In
The sectoral analysis shows that there is still a big gap between companies' human rights policies and their practices. Companies in some sectors (e.g. Tourism and Construction) demonstrated an awareness of certain key human rights concepts, including human rights due diligence, but also a general lack of proper integration of such concepts into corporate governance and supply chain practices. In other sectors (e.g.
Each sector faces its own set of human rights-related risks. For example, in Tourism, unrealistic working targets, unfair terminations and difficulties accessing unions are more commonplace.
Human rights risks - Practical considerations for investor decision-making
To assist investors in analysing the policies and commitments of prospective portfolio companies and the congruence between states policies and practical impacts, the FIDH identified a list of transversal areas that investors should pay attention to when analysing how companies address modern slavery risks, namely:
- Location - Investors should analyse the locations of a company's operations to identify high risk countries (e.g. countries with weaker labour laws) and, in that context, assess the company's human rights commitments and the effectiveness of its human rights due diligence processes.
- Supply Chains - Investors should examine whether their portfolios companies are mapping their supply chains, tracing raw materials and disclosing the data. Investors should also seek evidence that shows how companies are actively trying to mitigate the risks of forced labour throughout the supply chain (e.g. by cascading company standards throughout the whole value chain).
- Human Right Commitments - Investors should consider how companies put in place effective measures to implement their human rights commitments and prevent and mitigate modern slavery risks. The report is critical of preventative and mitigating measures based exclusively on audits and certifications - "Certifications and audits should not be the solely (sic) measure put in place by companies to make sure that the human rights are respected throughout the supply chain". Investors should look to understand how companies work with suppliers on the ground to find more effective, participatory, and sustainable solutions to human rights risks.
- Reflection on own business practices - Investors should consider if the company reflects on its own buying practices and business procedures in assessing human rights impacts. This reflects analysis in a recent report published by the
American Bar Association , which proposed new Model Contract Clauses to protect workers in international supply chains that "bake in" factors such as human rights due diligence, responsible sourcing and purchasing practices, and stakeholder remediation (see our Blog post). - Engagement with civil society - Investors should determine whether their portfolio companies meaningfully engage with organisations that can provide support and guidance (such as civil society organisations).
- Grievance mechanisms - Investors should consider what access to justice mechanisms are made available by their portfolio companies and ensure that grievance mechanisms are available and effective (see more in our Blog post).
- Ethical Recruitment - Investors need to look for indicators that show how companies have implemented their policies and practices on the ground as part of the recruitment process, especially if recruitment is done cross-border.
Read more of our coverage on Business and Human Rights here.
The post Business and Human Rights - Analysing modern slavery risks in portfolio companies: practical considerations for investors appeared first on Eye on ESG.
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