With the EU Due Diligence Legislation in play, the concept of mandatory human rights due diligence for companies is gaining momentum among governments and businesses in Europe. So how does this legislation matter? In terms of working conditions in India, for example, a government report found that:
- A sizeable number of workers in India earn less than half of the accepted minimum wage
- 71% do not have a written employment contract
- 54% do not get paid leave
- Nearly 80% of these in urban areas work well beyond the eight-hour workday (48-hour week).
The tragic collapse of the Rana Plaza factory in Bangladesh in 2013, which claimed the lives of over 1,000 people, confirmed for European lawmakers the need to establish a strict liability regime for corporate supply chains, says a report by Dr Daniel Sharma on dlapiper.com
The EU Due Diligence Legislation imposes liabilities on companies that procure their products through supply chains from India and South Asia and sell them in Europe. The aim is to establish sanctions under public law and establish complaint procedures for affected parties.
Navigating Human Rights Due Diligence requirements
Let us take a look at how companies with supply chains to India and South Asia can safely navigate this new regulatory landscape at the EU level:
- A good start would be to conduct an independent risk analysis of the company’s value chains, looking at the risk of potential human rights or environmental violations. Needless to say, this risk analysis must be conducted by independent third parties with knowledge of systems in India and South Asia.
- Companies should create a compliance structure and screening mechanism taking into account the cultural diversity of India and South Asia and ensuring that suppliers comply with the due diligence obligations.
- Companies must conduct a risk analysis of their value chains annually to verify that the due diligence mechanisms installed concerning their value chains are working and conduct an effective analysis of their preventive grievance mechanisms.
- Preventive measures need to be adopted for factors identified within the company’s value chain during the required risk analysis. This should be done by preparing agreements in which the suppliers are also required to comply with due diligence requirements relating to human rights, labour and environmental standards.
- Issuance of a policy statement regarding respect for human rights and the use of transparent and public reporting processes will also make the system robust for both the company as well as their suppliers.
- Random checks of the aforementioned requirements at regular intervals should also be part of effective supplier management, and suppliers can be asked to ensure that compliance standards are also observed in the downstream value chains.
Implementing the above will allow companies to safely navigate European supply chain legislation without exposing themselves to sanctions or penalties.
We can help with Human Rights Due Diligence
The CRI Group has developed a highly specialised assessment solution for Corporate Due Diligence to assist organisations in accurately identifying, preventing, mitigating and addressing actual and potential adverse impacts of affiliating with global partners and complying with all EU mandates.
From enhanced due diligence to identify non-compliance with the regulatory framework and damaging environmental allegations to investigating company (or stakeholder) human rights violations related to labour laws, child labour or human trafficking, CRI Group experts help determine the legal compliance, financial viability, and integrity levels of outside partners and suppliers affiliated with your company’s value chain.
About CRI Group
Based in London, CRI Group works with companies across the Americas, Europe, Africa, the Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research Solutions provider.
We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications and is an HRO-certified provider and partners with Oracle.
In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification.
ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and training.
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