Improvement Guidance

Critical Issues

There are currently nine questions throughout the BRM that have been identified as critical issues throughout the Higg BRM development process. The below guidance illustrates the initial suggested steps which users may adopt to improve their sustainability approach. Please note that this guidance also appears on platform if the user selects “no” for any of the questions.

  • Creating a system to monitor environmental and social/human legal requirements in all relevant countries on a regular basis, with qualified responsible individuals updating and communicating any changes and requirements throughout the company
  • Identifying and sharing information on any violations with the board or most senior management team, and ensuring that they have clear responsibility for any violations occurring
  • Working with internal and identified external topic experts and relevant stakeholders (including relevant government departments) to identify appropriate remediation actions to address existing violations or potential repeat of similar violations, including time-bound identified remediation activities
  • Monitoring progress against remediation action plan and ensuring board or senior management are responsible for outcomes, and that staff with relevant capacity are allocated to the relevant activities. If remediation action plan(s) is not achieved, review barriers/problems and ensure systems are adjusted to ensure actions take place within the relevant time.
  • Carry out a regular review of vulnerabilities in current business approaches and whether future violations are likely. Create a proactive plan to avoid future environmental and social/human rights violations, and ensure that there are no financial or organizational barriers likely to lead to future violations.

The information for your owned business operations, such as offices and retail stores.

  • It is crucial for any business wanting to shape an appropriate and effective sustainability strategy, to begin by evaluating their overall corporate environmental footprint associated with proprietary (owned) business operations and supply chain.
  • The information for your owned business operations, such as offices and retail stores, may be more accessible than the supply chain data.
  • Owned business operations are helpful in understanding your overall footprint. Start with mapping your own operations, offices, retail stores, and distribution centers by working with the colleagues who manage your facilities, logistics, retail operations, and offices, etc.
  • Owned business operations represent only a fraction of the impact of your entire product supply chain. 70 to 90% of your impacts are in your supply chain in order to help prioritise the immediate vs long term actions. Source : 2018 Environmental Impact of the Global Apparel and Footwear Industries Study
  • Mapping your supply chain starts with listing all of the suppliers that you have direct business relationships with and what products and services they provide to your company. A good place to start is by working with your sourcing managers, purchasing agents, facilities managers, field staff and buyers.
  • Start the mapping by focusing on the supply chain for your high volume products. For each product, trace the flow of materials through the supply chain and include if known tier 1 (product assembly) and tier 2 (material) suppliers. This will be an iterative process over time where one supplier leads you to the next set of suppliers. Suppliers may also provide data through their completed Higg Facility Environmental Module (Higg FEM).

Templates are located here.

  • It is crucial for any business wanting to shape an appropriate and effective sustainability strategy, to begin by evaluating their impact relative to social/human rights risks that are associated with their proprietary (owned) business operations and supply chain.
  • The information for your owned business operations, such as offices and retail stores, may be more accessible than the supply chain data.
  • Read the SAC BRM Guidance: Conducting Human Rights Risk Assessments. This overview explains the different types of risk assessments, action steps for how to conduct each type, and how to plan your risk assessment.
  • If your company has not completed a risk assessment previously, you are strongly encouraged to conduct an initial company-wide assessment. This provides an overview of where the company could have potential impacts to identify risk and opportunity areas and where more specific risk assessments are needed (i.e. country-specific, product-level, site-level).

Templates are located here.

  • Working with all sourcing and supply chain management teams to explore existing data held on suppliers, including physical addresses. The Facilities Environment Module will be used by many SAC members to gather data on their suppliers including location, and can provide exact latitude and longitude location as well as address.
  • Investigating whether data gaps on supplier locations exist because of: a) sourcing through intermediaries b) finding product lines where no supplier information is identified c) discovering that addresses on file are financial offices rather than production locations d) discovering that one address is listed for a company with multiple manufacturing sites e) identifying that supplier information is only available to a certain level e.g. Cut and Sew sites are mapped but no further data is available on tier 2 sites and beyond f) identifying that sub-contracting of key processes is happening with or without permission.
  • Identifying how much of the typical value chain impacts for relevant products are covered by the existing supplier data held, e.g. for fabrics key environmental impacts may be found in wet processing and raw materials stages, for leather key impacts are within the tanneries and farms. Leverage the OECD Apparel and Footwear Due Dilligence guidelines for support in exploring where key impacts lie in the supply chain, as well as SAC tools such as the Facilities Environment Module and the Material Sustainability Index.
  • Address any gaps in supply chain data as far as needed to support environmental performance improvements and risk management – more information on addressing each level of the value chain can be found below.
  • Review supplier tracking processes across your business, and whether sourcing practices are making data gathering more challenging – e.g. sourcing through agents if agents are not able to provide relevant details on suppliers; high supplier turnover or ad-hoc brief sourcing for specific product lines/styles; having a ‘long tail’ of suppliers with very small volumes being sourced; sourcing from sites with a lot of outsourcing or long process chains vs high capacity or integrated sites.
  • Engaging suppliers or reviewing data from the Higg FEM to understand whether suppliers have a system to monitor and ensure adherence relevant environmental legal requirements on at least a half yearly basis, with qualified responsible individuals updating and communicating any changes and requirements to senior management. This can include applications for relevant permits for wastewater discharge, water withdrawal, waste disposal, expansion licenses or other permits. Systems can be at a site or company level depending on their structure and locations.
  • If sites or companies do not have in-house capacity to monitor environmental requirements, creating an agreed action plan to put such a system in place, or to find a credible 3rd party to support them in monitoring of their legal requirements (expert local consultant, government or industry bodies, local NGOs).
  • Reviewing with suppliers, regulators and 3rd parties to identify whether there have been any environmental violations in the previous 5 years, and whether these violations have been resolved. This data can be a) gathered directly from suppliers through data gathering or on-site audits b) drawn from the Higg FEM c) gathered from government departments/regulatory bodies d) gathered from local NGOs, citizen science bodies or databases such as the IPE database in China, or e) even drawn from local community groups and stakeholders as part of an on-site audit process.
  • Where systems are not robust enough to ensure alignment with legal requirements, or previous violations have taken place, work with suppliers to set appropriate remediation actions to address existing violations or potential repeat of similar violations, including time-bound identified remediation activities.
  • Monitor progress against remediation action plan within the specific time limit. If remediation action plan is not achieved, review barriers/problems and possible solutions, or consider ceasing trade relationship with suppliers here relevant.

Understanding and managing the legal requirements of your suppliers is understandably a big ask of any company because identifying and tracking local laws in countries/regions where their supply chain exists can be a time consuming, difficult process. Next steps that companies may take to improve the management of this process include:

  • Having direct oversight of suppliers’ internal SOPs to manage such information, the use of third-party services to provide the check, or a company (brand) managing the regulatory information themselves and using this as a basis for checking compliance.
  • Monitor their supplier’s means to manage this action by utilizing—where available and verified—responses to the questions in the Higg Facility Environmental Module (see How to Higg guidance to see applicable questions).
  • Electing to use third-party organizations to satisfy this requirement. These service companies will most likely document and ensure supply chain legal compliance as an added benefit to the primary service of managing a broad set of EHS requirements for tier 2 & 3 facilties. Options such as the bluesign system and OEKO-TEX STeP certification, or a highly qualified EHS audit firm with experience and expertise in materials manufacturing processes and the primary issues, are suggested options. Companies should educate themselves on the scope and magnitude of the methodology for each 3rd party they are considering in order to determine the robustness of the option.
  • Review and revise your company’s Supplier Code of Conduct and other related policies to ensure they require suppliers to comply with local regulations and/or international norms. Consider consulting with subject matter experts and/or relevant stakeholders as part of this review.
  • Identify the different tiers of suppliers within your value chain that are currently accountable for complying with your Supplier Code of Conduct and verifying compliance based on your current responsible sourcing guidelines. For example, some companies require their tier 1 suppliers cascade requirements throughout the value chain and develop mechanisms to ensure compliance with the company’s requirements.
  • The level to which your company can extend and verify supplier compliance with your Supplier Code of Conduct across the different tiers within your supply chain is dependent upon your company’s level of supply chain traceability. For example, some companies have limited traceability beyond Tier 1 suppliers or may only have full traceability on high-risk commodities as part of their action plan to mitigate and prevent risks.
  • If you do not have full traceability to communicate expectations and verify compliance for all tiers, consider starting efforts by increasing current levels of supply chain traceability. It is recommended that traceability efforts start by focusing on the highest risks areas identified during the risk assessment, such as material risks related to cotton production or country-specific suppliers to address a geographic risk.
  • To streamline processes, some companies establish standard payment terms, which allow companies to implement one consistent process with a defined service level agreement on the amount of days it takes to pay invoices upon the date received.
  • If a company implements a consistent approach, they are encouraged to:
    • Communicate the length of time it takes to process invoices to suppliers to set expectations. This is especially critical if the supplier is required to pre-invest in any associated production costs prior to receiving payment.
    • Establish internal processes to identify and track your company’s agreed upon payment terms as specified in supplier contracts to ensure compliance.
    • Establish mechanisms to review and address payment protocols in the event of major events that disrupt production and could negatively impact workers (i.e. natural disasters, epidemics, etc.).
  • Establish internal processes to identify and track your company’s agreed upon payment terms as specified in supplier contracts to ensure compliance.
  • To streamline processes, some companies pre-define their preferred payment and invoicing terms to include in supplier contracts. This allows companies to implement one consistent process with a defined service level agreement on the amount of days it takes to pay invoices upon the date received.
  • If a company implements a consistent approach, they are encouraged to communicate the length of time it takes to process invoices to employers to set expectations. This is especially critical if the supplier is required to pre-invest in any associated production costs prior to receiving payment.

Environment: Risks and Impacts

  • This guidance will follow the approach of the OECD in defining a risk assessment as identifying both the likelihood and severity of a potential or actual harm within the value chain. This is a slightly different and broader approach than something like a Life Cycle Assessment or a GHG emissions calculation, which aims to calculate a specific amount of harm or impact in a specific case.
  • “Risk” covers potential or actual harm to individuals, other organizations or communities. A risk-based approach can also explore the systemic or contextual elements that make harms from specific activities (for example, a factory using a specific volume of groundwater) more likely (for example, if groundwater extraction is not regulated, it is more likely that over-use will occur) or more severe (for example, if groundwater is already severely depleted there will be less available for local farmers or communities).
  • Risk analysis should aim to take account of a number of different elements of risk – a) business model risk across the company b) specific materials or processes within a company’s value chain will be more or less likely to cause harm in impact areas such as climate, water etc. c) geographical risk of supplier or producer locations. This should be followed by in-depth stakeholder engagement and analysis on key impacts and locations. For full guidance on risk assessment, please see detailed guidelines on Conducting Environmental Risk Assessments, and Environmental Risks overview.
  • 1) Business model risk – questions to answer include:
    1. Do you have a high number of different suppliers and products from across high number of countries, or highly variable production cycle requiring short term contracts with suppliers, sometimes lacking sufficient time for a full supplier assessment?
    2. Do you purchase a small percentage of the total production volume of any given supplier, leading to low influence on individual sites, and do your products have high margin pressure and short lead times?
  • Do you carry out indirect sourcing or production through an agent or other 3rd party, or through license agreements?
  1. Do you permit supplier sub-contracting and do you have mechanisms in place to prevent unauthorized sub-contracting?
  • 2) Analysis of material or process risks can be done by using the SAC MSI, the Higg FEM, LCA data such as Quantis WALDB and the ThinkstepGaBi, or other impact data per production step. Questions to answer include:
    1. For each process or material type, are there specific risks that can be reasonably excluded? e.g. chemical risks from cut and sew factories are usually fairly limited.
    2. For each process or material type, are there particular risks that are more acute? e.g. chemical risks from leather tanneries tend to be high.
  • 3) Geographical risk analysis is another important tool in understanding many elements of your value chain, in particular to understand both the likelihood of a particular harm, and the potential severity of harm in that location. Understanding geographical risk is especially important when looking at supplier risk and raw materials risk, but can be relevant for all parts of the value chain. Tools to use include the WRI Aqueduct tool, the UN biodiversity lab, Climate performance index, World Animal Protection’s Animal Protection Index (see guidance document for details). Questions to answer include:
    1. How effective is the rule of law within that country or region, in terms of corruption and overall functioning of government?
    2. How strong are environmental policies and standards in each relevant country for relevant environmental impacts and how well are they enforced?
  • How much public infrastructure upkeep or investment is being made in the relevant area, for example water, energy or waste infrastructure?
  1. Are factories, producers or farms in that country or region typically adhering to environmental regulations? Do they have access to advanced practices, technologies, financial resources?
  2. What are the particular environmental sensitivities in the region, considering water resources, water quality, deforestation, biodiversity threat, soil conditions, protected landscapes, human settlements?
  • 4) Detailed stakeholder consultation for identified priority areas, including; in-depth data collection or verification from value chain and operational sites; in-depth analysis of the impacts from specific materials or processes; detailed analysis of the risk mitigation potential of existing policies, solutions or practices, e.g. certified materials, renewable energy power purchase agreements for stores; consultation with relevant local and global stakeholders. Stakeholders to include are:
    1. Suppliers
    2. Customers
  • Internal staff
  1. NGOs, technical organizations and pressure groups
  2. Regulators (if feasible)
  3. Local communities, farmers or other industries in higher risk regions.
  • 1) One of the most important factors in how a company should prioritise impacts is based on the materiality of their risks or known impacts. The main priority is that companies should look into:
    1. The likelihood and potential intensity of harm across their value chain for a range ofrisks including those listed above
    2. Which processes, materials or locations are most likely to have risks
  • Where data does not exist to support analysis, analysis should err on the side of caution and assume the highest relevant risks are occurring – for example for wood pulp sources with no verification in place and no identified country of origin, it should be assumed that there is some potential risk around deforestation.
  • 2) 3rd parties including NGOs and other stakeholders can also be helpful to include in this process, to support risk analysis processes, or to highlight issues potentially missed during a desktop risk analysis.
  • 3) Once risk analysis has been carried out, those areas with the highest risks of harm should be the first areas to prioritise. This applies both to the risk type (e.g. GHG, water) and the relevant step in the value chain (e.g. tier 2 suppliers, stores). Other factors that can also play a role in prioritisation include:
    1. How mature the industry data, approaches and benchmarks are for that specific risk (as above) and how equipped the company is to carry out individual or collective efforts to address any gaps or uncertainty
    2. How easily a company can influence that specific phase in the value chain – for example the easiest areas to influence might be the company’s own stores, and their tier 1 suppliers, and the most challenging areas might be in customer use phase or tier 3 and chemical suppliers
  • Whether collective efforts exist to create solutions to shared challenges where individual companies lack leverage – such as the SAC Higg, credible certification schemes, innovation and research programmes or policy engagement forums on key topics.
  • 4) Where a company is facing gaps in its data, it may be worth pursuing additional data sources in order to refine risks analysis. However, in many cases, it is not necessary to have a full granular baseline dataset to indentify material impacts and consider priority impact areas for target setting.
  • For full guidance on risk assessment, please see detailed guidelines on Conducting Environmental Risk Assessments, and Environmental Risks overview.

1) Types of data to track on animal welfare include: data on sourcing and practices/certification of specific kinds of high-risk product, such as wool, feather and down, leather and skins; data on producer participation in improvement or verification programmes

2) Steps to take on animal welfare include: policies against sourcing specific kinds of high-risk material (e.g. exotic furs or skins) or banning specific practices within the value chain (such as mulesing); setting targets around percentage of materials sourced from verified high animal welfare sources; targets on the percentage of producers involved in improvement programmes

3) Organisations who can support your work on animal welfare include:  RSPCA, Compassion in World Farming, PETA (more campaign-orientated), Textile Exchange

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

1) Types of data to track on biodiversity/land use/habitat loss include: modelled biodiversity impacts from pollution, land use change and other impacts in each stage of the value chain (particularly those stages with high chemical use, air pollution, water pollution or risk of land use conversion); data on biodiversity risk and vulnerability in key sourcing regions. MSI data and FEM data can help support understanding of biodversity impacts.

2) Steps to take on biodiversity/land use/habitat loss include: Policies against sourcing specific identified kinds of high biodiversity risk practices or products, switching to lower pollution and biodiversity impacting raw materials, particularly around agriculturally based products such as cotton; prevention of sourcing from locations with high likelihood of land conversion impacts e.g. leather from specific beef raising areas in the Amazon; working with suppliers to reduce impacts on biodiversity and habitat loss through reduction in chemical use, water and air pollution, or ensuring safe disposal proceedures for waste and hazardous waste.

3) Organisations who can support your work on biodiversity/land use/habitat loss include: IUCN, Science based targets network (working to develop SBTs beyond climate), Business for Nature, The Biodiversity Consultancy (commercial), WWF, Textile Exchange

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

1) Types of data to track on deforestation include: data on modelled or actual deforestation risk from raw materials and packaging sources – depending on level of traceability available; data on any use of deforested materials in the rest of the value chain such as for fuel; data on sourcing of certified or otherwise validated no deforestation sources. MSI data and FEM data can help support understanding of deforestation impacts.

2) Steps to take on deforestation include: Setting policies around zero deforestation value chains including solid wood products, packaging products, cellulosic fibres and leather; setting targets around the percentage or volume of raw materials or packaging products from verified no-deforestation sources including certified sources such as LWG, FSC, recycled or other credible deforestation-free value chain source.

3) Organisations who can support your work on deforestation include: Canopy Style, GFTN, LWG, Responsible Leather, FSC, CDP Forest Footprint Disclosure

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

1) Types of data to track on energy include: data on actual or modelled energy use by fuel source from stores, DCs, offices, transport and from suppliers as far down the value chain as possible including any purchase or generation of renewable energy; where data gaps exist and for further down the value chain e.g. raw materials, map modelled energy use; number of sites applying improved practices/technology or participating in energy efficiency programmes. MSI data and FEM data can help support understanding of energy impacts.

2) Steps to take on energy include: Setting policies around phase out of specific types of energy such as eliminating coal fired boilers in tier 1 and 2; setting targets around energy efficiency improvements above baseline for operational sites, transport and supplier sites; setting goals on the number of sites within the value chain implementing energy efficiency improvements or technologies; setting goals on number of sites taking part in improvement programmes

3) Organisations who can support your work on energy include: Greenhouse Gas Protocol, UNFCCC Fashion Industry Charter for Climate Action, Science Based targets initiative, CDP

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

1) Types of data to track on GHG emissions include: data on energy use by fuel sources across your value chain as above including purchased or generated renewable energy PLUS emission conversion factors for all relevant locations; modelled GHG emissions from raw materials phase, chemical and packaging inputs and anywhere else with data gaps on energy use/GHG emissions; modelled consumer impacts based on estimated consumer behaviour, energy usage and conversion factors; modelled GHG impacts from waste and product end of life depending on end destination. MSI data and FEM data can help support understanding of GHG emissions.

2) Steps to take on GHG emissions include: Setting incremental targets on GHG emissions reductions above baseline for operational sites, transport, supplier sites, raw materials and sometimes customer use phase; setting science-based targets on GHG emissions (absolute targets based on the overall required reduction from companies to meet the Paris Agreement); setting targets for switching to verified lower GHG impacting raw materials.

3) Organisations who can support your work on GHG emissions include: Greenhouse Gas Protocol,  UNFCCC Fashion Industry Charter for Climate Action, Science Based targets initiative, CDP, Textile Exchange

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

1) Types of data to track on air emissions include: data on real air emissions data from operational sites and suppliers; modelled air emissions data for raw materials and sites without real data available. MSI data and FEM data can help support understanding of air emissions impacts

2) Steps to take on air emissions include: setting targets around total air emissions across value chain; average air emissions per supplier or per unit of production; number of suppliers implementing best practices

3) Organisations who can support your work on deforestation include: ZDHC

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

1) Types of data to track on solid waste include: data on volumes of waste coming from suppliers across the value chain at least to tier 2; waste management practices per supplier including recycling; volumes of waste coming from stores, offices, DCs or customer packaging, with volumes that are recycled; modelled data on end of life destination of sold products and steps taken to reduce volumes sent to landfill through activities such as takeback schemes, resale; volumes of materials from across the value chain coming from verified pre or post-consumer sources, including fibres and materials, packaging, store fit-out and any other relevant material types.  MSI data and FEM data can help support understanding of solid waste impacts.

2) Steps to take on solid waste include: Setting targets on overall volume of waste produced or recycled of across the value chain including sold products and packaging; setting targets on number or percentage of supply chain sites with good waste management practices; setting targets on volumes or percentage of materials coming from verified recycled sources; setting targets on circularity including volumes of recovered pre and post consumer waste that is re-purposed for fibre to fibre recycling or other reuse or recycled purposes, new business concepts or approaches that can support a more circular model.

3) Organisations who can support your work on solid waste include: WRAP, Ellen MacArthur Foundation

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

1) Types of data to track on hazardous waste include: Data on number of suppliers operating safe hazardous waste disposal; volumes of hazardous waste being produced and methods of disposal across the value chain. MSI data and FEM data can help support understanding of hazardous waste impacts.

2) Steps to take on hazardous waste include: Setting policies against release of hazardous waste including sludge management, and ensuring included in supplier code of conduct on on-boarding requirements for new suppliers; setting targets on number or percentage of supply chain sites in specific tiers with safe disposal of hazardous waste; setting targets on volume of hazardous waste produced or safely disposed of across the value chain.

3) Organisations who can support your work on hazardous waste include: ZDHC initiative

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

See all guidance related to Chemicals in the Brand Environment Section in www.howtohigg.org.

1) Types of data to track on water use and risk include: Data on water use by source (groundwater, surface water, municipal etc) from offices, DCs, stores and suppliers, including raw materials if feasible; data on water risk level for specific sourcing regions, by water source type and overall; number of supplier sites reaching an identified benchmark or implementing a specific set of technologies; number of sites participating in credible improvement programmes. MSI data and FEM data can help support understanding of water use and risk.

2) Steps to take on water use and risk  include: Setting policies around responsible water use and water stewardship at company level; setting improvement targets against a baseline for overall water use by source across operations and supply chain, with particular focus on regions or processes with high water related risks; setting targets on number of sites applying best practices or specific technologies around water management; setting targets on the number of sites taking part in improvement programmes or multi-stakeholder collective action programmes, with particular focus in high water risk areas.

3) Organisations who can support your work on water use and risk include: CEO Water Mandate, WWF, Science based targets network (working to develop SBTs beyond climate), Apparel Impact Institute

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

1) Types of data to track on wastewater/water pollution/eutrophication risk include: Data on number of sites with functional on-site ETP or access to a credible CETP or municipal treatment facility; number of sites with high-impact or high-volume wastewater discharge linked to wet processing or tanning; water quality performance from each relevant supplier against BOD, COD, TSS, PH and Temperature; water quality performance from each relevant number of suppliers 3rd party verified to meet a specific water quality standard; modelling potential impact from raw material or supplier site on local water bodies and ecosystems through LCA or risk data. MSI data and FEM data can help support understanding of potential wastewater/water pollution/eutrophication risk.

2) Steps to take on wastewater/water pollution/eutrophication risk include: Setting policies around minimum requirements for wastewater treatment in wet processes and tanning; setting targets around number or percentage of suppliers applying best in class wastewater standards such as ZDHC WW guidelines; setting targets around actual water quality performance from suppliers or actual water quality performance on removal of toxic chemicals; setting targets on the number of sites taking part in improvement programmes or multi-stakeholder collective action programmes, with particular focus in high water pollution risk areas.

3) Organisations who can support your work on wastewater/water pollution/eutrophication risk include: ZDHC, WWF, Apparel Impact Institute.

For more information on risk reduction, please see detailed guidelines on Supply Chain Impacts and Activities, Setting Baselines and Targets, Tracking Targets and Gathering Data.

Social & Labor: Risks and Impacts

  • Read the SAC BRM Guidance: Conducting Human Rights Risk Assessments. This overview explains the different types of risk assessments, action steps for how to conduct each type, and how to plan your risk assessment.
  • If your company has not completed a risk assessment previously, you are strongly encouraged to conduct an initial company-wide assessment. This provides an overview of where the company could have potential impacts to identify risk and opportunity areas and where more specific risk assessments are needed (i.e. country-specific, product-level, site-level).
  • Read the SAC BRM Guidance: Conducting Human Rights Risk Assessments. This overview defines what salient risks are, the different types of risks assessments you can conduct as part of your company’s human rights due diligence and guidance for conducting an assessment.
  • If your company has not completed a risk assessment previously to identify salient risks, you are strongly encouraged to conduct an initial company-wide assessment. This provides an overview of where the company could have potential impacts to identify risk and opportunity areas and where more specific risk assessments are needed (i.e. country-specific, product-level, site-level).
  • Review and revise your company policies, including the Supplier Code of Conduct, to ensure company policies prohibit forced labour and the ILO Forced Labor Indicators, such as limiting freedom of movement, debt bondage, withholding identify papers and the use of prison labor.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes. If not addressed, identify and implement a process to extend monitoring to these requirements. This could include requiring audits beyond Tier 1 for high risk commodities or for labor agents recruiting migrant workers within your supply chain.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Read the SAC BRM Guidance: Checklist to Align Your Program with the UNGPs and SAC BRM Guidance: Understanding Human Rights Due Diligence to learn more human rights due diligence to assess where forced labor risks are highest and how to mitigate and prevent risks.
  • Review and revise your company policies, including the Supplier Code of Conduct, to ensure company policies prohibit the use of child labor and have provisions to protect young workers from any hazardous work as defined by the ILO.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes.
  • Define supplier remediation requirements if non-compliances are identified to correct issues. Refer to this guidance for industry best practices.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Read the SAC BRM Guidance: Checklist to Align Your Program with the UNGPs and SAC BRM Guidance: Understanding Human Rights Due Diligence to learn more human rights due diligence to assess where child labor risks are highest and how to mitigate and prevent these risks.
  • The ILO and the International Organisation of Employers (IOE) developed the Child Labour Guidance Tool as a resource for companies to meet the due diligence requirements laid out in the UN Guiding Principles related to child labor. This reference document should be used to guide your company’s human rights due diligence activities.
  • Review and revise your company’s policies, including the Supplier Code of Conduct, to ensure they require suppliers to:
    • Comply with local laws for wage payments for both regular working hours and overtime, as well as required benefits, at a minimum;
    • Establish management systems to document wages and hours worked by employees for verification during audits;
    • Provide wage slips with each paycheck;
    • Educate workers on how to read wage slips and report any incorrect wages.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes. If not addressed, identify and implement a process to extend monitoring to these requirements.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Review and revise your company policies, including the Supplier Code of Conduct, to ensure company policies limit the number of regular working hours and overtime worked per week aligns with the ILO Conventions and/or local law.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Review and revise your company’s policies, including the Supplier Code of Conduct, to protect workers’ rights to freely associate and collectively bargain. Consider reviewing ILO’s Freedom of Association guidance and other global standards, such as the Ethical Trade Initiative Base Code, to align with industry practice.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes. If not addressed, identify and implement a process to extend monitoring to these requirements.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Review countries of operation with countries where freedom of association and collectively bargaining are restricted or at risk to identify where additional interventions like social dialogue programs can be implemented to help create effective two-way dialogues between workers and managements to address concerns as part of your human rights due diligence risk assessment. To learn more, refer to the SAC BRM Guidance: Checklist to Align Your Program with the UNGPs and SAC BRM Guidance: Understanding Human Rights Due Diligence.
  • Review and revise your company’s Supplier Code of Conduct to ensure your company policies protect workers from exposure to short and long-term health risks related to work. This encompasses areas such as occupational health and safety, fire safety, building safety, emergency response, personal protective equipment and machine safety.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes. If not addressed, identify and implement a process to extend monitoring to these requirements.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Conduct a risk assessment on countries the company is procuring goods from to identify which have higher health and safety risks, which be a result of a lack of infrastructure or regulatory requirements and enforcement mechanisms. Suppliers in these areas may need additional guidance and/or monitoring to build capacity and verify compliance to mitigate risks. To learn more about risk assessments, refer to the SAC BRM Guidance: Conducting Human Rights Risk Assessments and SAC BRM Guidance: Understanding Human Rights Due Diligence.
  • Review and revise your company policies, including the Supplier Code of Conduct, to require suppliers to:
    • Establish controls to manage wastewater, volume of water usage and other production-related outputs that could negatively impact the community.
    • Ensure workers have access to hygienic toilets, dormitories, working areas and canteens, as well as safe drinking water.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Beyond audit tools can strengthen worker protections at facilities. This could include providing programs, such as the HER Project, which provides education on topics including heath to address sanitation and hygiene.
  • The risks to decent work and program interventions will vary based on geography, such as working hours and pay, and the type of work being provided.
  • Conduct a risk assessment to better understand the context and needs for the communities you operate in before determining what to implement programmatically.
  • Read the SAC BRM Guidance: Checklist to Align Your Program with the UNGPs and SAC BRM Guidance: Understanding Human Rights Due Diligence to learn more human rights due diligence and how to assess where risks to decent work are the highest and how to mitigate and prevent risks.
 
  
  • Review and revise your company’s Supplier Code of Conduct to ensure company policies protect workers from discrimination, harassment and abuse.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes. If not addressed, identify and implement a process to extend monitoring to these requirements.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Conduct a risk assessment to identify where discrimination, harassment and abuse may have the highest risks and may require different types of program interventions. To learn more about risk assessments, refer to the SAC BRM Guidance: Conducting Human Rights Risk Assessments and SAC BRM Guidance: Understanding Human Rights Due Diligence.
  • Review and revise your company policies, including the Supplier Code of Conduct, to ensure policies prohibit sexual harassment and gender-based violence. Refer to the ILO Convention, published in 2019, as a reference on best practice.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes.
  • Beyond audit tools can strengthen worker protections at facilities. This could include developing and implementing capacity building programs to address sexual harassment in the workplace and strengthen grievance mechanisms for individuals to report issues for review and redress by management.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.

  • Review and revise your company policies, including the Supplier Code of Conduct, to prohibit bribery and corruption and require compliance with local laws and maintain accurate documentation to provide as requested for transparent disclosure of business practices.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.

  • Review and revise your company policies, including the Supplier Code of Conduct, to ensure policies protect the health and safety of workers as part of occupational safety requirements. These should align with local law and best practices, such as the ILO Conventions for occupational health and safety.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes. This includes frequency of fire drills, emergency evacuation procedures, building structural inspections, machine safety, and more.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Certain geographic areas have higher risks to worker health and safety in the workplace due to regulations and/or enforcement, infrastructure or capacity. In these markets, additional beyond audit approaches should be considered to build capacity on health and safety requirements to limit occupational accidents. This could also include participating in health and safety initiatives like the Life and Building Safety Initiative (LABS).
  • Review and revise your company policies, including the Supplier Code of Conduct, to ensure policies protect workers’ rights to privacy.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes. This includes having appropriate management systems in place to maintain the confidentiality of employee information.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Review and revise your company policies, including the Supplier Code of Conduct, to ensure policies protect workers from harassment, abuse, threats and/or unreasonable searches.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Review and revise your company’s policies, including your non-retaliation policy and Supplier Code of Conduct, to ensure your company policies have protections related to minorities’ and communities’ rights.
  • Extend your current company grievance mechanisms to include the community. This may involve establishing a new grievance mechanism and/or revising internal procedures to review and respond to grievances raised by individuals outside of your company. Internal procedures may need to involve engaging third-party experts to help evaluate and respond to grievances raised.
  • Communicate on your company website how individuals can raise grievances, the non-retaliation policy and process for reviewing grievances on your website to ensure stakeholders have access to the materials.
  • Review current monitoring systems – such as audits – to determine how supplier compliance with the revised and/or new provisions is verified through existing processes. If not addressed, identify and implement a process to extend monitoring to these requirements.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.
  • Review and revise your company’s policies, including the Supplier Code of Conduct, to ensure your company policies address land rights. Refer to this publication by the United Nations Office of the High Commissioner of Human Rights on Land and Human Rights Standards & Application as a resource on best practices.
  • Review current monitoring systems – such as audits – to determine how supplier compliance is verified through existing processes. If not addressed, identify and implement a process to extend monitoring to these requirements.
  • Ensure your grievance mechanisms are extended to external parties to ensure they have access to remedy to raise issues.
  • Define supplier remediation requirements if non-compliances are identified to correct issues.
  • Communicate any policy changes and the effective date to suppliers for awareness of your company’s revised expectations.

 

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