Voluntary Social Compliance is Missing the Mark

🌱 What general guidance is there for companies?

The UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct provide companies with guidance on how to implement human rights due diligence throughout their supply chains and global operations. Despite being non-binding, both documents generally enjoy quite broad acceptance. This alone, however, has not been enough to prevent larger human rights issues from arising in corporations.

🌱 What issues are there with human rights due diligence?

For example, the Business & Human Rights Resource Centre and Amnesty International USA have said that “leading venture capital (VC) firms are failing in their responsibility to respect human rights”. Their research shows that many “[l]eading VC firms have not implemented basic human rights due diligence processes to ensure the companies and technologies they fund are rights-respecting, as mandated by the UN Guiding Principles on Business and Human Rights”.[i]

🌱 What issues are there with social audits?

Over the past two decades, audits have been used as evidence by companies “that they have eliminated abuses in their supply chains”. Social compliance audits are an $80 billion global industry. Yet, an analysis of 40 000 audits by the Cornell professor, Sarosh Kuruvilla, in 2021 “found that nearly half had relied on forged or dubious documents”. Moreover, a recent New York Times “review of confidential audits conducted by several large firms shows that they have consistently missed child labor”. According to the New York Times, “[c]hildren were overlooked by auditors who were moving quickly, leaving early or simply not sent to the part of the supply chain where minors were working”. A key problem is that “[a]uditors typically start their inspections in the morning and stay for about seven hours, even at 3,000-person factories that operate around the clock”. Consequently, the “late afternoon and night shifts, where child labor violations most often occur, are almost never seen”.[ii]

🌱 Why is collaboration important?

If we want the energy transition to be just, local communities, civil society, government, and the private sector must collaborate. We need effective participation of all key stakeholders and solid due diligence by investors and corporate actors. The risks to human rights must be continuously assessed, monitored, and addressed throughout all relevant supply chains. We will also need to address issues that arise in the context of energy justice, as well as more broadly in climate and environmental justice. Ultimately, we will also need to shift over to a circular economy.[iii]

[i] https://www.business-humanrights.org/en/from-us/briefings/silicon-shadows-venture-capital-human-rights-and-the-lack-of-due-diligence/

[ii] https://www.nytimes.com/2023/12/28/us/migrant-child-labor-audits.html

[iii] https://amp-theguardian-com.cdn.ampproject.org/c/s/amp.theguardian.com/environment/2022/nov/29/evidence-grows-of-forced-labour-and-slavery-in-production-of-solar-panels-wind-turbines; https://gizmodo.com/over-half-the-worlds-energy-transition-minerals-are-on-1849865104; https://www.transportenvironment.org/discover/how-europe-can-improve-the-way-global-extractive-companies-do-business/