using life cycle thinking to improve human rights performance · using life cycle thinking to...
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Using Life Cycle Thinking to Improve Human Rights Performance
Sarah Medearis, ERM
Universal Declaration of Human Rights
Human Rights Laws and Standards USA
Dodd-Frank Conflict
Minerals (in Supply Chains)
Law 2010
UNGPs (The Guiding
Principles) on Business
& Human Rights 2011
OECD Guidelines for Multinational Enterprises
2011
California Transparency
in Supply Chains Act
2012
SASB Sustainability Accounting Standards
Board standards
2012
UK Modern Slavery Act
2015
ICMM Intl Council Mining &
Metals “Guide to Responsible Sourcing”
2015
The Carbon Disclosure Project
(CDP) Pilot that Companies report
Supply Chain Emissions,
Deforestation Risk Mgmt
May 2015
French “Duty of Vigilance” for
Human Rights (& in Supply Chains) law
April 2017 (Netherlands;
Australia)
USA Anti-Trafficking
Bill H.R. 2200
July 2017 The OECD Guidelines "encourage business to…, based on (human rights & environmental) risk assessment, prioritize suppliers for due diligence.”
The UNGP Guidelines say “Business Should seek to prevent or mitigate adverse impacts directly linked to their operations…by business relationships (in value chains), even if they did not contribute to impacts
UN Guiding Principles The OECD Guidelines, UNGPs (and new laws such as “Transparency in Supply Chains”, etc & industry standards) say business should: 1. POLICY and have a public commitment to respect
rights, embedded through an ongoing process of human rights due diligence (including understanding impacts on Supply Chain).
2. RISK ASSESS and identify areas where risk of adverse human rights impacts is significant
3. INTEGRATE findings into decision making and actions, take steps to cease or prevent contribution and use leverage to mitigate adverse rights impacts.
4. TRACK effectiveness to verify if impacts addressed by performance contracts and audits; grievance mechanisms; processes for remedy.
5. COMMUNICATE and report efforts internally and externally
Why is This Important to Business?
Transparency is increasing: • 2014: Bangladesh Rana Plaza collapse let to reports on
safety in over 3000 Bangladesh Apparel factories being published
• 2015: ILO Better Factories Cambodia programme publish factories not remediating critical labour-safety issues, plan extend to Vietnam, etc
• 2016: The Walk Free Foundation launched the inaugural 2016 Global Slavery Index which estimates that over half of slave labor is located in Bangladesh, China, India, Pakistan or Uzbekistan.
• 2017: Formerly about 10 apparel, 3 IT, an auto and a few other firms published their supplier factory lists. In 2016 an NGO coalition called on 72 apparel brands to publish, 42 now do, other NGOs expanding to other industries.
• 2017: UK Modern Slavery Act “Transparency in Supply Chains”, California Transparency in Supply Chains Act causing more companies to report on supply chain efforts
Internet-of-things • Increased worker literacy and access to internet
and smart phones to post about conditions • NGOs ranking brands faster as more data, and
tools available e.g. : - Oxfam “Behind The Brands”
- Fashion Revolution “Transparency Index”
- 2016: 9 human rights NGOs formed coalition to advocate for transparency in apparel supply chains: Global unions: IndustriALL, ITUC, MSN, Worker Rights, Consortium Intl Corporate Accountability Roundtable, Inlt Labor Rights Forum.
Alarming Statistics
6
US Dept of Labor (DoL) Global and Local Slavery Stats 2017
Reports of Modern Slavery Prevalent Around the World
Financial and Reputational Risks
Apax Partners: portfolio company, German retailer Takko Holding, was found to have used a garment factory in Myanmar that employed underage workers. Financial News (2017)
Yakjin Holdings: a Korean garment manufacturer in which Carlyle Group acquired a 70% stake, was at the centre of labour disputes in Phnom Penh which shook the Cambodian capital in 2014. A key Carlyle investor, the California Public Employees' Retirement System (Calpers), raised questions on the labour strife and use of military force Forbes Magazine (2014).
Primark wasn’t assessing supply chain labour/safety risks properly. Supplier in Rana Plaza building Bangladesh collapsed killing 1,134 workers. Paid compensation $12m plus further unexpected OPEX of millions.
KIK (Germany): Alleged negligence for not assessing conditions of supplier in Pakistan where workers died in a fire. Paid Euros 5 Million .
Joe Fresh: Alleged negligence for not assessing conditions of supplier in Rana Plaza. Facing $2 Billion Canadian lawsuit.
Costco: Alleged buyer of shrimp produced with slave labour involvement. Facing Canadian lawsuit.
Yu Yen: Strike 2014, workers had accused Chinese shoemaker of Insufficient (common among Chinese manufacturers/exporters) payments of legal minimum wage related Insurance and Housing. Unexpected OPEX of $60 million estimated (by WSJ)
Apple: Bad Apple” and other campaigns until Apple agreed to implement proper China supply chain labour and environmental monitoring . Negative PR, then unexpected OPEX of hiring sustainable sourcing team, consultants
Challenges
Solutions? • Although the business evolution of environmental
sustainability metrics and method has advanced significantly over the past decade, social sustainability at product level is still in its early stages.
• However, there are a number of multi-stakeholder initiatives – industry groups coming together – such as Together for Sustainability (TfS), Mica Initiative, Cotton Better Program, Palm Oil Roundtable, Roundtable for Product Social Metrics, etc.
• Several groups have developed methods for organizations to assess the social impacts of products, building on existing standards at global level.
• These include the UNEP SETAC Guidelines for Social Life Cycle Assessment of Products (UNEP SETAC, 2009) and corporate level standards (GRI, 2013; ISO, 2010; UNGC, 2004)
What is it SLCA? Social life cycle assessment (SLCA) is a technique to assess the potential social impacts of a product along its life cycle
SLCA advantages • Supports the identification of social hotspots and improvement
opportunities, including risks in supply chains, production, use phase and end of life.
• Allows companies to identify both the negative and the positive impacts, which is the basis for strengthening the positive impacts and better managing the negative impacts.
• SLCA makes use of generic and site-specific data, can be quantitative, semi-quantitative or qualitative, and complements the environmental LCA.
• Assures compliance by prioritizing site-specific data collection and audit; and informing and reporting about governmental policy and programs
• Includes Human Rights related impacts.
SLCA Objectives • The goal is to identify and present the
social hotspots in a product life cycle. • Social Hotspots are production activities
that provide a higher opportunity to address:
• Issues of concern (e.g. human rights, community well-being etc.)
• Potential risks of violations • Potential risks affecting reputations • Issues that need to be considered
when doing business in a certain sector in a certain region/country.
• The boundary of the assessment is set by the practitioner to include those parts of the value chain that are relevant for the assessment (cradle to grave, cradle to gate, or gate to gate)
Stakeholder groups and the social topics of relevance to assess
Assessment Process SLCA utilizes a combination of open source research and databases which provide both generic and site-specific information that will allow to identify hotspots and assess performances. http://socialhotspot.org/
Database Source: The New Earth Institute https://www.newearthinstitute.com/
Categories & Themes
Database Source: The New Earth Institute https://www.newearthinstitute.com/
Mapping Product Sourcing
Human Rights Screening Assessed risk of Human Rights issues
Generic risk ranking of product supply countries
Very high potential inherent risk
Mexico, China, Indonesia and Thailand.
High potential inherent risk – ind
United States, Hungary and Spain.
Significant potential inherent risk
Australia, Japan, Italy, Singapore, Czech Republic and Israel.
Some potential inherent risk – in
United Kingdom, France, Belgium and Ireland.
Potential inherent risk may be low
Germany, Switzerland, Denmark, Sweden. The Netherlands and New Zealand.
Supply country: ITUC (worker conditions)
index
Corruption (Governance)
index
USA Trafficking in Persons
report rating United States 4 76 Tier 1 Germany 1 81 Tier 1 Australia 3 79 Tier 1 Switzerland 2 86 Tier 1 United Kingdom 3 81 Tier 1 France 1 70 Tier 1 Japan 2 75 Tier 2 Denmark 1 91 Tier 1 Belgium 1 77 Tier 1 Ireland 2 75 Tier 1 Italy 1 44 Tier 1 Mexico 4 35 Tier 2 Sweden 1 89 Tier 1 The Netherlands 1 87 Tier 1 New Zealand 2 88 Tier 1 Hungary 3 51 Tier 2 Spain 3 58 Tier 1 Singapore 3 85 Tier 2 China 5 37 Tier 2 watch list Czech Republic 2 56 Tier 1 Indonesia 4 36 Tier 1 Israel 3 61 Tier 1 Thailand 4 38 Tier 3
Results (Laptop SCLA)
Opportunities • SLCA, Human Rights Screening and associated metrics can help you
manage and mitigate risk • Allows you to keep the message focused and rational • Sustainability can be a major focus of corporate and product public
image, and product differentiation. • Evaluating and improving supply chain impacts can have positive
impacts on human health and well-being
• Allows companies to consider social issues in design and innovation
• Companies can also use SLCA to improve performance and reporting of their CSR impact (including towards the SDGs)
