When it comes to addressing human rights risks in supply chains, two key concepts often arise: compliance and responsibility. While these terms are frequently used interchangeably, they represent fundamentally different approaches to managing human rights risks. Understanding the distinction between compliance and responsibility is essential for companies seeking to genuinely protect human rights in their operations and beyond.
On its face, compliance is about avoiding legal repercussions.
Compliance in supply chains typically refers to adherence to laws, regulations, and standards set by governments or industry bodies. Companies often establish compliance programs to ensure that their supply chain practices align with national and international human rights laws, such as the UK Modern Slavery Act, the CSDDD, or the U.S. Uyghur Forced Labor Prevention Act (UFLPA). Compliance is legally necessary, but it usually focuses on avoiding penalties rather than fostering a proactive human rights culture.
Compliance practices typically focus on:
- Focus on Legal Requirements
Compliance centers on meeting legal obligations to avoid fines, detentions, and other sanctions. For example, UFLPA compliance requires companies to prove that their products do not involve forced labor from the Xinjiang region in China.
- Risk Mitigation
Compliance-driven approaches often focus on risk avoidance rather than addressing the root causes of human rights abuses. This can mean relying on supplier audits to meet minimum standards, rather than investing in long-term changes [oai_citation:8,Here Are the Fortune 500 Companies Doing Business in Xinjiang.
- Reactive Measures
Compliance often involves periodic reporting and audits, which can be reactionary and less adaptive to the complex, evolving nature of human rights risks in supply chains.
While compliance is crucial, focusing solely on compliance can lead to a “check-the-box” mentality, where companies do the bare minimum to meet legal requirements without driving meaningful change. As a result, compliance alone may fail to prevent or remedy human rights abuses comprehensively, which is a miss for the business. Yes, the business.
A compliance first framework robs the company of missed opportunities. Responsibility is different.
A responsibility framework implies a voluntary and proactive commitment to upholding human rights in all business practices, beyond the legal minimum. Responsibility-driven approaches to human rights in supply chains are more holistic, addressing not only the symptoms of rights abuses but also their root causes.
Key aspects of responsibility in human rights include:
- Going Beyond Legal Requirements
Responsibility involves taking actions to protect human rights, even in areas where laws may not require it. This can include adopting the UN Guiding Principles on Business and Human Rights (UNGPs), which outline corporate responsibilities to respect human rights through due diligence and grievance mechanisms.
- Long-Term Commitment to Change
Companies that prioritize responsibility work to understand the underlying causes of human rights abuses, such as poverty and lack of education, and invest in programs to improve conditions in their supply chains.
- Engagement with Stakeholders
Responsibility involves collaborating with local communities, non-governmental organizations (NGOs), and workers to co-create solutions that prevent abuses and empower affected communities. This can mean addressing systemic issues like low wages or lack of worker representation, which compliance programs may overlook.
Responsibility > Compliance
While compliance helps mitigate legal and financial risks, responsibility is essential for achieving sustainable human rights improvements. Responsibility-led initiatives can lead to greater brand loyalty, enhanced reputation, and stronger relationships with stakeholders. Importantly, responsibility can drive meaningful social impact by addressing the causes of human rights abuses rather than simply managing symptoms.
In recent years, consumers and investors have increasingly demanded that companies not only comply with human rights standards but also take responsibility for the broader impact of their operations. The movement towards Environmental, Social, and Governance (ESG) reporting reflects this shift, with companies that demonstrate responsibility in their supply chains often outperforming those focused solely on compliance.
For companies aiming to address human rights risks in their supply chains, balancing compliance and responsibility is critical. Compliance provides the foundational minimum, but a responsibility-driven approach is needed to foster ethical, resilient supply chains.
To achieve this balance, companies can:
- Establish a strong compliance framework to meet legal requirements.
- Integrate responsibility-driven practices, such as stakeholder engagement and community investment, to address systemic human rights issues.
- Develop transparent reporting and grievance mechanisms that go beyond mere compliance, offering accountability to stakeholders.
To learn more about how FRDM helps you achieve your compliance requirements and responsibility aspirations contact us at hello@frdm.co
