Management System

Table of Contents

1. Introduction

2. Environment

3. Social & Labor

Introduction

The section has been designed to:

  • Support companies in embedding environmental sustainability within their company’s management system.
  • Align with the Organization for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector.

What is Due Diligence

Due diligence is a process through which businesses can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts in relation to their own operations as well as throughout their supply chains.

Why is the OECD Due Diligence Guidance important?

Launched in 2017, the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector sets a common framework for understanding supply chain due diligence.

  • The OECD is the most authoritative international elaboration of due diligence that has been approved by 48 governments and endorsed by business, trade unions and civil society.
  • It is the first government backed reference on due diligence which makes it relevant for all types of companies operating in all countries and sectors of the economy.

The OECD represents a common understanding among governments and industry stakeholders on due diligence for responsible business conduct in the garment and footwear sector.

Why does the Higg BRM seek to align with the OECD Due Diligence guidance?
Sustainable Apparel Coalition (SAC) was founded to create a common language to measure and improve social and environmental sustainability performance across the apparel, footwear, and textile industry.
In this respect there is a clear commonality between the mission of OECD and SAC.

Industry collaboration is key to the success of the SAC’s mission. We consider multi-stakeholder alignment and convergence foundational to the change our industry needs to support the well-being of the planet and its communities. This is why, through the OECD’s advisory council, the SAC gave feedback during the development of the Due Diligence Guidance and also explains why the Higg Brand & Retail Module intends to align with the OECD Due Diligence expectations.

Steps in the OECD due diligence process that are addressed in the Management System section
Step 1. Embed Responsible Business Conduct into policies & management systems
Step 2. Identify & Assess Adverse Impacts in Operations, Supply Chains and Business Relationships.
Step 4. Track Implementation and Results
Step 5. Communicate How Impacts are Addressed

Environment

Intent of the question

It is critical for any business, that want to shape an appropriate and effective sustainability strategy, to start with getting a clear understanding and visibility on their entire value chain operations.

To start the evaluation of a company’s value chain operations (which includes owned business operations and of their supply chain) a company would need to map/list out their entities and supply chain partners on a “map”. To get started with this evaluation, please use the data collection sheet to start mapping your value chain. 

Technical Guidance

In the next paragraphs we will reference proprietary business operations and supply chain as value chain operations.

Value Chain definition: All activities involved in the creation, sale, and servicing of products to the end customer. This includes product development, manufacturing, logistics (inbound and outbound), company operations, distribution and customer support services (example repair programs).

By listing the value chain operations on a map, it allows you to visualize and assess the sites (owned and operated by your company) and supply chain partners you are currently working with.

The benefits of value chain mapping and the visualization of it are to:

  • Gain oversight and control on your value chain operations.
  • Visualization helps avoid feeling overwhelmed by uncertainty or abundance of data.
  • Provide clarity on what the “blind spots” are so that you can plan or better yet take actions to address them.
  • Enable knowledge sharing within your company.

A company that will start to map and evaluate their value chain operations for the first time, will find that the initial phase of collecting information and engaging stakeholders will require the most time and effort.

Though you will find in the following years that it will be easier to map your value chain operations so that you can focus efforts on identifying where adverse environmental impacts are occurring and take actions to address them. Lastly, updating your value chain mapping does not necessarily have to be an annual exercise but only when certain data points (sites locations/suppliers) have been changed.

Some tips to help you get started:

  • First step, map the information for your owned business operations, such as offices, retail stores (if applicable), and distribution centers by working with the colleagues who manage your facilities, logistics, retail operations, and offices, etc. We recommend starting with this information because it will be more accessible than the supply chain data (which will take more time).
  • As a second step, map your supply chain. This 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.
  • Focus on mapping 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. Include if known:

Your tier 1 suppliers:

  • Product assembly
  • Make, cut & sew

Your tier 2 suppliers:

  • Materials
  • Part and trim suppliers
  • Dyers
  • Tanners
  • Printers, trim

Your Tier 3 suppliers:

  • Spinning, down processing
  • Hide processing
  • Plastic pellet creation
  • 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) so that you can identify environmental impacts in your supply chain.

The mapping of your value chain operations should not only result in a deeper understanding of where all of your operations are taking place but must also inform and feed into your risk assessment process.

It is crucial for companies to map both their owned business operations and their supply chain so that you can articulate why certain priorities and/or actions have been made as part of the aforementioned process.

In the next question (on risk assessment) we will dive deeper into the risk assessment process and how it can help companies in identifying and prioritizing salient environmental risks relative to impacts.

Answer options

  • If answered “yes” to this question, you can demonstrate that you have documented or mapped your value chain operations. Companies may use the template that we have provided or other materials that drives towards the same intent: which is that you know/have visibility of your owned operations and supply chain partners.
  • If answered “partial yes” to this question, you may not have documented or mapped your value chain operations, but you can demonstrate that you know where your value chain operations are taking place.

How this will be verified

Documentation required

  • High-level description of your internal process to collect/gather the information.
  • A list of your supply chain partners, and their locations grouped on product or purchase order level.
  • A list of your proprietary (also known as owned and operated) offices, retail stores, and distribution centers.
  • Any documentation (carried out within the last 2 years) that can demonstrate that your company has identified, mapped and/or evaluated your value chain operations.

Interview questions to ask:

  • Please describe how the business operations and supply chain were mapped and documented. 
  • Who was involved in the mapping process?
  • What aspects of the business operations and supply chain were included? What was excluded?

Helpful Resources

2.1 Which risks factors were used to identify your company’s salient risks in its operations and/or supply chain?

  • Sector risk factors
  • Product risk factors
  • Country risk factors
  • Business model risk factors
  • Sourcing model risk factors
  • Other

2.2 Were standards or resources referenced in your process to identify these salient risks, impacts, and opportunities? Select which standards or resources were referenced

  • B Corp
  • Global Reporting Initiative (GRI)
  • ISO 14001
  • Internal assessment
  • UN Global Compact Communication On Progress (COP)
  • Other

2.3 Were internal and/or external experts consulted in identifying your salient environmental risks, impacts, and opportunities? Which stakeholders were consulted? Select all that apply:

  • Internal employees
  • Business partners (suppliers, manufacturers, agents, wholesale companies, retailers)
  • Consumers
  • NGOs
  • Regulators/Policy Makers/Government Bodies
  • Trade Unions/Industry Groups
  • Academic Institutions
  • Other

2.4 Do you update your assessment of risks based on new information and/or changing circumstances? Answer: Yes/No

Intent of the question

Companies must formalize their environmental risk assessment process in order to explain their risk-based approach to internal and external stakeholders. 

Technical Guidance

In the previous question, we have asked you to evaluate and map out where your operations are taking place. In this question, we ask you to take that information and feed that into your risk assessment process.

Risk assessment process describes the overall process or method where a company can:

  1. Identify & assess the risk of adverse environmental impacts in their operations, supply chain and business relationships that they may have caused or contributed to.
  2. Analyze and evaluate how likely the risk(s) will occur and how severe the damage will be.
  3. Prioritize the risks based on salience (severity of harm).
  4. Determine appropriate measures to cease, prevent or mitigate the risk of adverse environmental impacts.

A few more notes on the secondary questions:

  • Risk factors that increases the chance of adverse environmental impacts are sector, product, country, business model, and sourcing model. These factors are further explained in the supporting resource linked to above.
  • A risk assessment process forms an integral part of a management system. There are various standards and initiatives that are helping and advising companies on how to assess their risks. A few of which are mentioned in this question as well as under helpful resources.
  • Companies should engage and consult internal and/or external experts in the determination of salient risks as a means to ensure robustness of their process.
  • Lastly, conducting a risk assessment should be a dynamic (not static) process and as such should be updated at minimum every two years or earlier when new information and/or changing circumstances.

Definitions:

Risk – under the OECD Due Diligence Guidance and the UN Guiding Principles on Business and Human Rights, risk is explicitly defined as: the risk of harm to individuals, other organizations, and communities in relation to human rights, labor rights, and the environment — and not to the business itself. The Higg BRM aligns with this established risk terminology and excludes in this context the risk to the business itself.

Adverse impact – in the context of the OECD Guidelines “adverse impact” is considered as a harmful impact of human rights risks (such as child labor, sexual harassment and forced labor). The term “harm” and “adverse impacts” are used interchangeably throughout this How to Higg Guide.

Salience – is determined based on the risk and the severity of harm (adverse impact) the company’s activities or business relationships has on people, the communities and the environment. Salience in the OECD Due Diligence context does not include harm to the business (reputation, revenue, etc.) itself. The below figure is taken from the UN Guiding Principles.

Before answering this question, please review the guide on “Understanding Environmental Due Diligence” and “Conducting environmental risk assessment”. These resources were designed to:

  • Support your understanding of what a risk assessment process is.
  • Equip you with resources to support your due diligence efforts and support your company’s efforts to complete your Higg BRM submission.

Helpful Resources

How this will be verified

Documentation required

  • High-level description of your environmental risk assessment process.
  • The documented output of the environmental risk assessment, carried out in the last two years. (Note: All documentation should use credible data sources and/or should be verified by an accredited third party)
  • A list of stakeholders that were consulted (including their names). 
  • Explanation of how this risk assessment process has lead to an appropriate understanding of salient risks.

Interview questions to ask:

  • Is the described method for identifying the risks and adverse impacts considered to be suitable, or is there a risk that key aspects are missing? 
  • Was a uniform method used to calculate the fibre volume and do the results appear to be plausible? 
  • Is the risk analysis inherently consistent and were the countries, product categories and business areas (textile-related) relevant to the company taken into account? 
  • Did the company review suppliers with a higher risk of potential and actual impacts and does it guarantee the quality of this assessment appropriately? 
  • Did the company assess the maturity of the suppliers’ management systems and take it into consideration? 
  • Did the company consult external stakeholders or experts and/or obtain feedback from potential affected parties as part of the risk analysis, especially if information is missing?

Environmental Risks and Impacts Dropdown: Yes/No

  • Please select all that apply: (The below risk and impact questions will automatically appear based on risks/impact selected in question #3)
  • Animal Welfare
  • Biodiversity/Land Use/Habitat Loss
  • Deforestation
  • Energy/Fuel Use (or Fossil Fuel Depletion)
  • Greenhouse Gas (GHG) Emissions
  • Air Emissions/Air Pollution (non GHG)
  • Solid Waste
  • Hazardous Waste
  • Chemical Hazards
  • Water Use/Water Scarcity
  • Wastewater/Water Pollution/Eutrophication

Intent of the question

The purpose of this question is to allow you to elaborate on the actions your company is taking to manage and measure your salient risks, impacts, and opportunities, as well as to describe how deeply in your business operations you are taking action.

Technical Guidance

Companies are expected to prioritize and address salient risks first instead of addressing all risks at the same time. It is important to review the three resources below before continuing on to the rest of the guidance:

  1. Review this 4 minute video created by the UN Guiding Principles Reporting Framework on salient human rights. Although the video focuses on human rights and not environment, the same principle can be applied for evaluating salient environmental risks.
  2. If you have missed this resource on how to conduct an environmental risk assessment process from the previous question, please start by reviewing this.
  3. As a subsequent step to guide users towards better understanding the 11 types of environmental risks, and to determine whether these are salient risks, please review this overview on environmental risks.

 Preparing for the risk assessment

  • When prioritizing environmental risks, a company should focus its attention on salience. Salience is determined based on the severity of harm that the risk poses to the environment and the likelihood of the event occurring. Under the OECD Due Diligence Guidance companies are expected to prioritize and address salient risks first instead of addressing all risks at the same time.
  • As you are evaluating the likelihood and severity of risks across your value chain operations, you will find that owned business operations may represent only a fraction of the impact of your entire product supply chain. In a recent study[1] 70 to 90% of a company’s impacts were found to be in their supply chain. This information can be used to inform how you will prioritize your actions and resources based on salience. This does not mean that the impact of owned business operations is not important, it just means that it may not be the first place where you start in comparison with the impact that you can make on mitigating / reducing the risks in the supply chain and its workers.

Starting the risk assessment process

  1. For each area of your proprietary business operations, materials, product, packaging, and supply chain assess whether any of the below 11 risks have a higher likelihood of occurring:
  • Animal Welfare
  • Biodiversity/Land Use/Habitat Loss
  • Deforestation
  • Energy/Fuel Use (or Fossil Fuel Depletion)
  • Greenhouse Gas (GHG) Emissions
  • Air Emissions/Air Pollution (non GHG)
  • Solid Waste
  • Hazardous Waste
  • Chemical Hazards
  • Water Use/Water Scarcity
  • Wastewater/Water Pollution/Eutrophication
  1. A good place to begin your risk assessment is with your supply chain and materials, as this is where the biggest risks and impacts occur. Keep in mind that varying product types (for instance, leather shoes vs. a polyester shirt vs. a water bottle) will have different supply chains and will each need to be evaluated separately for risks.
  2. Review the raw materials used to make the product you sell, starting with the highest volume materials. Include the raw materials (for example: cotton, wool, rubber, metals, etc.) that go into those materials, as well as the processes to make the materials (such as: dyeing, finishing, smelting, etc.) as that is where most of the biggest environmental risks and impacts occur. Identify and engage with the people who develop, manage, and purchase your materials. This may involve your internal staff or it may involve the companies (e.g. brands or factories) that develop and produce the products you sell. The Higg Materials Sustainability Index (Higg MSI) can be used to obtain the average environmental impact for many materials and can also be used to identify the areas that drive those impacts (such as energy, water, waste, land use, etc.) The results from the Higg MSI will provide a basic list of types of materials that drive your largest risks and impacts (energy, GHG, wastewater, etc.) Additional information on the high risk areas associated with your materials (animal welfare, deforestation, etc.) can be found in the “Helpful Resources” section of the How to Higg Guide.
  3. Review the major processes used to convert the materials into your final product (such as cut and sew, injection molding, heat forming, etc.) You will most likely need to work with the same internal and external people identified in the previous step. If suppliers have completed the Higg Facility Environmental Module (Higg FEM) they may be able to provide you with the impacts identified in the Higg FEM. This will provide you with your “hot spots“ — the largest impacts in the manufacture of the products you sell.
  4. Important Note: In the above review companies should prioritize the evaluation of suppliers that are associated with more severe risks linked to their raw material production process (for example, wet-processing facilities that use more environmental resources than a cut-and-sew facility) as well as suppliers they indirectly source from through sourcing agents/vendors.
  5. Review the logistics for shipping your products and review the consumer packaging and transport packaging. Identify and work with the people who manage and oversee inbound and outbound logistics to identify the environmental risks and impacts involved in this aspect of your operations.
  6. Finally, review your own operations. Identify the person who manages the utility bills, manages the building, oversees maintenance, remodels, building management, and purchase orders. Work with these people to quantify the impact of your own operations and to identify where there may be environmental impacts and risks.
  7. The risk assessment process is not easy or quick. In the first attempt you will most likely uncover more questions than answers. This is an indicator of progress and will provide you a preliminary understanding of the largest environmental impacts and risks. As you dig deeper into those areas, you will continue to learn more and will improve the accuracy and value of your assessment over time.

Answer option

The expectation when answering “yes” and selecting one or more salient environmental risk(s) is that your company has identified this as a salient risk through the risk assessment process.

Helpful Resources

 After selecting a salient risk, the following secondary questions will appear for each selected risk

  • Is your company taking steps to improve the selected risk? Answer options: Yes/No
  • If answered yes, what is included in your program?
    • A corporate policy approved by your company’s executive team and/or Board that underpins the commitment to the success of this program.
    • Compliance with all applicable regulations?
    • Specific minimum requirements and best practices that go above and beyond applicable regulations.
    • Requirements in manufacturer contracts that requires their suppliers and subcontractors to meet the goals of the program.
    • Public disclosure including a description of your impact in this area and details pertaining to your program.
    • Other
  • What value chain/business stages do these actions address?
  • Product
  • Packaging
  • Transportation
  • Offices
  • Distribution Centers
  • Retail Stores
  • Product Use & End of Use
  • Supply Chain: Agent/Trading Company/Licensees
  • Supply Chain Tier 1: Final product manufacturing and assembly (or finished goods production)
  • Supply Chain Material Converters
  • Supply Chain Tier 2: Material manufacturing (or finished materials production)
  • Supply Chain Tier 3: Raw material processing
  • Supply Chain Tier 4: Agriculture, Ranching, Forestry, and Extraction
  • Supply Chain: Chemical Suppliers (management, finished product and/or packaging compliance)
  • Other
  • Please describe your priority focus areas for the selected supply chain segments (e.g. a focus on wet processing factories in tier 2 because water pollution is a risk hotspot)
  • Describe the actions you are taking
  • Has your company measured impacts, set targets to reduce them and tracked YOY progress for its program aimed at improving the selected risk? Answer options: Yes/No
  • Which value chain/business stages do these measurements and targets cover?
  • Please describe the target(s) or upload template

 

 

Intent of these questions

The intent here is for your company to demonstrate that it has established a program for specific supply chain segments and that targets have been set to measure progress year over year.

Environmental performance improvement and risk mitigation are most effectively managed by implementing clear program(s) which have specific environmental goals to work towards, and that are enforced across the value chain. Successful implementation of such a program will lead to year-over-year progress on set goals and targets.

Technical Guidance

Program: intends to create a positive change in a specific area. A program provides details on the how and what will be achieved through goals, requirements, actions and accountability metrics to improve in a specific area. Policies, strategies, projects and action plans are all elements of a program.

A program should include the following key aspects:

  • Scope and the business activities the program addresses.
  • Priority focus areas or segments of the supply chain that are covered.
  • Description of the actions taken by the company to integrate the program into its business, including in relation to identifying the individuals and groups within the organization who are responsible or must be engaged / involved in deploying the program.
  • Outward actions taken by the company to address the salient risk(s).
  • The actions taken by the company internally to mitigate the risk from occurring in its supply chain e.g. through the design process, through the company’s purchasing practices, through the company’s selection of suppliers and new markets.
  • Baselines, targets, and an action plan to track year-over-year (YOY) progress for improvement.

Helpful Resources

  • Guidance document on setting environmental baselines and targets
  • We encourage you to use the baselines and targets template provided to track and upload your goals, targets, and progress. You may upload that information into here in place of a text description. While we currently do not have industry alignment on common units for reporting on goals, having all companies report in a common format may help us extract themes in the long-term

Lastly, as part of question 3, the following three additional questions will appear if these were selected as salient risk(s).

When Energy and/or Water has been selected as a salient risk for retail stores, offices and distribution centers.

Energy

Companies will be asked to complete a table by answering the below information:

  • What energy source(s) do you use in stores/offices/distribution centers?
  • Answer options: Electricity (purchased), Geothermal, Hydro, Solar Photovoltaic, Wind, Natural Gas
  • Do your stores/offices/distribution centers track their energy use from this source?
  • Answer options: Yes/No/Unknown
  • What quantity of energy was used by this source this year?
    • Enter the quantity
    • Unit of Measure
    • Dropdown box will appear with unit of measurements populated e.g. kWh/MJ etc.
  • Tracking Method
  • Answer options: Meters/Invoices/Estimates
  • Additional comments (Free text)

Intent of the questions

Energy production and energy use are the largest man-made sources of air pollution and greenhouse-gas (GHG) emissions. The operational, environmental, and financial impacts of energy are key issues for site operations (e.g. offices, stores and distribution centers). To understand how to improve you first need to start by measuring and tracking your energy use.

Helpful Resource:

Water

Companies will be asked to complete a table by answering the below information:

  • What water source(s) do you use in stores/offices/distribution centers?

Answer options: Fresh Surface Water, Rainwater, Groundwater, Produced/Process Water, Municipal Water, Wastewater from another organization, Brackish surface water/seawater, Other water source

  • Do your stores/offices/distribution centers track their water use from this source?

Answer options: Yes/No/Unknown

  • What quantity of water was used by this source this year?
  • Unit of Measure

Dropdown box will appear with unit of measurements populated e.g. m3/liter/gallon etc.

  • Tracking Method

Answer options: Meters/Invoices/Estimates

  • Additional comments (Free text)

Intent of the questions

There is a finite amount of water on Earth, but we are demanding more and more water to sustain our population and our industry. It is important to understand how much water you are using, in order to take action to improve your freshwater across your sites’ (offices, stores and distribution centers) operations.

Helpful Resource

When Greenhouse Gas (GHG) Emissions Risk has been selected as a salient risk

Greenhouse Gas Emission

  • Have you measured Scope 1, 2 and/or 3 emissions? Answer options: Yes/Partial Yes/No
    • Please enter your total Scope 1 emissions in metric tons of C02e.
    • Please enter your total Scope 1 emissions in metric tons of C02e.
    • Please enter your total Scope 3 emissions in metric tons of C02e.
    • Please provide comments and/or description of your measurements, if available

Intent of the question

Companies must help to prevent the worst impacts of climate change through their operations as quickly as possible. Emissions along the value chain represent a company’s biggest greenhouse gas impacts.

By calculating and measuring Scope 1, 2 and 3 emissions companies can focus their efforts on finding the greatest GHG reduction opportunities.

Technical Guidance

Measuring your full greenhouse gas emissions inventory – by incorporating corporate-level scope 1, scope 2, and scope 3 emissions – enables companies to understand their full value chain emissions.

The GHG Protocol categorizes emissions into three broad scopes:

  • Scope 1: All direct GHG emissions.
  • Scope 2: Indirect GHG emissions from consumption of purchased electricity, heat or steam.
  • Scope 3: Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc.(Source: https://ghgprotocol.org )

[1] Source : 2018 Environmental Impact of the Global Apparel and Footwear Industries Study

When completing your answer please report on GHG emissions in metric tons of C02e.

Answer options

  • If you have answered ‘yes’ to this question, your company (or a third party) has measured your corporate level Scope 1, 2 and/or 3 C02e emissions.
  • If you have answered ‘partial yes’ to this question, your company (or a third party) is currently measuring your corporate level Scope 1, 2 and/or 3 C02e emissions.
  • If you have answered ‘no’ to this question, your company has not measured your corporate level Scope 1,2 and/or 3 C02e emissions yet.

Helpful Resource

How this will be verified

Documentation required

  • A list of any standards, industry tools, resources, or documents used to guide the identification of the salient risks, adverse impacts, and opportunities.
  • Copies of documents produced in determination of salient risks, impacts, and opportunities

Any documentation should use credible data sources and/or data that has been verified by an accredited third party.

  • A list of internal and external stakeholders engaged and description of the engagement.

For each selected risk impact:

  • Copies of documents related to the program — covering the components explained in the technical guidance 
  • A list of internal and external stakeholders engaged, as well as high level description of the engagement

Energy:

  • Utility bills
  • Mapping out business and operational processes to identify sources of energy use
  • Energy management plans and/or systems

Water:

  • Utility bills
  • Mapping out business and operational processes to identify water use processes and spaces
  • Water management plans and/or water resource management system

GHG:

  • Records of sources for calculating Scope 1,2 and/or 3 GHG emissions in metric tons of C02e in the last calendar year. 
  • A verified report of the calculation (e.g. reported through the Carbon Disclosure Project or other external reporting tool).

Interview questions to ask

  • Please describe the process or methodology that led to an appropriate understanding of the salient risks, impacts, and opportunities. 
  • Please describe the areas of the business operations, supply chain, materials, products, and packaging included in the risk assessment
  • A list of any standards, industry tools, resources, or documents used to guide the identification of the salient risks, adverse impacts, and opportunities.
  • Copies of documents produced in determination of salient risks, impacts, and opportunities

Any documentation should use credible data sources and/or data that has been verified by an accredited third party.

  • A list of internal and external stakeholders engaged and description of the engagement.

For each selected risk impact (this guidance is aligned wih German Partnership for Sustainable Textiles):

  • Please describe the process for establishing the program. 
  • Please describe the scope and the business activities that are covered, as well as the actions that you are taking to mitigate or improve on the risk(s) through this program.
  • Please explain the internal responsibilities and engagement (for example via an organizational chart or job descriptions). 
  • Please describe the process for establishing baselines and targets, and explain how your organization is tracking progress. 
  • Explanation of the methodology or the process of how these targets were selected to address the salient risk(s) identified earlier in this assessment. 
  • Relevant staff understands and can explain the methodology for calculating Scope 1, 2 and/or 3 GHG emissions in metric tons of C02e.
  • Results of the risk assessment:
    • Do the results of the risk analysis coincide with common insights, reports and indices on the production countries, product categories, and the business and purchasing model relevant for the company? 
    • Is the content of the internal and external risk description basically the same and are targets and measures from the published content plausible?
    • Is the estimated likelihood of occurrence (based on the assumed effectiveness of the existing mitigation measures and information on specific impacts or on the local context) coherent? 
    • Is the estimated severity (based on scale, scope and irremediable character) coherent?
  • Risk Prioritization:
    • Is the justification that certain sector risks cannot be dealt with through targets (‘explain’) convincing? 
    • Is the focus of Prioritization that has been set (and hence the targets that have been defined based on it) on certain countries/supply chain tiers/suppliers/materials coherent in view of the likelihood of occurrence and severity?
  • Are targets and measures:
    • …appropriate to address the severity of the risk and likelihood of its occurrence? 
    • …more comprehensive in high-risk contexts than in low-risk contexts? 
    • …appropriate to the nature of the risk?
    • …appropriate to the size and business model of the company 
    • …based on existing good practices or best available techniques? 
    • …based on the knowledge of local stakeholders and external experts, insofar as the risk requires it?

4.1       Has your company’s environmental strategy been reviewed and approved by your senior management/executive team? (Yes/No)

4.2       Has your company stipulated the expectations of personnel, business partners, and other parties who are responsible for executing the strategy? (Yes/No)

  • Which stakeholders were consulted in identifying the salient environmental risk(s), impacts(s), and opportunities for your company’s overall operations? Checkbox:
  • Internal employees
  • Business partners (suppliers, manufacturers, agents, wholesale companies, retailers)
  • Consumers
  • NGOs
  • Regulators/Policy Makers/Government Bodies
  • Trade Unions/Industry Groups
  • Academic Institutions
  • Other (If other, please describe)
  • Do you update your strategy based on new information and/or changing circumstances? (Yes/No)
  • Has your company’s environmental strategy been communicated internally to all personnel? (Yes/No)
  • Has your company written operational policies and procedures for implementing the strategy? (Yes/No)

Intent of the question

This question is intended to confirm that the company has a process in place to advance and implement their environmental strategy. The aforementioned process is reflected in the embedded policies and procedures within the organization.

Technical Guidance

A company commitment may be a policy, a strategy, a strategic plan, or any other form of a written commitment to environmental improvement.

The steps required to demonstrate that advancing environmental sustainability is a core focus in your business strategy:

  • Stakeholders have been consulted to identify the salient risk(s), impact(s), and opportunities.
  • Company’s environmental strategy is approved by the company’s senior management / executive team.
  • A process is in place to implement and adjust the strategy based on new information and/or changing circumstances.
  • The implementation of the strategy is reflected in the company’s policies and procedures.
  • The roles and responsibilities for personnel and business partners to implement the strategy are clearly specified within the company’s policies and procedures and communicated to the relevant parties.
  • Company’s environmental strategy has been communicated internally to all personnel.

A brief explanation on each step:

1)    Stakeholders were consulted to confirm the salient risk(s), impact(s), and opportunities for your company

To increase the robustness of the risk assessment process, companies are encouraged to build engagement with the people, businesses, and organizations that are affected by the actions and activities of the company. It is beneficial for your company to engage with these stakeholders (which may include governments, NGOs, and community members) in order to more deeply integrate environmental improvement into your local and global context. Consulting stakeholders complements (but does not replace) existing internal processes, and increases the level of transparency.

2)    Company’s environmental strategy is approved by the company’s senior management / executive team

A formal commitment from the leadership is necessary to demonstrate that environmental sustainability is a core focus in your business strategy. This company commitment may be visible in the form of a policy, a strategy, a strategic plan, or any other form of a written commitment to environmental improvement.

Making significant changes to your business operations, supply chain, products, materials, and packaging can take many years. Leadership’s adoption of short-, medium-, and long-term targets helps ensure organizational alignment and focus, and increases the likelihood that business decisions align with the efforts to reduce environmental impacts.

How to develop a policy? The German Partnership for Sustainable Textiles has developed this helpful resource on “Developing and implementing your own policy”

3)    A process is in place to implement and adjust the strategy based on new information and/or changing circumstances

As situations and conditions in the value chain continuously evolve and change, so should the company’s commitment and strategy be adapted based on new information and/or the changing circumstances that are raised to the organization by stakeholders. The due diligence process should be on-going, proactive and reactive and applied with flexibility — without leading to a “tick the box” approach.

For example:

  1. The circumstances in which the company is operating can shift, for example due to changes in relevant environmental laws, increases in migrant labor, shifts in the political landscape, etc.
  2. A company may enter into a new market or environment.
  • A company may receive information on an existing product or additional context that it did not have previously. This new information should be weighed and considered as the company moves forward.

4)    The implementation of the strategy is reflected in the company’s policies and procedures

Embedding policies and procedures is important for ensuring that your organization will use time and resources more efficiently towards achieving your goals as an organization. This practice also provides clear guidance to both management and personnel in order to streamline internal processes, clarify roles and responsibilities, and support consistent decision-making.

5)    The roles and responsibilities for personnel and business partners to implement the strategy are clearly specified within the company’s policies and procedures and communicated to the relevant parties

Setting clear expectations for personnel and business partners is crucial so they know what they are responsible for, what’s expected of them, and what support they can expect from their supervisors, co-workers, or customers. Providing the aforementioned information enables these key stakeholders to execute their work with confidence and excellence towards achieving the organizational goals as articulated in the environmental strategy.

6)    Company’s environmental strategy has been communicated internally to all personnel

The company’s environmental strategy and regular updates on the progress should be shared with all personnel — not merely those directly responsible for implementing the environmental strategy within the company.

In doing this, the company ensures all employees are aligned with the organizational goals the strategy is seeking to achieve. Furthermore, it provides an opportunity for all employees to contribute to these efforts by sharing ideas and/or identifying improvement opportunities — even if they are not directly responsible for the implementation of the strategy.

Answer options

  • If answered “yes to this question, you can demonstrate that you have a company commitment through either a policy, strategy, strategic plan, or any other form of a written commitment to environmental improvement.
  • If answered “partial yes” to this question, you may not have a written commitment, but you can demonstrate that you have taken actions to advance environmental improvement.

Helpful Resources

A company-wide environmental strategy provides an opportunity to strengthen your company’s business resilience. Having a strategy will enable you to better respond to volatility in the markets related to the supply chain workforce by keeping your company attuned to their environment and agile in your ability to respond. More information can be reviewed through the below industry reports.

How this will be verified

Documentation required

Companies should have one or more of the following: 

  • Company’s environmental sustainability strategy or commitment thereof from the leadership (senior management/executive team).
  • Relevant policies and procedures to implement the strategy.
  • Description of the process for updating the strategy based on new information and/or changing circumstances. 
  • Organizational chart. 
  • Formal inclusion of sustainability-related functions into the organization and/or individual job descriptions. 
  • Relevant communication on the environmental strategy that has been shared with all personnel (e.g. through email, public URL or posting on the company’s intranet) 
  • Supporting documentation of stakeholder consultation
    • List of stakeholders that were consulted (including their names).
    • Output / input from stakeholder consultation.
    • Event photos or videos of this stakeholder consultation.
    • Examples of how the strategy has been adjusted based on the stakeholder engagement process. 
  • If no written commitment can be provided, please share any evidence or materials that can demonstrate that the actions you have taken, have resulted in environmental improvements. 

Interview questions to ask :

  • Management can clearly articulate the environmental strategy or commitment and how it is integrated into the organization and across the value chain.
  • Key employees, responsible for implementing the environmental strategy and program, can demonstrate that they understand and are able to explain their roles.

Consulted stakeholders understand how their input has been used in the company’s environmental sustainability strategy.

Answer options: Yes/No

If answered yes, please complete the table below:

  • How do you ensure employees have the technical competence required to do their job? (msenvemployeecompetence)
  • What percentage of employees have environmental sustainability goals formally included in the annual performance review process? (msenvemployeepercent)

Intent of the question

This question is intended to confirm who in your company is responsible for advancing environmental sustainability across your value chain operations. The first step to demonstrate that environmental sustainability is a core focus in your business strategy is to have dedicated staff responsible for this within your company.

Technical Guidance

To answer ‘yes’ to this question, companies should have at least 1 member of staff with sustainability goals embedded into one or more of the following:

  • Companies should have clearly defined roles and responsibilities for any staff assigned to coordinating environmental sustainability activities at the company.
  • An organizational chart and clear job description is important in keeping employees accountable to their roles.
  • These employees must deal directly with senior management and have defined roles for that purpose.
  • The roles could be either required in their job description or accountabilities or designated by relevant system documents to oversee or coordinate.
  • The time spent on the salient risk (as identified earlier in this assessment) and the business area (proprietary business operations and supply chain) for these employees should be known and specified as part of their job description.
  • Employees are resourced, through access to a budget, to hire external expertise and/or engage in training to build capacity and competence to effectively carry out their responsibilities.

When completing the table:

  • If you do not wish to share the name(s) of your employee(s) for privacy reasons, please enter “N/A”
  • One full row requires to be completed in order to be considered towards completion percentage

To answer the final sub-question, please consider all company employees when providing the percentage of employees that have environmental sustainability goals formally included in the annual performance review process.

Helpful Resources

6.1 What is the highest level at which employee accountability is tied to goals in your company’s environmental sustainability approach or strategy?

  • Corporate Social Responsibility team
  • Human Resources
  • Executive Team
  • Board of Directors

Intent of the question

This question is intended to evaluate the level of integration of environmental sustainability practices within the company. Accountability in the workplace is linked to higher performance, increases in commitment to work, and employee morale.

Examples from companies that have included sustainability as part of their governance structure:

How this will be verified

Documentation required

To answer ‘yes’ to this question, your company should have one or more of the following: 

  • A brief description identifying who is accountable for your company’s environmental sustainability strategy/approach and their role as part of integrating environmental sustainability within the organization. 
  • Formal inclusion of environmental sustainability-related goals into job description, key performance indicators annual performance targets and review 
  • Evidence that supports accountability for environmental sustainability within individuals and/or teams (This can include organization charts, employee bios).
  • If your company has already answered and published this material in another external document such as a sustainability report, annual report etc. provide the document, link to where it is posted and identify the page number.

7.1 Please indicate how (checkbox)

  • Incentivize company employees to engage in local environmental service projects and/or investment initiatives
  • Give charitable contributions to environmental programs
  • Share our innovations, tools or solutions with the wider industry
  • Engage stakeholders (e.g., NGOs, academia, business partners, communities) to understand and address local environmental issues together
  • Engage stakeholders (e.g., NGOs, academia, business partners, communities) to understand and address industry-wide environmental issues together
  • Engage with local or national governments on environmental regulation or management issues
  • Other

Intent of the question

This question is intended to encourage companies to:

  1. Drive positive environmental change in the communities in which it operates, through either: high-impact, employee-led volunteering programs or through giving contributions to relevant charities
  2. Engage and collaborate with the wider industry on relevant local or industry-wide environmental issues. This type of engagement and cross-collaboration is crucial to drive change and to address contextual risks and challenges. Contributions to shared solutions by brands, retailers and manufacturers can: add credibility or influence to processes, provide resources to facilitate action, or directly contribute to the knowledge and best practices available in that location.

Technical Guidance:

In this part of the guidance, we will provide a brief explanation for each of the answer options that could be selected as part of this question:

Incentivize company employees: Corporate volunteering is when a business creates volunteer experiences for their staff to work outside the office and give back to communities. Employee volunteering programs can allow workers to feel that the work they do is not only contributing to the overall success of the company, but that it is also helping out a charitable cause that is important to them.

Giving charitable contributions to environmental programs and organizations: Charitable contributions (either in time or money) are one way that companies, owners, and employees can give back to the community. Choose an organization that matches the environmental goals and values your company has set.

Note: Charity Navigator is the largest charity evaluator in the U.S. The organization helps guide intelligent giving by evaluating the Financial Health, Accountability, and Transparency of over 9,000 charities and provides basic data on the rest of the 1.8 million U.S. nonprofits. https://www.charitynavigator.org

At the time of writing this guidance, no European equivalent to Charity Navigator was found.

Examples of organizations with environmental programs that accept charitable contributions: Clean Up The World, Earth Guardians and ClientEarth.

Share innovations, tools, or solutions with the wider industry: Research and development is an important means of bringing new solutions to market and helping to contribute to a larger shift in the industry. In particular, Small and Medium- sized Enterprises (SMEs) are encouraged to take part in multi-stakeholder initiatives that drive collective impact to bring programs to scale.

Below are some examples of initiatives that companies can participate in:

Engage stakeholders to address local and/or industry-wide environmental issues together:

Example of initiatives:

Engage with local or national governments on environmental regulation or management issues:

Context driven engagement, particularly with communities or governments, should be carried out with some clear ‘safety’ mechanisms and support measures in place. In particular, it will be important to work with credible and neutral brokers in order to avoid undue influence, inequitable resource allocation, or policy capture[1].

Resources from the World Wildlife Fund (WWF) on local or national government engagement:

Important Note: The above is not an exhaustive list of initiatives. There are many other opportunities and organizations that companies can reach out to. The Sustainable Apparel Coalition intends to update the Higg Brand & Retail Module – How to Higg Guide on an annual basis with user feedback.

Helpful Resources

Please review the helpful resources under technical guidance.

How this will be verified

Documentation required

To answer ‘yes’ to this question, your company can provide one or more of the following:

  • Provide a description related to any item you have checked
  • Include internal and/or external information documentation or promotional material
    for every item checked
  • Documentation of events, best practices, training materials, or datasets provided by your organization (with information on who they were provided to, and the outcomes of that provision — including which actors have access to them)
  • Evidence of funding, research, or other supported activities carried out in collaboration with other stakeholders

Evidence of governance or multi-stakeholder processes undertaken — with documentation of the aims, processes, and safeguards put in place, and the outcome of those engagements.

[1] Policy Capture when public decisions over policies are consistently or repeatedly directed away from the public interest towards a specific interest, this can exacerbate inequalities and undermine democratic values, economic growth and trust in government. Source

8.1 What is shared? (Checkbox)

  • Background information describing your company’s risks, impacts, and opportunities
  • Due diligence management system
  • Strategies and action plans for addressing your risks, impacts, and opportunities
  • Policies and procedures
  • Progress, remediation, and improvements made
  • Metrics and key performance indicators
  • Stakeholder engagement approach
  • Government policy engagement efforts and outcomes
  • Other (If Other, please describe

8.2 How are you sharing this information? (Checkbox)

  • Our company follows internationally recognized standards (e.g., UNGP, GRI, etc.)
  • Our company publishes this information at least annually
  • Our company has our information externally reviewed or verified by a qualified verification body.
  • Other (If Other, please describe)

8.3 If applicable, please provide the relevant URLs

Intent of the question

It is important for companies to provide internal and external stakeholders with visibility to their sustainability efforts for a variety of reasons. Firstly, it fosters transparency and provides a way for employees, business partners, and customers who are interested to understand what companies are doing to advance sustainability within their organization. Secondly, it promotes accountability among companies, since it provides stakeholders with an opportunity to monitor your efforts.

Technical Guidance

This information, shared with internal and external stakeholders, can be communicated through: position papers where relevant, the company’s corporate website, sustainability reports, Corporate Social Responsibility reports, Integrated reports, or an equivalent thereof. Examples of internationally recognized standards are: Global Reporting Initiative (GRI) and AA1000.

A qualified verifier or verification body must have been approved or licensed by the relevant standards organization to carry out the verification on behalf of their initiative. If in doubt as to whether the verification body is qualified, please contact the respective standards organization.

Helpful Resources

How this will be verified

Documentation required

  • High-level, publicly-shared, description of the internal process to consolidate and gather information about its environmental risk management
  • The information has been shared with internal and external stakeholders through public URLs or other means

Social & Labor

Intent of the question

It is critical for any business, that want to shape an appropriate and effective social/human rights strategy, to start with getting a clear understanding and visibility on their entire value chain operations.

To start the evaluation of a company’s value chain operations (which includes owned business operations and of their supply chain) a company would need to map/list out their entities and supply chain partners on a “map”. To get started with this evaluation, please use the data collection sheet to start mapping your value chain.

Technical Guidance

In the next paragraphs we will reference proprietary business operations and supply chain as value chain operations.

Value Chain definition : All activities involved in the creation, sale, and servicing of products to the end customer. This includes product development, manufacturing, logistics (inbound and outbound), company operations, distribution and customer support services (example repair programs).

By listing the value chain operations on a map, it allows you to visualize and assess the sites (owned and operated by your company) and supply chain partners you are currently working with.

The benefits of value chain mapping and the visualization of it are to:

  • Gain oversight and control on your value chain operations.
  • Visualization helps avoid feeling overwhelmed by uncertainty or abundance of data.
  • Provide clarity on what the “blind spots” are so that you can plan or better yet take actions to address them.
  • Enable knowledge sharing within your company.

A company that will start to map and evaluate their value chain operations for the first time, will find that the initial phase of collecting information and engaging stakeholders will require the most time and effort.

Though you will find in the following years that it will be easier to map your value chain operations so that you can focus efforts on identifying where adverse social/human rightsl impacts are occurring and take actions to address them. Lastly, updating your value chain mapping does not necessarily have to be an annual exercise but only when certain data points (sites locations/suppliers) have been changed.

Some tips to help you get started:

  • First step, map the information for your owned business operations, such as offices, retail stores (if applicable), and distribution centers by working with the colleagues who manage your facilities, logistics, retail operations, and offices, etc. We recommend starting with this information because it will be more accessible than the data related to the workers in your value chain, which will require support from external parties such as consultants or local NGOs or trade unions to obtain.
  • As a second step, map your supply chain by 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.
  • Focus on mapping 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. Include if known:

Your tier 1 suppliers:

  • Product assembly
  • Make, cut & sew

Your tier 2 suppliers:

  • Materials
  • Part and trim suppliers
  • Dyers
  • Tanners
  • Printers, trim

Your Tier 3 suppliers:

  • Spinning, down processing
  • Hide processing
  • Plastic pellet creation
  • This will be an iterative process where one supplier leads you to the next set of suppliers. Suppliers may also provide data through their completed Higg Facility Social & Labor Module (Higg FSLM).

The mapping of your value chain operations should not only result in a deeper understanding of where all of your operations are taking place but must also inform and feed into your risk assessment process. It is crucial for companies to map both their owned business operations and their supply chain so that you can articulate why certain priorities and/or actions have been made as part of the aforementioned process.

Answer options

If answered yes to this question, you can demonstrate that you have documented or mapped your value chain operations. Companies may use the template that we have provided or other materials that drives towards the same intent: which is that you know/have visibility of your owned operations and supply chain partners.

Helpful Resources

How this will be verified

Documentation required

  • High-level description of your internal process to collect/gather the information.
  • A list of your supply chain partners, and their locations grouped on product or purchase order level.
  • A list of your proprietary (also known as owned and operated) offices, retail stores, and distribution centers.
  • Any documentation (carried out within the last 2 years) that can demonstrate that your company has identified, mapped and/or evaluated your value chain operations. 

Interview questions to ask:

  • Please describe how the business operations and supply chain were mapped and inventoried.
  • Who was involved in the mapping process?
  • What aspects of the business operations and supply chain were included? What was excluded?

2.1 Which risks factors were used to identify your company’s salient risks in its operations and/or supply chain?

  • Sector risk factors
  • Product risk factors
  • Country risk factors
  • Business model risk factors
  • Sourcing model risk factors
  • Other (If Other, please describe)

2.1 Were standards or resources referenced in your process to identify these salient risks, impacts, and opportunities? Select which standards or resources were referenced

  • Global Reporting Initiative (GRI)
  • ILO Core Conventions
  • OECD Due Diligence Guidance
  • SA8000
  • UN Global Compact COP
  • UN Guiding Principles on Business and Human Rights
  • UNGP Reporting Framework
  • Your company’s own program or other internal resources
  • Other (If other, please describe)

2.2 Were internal and/or external experts consulted in identifying your salient social/human rights risks, impacts, and opportunities? Which stakeholders were consulted? Select all that apply

  • Internal employees
  • Business partners (suppliers, manufacturers, agents, wholesale companies, retailers)
  • Consumers
  • NGOs
  • Regulators/Policy Makers/Government Bodies
  • Trade Unions/Industry Groups
  • Academic Institutions
  • Other (If other, please describe)
  • Do you update your assessment of risks based on new information and/or changing circumstances? Dropdown: Yes/No

Intent of the question

Companies must formalize their social/human rights risk assessment process in order to explain their risk-based approach to internal and external stakeholders.

Technical Guidance

In the previous question, we have asked you to evaluate and map out where your operations are taking place. In this question, we ask you to take that information and feed that into your risk assessment process.

Risk assessment process describes the overall process or method where a company can:

  1. Identify & assess the risk of adverse social/human rights impacts in their operations, supply chain and business relationships that they may have caused or contributed to.
  2. Analyze and evaluate how likely the risk(s) will occur and how severe the harm/damage will be.
  3. Prioritize the risks based on salience (severity of harm).
  4. Determine appropriate measures to cease, prevent or mitigate the risk of adverse social/human rights.

A few notes on the secondary questions:

  • Risk factors that increase the chance of adverse social/human rights impacts are sector, product, country, business model, and sourcing model. These factors are further explained in the supporting resource linked to above.
  • A risk assessment process forms an integral part of a management system. There are various standards and initiatives that are helping and advising companies on how to assess their risks. A few of which are mentioned in this question as well as under helpful resources.
  • Companies should engage and consult internal and/or external experts in the determination of salient risks as a means to ensure robustness of their process.
  • Lastly, conducting a risk assessment should be a dynamic (not static) process and as such should be updated at minimum every two years or earlier when new information and/or changing circumstances.

Definitions:

Risk – under the OECD Due Diligence Guidance and the UN Guiding Principles on Business and Human Rights, risk is explicitly defined as: the risk of harm to individuals, other organizations, and communities in relation to human rights, labor rights, and the environment — and not to the business itself. The Higg BRM aligns with this established risk terminology and excludes in this context the risk to the business itself.

Adverse impact – in the context of the OECD Guidelines “adverse impact” is considered as a harmful impact of human rights risks (such as child labor, sexual harassment and forced labor). The term “harm” and “adverse impacts” are used interchangeably throughout this How to Higg Guide.

Salience – is determined based on the risk and the severity of harm (adverse impact) the company’s activities or business relationships has on people, the communities and the environment. Salience in the OECD Due Diligence context does not include harm to the business (reputation, revenue, etc.) itself. The below figure is taken from the UN Guiding Principles.

Before answering this question, please first review these two guides: “Understanding Human Rights Due Diligence” and “Conducting Human Rights Risk Assessment”. These resources were designed to:

  • Support your understanding of what Human Rights Due Diligence is (building on an internationally recognized framework) and where all of the above mentioned 8 steps are explained in detail.
  • Equip you with resources to support your due diligence efforts and support your company’s efforts to complete your Higg BRM submission.

Helpful Resources

Company examples:

How this will be verified

Documentation required

If you have answered ‘yes’ to this question: 

  • High-level description of your social/human rights risk assessment process. 
  • Documented output of the social/human rights risk assessment, carried out in the last two years. (Note: All documentation should use credible data sources and/or should be verified by an accredited third party)
  • A list of stakeholders that were consulted (including their names). 
  • Explanation of how this risk assessment process has lead to an appropriate understanding of salient risks.

Interview questions to ask

  • Is the described method for identifying the risks and adverse impacts considered to be suitable, or is there a risk that key aspects are missing? 
  • Was a uniform method used to calculate the fibre volume and do the results appear to be plausible? 
  • Is the risk analysis inherently consistent and were the countries, product categories and business areas (textile-related) relevant to the company taken into account? 
  • Did the company review suppliers with a higher risk of potential and actual impacts and does it guarantee the quality of this assessment appropriately? 
  • Did the company assess the maturity of the suppliers’ management systems and take it into consideration? 
  • Did the company consult external stakeholders or experts and/or obtain feedback from potential affected parties as part of the risk analysis, especially if information is missing?

Social Risks and Impacts Dropdown Answer options: Yes/No

  • Please select all that apply: (The below risk and impact questions will automatically appear based on risks/impact selected in question #3)
  • Forced Labor or Human Trafficking
  • Child Labor
  • Wages and Benefits
  • Working Hours
  • Freedom of Association and Collective Bargaining
  • Health and Safety
  • Access to Water and Sanitation
  • Decent Work
  • Discrimination, Harassment and Abuse
  • Sexual Harassment and Gender-Based Violence
  • Bribery and Corruption
  • Right to Health
  • Right to Privacy
  • Right to Security of the Person
  • Minorities’ and Communities’ Rights
  • Land Rights
  • None of the above

Intent of the question

The purpose of this question is to allow you to elaborate on the actions your company is taking to manage and measure your salient risks, impacts, and opportunities, as well as to describe how deeply in your business operations you are taking action.

Technical Guidance

It is important to review the three resources below before continuing on to the rest of the guidance:

  • Review this 4 minute video created by the UN Guiding Principles Reporting Framework on salient human rights.
  • If you have missed this detailed guidance on how your company can conduct a human rights risk assessment (aligned with the 8 steps of the UN Guiding Principles), please start by reviewing this.
  • As a subsequent step, this overview aims to explain the 16 types of social / human rights risks, to help companies determine whether these are salient risks.

Preparing for the risk assessment

When prioritizing human rights risks a company should focus its attention on salience. Salience is determined based on the severity of harm that the risk poses to people and the likelihood of the event occurring. Under the UN Guiding Principles companies are expected to prioritize and address salient risks first instead of addressing all risks at the same time.

Starting the risk assessment process

  1. For each area of your proprietary business operations, materials, product, packaging, and supply chain assess whether any of the below 16 risks have a higher likelihood of occurring:
  • Forced Labor or Human Trafficking
  • Child Labor
  • Wages and Benefits
  • Working Hours
  • Freedom of Association and Collective Bargaining
  • Health and Safety
  • Access to Water and Sanitation
  • Decent Work
  • Discrimination, Harassment and Abuse
  • Sexual Harassment and Gender-Based Violence
  • Bribery and Corruption
  • Right to Health
  • Right to Privacy
  • Right to Security of the Person
  • Minorities’ and Communities’ Rights
  • Land Rights
  1. Review the major processes and the stage of the supply chain used to manufacture the raw materials into your final product (things like cut and sew, injection molding, heat forming, etc.) You will most likely need to work with your sourcing managers, purchasing agents, facilities managers, field staff and buyers. If suppliers have completed the Higg Facility Social & Labor Module (Higg FSLM) they may be able to provide you with the risks identified in the Higg FSLM. This will provide you with your ‘hot spots’ in identifying the salient social and human rights risks in the manufacturing of the products you sell.

Important Note: In the above review companies should include the evaluation of direct as well as indirect suppliers (through the use of sourcing agents) as well as their geographical location.

  • Review the operations and logistics for the storage and shipment of your products. Identify and work with the people who manage and oversee inbound and outbound logistics through the distribution centers to identify the social/human rights risks and impacts.

  • Finally, review your owned operations. Identify the person who manages the human resources for offices and/or stores. Work with these people to quantify the impact of your own operations and to identify where there may be social/human rights impacts and risks.

The risk assessment process is not easy or quick. In the first attempt you will most likely uncover more questions than answers. This is an indicator of progress and will provide you a preliminary understanding of the salient social/human rights impacts and risks. As you dig deeper into those areas, you will continue to learn more and will improve the accuracy and value of your assessment over time.

Answer option

The expectation when answering “yes” and selecting one or more salient social/human right risk(s) is that your company has:

  • Identified this as a salient risk through the risk assessment process.
  • Taken actions to address this salient risk.
  • Implemented program to reduce this risk. The following components should be included within this program:

  • the scope and the business activities it addresses.
  • the priority focus areas covered.
  • the actions you are taking to improve on the risk.

Helpful Resources

After selecting a salient risk, the following secondary questions will appear for each selected risk:

  • Has your company established a program aimed at addressing the selected risk? Answer options: Yes/No
  • If answered yes, what is included in your program?

  • A corporate policy approved by your company’s executive team and/or Board that underpins the commitment to the success of this program.
  • Compliance with all applicable regulations?
  • Specific minimum requirements and best practices that go above and beyond applicable regulations.
  • Requirements in manufacturer contracts that requires their suppliers and subcontractors to meet the goals of the program.
  • Public disclosure including a description of your impact in this area and details pertaining to your program.
  • None of the above.

  • What value chain/business stages do these actions address?

  • Product
  • Packaging
  • Transportation
  • Offices
  • Distribution Centers
  • Retail Stores
  • Product Use & End of Use
  • Supply Chain: Agent/Trading Company/Licensees
  • Supply Chain Tier 1: Final product manufacturing and assembly (or finished goods production)
  • Supply Chain Material Converters
  • Supply Chain Tier 2: Material manufacturing (or finished materials production)
  • Supply Chain Tier 3: Raw material processing
  • Supply Chain Tier 4: Agriculture, Ranching, Forestry, and Extraction
  • Supply Chain: Chemical Suppliers (management, finished product and/or packaging compliance)
  • Other

  • Please describe your priority focus areas for the selected supply chain segments (e.g. focused on forced labor in Tier 4 in a specific country for a specific fiber type)
  • Describe the actions you are taking in these areas
  • Has your company measured the risk, set targets to reduce the risk and tracked YOY progress for its program aimed at improving the selected risk? Answer options: Yes/No
  • Which value chain/business stages do these measurements and targets cover?
  • Please describe the target(s) or upload template

Intent of these questions

The intent here is for your company to demonstrate that it has established a program for specific supply chain segments and that targets have been set to measure progress year over year.

Risk mitigation and/or remediation of social and human rights risks are most effectively managed by implementing clear program(s), that have specific social/human rights goals to work towards, that are enforced across the value chain. Successful implementation of a program leads to year-over-year progress on set goals and targets.

Technical Guidance

Program: intends to create a positive change in a specific area. A program provides details on the how and what will be achieved through goals, requirements, actions and accountability metrics to improve in a specific area. Policies, strategies, projects and action plans are all elements of a program.

A program should include the following key aspects:

  • Scope and the business activities the program addresses.
  • Priority focus areas or segments of the supply chain that are covered.
  • Description of the actions taken by the company to integrate the program into its business, including in relation to identifying the individuals and groups within the organization who are responsible or must be engaged / involved in deploying the program.
  • Outward actions taken by the company to address the salient risk(s).
  • The actions taken by the company internally to mitigate the risk from occurring in its supply chain e.g. through the design process, through the company’s purchasing practices, through the company’s selection of suppliers and new markets.
  • Baselines, targets, and an action plan to track year-over-year (YOY) progress for improvement.

We recommend that you design and align your company’s social/human rights program with the United Nations Guiding Principles for Business and Human Rights (UNGPs). The UNGPs are the authoritative global standard on business and human rights, unanimously endorsed by the United Nations Human Rights Council in 2011. We have created a checklist for your company to use in order to build or align your program with the UNGP.

In order for your company to demonstrate improvements or progress on your social / human rights strategy (as identified by your company in the previous question) it is important to set baselines and targets.

About Baselines

Baseline setting is important in order to identify where you are now as it relates to a specific topic and/or area of focus. It also serves as the starting or reference point used to measure progress and/or improvement of any activities taken, which is why it should be conducted before any activity begins. Some companies find it valuable to conduct a baseline prior to establishing a target to help inform the goal-setting process and to help set realistic, stretch targets.

Setting baselines could be done using your own historical data or in the absence of data you could refer to either local law (in the production country) or to the ILO Core Conventions.

Companies are encouraged to monitor their progress on addressing social and human rights risks even without available baseline data.

About Targets

Targets should focus on the outcomes of the risk mitigation and/or remediation of social / human rights risks and impacts. It is acceptable to begin with prioritizing target(s) for the most urgent and salient risks, and then over time to add other targets.

There are two types of targets: quantitative and qualitative.

  • What are the actions you are trying to measure? (These are the quantitative )
  • What change in behavior are you trying to achieve? (These are the qualitative )

Companies are increasingly engaging in collaborative approaches with other stakeholders to address social and human rights risks at a sector-wide level. In these cases, industry-wide collaboration rather than a single company agenda is most effective in addressing systemic social & labor issues.

In this context qualitative indicators may be most appropriate.

For example, a collaborative sector-wide approach that has resulted in a change in legislation or a change in the minimum wage would be best measured by a qualitative indicator when measuring the effectiveness.

Helpful Resources

  • Checklist to align your program with the UN Guiding Principles – explains the steps needed to build a social/human rights program that is aligned with the UN Guiding Principles.
  • Guidance document on setting baselines and targets
  • We encourage you to use the baselines and targets template provided to track and upload your goals, targets, and progress. You may upload that information into here in place of a text description. While we currently do not have industry alignment on common units for reporting on goals, having all companies report in a common format may help us extract themes in the long-term

How this will be verified

Documentation required

  • A list of any standards, industry tools, resources, or documents used to guide the identification of risks, impacts and opportunities. 
  • Copies of documents produced in determination of salient risks, impacts and opportunities. Note: Any documentation should use credible data sources or data that has been verified by an accredited third party.
  • A list of internal and external stakeholders engaged and description of the engagement.

For each selected risk/impact:

  • Copies of documents related to the program — covering the components explained in the technical guidance 
  • A list of internal and external stakeholders engaged, as well as high level description of the engagement
  • A description of the process to establish the set baselines and targets 
  • Explanation of the methodology or the process of how these targets were selected to address the salient risk(s) identified earlier in this assessment 
  • Documentation related to the established baselines, qualitative and/or quantitative targets and a plan (with accountable staff) to track year-over-year (YOY) progress for improvement

Interview questions to ask

  • Please describe the process or methodology that lead to an appropriate understanding of the salient risks, impacts, and opportunities 
  • Please describe the areas of the business operations, supply chain, materials, products, and packaging included in the assessment.
  • Results of the risk assessment:
    • Do the results of the risk analysis coincide with common insights, reports and indices on the production countries, product categories, and the business and purchasing model relevant for the company?
    • Is the content of the internal and external risk description basically the same and are targets and measures from the published content plausible?
    • Is the estimated likelihood of occurrence (based on the assumed effectiveness of the existing mitigation measures and information on specific impacts or on the local context) coherent? 
    • Is the estimated severity (based on scale, scope and irremediable character) coherent?
  • Risk Prioritization:
    • Is the justification that certain sector risks cannot be dealt with through targets (‘explain’) convincing?
    • Is the focus of Prioritization that has been set (and hence the targets that have been defined based on it) on certain countries/supply chain tiers/suppliers/materials coherent in view of the likelihood of occurrence and severity?
  • Are targets and measures:
    • …appropriate to address the severity of the risk and likelihood of its occurrence? 
    • …more comprehensive in high-risk contexts than in low-risk contexts? 
    • …appropriate to the nature of the risk?
    • …appropriate to the size and business model of the company 
    • …based on existing good practices or best available techniques? 
    • …based on the knowledge of local stakeholders and external experts, insofar as the risk requires it?

For each selected risk/impact:

  • Please describe the process for establishing the program. 
  • Please describe the scope and the business activities that are covered, as well as the actions that you are taking to mitigate or improve on the salient risk(s) through this program.
  • Please explain the internal responsibilities and engagement (for example via an organizational chart or job descriptions). 
  • Please describe the process for establishing baselines and target and explain who will be responsible for the actions to be taken and for tracking progress going forward. 

Explanation of the methodology or the process of how these targets were selected to address the salient risk(s) identified earlier in this assessment.

  • Has your company’s social/human rights strategy been reviewed and approved by your senior management/executive team? (Yes/No)
  • Has your company stipulated the expectations of personnel, business partners, and other parties who are responsible for executing the strategy?(Yes/No)
    • Which stakeholders were consulted in identifying the salient social/human rights risk(s), impacts(s), and opportunities for your company’s overall operation? (Checkbox)
    • Internal employees
    • Business partners (suppliers, manufacturers, agents, wholesale companies, retailers) Consumers
    • NGOs
    • Regulators/Policy Makers/Government Bodies
    • Trade Unions/Industry Groups
    • Academic Institutions
    • Other (If Other, please describe)
  • Do you update your strategy based on new information and/or changing circumstances? (Yes/No)
  • Has your company’s social/human rights strategy been communicated internally to all personnel? (Yes/No)
  • Has your company written operational policies and procedures for implementing the strategy?

(Yes/No)

Intent of the question

This question is intended to confirm that the company has a process in place to advance and implement their social/human rights strategy. The aforementioned process is reflected in the embedded policies and procedures within the organization.

Technical Guidance

A company commitment may be a policy, a strategy, a strategic plan, or any other form of a written commitment for improving the management of social / human rights risks.

The steps required to demonstrate that advancing social/human rights is a core focus in your business strategy:

  • Stakeholders have been consulted to identify the salient risk(s), impact(s), and opportunities
  • Company’s social / human rights strategy is approved by the company’s senior management / executive team
  • A process is in place to implement and adjust the strategy based on new information and/or changing circumstances
  • The implementation of the strategy is reflected in the company’s policies and procedures
  • The roles and responsibilities for personnel and business partners to implement the strategy are clearly specified within the company’s policies and procedures and communicated to the relevant parties
  • Company’s social / human rights strategy has been communicated internally to all personnel

A brief explanation on the above steps:

1)    Stakeholders have been consulted to identify the salient risk(s), impact(s), and opportunities

To increase the robustness of the risk assessment process, companies are encouraged to build engagement with the people, businesses, and organizations that are affected by the actions and activities of the company. It is beneficial for your company to engage with these stakeholders (which may include governments, NGOs, and community members) in order to more deeply integrate social/human rights improvement into your local and global context. Consulting stakeholders’ complements (but does not replace) existing internal processes and increases the level of transparency.

2)    Company’s social / human rights strategy is approved by the company’s senior management / executive team

A formal commitment from the leadership is necessary to demonstrate that social/human rights is a core focus in your business strategy. This company commitment may be visible in the form of a policy, a strategy, a strategic plan, or any other form of a written commitment to improving social/human rights.

Making significant changes to your business operations, supply chain, products, materials, and packaging can take many years. Leadership’s adoption of short-, medium-, and long-term targets helps ensure organizational alignment and focus, and increases the likelihood that business decisions align with the efforts to reduce social/human rights impacts.

How to develop a policy? The German Partnership for Sustainable Textiles has developed this helpful resource on “Developing and implementing your own policy”

3)    A process is in place to implement and adjust the strategy based on new information and/or changing circumstances

As situations and conditions in the value chain continuously evolve and change, so should the company’s commitment and strategy be adapted based on new information and/or the changing circumstances that are raised to the organization by stakeholders. The due diligence process should be on-going, proactive and reactive and applied with flexibility — without leading to a “tick the box” approach.

For example:

  1. The circumstances in which the company is operating can shift, for example due to changes in relevant labor laws, increases in migrant labor, shifts in the political landscape, etc.
  2. A company may enter into a new market or environment.
  • A company may receive information on an existing product or additional context that it did not have previously. This new information should be weighed and considered as the company moves forward.

4)    The implementation of the strategy is reflected in the company’s policies and procedures

Embedding policies and procedures is important for ensuring that your organization will use time and resources more efficiently towards achieving your goals as an organization. This practice also provides clear guidance to both management and personnel in order to streamline internal processes, clarify roles and responsibilities, and support consistent decision-making.

5)    The roles and responsibilities for personnel and business partners to implement the strategy are clearly specified within the company’s policies and procedures and communicated to the relevant parties

Setting clear expectations for personnel and business partners is crucial so they know what they are responsible for, what’s expected of them, and what support they can expect from their supervisors, co-workers, or customers. Providing the aforementioned information enables these key stakeholders to execute their work with confidence and excellence towards achieving the organizational goals as articulated in the social/human rights strategy.

6)    Company’s social / human rights strategy has been communicated internally to all personnel

The company’s social/human rights strategy and regular updates on the progress should be shared with all personnel — not merely those directly responsible for implementing the social/human rights strategy within the company.

In doing this, the company ensures all employees are aligned with the organizational goals the strategy is seeking to achieve. Furthermore, it provides an opportunity for all employees to contribute to these efforts by sharing ideas and/or identifying improvement opportunities — even if they are not directly responsible for the implementation of the strategy.

Answer options

  • If answered “yes” to this question, you can demonstrate that you have a company commitment through either a policy, strategy, strategic plan, or any other form of a written commitment to improve on the management of social/human rights risks.
  • If answered “partial yes” to this question, you may not have a written commitment, but you can demonstrate that have you taken actions to commitment to improve on the management of social/human rights risks.
  • If answered “no” to this question, you do not have a company commitment to improve on the management of social/human rights risks.

Helpful Resources

A company-wide social/human rights strategy provides an opportunity to strengthen your company’s business resilience. Having a strategy will enable you to better respond to volatility in the markets related to the supply chain workforce by keeping your company attuned to their environment and agile in your ability to respond. More information can be reviewed through the below industry reports.

How this will be verified

Documentation required

Companies should have one or more of the following: 

  • Company’s social/human rights strategy or commitment thereof from the leadership (senior management/executive team).
  • Relevant policies and procedures to implement the strategy. 
  • Description of the process for updating the strategy based on new information and/or changing circumstances. 
  • Organization chart.
  • Formal inclusion of sustainability-related functions into the organization and/or individual job descriptions.
  • Relevant communication on the social/human rights strategy that has been shared with all personnel (e.g. through email, public URL or posting on the company’s intranet).
  • Supporting documentation of stakeholder consultation.
  • List of stakeholders that were consulted (including their names).
  • Output / input from stakeholder consultation.
  • Event photos or videos of this stakeholder consultation.
  • Examples of how the strategy has been adjusted based on the stakeholder engagement process.

Interview questions to ask:

  • Management can clearly articulate the social / human rights strategy or commitment and how it is integrated into the organization and across the value chain. 
  • Key Employees, responsible for coordinating corporate social responsibility activities.
    for corporate offices and within the value chain, can demonstrate that they understand and are able to explain their roles.
  • Consulted stakeholders understand how their input has been used in the company’s social / human rights strategy.

5.1 If answered yes, please complete the table below:

5.2 How do you ensure employees have the technical competence required to do their job?

5.3 What percentage of employees have environmental sustainability goals formally included in the annual performance review process? (msslemployeepercent)

Intent of the question

This question is intended to confirm who in your company is responsible for advancing social/human rights activities. The first step to demonstrate that advancing social/human rights is a core focus in your business strategy is to have dedicated staff responsible for this within your company.

Technical Guidance

To answer ‘yes’ to this question, companies should have at least 1 member of staff with social/human rights goals embedded into one or more of the following:

  • Companies should have clearly defined roles and responsibilities for any staff responsible for coordinating social/human rights activities at the company.
  • An organizational chart and clear job descriptions is important in keeping employees accountable to their roles.
  • These employees must deal directly with senior management and have defined roles for that purpose.
  • The roles could be either required in their job description or accountabilities or designated by relevant system documents to oversee or coordinate.
  • The time spent on the salient risk (as identified earlier) and the business area (proprietary business operations and supply chain) for these employees should be known and specified as part of their job description.
  • Employees are resourced, through access to a budget, to hire external expertise and/or engage in training to build capacity and competence to effectively carry out their responsibilities.

When completing the table:

  • If you do not wish to share the name(s) of your employee(s) for privacy reasons, please enter “N/A”
  • One full row requires to be completed in order to be considered towards completion percentage

To answer the final sub-question, please consider all company employees when providing the percentage of employees that have environmental sustainability goals formally included in the annual performance review process.

Helpful Resources

How this will be verified

Documentation required

Companies should have one or more of the following:

  • Organization chart.
  • Formal job description or title.
  • The qualifications of responsible staff.
  • Formal inclusion of social / human rights related activities into select job descriptions.
  • Inclusion is reflected in company goals, annual performance targets and review.
  • Use of incentives (financial or otherwise) to encourage behavior that supports
    social/human rights of corporate offices.
  • Regularly updated training for relevant staff on the expectations within their role.
  • Evidence of training and capacity building delivered to the relevant staff.
  • Evidence of internal tools or protocols that include sustainability criteria as part of business-as-usual job functions.
  • Access to industry publications, events, conferences, news, and research to stay up-to-date on sustainability issues in the industry.

Interview questions to ask:

  • Management can clearly articulate the roles and responsibilities of those responsible
    for coordinating activities around social / human rights. 
  • Key employees, responsible for coordinating social / human rights activities can demonstrate that they understand and are able to explain their roles.

Interviews with selected staff to understand how well sustainability goals are embedded within their role, whether there are any tensions with other goals such as commercial targets, and how well resourced or experienced they are in carrying out their responsibilities.

Please complete the table below :

Intent of the question

This question is intended to confirm who is responsible for managing internal social/labor workplace standards within your company. The first step to demonstrate that internal social/labor workplace standards are a core focus in your business strategy is to have dedicated staff responsible for human resources within your company.

Technical Guidance

  • If you do not wish to share the name(s) of your employee(s) for privacy reasons, please enter “N/A”
  • If you answered yes to this question, companies should have at least one employee specifically trained and experienced in social/labor issues with responsibility and/or oversight of the company’s practices in relation to the company employees.
    • Companies should have clearly defined roles and responsibilities for any staff responsible for coordinating and advancing internal social/labor workplace standards.
    • These employees must deal directly with senior management and have defined roles for that purpose.
    • The roles could be either required in their job description or accountabilities or designated by relevant system documents to oversee or coordinate.

Helpful Resource

How this will be verified

Documentation required

  • An organizational chart.
  • Formal job description of employee(s) who are formally responsible for the management and development of employees (also known as Human Resources).
  • Other signals of formal accountability may include: inclusion of human resources related goals/targets into the annual performance review and/or training of one or more members responsible for Human Resources.
  • Proof of responsible staff being provided regular access to
    • Updated training on the expectations within their role.
    • Access to industry publications, events, conferences, news, and research to stay up to date on evolving workplace standards in the industry.

Interview questions to ask:

  • Management can clearly articulate the roles and responsibilities of those responsible for coordinating activities around advancing internal workplace standards.
  • Key employees responsible for coordinating internal human resources activities can demonstrate that they understand and are able to explain their roles

7.1 What is the highest level at which employee accountability is tied to goals in your company’s social/human rights approach or strategy?

  • Corporate Social Responsibility team
  • Human Resources
  • Executive Team
  • Board of Directors

Intent of the question

This question is intended to evaluate the level of integration of environmental sustainability practices within the company. Accountability in the workplace is linked to higher performance, increases in commitment to work, and employee morale.

Examples from companies that have included sustainability as part of their governance structure:

How this will be verified

Documentation required

To answer ‘yes’ to this question, your company should have one or more of the following: 

  • A brief description identifying who is accountable for your company’s social/human rights approach/strategy and their role as part of integrating social/human rights within the organization. 
  • Formal inclusion of social/human rights-related goals into job description, key performance indicators annual performance targets and review 
  • Evidence that supports accountability for social/human rights approach or strategy within individuals and/or teams (This can include organization charts, employee bios).
  • If your company has already answered and published this material in another external document such as a sustainability report, annual report etc. provide the document, link to where it is posted and identify the page number.

8.1 Is the mechanism designed and implemented to meet effectiveness criteria that are legitimate, accessible, predictable, equitable, transparent, rights- compatible, a source of continuous learning, and based on engagement and dialogue? Answer options: Yes/No

8.2 Does your company ensure that retaliation is prohibited, confidentiality is preserved, and there are no negative consequences towards employees who report grievances/complaints? Answer options: Yes/No

8.3 Which stakeholders can make use of this mechanism? (Checkbox)

  • Our own employees
  • Employees of our business partners
  • Local community members
  • Workers
  • Anyone that is affected by our goods, products, or services
  • Other

8.4 Does your company credibly prioritize and address complaints or concerns? (Yes/No)

8.5 What is included in the monitoring of the complaint/how does the grievance mechanism work? Checkbox

  • Number of complaints received
  • % of complaints received broken down by stakeholder type (employee, value chain worker, community member, other, etc.)
  • Categorization of complaints by type and severity
  • Rate of resolution of complaints
  • Parties responsible for investigation and management
  • Other

Please answer the following questions regarding how your company addresses complaints relating to social/human rights management:

8.6 Does your company assess the effectiveness of its system and its outcomes?       (Yes/No)

8.6.1 Please list the social/human rights impacts you have addressed in the last calendar year, describing the action you took to redress/resolve the complaint.

8.6.2 What lessons did your company learn?

8.7 In the last calendar year, were you able to improve the rate of resolution of complaints?  (Yes/No)

8.7.1 Please describe the improvements

Intent of the question

This question is intended to support companies to design and develop a grievance mechanism for any stakeholder who is impacted by the company’s operations and activities, and to facilitate the submission of complaints and/or concerns to the organization. The benefit of having a grievance mechanism is that it allows management to identify and address potential and emerging issues before they escalate.

Technical Guidance

The core purpose of conducting due diligence is to avoid harm from occurring in the company’s proprietary business operations and supply chain. When a company has identified that they have caused or contributed to adverse human rights impacts. They should also provide for, or cooperate in legitimate processes towards, the remediation of these impacts. The mechanism to support companies to come to that understanding, and to receive information on whether they have caused or contributed to adverse human rights impacts, is a grievance mechanism.

Definition of Grievance Mechanism: a formal, legal or non-legal (or ‘judicial/non-judicial’) complaint process that can be used by individuals, workers, communities and/or civil society organizations that are being negatively affected by certain business activities and operations.

Complaints submitted through the grievance mechanism should be material and substantiated and assert that the company has caused or contributed to an impact in its supply chain.

A safe, effective grievance mechanism should be designed according to the eight steps of an effective grievance mechanism (as outlined by the United Nations Guiding Principles on Business and Human Rights (UNGPs).

 

CriteriaDefinition
1. LegitimateEnables trust from the stakeholder groups for whose use they are intended, and being accountable for the fair conduct of grievance processes
2. AccessibleKnown to all stakeholder groups for whose use they are intended, and providing adequate assistance for those who may face barriers to access
3. Predictable

Provides a clear and known procedure with an indicative time frame for each stage, and clarity on the types of process and outcome available and means of monitoring

implementation

4. EquitableSeeks to ensure that aggrieved parties have reasonable access to sources of information, advice and expertise necessary to engage in a grievance process on fair, informed and respectful terms
5. TransparentKeeps parties to a grievance informed about its progress, and providing enough information about the mechanism’s performance to build confidence in its effectiveness and meet any public interest at stake
6. Rights CompatibleEnsures that outcomes and remedies accord with internationally recognized human rights
7. A source of continuous learningDraws on relevant measures to identify lessons for improving the mechanism and preventing future grievances and harms
8. Based on engagement and dialogueConsults the stakeholder groups for whose use they are intended on their design and performance, and focusing on dialogue as the means to address and resolve grievances

Answer Options

  • If you have answered “yes” to this question, your company has implemented all 8 points listed above in the design of your grievance mechanism.
  • If you have answered “partial yes” to this question, your company has implemented some points listed above but not all in the design of your grievance mechanism.
  • If you have answered “no” to this question, your company has not implemented any of the points listed above or does not currently have a grievance mechanism.

Best practices of how a company can receive grievances, concerns, and complaints:

  • Establishing an email or worker hotline to provide an opportunity for workers to raise concerns and/or complaints
  • Establishing a worker feedback system that enables vendor employees to share concerns in a confidential manner. Example : Puma’s collaboration with Microbenefits on the Worker Voice program : Sections of PUMA’s 2018 Sustainability Performance
  • Engagement and dialogue are at the core of an effective operational-level grievance mechanism. An effective grievance mechanism complements other ongoing methods of engagement and dialogue and is not meant to substitute for other efforts such as stakeholder engagement, supplier summits and surveys.

Guidance on sub-question: Does your company credibly prioritize and address complaints or concerns?

 To be able to answer “yes” to this question the company must have:

  • Implemented a formal (documented) grievance mechanism procedure that is aligned with the eight steps of the UNGP as described in the technical guidance.
  • This procedure outlines how the company prioritizes and addresses complaints or concerns that are raised (refer to the example below of such a procedure).
  • Records of complaints and concerns that were raised in the past 12 months including how the company has ensured that the outcomes of grievance processes are in line with international human rights standards (either direct or through mediated dialogue).

Source: Esquel Garments Vietnam

Piloting Principles for Effective Company-Stakeholder Grievance Mechanisms: A Report of Lessons Learned

Helpful Resources

 Understanding Grievance Mechanisms:

Assessing the Effectiveness of Grievance Mechanisms:

Best practices on protecting whistleblowers

How this will be verified

Documentation required

  • Documentation or public links (URL) to the grievance mechanism and procedure that are in place and how it is aligned with the UN Guiding Principles
  • Records of the grievance mechanism from the past 12 months where the company has received and addressed (substantiated) concerns or complaints of impacted stakeholders 
  • Documentation and communication between the company and the impacted stakeholders —from the moment of receiving the concern/complaint to the day of resolution. The latter of which was accepted by both the worker concerned and the company.

Interview questions to ask

  • Are the targets and measures derived from mapping of existing complaints channels along the supply chain (as well as the review of their effectiveness), potential affected parties/users and possible complaints issues?

9.1 Please describe or upload your internal standards

9.2 For which employees do these internal social/human rights & labor workplace standards apply?

  • Offices
  • Distribution Centers
  • Retail Stores
  • Owned Manufacturing Transportation and Logistics
  • Other (If other, please describe)

9.3 Do your internal social/human rights & labor workplace standards align with any of the following resources or standards?

  • Global Reporting Initiative (GRI)
  • ILO Core Conventions
  • OECD Due Diligence Guidance
  • SA8000
  • Engagement with external stakeholders consultation
  • UN Global Compact COP
  • UN Guiding Principles on Business and Human Rights
  • UNGP Reporting Framework
  • Your company’s own program or other internal resources
  • Other

9.4 Are the social/human rights & labor risk areas you’ve identified for your own operations included in any of the following resources or standards codes? (Checkbox)

  • Employee Compensation, in accordance with legal requirements
  • Employee Hours of Work, Time Off, Holidays, in accordance with legal requirements
  • Employee Involvement and Communication
  • Employee Treatment and Development
  • Employee Health and Safety
  • Employee Conduct
  • Company Values and Culture
  • Company Hot Lines and Grievance Procedures
  • HR related items. Example: Performance Improvement Plan procedures (PIPs), Termination procedures
  • Company Code of Ethics and Business Conduct
  • Code of Conduct for manufacturers
  • Other

9.5 Are there risk areas in which your company offers better conditions than those required by local labor law? (Yes/No)

9.5.1 Describe the risk areas and your standards

What is the intent of the question?

This question is intended to ensure the company has established tools that provide a consistent set of rules to manage working conditions, workplace behavior, and contributions the company expects from their employees. Workplace rules and guidelines help protect your business and workers while creating and maintaining a better work environment for all.

Technical Guidance:

This question applies to your company’s own operations and employees. If you answered yes, the company should have:

  • At least one employee who has responsibility for coordinating and advancing internal social/labor workplace standards and/or oversight of the company’s practices in relation to its own employees.
  • One or more of the below tools for employees:
    • Employee Code of Conduct – Outlines a company’s expectations regarding employees behavior towards their colleagues, supervisors, and overall organization.
    • Employee Handbook – An employee handbook that applies to all employees and can be considered as an addition to their employment contracts. It outlines key information of a company’s culture, policies, and procedures. Employers also use the policies in an employee handbook to provide the roadmap to ethical and legal treatment of employees.
    • Internal Code of Ethics and Business Conduct – Outlines a company’s set of rules or standards regarding organizational values, responsibilities, and ethical obligations. The code of conduct provides employees with guidance for handling difficult ethical situations related to the business.

Helpful Resources

How this will be verified

Documentation required

  • Organization chart and job description of responsible staff.
  • Documents related to the internal social/human rights & labor workplace standard(s) which provides guidance to employees on how to manage working conditions at the workplace. Examples of these documents: Employee Code of Conduct, Employee Handbook, Internal Code of Ethics and Business Conduct.

Interview questions to ask:

  • Management can clearly articulate the roles and responsibilities of those responsible
    for coordinating activities around monitoring and advancing internal social/human rights & labor workplace standards.
  • Key employee(s) responsible for coordinating internal management activities can
    demonstrate that they understand and are able to explain their roles.

10.1 How does your company monitor its performance?

  • Self-assessment
  • Internal audit
  • External audit by an independent third-party (If company uses a third-party audit, provide the name of the auditing organization)
  • Confidential employee surveys
  • Confidential employee hotlines
  • Confidential management surveys
  • Senior management oversight committee
  • Other (If other, please describe)

Intent of question

This question intends to confirm the company has a program in place to monitor that employees rights for employment, health & safety, and livelihood are protected.

Technical Guidance

This question applies to your company’s own operations and employees.

The monitoring of social/human rights & labor performance is a continuing process in which organizations endeavor to protect the health, safety, and rights of their employees. Monitoring social & labor performance in the workplace is intended to support part of a larger system to improve labor conditions within the organization.Various studies show that a happier workforce leads to enhanced performance through high efficiency and productivity.

Helpful Resources

How this will be verified

Documentation required

  • Documents and records related to the company’s process for monitoring social/human rights & labor performance for its own employees
  • Description of the roles and responsibilities of the individuals or parties who are part of the monitoring process 
  • Records of non-compliance that have been found within the past 12 months where the company has received and addressed (substantiated) concerns or complaints of impacted employees.

Tooltip: This question applies to your company’s own operations and employees

11.1 Does your company have a whistleblower strategy or policy to ensure that retaliation is prohibited, confidentiality is preserved, and there are no negative consequences towards employees who report grievances/complaints? Answer options: Yes/No

Intent of question

This question is intended to encourage companies to have an internal complaint / grievance mechanism in place so that employees can anonymously raise problems, concerns, and complaints. It is important that employees are treated fairly and receive prompt responses to problems and concerns.

Technical Guidance

The same guidance as question 8 applies to this question.

Helpful Resource:

Same resources listed as part of question 8.

How this will be verified

Documentation required

  • Documentation or public links (URL) to the grievance mechanism and procedures that are in place for employees, which includes the whistleblower strategy and/or policy
  • Records of the grievance mechanism from the past 12 months where the company has received and addressed (substantiated) concerns or complaints of impacted employees
  • Documentation and communication between the organization and the impacted employee(s) from the moment of receiving the concern/complaint to the day of company. The latter of which was deemed acceptable by the employee concerned and the company.

12.1 Please indicate how:

  • Incentivize company employees to engage in local social/human rights service projects and/or investment initiatives
  • Give charitable contributions to social/human rights programs
  • Sponsor community health and well-being programs
  • Share our innovations, tools, or solutions with the wider industry
  • Engage stakeholders (e.g., NGOs, academia, business partners, communities) to understand and address local social/human rights issues together
  • Engage stakeholders (e.g., NGOs, academia, business partners, communities) to understand and address industry-wide social/human rights issues together
  • Engage with local or national governments on social/human rights regulation or management issues
  • Other (If other, please describe)

Intent of the question

This question is intended to encourage companies to:

  1. Drive positive social impact in the communities it operates in through either high-impact employee-led volunteering programs or through giving contributions to charities
  2. Engage and collaborate with the wider industry within relevant local or industry-wide social impact issues. This type of engagement and cross-collaboration is crucial to drive change and address contextual risks and challenges. Contributions to shared solutions by brands, retailers, and manufacturers can: add credibility or influence to processes, provide resources to allow for action, or directly contribute to the knowledge and best practices available in that location.
 

Technical Guidance

Incentivize company employees: Corporate volunteering is when a business creates volunteer experiences for their staff to work outside the office and give back to communities. Employee volunteering programs can allow workers to feel that the work they do is not only contributing to the overall success of the company, but that it is also helping out a charitable cause that is important to them.

Giving charitable contributions to social/human rights programs: Charitable contributions either in time or money are one way that companies, owners, and employees can give back to the community. Choose an organization that matches the social impact goals and values your company has set.

Note: Charity Navigator is the largest charity evaluator in the U.S. The organization helps guide intelligent giving by evaluating the Financial Health, Accountability and Transparency of over 9,000 charities and provides basic data on the rest of the 1.8 million U.S. nonprofits. https://www.charitynavigator.org

At the time of writing this guidance no European equivalent to Charity Navigator was found.

Examples of organizations with social impact programs that accept charitable contributions: Ashoka, Terre des Homes, Save the Children.

Share innovations, tools, or solutions with the wider industry: Research and development is an important means of bringing new solutions to market and help contributing to a larger shift in the industry. In particular, Small and Medium- sized Enterprises (SMEs) are encouraged to take part in multi-stakeholder initiatives that drive collective impact to bring programs to scale.

Below are some examples of initiatives that companies can participate in:

Engage stakeholders to address local and/or industry wide social/human rights issues together:

Examples of initiatives:

Important Note: The above is not an exhaustive list of initiatives. There are many other opportunities and organizations that companies can reach out to. The Sustainable Apparel Coalition intends to update the Higg Brand & Retail Module – How to Higg Guide on an annual basis with user feedback.

Engage with local or national governments on social/human rights regulation or management issues:

Helpful Resource

How this will be verified

Documentation required

  • Provide a description related to any item you have checked
  • Include internal and/or external information documentation or promotional material for every item checked

13.1 What information is shared? Checkbox

  • Background information describing your company’s risks, impacts, and opportunities
  • Due diligence management system
  • Strategies and action plans for addressing your risks, impacts, and opportunities
  • Policies and procedures
  • Progress, remediation, and improvements made
  • Metrics and key performance indicators
  • Stakeholder engagement approach
  • Government policy engagement efforts and outcomes
  • Other (If Other, please describe)

13.2 How are you sharing this information? Checkbox

  • Our company follows internationally recognized standards (e.g., UNGP, GRI, etc)
  • Our company publishes this information at least annually
  • Our company has our information externally reviewed or verified by a qualified verification body
  • Other (If Other, please describe)
    • If applicable, please provide the relevant URLs:

Intent of the question

It is important for companies to provide internal and external stakeholders with visibility to their sustainability efforts for a variety of reasons. Firstly, it fosters transparency and provides a way for employees, business partners, and customers who are interested to understand what companies are doing to advance sustainability within their organization. Secondly, it promotes accountability among companies, since it provides stakeholders with an opportunity to monitor your efforts.

Technical Guidance

This information, shared with internal and external stakeholders, can be communicated through: position papers where relevant, the company’s corporate website, sustainability reports, Corporate Social Responsibility reports, Integrated reports, or an equivalent thereof.

Examples of internationally recognized standards are: Global Reporting Initiative (GRI) and AA1000.

Helpful Resources:

How this will be verified

Documentation required

  • High-level, publicly- shared, description of the internal process to consolidate and gather information about its social/human rights risk management
  • The information has been shared with internal and external stakeholders through public URLs or other means 

Interview questions to ask:

  • Please describe the process of how your company provides regular information updates to your customers and/or the public on your social/human rights risk management

Describe the types of update(s) provided by your company and where these can be accessed by the general public

 

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