Legislative initiatives to eradicate child labour, forced labour, and modern slavery in supply chains are vital to addressing widespread, systemic human rights violations. It constitutes one of the concrete actions by states needed to reach key Sustainable Development Goals (SDGs).
Much of the existing and proposed legislation focuses on establishing the legal obligation of companies to undertake human rights due diligence in their supply chains. Generally, the obligation of due diligence requires companies to prove that there are no human rights violations in their supply chains; to continuously identify the potential risk of human rights abuse; and to make the necessary changes to reduce that risk. If violations occur, then remedial action is needed.
A critical weakness in much of the existing legislation is that the reporting process itself fulfills due diligence requirements. Instead of being a measure, reporting becomes an objective in and of itself. If human rights violations are identified in the reporting process, it is up to companies to decide on what remediation is applied and how progress is assessed. If the problem is acknowledged and some form of remedial action is taken (or is in process), then it apparently meets due diligence requirements.
This misses the critical question of why these human rights violations occurred in the first place. Due diligence must necessarily include the question of why the factors contributing to these rights violations were not addressed before it happened. Human rights due diligence is about the prevention of human rights violations, not its simply its acknowledgement and resolution.
In the prevailing regulatory environment, many companies appear to have confused their commitment to eradicate child labour and forced labour and other human rights abuses in their supply chains with its actualization. Having communicated a set of policies throughout the company and cascaded this down through supply chains, with the requisite PowerPoint presentations, portals, tools and training, everyone knowing these policies and pledging compliance readily becomes an indicator of actual implementation. Acknowledgement is compliance.
The test of this compliance is then measured against the number of complaints or reports received. Often suppliers are asked to complete self-assessments, confirming both knowledge of the policies and standards and reaffirming compliance. In such situations, human rights abuses are only acknowledged if an issue is (self-) reported by suppliers or complaints are received through recognized feedback and reporting mechanisms. In the absence of reports or complaints it is assumed that human rights violations have not occurred. Silence is compliance.
This is where the intersection of human rights due diligence and governance becomes critical. For most transnational companies and companies with extensive global supply chains, highly centralized standards and systems coexist with decentralized authority and responsibility. While due diligence legislation treats companies as single entities with control over their own business operations, in reality companies struggle with internal communication, reporting, decision-making, accountability and control. Despite all the protocols, policies and standards in place, on most days management at the center simply does not know what is going on. This gap widens under joint ventures, franchising, and outsourcing arrangements.
By assuming an ideal model of corporate governance that does not exist, legislation aimed at preventing human rights abuses tends to replicate the very weakness of the companies they are trying to regulate. They report only what they know and what they think they know. For most legislative requirements this is sufficient. But it is simply saying we tried.
When human rights violations are reported in the media or by civil society organizations and trade unions, companies are quick to claim they did not know and are working to address it (sometimes after an initial denial). Yet the very meaning of due diligence is that they should have known. Not knowing is both a failure of due diligence and of corporate governance.
There is also a dissonance between internal investigations into systemic corruption between elements of local management and suppliers and assertions that human rights due diligence is working effectively. Where the same elements of local management tasked with ensuring the human rights compliance of suppliers are involved in contracts, orders and/or purchasing, the risk of both human rights violations and a failure of corporate governance is high.
In this regard it is important that legislation more clearly identifies human rights due diligence as an integral part of corporate governance. The occurrence of human rights violations must be recognized as a failure of corporate governance with appropriate legal, financial, and administrative consequences.
One of the biggest challenges for human rights due diligence in supply chains is traceability. While many companies are confident to report their rigorous human rights due diligence in their supply chains, on a daily operational basis they are unable to establish traceability. This is especially the case with agricultural and fisheries supply chains.
While companies may be able identify suppliers at the initial stage, they cannot be certain of the farm, plantation, or fishing vessel where the produce originated. This is further complicated by layers of traders and middlemen who mix crops and catch from different sources before sending them along the supply chain. While some companies have made progress in traceability to the source (farm, plantation, boat), these are pilot projects – examples of what can or should be done. This accounts for only a tiny fraction of the commodities sourced. Despite claims of 100 percent traceability, the reality is that crops and catch are traceable to mills, grinders, and processors – and the ubiquitous middlemen who mix it all together.
These middlemen also absorb the premiums intended for farmers and fisherfolk, leaving them with the low prices, low incomes and debt that drives child labour and increases the risk of trafficking and forced labour.
Legislative measures on human rights due diligence in supply chains assume a level of traceability that simply does not exist. Pilot projects and Blockchain experiments aside, the vast majority of agricultural products are traceable only to traders and middlemen. This raises serious questions about their material interest in reporting – or allowing the reporting – of human rights abuses or the conditions that create a high risk of abuse.
Another key failing of existing regulatory measures on human rights due diligence is that while freedom of association is recognized as one of several human rights, its centrality in ensuring access to other human rights is not clearly understood. It is not understood as an enabling right. As the ILO explains:
Freedom of association is a fundamental human right proclaimed in the Universal Declaration of Human Rights (1948). It is the enabling right to allow effective participation of non-state actors in economic and social policy, lying at the heart of democracy and the rule of law. [emphasis added]
This concept of enabling rights applies not only to ILO Convention No. 87, but also to Convention No. 11 concerning the Rights of Association and Combination of Agricultural Workers and Convention No.141 concerning Organisations of Rural Workers and Their Role in Economic and Social Development.
Freedom of association – the right to combine to form or join unions – gives agricultural workers, fish workers and farmers the collective ability to access their other rights. It also allows the collective representation (and a degree of protection) needed to identify, expose, report and prevent human rights abuses. It is here that the connection to farm, plantation and boat is made – traceability in its real form.
Traceability is only meaningful if it is confirmed by the people who farm, catch and harvest, and when they can (through the enabling right of freedom of association) tell us whether it is a fair crop or catch. Recognizing their collective representation, engaging them, involving them directly through their organizations will help prevent human rights violations. This would make human rights due diligence in supply chains real, and not merely aspirational.
Dr Muhammad Hidayat Greenfield, IUF Asia/Pacific Regional Secretary