Interview: human rights in the supply chain needs more focus
Human rights in the supply chain is invariably overlooked.
While organisations increasingly focus on employee rights, ramping up policies around anti-discrimination and equal opportunities, they are less concerned with protecting the rights of suppliers, it seems.
According to recent ISN data, 87% of subscribing contractors have an anti-discrimination policy in place, while 79% have a policy promoting equal pay for men and women with 83% ensuring equal opportunities for promotions.
There are far fewer businesses with policies in place to address human rights (42%) and forced labour (41%), however.
Rick Dorsett, Senior Director HRAVS & ESG at ISN, the global leader in contractor and supplier management services, tells Business Chief that such a discrepancy may well be because anti-discrimination and equal pay policies are already integrated into the company’s business operations.
“Both human rights and forced labour policies typically pertain more directly to a company’s suppliers in their global supply chain. In comparison, anti-discrimination policies more often address employees in domestic workplaces.”
Social policies critical part of a holistic ESG strategy
While environmental criteria has been top-of-mind when it comes to assessing ESG risk, the social aspects have been lagging, but are slowly beginning to receive more attention. The social component highlights how companies interact with both their employees and the communities in which they operate.
And while many consumers are concerned about the ethical conduct of businesses’ operations today, the risks go far beyond ethics, Rick tells Business Chief.
Failing to give proper attention to the human rights of suppliers and contractors can have serious consequences for companies, Rick warns. Organisations risk significant financial, legal and reputational consequences as a result of not protecting workers throughout their supply chain.
Rick says social policies are a critical element of a holistic ESG strategy because they demonstrate an organisational commitment to respect human rights and protect the rights of all employees in the workplace.
In addition, the social aspects of an organisation’s business contribute to a framework that can be used to anticipate and evaluate risk, which is a primary goal of ESG strategies.
“A human rights-focused approach not only demonstrates positive business practices, but it also identifies gaps in existing policies that miss key potential impacts to human rights. This approach ensures that organisations are properly equipped to mitigate risk associated with human rights and modern slavery.”
Aside from ethics, prioritising human rights is good for business
The fact is too that companies prioritising human rights and forced labour policies oftentimes have an advantage over competitors that overlook the area.
“Creating and implementing human rights policies across an organisations’ supply chain will help improve reputation, profitability, efficiency and ultimately minimise the resources devoted to liability. And commitment to human rights can build better relationships with stakeholders and investors.”
And more organisations are turning their attention toward protecting human rights throughout their business.
“There is increased societal pressure today for companies to protect the rights of not only their workers, but also workers throughout their value chain,” explains Rick.
“Legislation is increasingly putting emphasis on improving global supply chain labour and human rights practices through mandatory human rights due diligence laws.”
That said, Rick says he expects global reporting requirements addressing human rights disclosures to become even more prevalent. Over the past year, ISN has seen a 170% increase in subscribers requesting this information throughout their value chain.
Putting human rights policies in place – where to start
Rick says developing a human rights policy should be an ongoing process, with the policy being periodically reviewed and updated to ensure it remains an effective policy over time.
“It’s important to have a dedicated team with executive leadership to drive the process and showcase the business value of having a human rights policy,” he says.
To begin, he suggests organisations review their current policies to determine where human rights are already being addressed and identify areas that would be best addressed by an all-encompassing human rights policy. During this process, organisations should evaluate their key potential human rights impacts to inform the drafting of their policy.
“After the policy is developed and approved, it must be communicated to both internal and external parties in the business,” he says.
“Once communicated to stakeholders, the final step is to implement it throughout company operations. It is essential that the policy is reviewed often and that the impact is assessed on a regular basis, so that updates to the policy can be made to ensure optimal effectiveness.”