The UNGPs provide for supply chain HRDD which extends beyond the company to third parties with whom the company has a business relationship. This approach is an evolution of the traditional approach whereby corporate responsibilities were limited to the separate corporate entity and could be excluded through contractual provisions.
The UNGPs’ vision of supply chain HRDD has caused a shift in social expectations, regulatory reforms and corporate behaviour. Recent legal developments include mandatory HRDD and reporting requirements, as well as legal claims brought against large companies for impacts which occurred in their supply chains. Companies are responding to this changing landscape by evolving contractual provisions, codes of conduct, audits, investigations, training and grievance mechanisms for HRDD.
However, the concept of supply chain HRDD is new, and even the leading companies are only beginning with their supply chain “human rights journey”. In many companies, efforts are currently still confined to first tier suppliers. The UNGPs recognise the complexities of global supply chains and allows companies to prioritise areas of the supply chain based on considerations of severity and irremediability.1 With the use of technology it is envisioned that supply chain human rights monitoring and traceability may improve to a similar level as seen in other contexts such as food and product safety.
One particular challenging aspect of supply chain HRDD is the lack of control which individual companies have over the activities of suppliers as separate legal entities. Often, suppliers are based in different jurisdictions and operational contexts, where the company may have a small share of the market and limited leverage. For this purpose, companies identify the usefulness of collective engagement with peers and other stakeholders, which may take various forms.
A prominent and recurring theme is the current underperformance of states in this area. Our research has showed that legal developments are currently important drivers of supply chain HRDD in companies. However, as long as there is a lack of monitoring, enforcement and adequate remedy at state level, legal developments are effectively outsourcing enforcement of human rights to companies themselves, through self-regulation, and to civil society. In complex international environments, with structural issues embedded in regions and national economies, there are limits to what an individual company can achieve through supply chain due diligence.
As we continue to see an increase in legal developments around HRDD, the new frontiers will include evolving mechanisms for HRDD beyond the first tier, traceability of human rights impacts through improvements in technology, the further development of human rights-specific audits and compliance mechanisms, more formalised and comprehensive collective engagement, development of effective operational-level grievance mechanisms, as well as more state action.
1 Guiding Principle 24.