Strategically align the company

How human rights, the environment and economic viability are interrelated

Every business activity of a company can have an impact on people’s lives and on the environment. This applies to processes within the company itself, but also along the entire value chain. Within the framework of so-called corporate due diligence, companies systematically and at an early stage identify potential adverse impacts on affected stakeholders, implement countermeasures and effectively address possible violations. Legislators, major customers, investors and other stakeholders expect companies to implement five core elements of corporate due diligence:

• Adopt a policy statement on respecting human rights
• Conduct a risk analysis
• Implement measures to prevent risks and review their effectiveness
• Report publicly on a regular basis
• Provide a complaints mechanism

The benefit for companies: this internationally recognised framework helps maintain competitiveness, prevent risks such as reputational damage, production disruptions and quality deficiencies, and avoid the associated unpredictable long-term costs.

Reference documents

• UN Guiding Principles on Business and Human Rights
• German Federal Government, National Action Plan on Business and Human Rights (NAP)
• OECD Guidelines for Multinational Entreprises

Start the corporate due diligence process pragmatically

• Check what knowledge already exists within your company
• Visualise the relevant parts of your value chain

Focus on the relevant areas of the value chain

Your company’s business activities can impact people and the environment at different points along the value chain. You should therefore consider the following areas:

Structure and visualise the value chain

For your analysis, focus on those sub-areas that you consider particularly relevant and risky —especially if your value chain is complex or you have a broad product portfolio.

Manufacturing companies typically begin by focusing on the upstream supply chain, i.e. the extraction of raw materials, their transport and processing into intermediate and component products (sub-suppliers), as well as the activities of direct suppliers.

Service companies should pay particular attention to the downstream value chain—for example, financial service providers by considering investment decisions, or IT service providers by assessing potential misuse (e.g. through spyware).

Visualise your results, your core processes, key supply chain stages, suppliers, processes and production sites. This visualisation forms the basis for the risk analysis.

Implementation support: visualisation of your supply chain; online tool of the Bavarian State Office for the Environment: Sustainability Management for SMEs – Sustainable supply chain. Process steps and starter kit (in German only, PDF download available in English).

Further information: The CSR Risk Check provides guidance

Use the introductory online tool “CSR Risk Check” to familiarize yourself with potential environmental and human rights risks along your value chain.

The “CSR Risk Check” from the Helpdesk Business & Human Rights (in cooperation with MVO and UPJ) is a good source for the initial identification of environmental and human rights risks. It is possible to filter by product, raw material and service and / or country and receive immediate information on risks and recommendations tailored to them.
 

CSR Risk Check

 

Inform top management at an early stage about the requirements for the company, the risks involved and the necessary activities. This forms the basis for securing top management support and for obtaining approval of financial and human resources.

Template for structured information for top management

Convince executive management, the supervisory board and shareholders of the importance of human rights and environmental protection along the entire value chain for your company. Prepare the following information:

Situation for your company – Requirements

• Overview of relevant laws and regulations
• Customer requirements: specific requests such as questionnaires, codes of conduct to be signed, etc.
• Requirements from financial institutions and investors: requests for reports, key figures, risk management
• Overview of particularly relevant potential risks in your own business operations, in the supply chain and in the downstream value chain (e.g. CSR Risk Check, specific incidents or complaints)
• Business case:
  Practical guidance: Business and humand rights: Key arguments & basics
  UN Global Compact Network Germany: The business case for social sustainability
  Council of Europe: Human rights and competitiveness. Reframing the business case for human rights

Status quo in your company – Current level of implementation

Use the initial results of your status quo analysis (see 1.1). Report on key topics, stakeholders involved and challenges.

Priorities & implementation plan – Approval by top management:

• Propose initial activities 
• Outline required resources
• Address where support is needed
• Obtain a formal mandate from top management

Start the exchange in your company

• Decide how oversight and coordination as well as operational implementation should be organised (see 3.2 Embedding the topic within the company)
• Consider whether responsibility should initially be assigned to a single person or driven forward by several individuals from different departments.
• Decide which departments need to be involved. Design this process in a practical and pragmatic way.

The policy statement serves as an important guide for your company’s actions. It demonstrates to employees and the public how your organisation implements environmental protection and respect for human rights. The starting point is the specific issues and challenges relevant to your company.

Review existing company policies

Companies rarely start from scratch. Check whether existing policies within your organisation already address human rights and environmental aspects, such as:

• Codes of conduct
• Mission statements and corporate values
• Compliance policies, e.g. anti-corruption measures
• Occupational health and safety policies
• Environmental policies

You can build on existing content and wording when drafting your policy statement. In some cases, one of your current documents may even serve as a foundation. It is essential to ensure that the content and objectives of your corporate policies and your policy statement are consistent and not contradictory.

For support, please feel free to contact the Helpdesk Business & Human Rights.

Drafting a policy statement – Formal and substantive requirements

Required elements of a policy statement:

• A clear commitment by the company to respect human rights, with reference to internationally recognised human rights standards and reference documents
• A description of the risks to people and the environment arising from the company’s business activities
• A description of the procedures by which the company fulfils its human rights and environmental due diligence obligations
• A formulation of expectations directed at employees, suppliers, business partners and customers
• A concise description of measures, implementation timelines and responsibilities
• Provision for continuous improvement – for example with regard to risk analysis (see 2.1 Identifying potential risks)
• Formal adoption of the publicly available policy statement by top management

Involve internal stakeholders: within the company, engage those who will later be (co-)responsible for implementing the corporate principles:

• Executive management
• Specialists and managers responsible for relevant business relationships or activities along the value chain
• Works council or other employee representative bodies

Consider external stakeholders: wherever possible, involve actors outside the company as well.

These may include, for example, trade unions, NGOs or local communities. This is particularly advisable if the revised corporate principles directly address these groups or if your business activities have a direct impact on them. Assess whether dialogue via an industry initiative is possible.

Communicating corporate principles internally and externally

The policy statement should, above all, reach those who are expected to implement its content. This includes employees within your own company, as well as both direct and indirect suppliers and customers.

At the same time, the principles should be communicated to stakeholders with a direct interest in their implementation. These may include, for example, potentially affected communities, investors, consumers and civil society actors.

Actively promote compliance with the principles and, as a final step, select appropriate communication channels for your target groups (see also practical guidance "Target group-oriented communication").