Companies often face dilemmas concerning their engagement with countries or areas marred by human rights concerns. This is particularly relevant to companies facing supply chain due diligence laws (UFLPA, LKSG, CSDDD, Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act). This post summarizes the United Nation’s article entitled ‘Business and Human Rights in Challenging Contexts Considerations for Remaining and Exiting’ which offers guidance to companies regarding doing business internationally with ‘risky suppliers’.
Understanding the Context
Corporate responsibility to respect human rights gains paramount importance in situations of conflict or worsening human rights circumstances worldwide. While maintaining business relationships can offer engagement opportunities, the decision-making process is intricate, necessitating careful consideration of human rights implications.
Key Pillars
The United Nations Guiding Principles on Business and Human Rights (UNGP) provide the foundation for this note. Pillar II outlines global standards for business conduct across sectors and contexts, requiring companies to establish policies and procedures to identify, prevent, mitigate, and account for human rights impacts.
Challenges in Challenging Contexts
You can’t fix what you can’t see, and supply chain risk management is a necessary tool. The UNGPs acknowledge that global supply chains pose exceptional human rights challenges. These include scenarios where grave human rights abuses occur due to conflicts, political turmoil, or systemic violations of rights. Businesses must be vigilant about their involvement and potential complicity.
Legal Considerations
Laws like the EU Supply Chain Due Diligence Directive contain penalties for non-compliance. Businesses are expected to adhere to both national laws and internationally recognized human rights standards. If legal requirements conflict with human rights responsibilities, consultation with experts and stakeholders is crucial. Transparency and communication efforts are essential when navigating conflicting requirements.
Deciding to Remain or Exit
Removing a supplier, especially a strategic partner, is obviously difficult. The UNGPs offer a framework for evaluating and addressing adverse human rights impacts tied to business decisions. The involvement framework suggests that businesses should cease contributing to such impacts and mitigate any residual effects. The decision to remain or exit depends on factors like leverage, relationship importance, and severity of abuse.
Exiting Responsibly
It’s not easy to say goodbye. Exiting a challenging context or relationship demands human rights due diligence, stakeholder consultation, and post-exit consequences management. Gradual, managed transitions can minimize negative impacts. The focus should be on human rights commitments, transparency, and collaboration.
Conclusion
The UNGPs guide businesses towards responsible decision-making when faced with human rights challenges. Termination or exit should not be hasty reactions, but rather informed by thorough assessments of potential impacts, like supply chain risk management tools and mapping your supply chain. Engaging, leveraging, and proactively addressing human rights concerns are paramount in maintaining ethical business operations.
