Ten Things to Think About® when assessing a supplier for human rights risks
In today's globalised world, businesses are increasingly sourcing goods and services from a complex network of suppliers, often located in countries with vastly different legal and regulatory environments. This presents a significant challenge for companies that want to ensure their supply chains are free from human rights abuses.
What are human rights risks?
Human rights risks are any potential negative impacts that a company's activities or business relationships can have on people's human rights. These risks can include:
• forced labour
• child labour
• unsafe working conditions
• discrimination
• freedom of association.
Why is it important to assess suppliers for human rights risks?
You need to assess suppliers for human rights risks to:
• protect your reputation – consumers are increasingly concerned about the ethical sourcing of products and services, so if your company is found to be sourcing from suppliers with poor human rights practices it can damage your reputation and cause you to lose customers
• comply with the law – in many countries, there are laws that require companies to conduct human rights due diligence
• manage your supply chain risks – human rights abuses can disrupt your supply chain and lead to financial losses.
What you need to consider when assessing a supplier for human rights risks
1. The supplier's country of origin
Countries with weak rule of law and poor labour standards are more likely to have human rights abuses.
2. The supplier's industry
Some industries, such as the garment industry, are known to have higher risks of human rights abuses.
3. The supplier's size and complexity
Larger and more complex suppliers may be more difficult to assess for human rights risks.
4. The supplier's relationship with its workers
Suppliers that have good relationships with their workers are less likely to have human rights abuses.
5. The supplier's policies and procedures
Suppliers that have strong human rights policies and procedures are less likely to have human rights abuses.
6. The supplier's past performance
Suppliers that have a history of human rights abuses are more likely to have them in the future.
7. The availability of information about the supplier
It is important to be able to gather information about the supplier from a variety of sources, such as NGOs, government reports and the media.
8. The cost of conducting an assessment
Conducting a human rights due diligence assessment can be expensive, but it is important to weigh the cost of the assessment against the potential cost of a human rights violation.
9. The company's risk tolerance
Some companies are more willing to tolerate human rights risks than others.
10. The company's resources
Companies that have more resources are better able to manage human rights risks.
By considering these factors, companies can take steps to mitigate the risks of human rights abuses in their supply chains. By acting responsibly, companies can protect their reputation, comply with the law and manage their supply chain risks.
