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Process requirements 5

Here we explain what is meant by monitoring the measures to prevent and mitigate adverse impacts. We describe what we mean by following-up established action plans, by consulting in a meaningful way with rights-holders or their representatives, and by addressing deviations.

Excerpt from the contract terms

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Supplier shall regularly monitor the measures to prevent and mitigate actual and potential adverse impacts, by

a) following-up established action plans for its own operations and for risk suppliers, with a particular focus on the most significant risks identified,

b) consulting in a meaningful way with rights-holders affected by its own operations, or their representatives, and to the extent possible in the supply chains of risk suppliers and

c) addressing deviations.

Monitoring is needed to evaluate the implementation and effectiveness of the supplier’s measures to prevent and mitigate adverse impacts in its own operations and in the supply chains. The most commonly used monitoring method is periodic internal or external reviews or audits, but there are also other methods such as origin verification, open data or government databases.

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Origin verification is used to verify where a particular raw material comes from. The method is based on analyses of isotopes and is particularly useful for raw materials such as meat, cotton and wood.

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Open data can be everything from posts on social media and other platforms, where rights-holders write about the risks they are exposed to at work or in society, to public documents published by authorities. The analyses of open data can be done manually or with the help of artificial intelligence.

 

When it comes to government databases, two are particularly useful:

  • US Customs and Border Protection issues decisions on so-called Withhold Release Orders, i.e. import bans, when they believe there is sufficient evidence of forced labor in the production of a certain product. The decisions are compiled on their website.

 

U.S. Customs and Border Protection – Withhold Release Orders 

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  • The US Securities and Exchange Commission's database contains information on smelters and refiners for the 3TG (tin, tungsten, tantalum and gold) supply chains for US listed companies. These companies are required to report on their work to reduce risks in the supply chains of these minerals, under the Dodd-Frank Act.

​U.S. Securities and Exchange Commission 

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a) Follow up action plans

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You shall follow up established action plans for your own operations and for risk suppliers, with a particular focus on the most significant risks that have been identified. 

  • How to carry out a risk analysis
    Step 1: Mapping the supply chain The first step in a risk analysis consists of mapping the supply chain to find out its structure. This includes identifying in which countries the work is carried out, and if possible also in which regions. This is particularly relevant if the work is carried out in any region known to have high risks. Within certain industries such as food, textiles and IT there is a lot of information. For other industries such as pharmaceuticals, however, transparency is low. To obtain this information, you can ask the category manager, the category councils, ask questions of suppliers, find out import data, read audit reports and market analyzes for specific industries. It is also important to identify what type of work is carried out and what type of actors in the supply chain that performs it. Is it, for example, an industry characterized by low wages and health-hazardous processes? Does the workforce consist of migrant workers or seasonal workers? Is the supply chain complex with many subcontractors and a lack of transparency? This type of information is important as both geographical risks, industry risks and product risks need to be taken into account. Step 2: Gather information from credible and independent sources Once you have mapped the origin and the supply chain, the next step is to gather information about the situation of human rights, workers' rights, the environment and business ethics in the relevant countries where the work is carried out, that is, both for final manufacturing, component manufacturing and raw materials. For this you need to turn to credible and independent sources such as international organizations, authorities, voluntary and civil society organizations and global trade unions. Sources Step 3: Identify and assess negative impacts The last step involves assessing the actual and potential negative impact the supply chain is associated with, based on the information that has been compiled in steps 1 and 2. This is to be able to determine which concrete measures need to be taken to manage the risks. Often several risks have been identified and to prioritize them you need to make a seriousness assessment. The most significant risks are prioritized based on probability and seriousness ( read more under point d in process requirement 2 )

Suggested verifications​

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  • Process document(s) which describe(s) the monitoring.

  • Reports from internal or third-party reviews.

  • Action plans with completed measures.

  • Supplier self-assessments, for sample products.

  • Reports from on-site visits or inspections, for sample products.

  • Reports from multi-stakeholder initiatives, for sample products.

  • Origin verification, open data, government databases etc.  

b) Consult with rights-holders

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Suppliers shall consult in a meaningful way with rights-holders affected by its own operations, or their representatives, and to the extent possible in the supply chains of risk suppliers.

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Suppliers need to understand the concerns of those who may be affected by adverse impact in their own operations and in their supply chains. Nevertheless, the requirement for meaningful consultations only exists in relation to rights-holders affected by the supplier’s own operations. This means that these consultations, with rights-holders or their representatives, shall be characterized by two-way communication, the good faith of the parties, responsiveness and ongoingness. In this lies a preparedness on behalf of the supplier to address adverse impacts it causes or contributes to, and to follow-through on the implementation of agreed commitments. 

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Consultations in the supply chains of risk suppliers are only required to the extent possible. Audits usually take into account the views of rights-holders, but the worker interviews rarely meet the requirement for meaningful consultations. This is one reason the requirement for consultations is not as strict regarding the supply chains of risk suppliers. It may also be difficult for SMEs to interview workers on their own in faraway places.

Consulting with rights-holders and retrieving information 

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Suggested verifications​

  • Process document(s) which describe(s) the consultations with rights-holders in the follow-up of action plans for the own operations, and how these meet the requirement of “meaningful” consultations.  

  • Process document(s) which describe(s) the consultations with rights-holders in the follow-up of action plans for risk suppliers.

  • Meeting minutes from social dialogues, hearings and other proceedings, for sample products.

  • Results from worker voice programs and/or surveys, for sample products.

  • Audit reports where the consultations are described, for sample products.

c) Addressing deviations

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You must address deviations.

 

The purpose of requiring suppliers to address deviations is to ensure that they have processes in place for deviation management, regardless of whether they have caused, contributed to or are linked to adverse impact.

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All deviations from the commitments and the due diligence process shall be addressed. Severe deviations should also be escalated to the supplier’s general deviation management system. This in order to ensure that they are addressed at the highest levels of management.

Suggested verifications​

  • Process document(s) which describe(s) the deviation management.

  • Screenshots or printouts of deviation management systems.

  • Action plans with completed measures.

  • Meeting minutes where deviations have been addressed.

Templates for process requirements 5 (in Swedish only)

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