Why your CSR Policy is not enough to tackle

Modern Slavery

Author

Harriet von Spiegel

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The terms Corporate Social Responsibility (CSR) and Business and Human Rights (BHR) are often used interchangeably. However, the aim and implication of these two concepts are fundamentally distinct. If you are not aware of these differences your company may be falling short in meeting statutory and/or best practice reporting requirements. The collapse of the Rana Plaza building in 2013, the discovery of pleas for help sewn inside clothing by garment workers[1]and reports of forced labor at construction works for the Qatar World Cup 2022[2]are only a few examples of inhumane working conditions in global supply chains. These incidents highlight that the implementation of CSR mechanisms is not a guarantor for ethical business conduct. To address this gap and to end labor exploitation effectively, governments are increasingly requiring organizations to report on modern slavery risks specifically and to put in place appropriate policies and processes accordingly.

 

Using the example of modern slavery, this short article outlines the key differences between CSR and BHR and sets out why, although most organizations have a serious commitment to CSR, they often do not address human rights risks and as a result may not be complying with new BHR reporting laws and best practice. 

 

[1]https://www.independent.co.uk/life-style/fashion/zara-istanbul-unpaid-workers-inditex-bravo-clothing-tags-notes-a8037256.html

[2]https://www.theguardian.com/football/2018/sep/26/qatar-world-cup-workers-still-exploited-says-amnesty-report

The Origin of the CSR Movement

CSR is a broad concept that is based on the idea of ‘doing good’. It is a purely voluntary approach that refers to the measures implemented by organizations to make positive contributions to society and the environment. Typical CSR initiatives include environmental and social programs like encouraging employees to engage in voluntary work or giving donations to worthy causes. CSR as such provides organizations with an opportunity to improve its standing in the wider business and social community. Corporate responsibility can therefore be defined as the sum of an organization’s charitable commitment to the common good. The CSR movement has derived from this notion that profit-making organizations bear a wider responsibility to contribute to society as a whole. This approach, and the fact that CSR has become common practice, is to be welcomed. 

 

The flaws of CSR to combat modern slavery 

CSR activities are mostly independent and rarely directly address any negative impact that might arise from a company’s own business operations. CSR does not typically address human rights issues and is therefore notably flawed as a method for combating modern slavery in supply chains; Companies can freely decide the extent to which they want to create value for the wider society. Volunteering and donating are important actions but they do not absolve a company from its duty and responsibility to respect the rights of workers in its operations and supply chains. While your company’s CSR commitment to CSR might contribute significantly to society it is unlikely to address modern slavery risks arising from your direct and indirect business activities. Consequently, CSR measures are not a replacement for the due diligence measures required to address the challenges present in today’s supply chains.

 

It is this awareness of CSR as being insufficient in tackling the potential negative impacts of business activities on human rights which resulted in a new wave of customers and investors insisting on tighter human rights measures. This has contributed to the emergence of the business and human rights movement which aims to prevent worker exploitation and to hold companies accountable for their activities. 

From voluntary measures to mandatory procedures

The adoption of the UN Guiding Principles on Business and Human Rights (UNGPs) in 2011 marks the cornerstone of the BHR movement. The UNGPs for the first time confirmed the responsibility of corporations to respect human rights within their business activities. Building on this global framework several national and regional laws and regulations have been passed, obliging organizations to implement human rights due diligence processes.[3]These regulations require corporations to assess their operations and supply chains in order to mitigate the risk of human rights violations. It is particularly this development from voluntary measures towards legal reporting obligations on adverse business operations that marks the key difference between CSR and BHR. Whereas CSR traditionally focuses on the positive contributions of a company, BHR is based on the idea of ‘do no harm’. Companies are required to look underneath the surface of their own business activities and to respect the rights of those they impact on, including workers, and to provide effective access to remedy. 

 

[3]United Nation (2011), UN Guiding Principles on Business and Human Rights  https://www.ohchr.org/documents/publications/GuidingprinciplesBusinesshr_eN.pdf

 
 

Adopting a human rights-based approach to end modern slavery

 

Based upon this new approach towards responsible business conduct the British, Californian and Australian governments have adopted laws specifically addressing the issue of modern slavery in business supply chains. In so doing governments have responded to the reported increase in prevalence of modern slavery and the severity of the abuse. The UK Modern Slavery Act (2015) for the first time set out the obligation for companies to annually disclose the measures that have been implemented to address modern slavery risks in their operations and supply chains.[4]The Australian Modern Slavery Act (2018) goes even further by explicitly requiring corporations to report on due diligence measures undertaken.[5]In order to conform with these new laws, it is essential for your company to conduct regular modern slavery due diligence. 

 

However, thousands of companies subject to the reporting requirements of the UK Modern Slavery Act have failed to publish a report and only 20% of the published reports fulfill the minimum requirements.[6]In response, the Government will start ‘naming and shaming’ non-compliant companies in 2019. 

 

[4]https://www.business-humanrights.org/en/the-modern-slavery-act-turns-four-today-is-it-working-and-how-can-it-be-improved

[5] For more detailed information on compliance with the UK Modern Slavery Act see our guide ‘How to write a modern slavery statement’  

[6]https://www.business-humanrights.org/sites/default/files/documents/Modern%20Slavery%20Act%202018%20-%20Draft%20Guidance%20for%20Reporting%20Entities%20%28004%29.pdf

Due Diligence to end Modern Slavery

The complex nature of modern slavery, the scale of today’s supply chains and increasing economic competitiveness means modern slavery will not be eliminated over night. Addressing slavery risks is a challenge for companies of all sizes and industries. Implementing a comprehensive modern slavery due diligence process is critical to meeting these challenges. Respect for human rights is non-negotiable and needs to be guaranteed unconditionally. Thus, BHR goes beyond the desire of simply ‘doing good’ by turning the implementation of effective measures to mitigate modern slavery risks into a ‘must have’.  

 

Modern slavery due diligence is a complex and continuous process. The risks of human rights violations vary across industries and countries and require regular risk assessments and mitigation plans. RightsDD’s due diligence platform supports your company to mitigate risks by helping identify, assess, prioritize and report on modern slavery risks in your supply chain. In so doing, RightsDD supports your business to comply with relevant regulations and to fulfill rising societal expectations.