Alignment for impact: To maximize the impact of human rights due diligence, policymakers should define the role of credible multi-stakeholder initiatives
Multi-stakeholder Initiatives (MSIs) will—and should—continue to play a role in advancing and scaling up sustainable business practices. With regulation on the rise, and the proliferation of MSIs, policymakers need to define what constitutes a credible initiative, and what role they should play. In a previous article, the Social and Labor Convergence Program (SLCP) set out the features of a credible initiative – this article aims to build on this by focusing on the diverging roles of MSIs: as facilitators and verifiers of due diligence efforts. It also clarifies SLCP’s role as a facilitator.
Setting clear and tangible expectations on the role of sustainability initiatives entering the era of mandatory human rights due diligence
Human rights due diligence (HRDD) is a crucial step towards ensuring that companies respect human rights in their operations and supply chains.
However, legislation alone may not be enough to ensure that companies respect human rights, undermining the effort of policy makers to address chronic issues of human rights violations. MSIs that support HRDD efforts are necessary to ensure that HRDD legislation achieves its potential impact.
Growing momentum around HRDD on responsible business conduct (RBC), particularly in Europe, has brought to the fore debates about the potential role of initiatives in mandatory frameworks—including the extent to which they can inform implementation and enforcement and be used as ‘indicators of compliance’.
The OECD alignment assessments of industry and multi-stakeholder programs and the ITC Standards Map serve as great tools to ensure alignment and avoid duplicative efforts. Policy makers should consider leveraging the valuable resources of such tools to enhance efficiency, promote alignment, and prevent redundant efforts.
According to the OECD, MSIs tend to play two broad roles. in the context of companies’ RBC due diligence. First, they can inform the due diligence process, acting as facilitators and multipliers by providing companies with collaborative tools, guidance, and information to help them scale up effective practice. Second, many initiatives increasingly set requirements for and assess, monitor, or certify individual company practices or products against those requirements, so called verifiers. It can therefore be helpful for policy makers to distinguish between these two broad categories of initiatives to clarify their role and further assist companies in deciding which category fits their needs in conducting HRDD.
Policy makers can contribute by clarifying the ways in which different types of initiatives can support implementation and enforcement of mandatory due diligence, without undermining companies’ own due diligence responsibilities, creating de facto safe harbors from liability or promoting over-reliance. Governments can do this by setting clear expectations for initiatives, companies, and enforcement authorities and, where appropriate, ensuring that companies and governments have robust processes in place to monitor and verify the credibility of initiatives that they use or rely on.
“MSIs like the Social & Labor Convergence Program and the Partnership for Sustainable Textiles (PST) in Germany play an important role in supporting the effective implementation of HRDD in the supply chain of member companies. Firstly, they provide companies with information, tools and guidance that are aligned with international agreements and guidelines. The PST also acts as a platform for learning and dialogue between members. Secondly, the PST requires member companies to report publicly on the results of their risk analyses as well as on measures implemented to address the risks. A third role – and at the same time a strong lever – is joint action. The members of the Partnership for Sustainable Textiles join forces to implement projects in producing countries on relevant topics. This joint action has a direct impact on the social and environmental conditions in producing countries.“
Noor Naqschbandi, GIZ, Head of Program Sustainable Consumption (Partnership for Sustainable Textiles, Green Button, Siegelklarheit)
The EU Parliament position on the upcoming CSDDD legislation, voted and finalised on June 1st, includes key amendments to the Draft proposal that further ensure there are clear guidelines for the use of credible accompanying measures such as MSIs like SLCP and the PST. When it comes to the implementation phase of HRDD, this clarity and certainty not only on what defines a credible MSI, but also what their role should be, is going to be critical.
Initiatives can inform and facilitate company due diligence across the 6-step framework outlined in the OECD Guidance, but there is a limit to how much of the due diligence process initiatives can take on, regardless of how strong or well-designed they are. Companies must retain responsibility for building on and tailoring the information they receive to the specificities of their supply chains, integrating it into their risk prioritization and management processes, identifying gaps and layering on their dynamic, risk-based monitoring, mitigation, prevention, and stakeholder consultation processes.
Sustainability initiatives should therefore be clear on which components of due diligence they can support. This claim should be based on an honest depiction of the tool, system, design, and scope, while ensuring that the approach aligns with the demands of the policy, guidance, or law.
Why can policy makers recognize and rely on SLCP as a credible facilitator for mHRDD?
Within the two roles described above, SLCP is a ‘facilitator’ for HRDD in global supply chains.
SLCP facilitates due diligence efforts by informing companies of their due diligence impacts. The SLCP HRDD Toolkit is an example of this. Honestly informing stakeholders is a critical part of the ‘facilitation initiative’ role. With quality data and a unique 'facility ownership' model, facilities can provide information regarding human rights impacts to stakeholders such as complying companies. SLCP's Converged Assessment Framework (CAF) includes many of the relevant sector risks and quality checks demanded by policymakers for due diligence.
Further, SLCP is built on the principles of stakeholder collaboration, harmonization of assessments, accountability and driving transparency. SLCP facilitates the sharing of aggregated data and works with key partners to inform industry stakeholders on the sector specific trends in supply chains.
In addition, SLCP was established within the context of two key international frameworks, namely the UNGPs and the OECD Guidelines. By implementing the CAF, SLCP has a specific mandate that supports businesses in respecting human rights in global supply chains through meaningful human rights due diligence implementation.
Moreover, SLCP has a unique process for collecting social & labor data. As Step 1 of the tool is developed in collaboration with ILO Better Work and mapped against international labor standards and national labor laws, this ensures the data is actionable and built with policy compliance at its core. Further, SLCP prioritizes data quality and integrity by implementing its Verification Oversight and Quality Assurance strategy. This underpins the usefulness of SLCP data for due diligence and continues to be a priority area.
‘’Initiatives that can demonstrate alignment with policy makers’ objectives and a willingness to address issues related to scope, implementation and overall credibility can and should play an important role in promoting effective implementation and in driving best practice."
OECD (2022), The role of sustainability initiatives in mandatory due diligence: Background note on Regulatory Developments concerning Due Diligence for Responsible Business Conduct.
Conclusions
To maximize the impact of HRDD and ensure effective implementation in global supply chains, policymakers should define the role of credible MSIs. By setting out their expectations and ensuring robust monitoring and verification processes, policymakers can promote effective implementation of HRDD. Principles that should be integrated in this context are good governance models, legitimacy of the tools, data quality and integrity, robust monitoring and evaluation practices and transparency.
While initiatives can inform and facilitate the due diligence process, companies bear the ultimate responsibility for integrating the received information, prioritizing risks, and engaging in risk-based monitoring and mitigation. Policymakers should emphasize that initiatives cannot replace companies' own due diligence efforts but can support specific components of the process.
Credible sustainability initiatives, including SLCP, can support policymakers and governments by providing an honest depiction of their mandate. Policymakers can set clear expectations that facilitate alignment, prevent duplication, and empower companies to determine where they need the support of facilitating and verifying initiatives in their HRDD efforts.
