a complex topic. The short answer is, it depends. It depends on the nature of the companys involvement in the
human rights harm. In supply chains, the company probably didnt cause the harm it probably contributed to it, or it is
linked to it (being linked to means the company played no role in the harms occurrence, but its still connected to the
harm via the value chain). | Learn more about cause, contribution and linkage in Doing business with respect for human
rights from Global Compact Network Netherlands, Oxfam and Shift
For the purposes of this course, whats important to understand is that companies can play a helpful role in grievance
mechanisms and remedy even while those things may be the primary responsibility of their business relationships. This is
particularly true because of the helpful early warning function that grievance mechanisms can play.
Furthermore, even if companies dont have a responsibility to provide remedy, often the most meaningful action for them
to take will be using their leverage to push the responsible party to provide remedy (as well as adopt improved forwardlooking measures to try to prevent future harm). Actually making suppliers provide remedy can be the most powerful way
to make them learn the lesson for the future. So by supporting grievance mechanisms along the supply chain, companies
can better prevent risks from becoming reality.

Overview: Respecting human rights in supply chains