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3
„Taking on responsibility“

Selecting and implementing measures

 Core element 3 of the NAP / Supply Chain Due Diligence Act

In the National Action Plan on Business and Human Rights (NAP), the German government formulates its expectations for companies to respect corporate due diligence along the value chain. This is defined in five core elements (in German only):

  1. a human rights policy statement
  2. procedures for the identification of actual or potential adverse impact on human rights
  3. measures to ward off potentially adverse impacts and review of the effectiveness of these measures
  4. reporting
  5. a grievance mechanism
Starting point
Starting point: What are the requirements?
  • Use the results of your risk analysis as a basis for aligning existing processes/measures, creating an action plan and implementing risk-based measures
3.1

Compare existing processes/measures

reading time approx. 4 min

Usually your company will have already started to manage environmental and human rights risks through environmental management systems or training concepts for suppliers. Determine which processes and measures you can use to further develop the due diligence process.

Basic understanding: What to pay attention to?

Jump to implementation

Involving colleagues

To determine whether adequate processes and measures to avoid or reduce the identified risks already exist (see phase 2 Identify and evaluate risks), involving colleagues is of great importance. Use the following guiding questions:

  • What measures should be taken to manage the identified risks?
  • Which departments have processes and measures in place to record and address environmental and human rights risks identified in previous steps?
  • Which existing processes and measures can be used?
  • Are there any indications on how well processes and measures are working that also allow for identifying weak points?
  • Which measures should be taken to manage the identified risks?
  • Which risks are not yet addressed and covered by measures?

Continue the exchange with colleagues with whom you started the risk analysis. In this way, you create an awareness of environmental management, social responsibility and appropriate working conditions and raise awareness for others concerning the link between risks and measures. Ideally, you are already familiar with the environmental and human rights risks identified in your company. Based on this, you can communicate the list of priority environmental and human rights risks drawn up in phase 2.

 

Implementation: How to proceed?

Get an overview of relevant company areas and identify possible points of contact:
  • As a first step, get an overview of existing processes and measures in order to see which data your company has already recorded, and which activities are being implemented.
  • Use the existing knowledge and information to find suitable points of contact. For example, the HR department will already deal with employee rights or temporary and contract workers; whereas the legal department works on compliance with corporate values. The purchasing department probably already controls the dealings with suppliers and works with codes of conduct and supplier evaluation systems if necessary.
Hint: Overview of selected corporate areas and sustainability issues

You should record all areas of the company that (most likely) need to be involved in order to implement risk-related measures. The Human Rights Due Diligence Information Portal of the Global Compact Network Germany has a list of corporate divisions and the issues assigned to them, which can be used for a comparison. You can supplement these if necessary.

The guideline "5 steps to manage the human rights impacts of your company" by the DGCN (p. 24 ff) helps to get an overview of possible gaps in existing processes.

The Helpdesk Business & Human Rights can advise you on how to identify the relevant areas of your company.

Evaluate existing approaches together with other departments:
  • Start by evaluating existing documents such as company guidelines/mission statements, codes of conduct, employee surveys, supplier codes of conduct, audit results, certificates or management system documentation.
  • You should proceed as systematically as possible in order to analyse the current situation to identify gaps.
  • One possibility is to work with colleagues from the respective company divisions to determine which sustainability issues are related to which division. In addition, this approach enables you to understand which processes and measures already exist and are (or can be) used to address environmental and human rights risks. Based on this, you can identify gaps and need for action.
  • Document your results. This is the basis for internal and external communication.
    Target group-oriented communication
Supplier Code of Conduct

With a supplier code of conduct, the company formulates its expectations, e.g. towards suppliers. You can use templates as a guide when developing your own codes of conduct. The Bavarian Chambers of Commerce and Industry have developed a sample text for a supplier code of conduct (in German only), which you can use as a guide or comparison.

Implementation support: Systematic analysis of the current situation and gaps (excerpt)
Implementation support: Systematic analysis of the current situation and gaps (excerpt)
Corporate division Sustainability issue Existing measures Gaps Need for action
• Purchasing, food retailer • Working conditions on plantations • Purchase of certified products
• Employee training
• Code of conduct does not cover the subject of “working conditions”
• The direct supplier does not deal with the issue


• Revision of the code of conduct
• Training of direct suppliers
• Participation in industry initiative


• Human resources department (automotive supplier) • Discrimination against women • Works council deals with the topic
• Embedded in the corporate mission statement
• Lack of grievance mechanisms within the company
• The direct supplier does not offer any training on the subject

• Survey among our own employees on questions about discrimination/equal opportunities
• Establishment of a grievance mechanism
• Training for direct suppliers

Based on:
Online-Tool | Global Compact Network Germany | Human Rights Due Diligence Information Portal | click here. (in German only)

As a rule, the gaps result in a need for action for both internal and external measures. You may then determine cases in which further information should be obtained (e.g. via internal surveys) in order to understand the current situation. The picture is not immediately clear in all cases. These activities are also important in moving forward towards sustainable supply chain management.

The Helpdesk Business & Human Rights can advise you on the development or revision of your supplier code.

3.2

Embed the topic in your company

reading time approx. 4 min

For the due diligence processes to become a core topic of your company, you should clearly define internal areas of responsibility and create the prerequisites for coordination and operational implementation of the topic.

Basic understanding: What to pay attention to?

Jump to implementation

Hint: Include management and communicate corporate culture

In this step of the Due Diligence Compass, make sure to communicate that the adaptation of existing processes and measures is a critical, obligatory step and part of the (new) corporate culture. Discuss this with management.
Business & human rights - An introduction

Embed due diligence vertically: Supervision and coordination

Management should oversee the implementation of environmental and human rights due diligence. Especially in smaller companies, it is an advantage if management can communicate the new topic in a values-based manner.

Coordination can be the responsibility of an expert, a team or a department. This can be particularly useful when starting out on the topic, so that your employees do not lose their bearings and have clearly defined tasks and goals communicated through central management.

Alternatively, the responsibility can lie with a cross-departmental team consisting of representatives from different departments that deal with the value chain. Smaller companies that cannot create a specific position for this role might find this approach useful.

 

Embed due diligence horizontally: Operational implementation

In order to ensure effective implementation of human rights due diligence, the relevant corporate areas must be included in the implementation, particularly with regards to risk analysis and the implementation of measures. The responsibility for implementation should be transferred to the relevant departments.

The company's purchasing department offers a good starting point for operational implementation. This department usually selects and assesses suppliers.

Your company should use existing informal communication channels to strengthen the issue within the company. A direct communication channel also enables employees to communicate implementation challenges they face.

One important success factor for implementation is employee motivation. This can be achieved for example via the adjustment of remuneration and incentive systems.

 

Hint: The Helpdesk Business & Human Rights can help embed a due diligence process in your company.

Implementation: How to proceed?

Provide resources
  • Make sure that enough resources are available for coordination and implementation.
  • Avoid making employees responsible for sustainable supply chain management without the necessary resources.
Create incentives
  • Existing remuneration and incentive systems should be expanded to also include sustainability aspects.
  • Existing systems should not provide incentives for wrongdoing. For example, procurement staff may not receive a bonus when suppliers meet tight deadlines to produce products faster because such labour practices may push  in suppliers towards  excessive or unpaid overtime.
Inform and empower employees
  • If internal resources and knowledge are available, the qualifications can be developed and conveyed internally. Employees need training on a regular basis to acquire and further develop knowledge on supply chain-related sustainability issues.
  • External options can be helpful for example for highly specific issues such as human rights due diligence.
Hint: External training options

The Helpdesk Business & Human Rights offers free of charge human rights trainings for companies and their suppliers as well as supports companies in implementing their own training activities. For further information, please contact the Helpdesk Business & Human Rights.

You can find an overview of training courses and other events on the subject of business and human rights here (in German only).

The Global Compact Local Networks offers seminars and other training measures on various topics related to human rights due diligence and sustainable supply chain management. You can find an overview of international activities here. The event calendar of the Global Compact Network Germany can be found here.

You can also contact chambers of industry and commerce in your region and ask about training.

Hint: Dealing with conflicting goals and dilemmas
Possible conflicting goals

When corporate due diligence processes are being integrated into the overarching corporate goals, this can create conflict with established objectives. This is especially true in purchasing, where the criterion “sustainability” can conflict with the classic criteria “price”, “delivery time” and “quality”.

For example, if sustainably manufactured materials are not available in sufficient quantity or quality or the purchase price is higher. There can also be negative effects on human rights if, due to a short-term change request by your company and the resulting need for adjustments to a preliminary product, there are (temporarily) longer working hours or even working time violations among supplier employees.
Supplier Review

Possible solutions

There is no predetermined solution for how to deal with this or other conflicting goals and dilemmas. One way to find solutions is to establish orderly procedures. For example, you can establish a committee of representatives from various corporate areas to organise and openly discuss conflicting goals. The committee can also document dilemma situations and potential solutions and make them accessible to employees (e.g. via the intranet) so that they can function as guidelines and templates in similar cases.

Hint: The website "Human Rights and Business Dilemmas Forum" of the United Nations Global Compact offers an overview of potentially conflicting goals, dilemma situations and possible solutions.

For practical tips, (e.g. to raise the awareness of sustainable supply chain management in purchasing), see the brochure "Sustainable Supply Chain Management in Practice”, which was created with support from the Federal Environment Ministry (in German only).

3.3

Determine the connection to risks

reading time approx. 5 min

Before developing concrete measures, it is helpful to look at your company's connection to potential and actual negative environmental and human rights impacts. This connection determines the responsibility of the company and its options for action.

Basic understanding: What to pay attention to?

Jump to implementation

Based on the risk analysis, your company should develop its own measures or use its leverage to avoid negative effects along the value chain (phase 5).

Avoid potential effects

Potential negative effects on human rights and/or the environment are risks, which can be prevented by taking appropriate action. Measures to avoid potential negative effects are therefore about forward-looking action with the aim of preventing negative effects from occurring in the first place.

Suitable measures can include training of your own employees or training of suppliers; or it can include strengthening sustainability criteria in purchasing in relation to the procurement criteria of price, delivery time and quality.

Remedy for actual effects

If you find out that your company has violated or contributed to the violation of the human rights of supplier employees or other groups of people through your business relationships, you must eliminate or reduce these negative effects promptly and effectively. In addition, you must also consider the question of remedy to those affected. Further information on remedy will be discussed in phase 5.

Assign impact to own business activity: causation, contribution, or connection?

Depending on your contribution to the negative impact (see cause and contribution in the table below), you can respond by adapting your business practices or using leverage to change the practices of a third party (see contribution and connection in the table below).

Connecting sustainability impacts to your business activities helps you develop targeted, appropriate measures for identified environmental and human rights risks.

Making these connections is not about assigning blame to your company.  Rather, the analysis helps you assign the identified environmental and human rights risks to the different stages of your value chain, which in turn determines your scope of action and your ability to have influence.

Figure: Modes of involvement

Baded on:
Study | Shift, UN Global Compact Netherlands, Oxfam | Doing business with respect for human rights: a guidance tool for companies | p. 64-65 | Click here.

Cause of adverse sustainability impacts

Definition: In general, a company causes an adverse impact when its own activities alone are enough to produce that impact.

Example:

  • The company does not adhere to safety precautions in its own factories, which is a cause for workers seriously injuring themselves while working on machines
  • The company discriminates against women in its human resource policy.
  • The company does not abide by the limit for drinking water at their production site. This restricts access to clean drinking water for the neighbouring communities.

Necessary measures:

  • The company ceases or avoids those activities that cause the adverse impact.
  • The company makes amends.
Contribution towards adverse sustainability impacts

Definition: A company contributes to an adverse impact if the company's activities lead third parties to cause the adverse impact or the activities help adverse impacts occur.

Examples:

  • The company repeatedly changes product requirements for suppliers without adjusting production dates and remuneration. The supplier feels pressured to violate employment contracts and standards in order to meet the requirements.
  • Several of the company's own suppliers in an area discharge harmful sewage into a river. Each discharge is below the legal limit, but together they cause the water to be so polluted that neighbouring communities can no longer use it.
    Supplier Review

Necessary Measures:

  • The company uses its influence on others to try to limit or avoid the negative effects.
  • The company should take steps to ensure that it provides remedies for the actual impacts that occurred.
Linkage to adverse sustainability impacts

Definition: A company is linked to negative effects through a business relationship. The connection is not based on a contractual relationship with another company, but through the company's activities, products or services. This concerns, for example, human rights violations deeper in the supply chain, where there isn’t a direct business relationship.

Examples:

  • The company provides financial loans to an international company that is displacing indigenous people due to an infrastructure project.
  • The company’s exported agricultural machines are operated by children. This leads to serious violations of children's rights.
  • The company manufactures electronic products. Further down in the supply chain, the health and safety of workers is not adequately guaranteed when the minerals are mined.

Necessary Measures

  • The company tries to use its influence to prevent the negative effects from continuing or repeating.
  • According to the UN Guiding Principles, the company is not responsible for repairing the damage – although it can choose to do so for other reasons.

Hint: The Helpdesk Business & Human Rights can advise you on how to identify possible starting points and leverage for dealing with negative effects on human rights.

Implementation: How to proceed?

Use the results of your risk analysis
  • Note which risks you have prioritised with high relevance.
  • Check which negative effects on individuals or the environment lead to irreparable damage if countermeasures are delayed.
  • At the beginning of your engagement with environmental and human rights risks in the value chain, focus on the most salient issues.
  • At the same time, keep in mind that over time you will also address lower-priority environmental and human rights risks.
  • Check which (prioritised) negative effects can be eliminated quickly and with little effort (“quick wins”)

The Learning System

Connection between your company and sustainability impacts
  • Use the table above to identify what link your company has to the respective negative impact.
  • This will help you to work out suitable measures in the next step and develop an action plan.
Implementation support: Determine the connection between your company and sustainability impacts

You should approach your company's connection to sustainability impacts pragmatically. In practice, it is often impossible to isolate the different impacts, as they are related. More important than the classification is that you get started and implement measures that improve the situation for (potentially) affected persons and the environment.

The Human Rights Impact Assessment Guidance and Toolbox (Phase 3) from the Danish Institute for Human Rights includes examples to help the classification process.

3.4

Create and implement an action plan

reading time approx. 4 min

Get an overview of possible measures to determine which measures your company can use to optimise its business activities and value chain from a sustainability perspective. The goal is to implement this action plan.

Basic understanding: What to pay attention to?

Jump to implementation

There are a variety of possible actions your company can take. In general, only the combination of several measures over a longer period of time has a major effect.

The following questions can help you make the initial decisions:

 

Which value chain or which actors should be addressed?

Measures can affect regulations and structures in your company, your products or services, your investment activities, or your direct or indirect suppliers.

 

Which measures effectively address the (potential) negative effects?

Possible measures include the adaptation of processes; the empowering and informing of employees or the dialogue with (potentially) affected persons; the work with other companies or the structural change in the value chain.

Implementation: How to proceed?

Getting an overview of potential solutions

Determine which measures you want to start with. There are three ways to get started:

1. Measures in your company for in-depth knowledge building:

  • Particularly in smaller companies with a more informal corporate culture, it makes sense to look inward for initial measures and to build up knowledge on the topic. 
  • Check whether an in-depth risk analysis can be a useful first step here. In terms of methodology, you can conduct a risk analysis in accordance with, for example, the Human Rights Impact Assessment.
Hint: Ideas for taking action

When developing measures, it makes sense to seek contact with industry associations, sector and multi-stakeholder initiatives and other relevant networks. Take advantage of the exchange with other companies, association representatives and civil societies to receive practical tips for taking action. The Helpdesk Business & Human Rights can advise you.
Interview Guide Civil Society
Supplier Review
Target Group-Oriented Communication

Social and environmental labels, which generally serve as evidence of sustainability, can also be understood as measures. More information on this is available in the "Sustainability Compass". 

The publications "5 Steps Towards Managing the Human Rights Impacts of Your Business" (page 33 ff.; in German Only) and "Sustainable Supply Chain Management in Practice" (page 11 ff.; in German only) offer example measures. The DGCN's information portal mr-sorgfalt.de contains examples from companies and a webinar to develop measures to mitigate/avoid human rights risks.

You can also have a look at sustainability reports from companies. In many cases you will find examples of concrete measures there. The “Ranking of Sustainability Reports” from IÖW and future can help here. 

Further information on leverage is available in the guide "Doing Business with Respect for Human Rights".

2. Measures in your company to raise awareness and empower Employees:

  • An important step is to question habits that prevent more sustainability (“We have always done it this way”).
  • Check whether training courses exist for employees that could include and create awareness about the issues.
  • Determine whether you first want to improve the information situation for the topic and set up media monitoring. On this basis, you can determine which information is particularly relevant to you and how you can best convey the topic to your employees or train them on it.
  • Refer to the results of the comparison of existing measures and processes in the first step of this phase (see step 3.1 Record existing processes and measures and improve them).

3. Working with other actors to strengthen your leverage

  • As a smaller company in particular, you will often find yourself in a situation in which your leverage is limited. This is especially the case if your company only accounts for a limited share of your supplier's total sales, if you have business relationships with larger companies or if you are faced with situations in the deeper supply chain that require structural changes.
  • Check whether partners outside your company can be involved. For example, it can be helpful to cooperate with NGOs or to tackle certain challenges together at association level or in the context of multi-stakeholder initiatives.
Developing an action plan
  • The plan can include the following elements, for example:
    • Type of measure
    • Target group
    • Estimated time required
    • Description of the measure
    • Responsible department
    • Budget (if relevant)
    • Deadline for implementation
Further information: Develop an action plan

The publication "5 Steps Towards Managing the Human Rights Impacts of Your Business " includes an example draft of an action plan (page 36; in German only).

The "Steps in the process and Starter-Kit" (in German only) includes a template for an action plan.

3.5

Supplier review and capacity building

reading time approx. 7 min

Your suppliers are important partners in addressing risks along the value chain. Develop measures in dialogue with your suppliers and implement them together. Check the implementation status and continuously develop your suppliers.

Basic understanding: What to pay attention to?

Jump to implementation

Various formats for measuring the progress of your supplier management are possible. Generally, a code of conduct forms the foundation. The requirements for suppliers can also be defined in a separate supplier code of conduct. This is followed by the supplier self-assessment based on criteria from the code of conduct and/or the supplier audit. If grievances are found, corrective actions are to be determined. These usually include short-term measures and long-term skills development. For serious grievances, an escalation process is defined, at the end of which the supplier relationship is terminated.

Hint: Supplier Code of conduct

With a supplier code of conduct, the company formulates its expectations, e.g. towards suppliers. You can use templates as a guide when developing your own codes of conduct. The Bavarian Chambers of Commerce and Industry have developed a sample text for a supplier code of conduct (in German only), which you can use as a guide or comparison.

Implementation support: Focus on capacity building of suppliers

The practice of sustainable supply chain management shows that suppliers are ready to address sustainability risks and implement requirements from the code of conduct. What is missing is often the knowledge on how to proceed or how to reconcile existing requirements for quality and other classic purchasing criteria (in particular price and delivery time) with new sustainability requirements. For this reason, it is not enough to rely on self-assessment and one-sided audits.

Even if you do not have the capacity for extensive training programs for suppliers, there is still something you can do. This can include, for example, the distribution of internal training materials on sustainability. It can also include the continuous exchange with suppliers, which your employees can use to give advice to suppliers on all aspects of sustainability.

Always check the possibility of working together with other companies or at the industry level.

The Standards Compass offers guidance on what to pay attention to when selecting standards and what standards achieve, but also highlights their limits and the requirements the company itself needs to implement.

Hint: The Helpdesk Business & Human Rights can advise you on the appropriate measures and identify the appropriate funding or financing instrument.
Supplier Review

Implementation: How to proceed?

Inform your suppliers about your expectations
  • In addition to the (revised) code of conduct, you should also communicate how to proceed and what to expect from your suppliers.
  • Communicate what happens when suppliers do not adhere to guidelines, how your company can support suppliers and what advantages the commitment to suppliers can have.
  • Make sure that you communicate your requirements transparently and visibly.
  • You should also allow suppliers to ask questions.
    Target group-oriented communication
Prioritise suppliers that you want to check more closely
  • Use the results of your risk analysis to specifically examine individual suppliers in detail. You should examine suppliers with higher priority in more detail.
  • Consider what environmental and human rights risks exist at the country or industry level.
  • Check whether the risks arise from the business activities of the supplier.
  • Prioritise suppliers based on your ability to influence, for example based on the purchasing volume.
    Supplier Review
Obtain a self-assessment from your suppliers
  • Collect information about suppliers using a questionnaire that you send to all prioritized suppliers.
  • The questionnaire aims to evaluate supplier behaviour concerning your code of conduct and, if necessary, other industry and sustainability standards.
Conduct random checks on the details of a supplier's self-assessment, e.g. when company representatives visit, or conduct their own audits
  • In the case of selected suppliers with an increased risk potential, an on-site inspection may be useful or necessary in addition to the supplier self-assessment.
  • If your company does not have the necessary capacity for on-site visits or audits, the supplier can be asked or required to have an audit carried out by an independent auditor and provide an audit report or certification.
  • However, since this is time-consuming and costly, you should carefully consider where this is justified.
  • Try to explain to your suppliers the added value of such measures and address possible concerns.
Evaluate the results

These should be included in the supplier evaluation and communicated to suppliers: If the supplier's performance deviates from the requirements of your code of conduct, you will have to take action.

Corrective actions:
  • Ensure that the results of the self-assessment or the audit are visible.
  • If the results of the self-assessment or the audit show that there is potential for improvement at a supplier, your company should check whether it can develop a concrete action plan with the supplier and provide support during implementation. This is particularly true in case of violations by suppliers.
  • In principle, corrective action plans should set goals clearly defined in terms of content and time, as well as clear indicators for the purpose of review.
Supplier training and development
  • In order to improve the supply chain, it is most effective in the long term to develop appropriate skills among suppliers. In this way, you enable your suppliers to meet customer expectations.
  • With this in mind, check what internal information material you can provide to suppliers or which external sources you can pass on.
  • You should also consider whether you can pass on training materials to your suppliers or, if necessary, train them yourself.
  • Under certain circumstances, technical discussions on special topics that you organise yourself are also available.
  • An alternative would be to refer to online seminars or other online training opportunities. You can also involve (local) initiatives, associations, experts and NGOs.
  • Various promotional and financing instruments are also available to companies to provide targeted support to suppliers. Programs can aim to train employees and management to improve working conditions at various stages of the supply chain (e.g. occupational safety in factories or in the field). Investments such as Filter systems can be funded.
Escalation process:
  • If you have identified serious violations at supplier level or if a supplier refuses to take effective countermeasures, you must act quickly.
  • This can include discussions with the supplier, temporary purchasing stops, fines and the like.
  • Make sure that everyone in the company supports this process and that your suppliers are informed about the process, at least in terms of the basics.
  • Existing quality management processes can be used as a basis.
    Supplier Review
The develoPPP.de program

The Federal Ministry for Economic Cooperation and Development uses develoPPP.de to promote private-sector activities where there are both entrepreneurial opportunities and the need for developmental action. To this end, the BMZ provides companies that want to develop or expand their involvement in developing and emerging countries with financial and technical support for specific projects. The projects funded via develoPPP.de can be in different industries and subject areas.

Environmental and human rights due diligence along the supply chain is becoming increasingly important. Accordingly, as part of the develoPPP.de program, many companies are developing and implementing innovative and diverse solutions for improving the social and environmental standards of their suppliers. It is important that this also triggers a development beyond the individual project and thus creates a long-term benefit for the local population. Project examples and further information can be found here.

As part of the develoPPP.de program, the BMZ contributes up to 50 percent of the total costs. The funding can amount to between 100,000 and 2 million euros. During implementation, the participating company cooperates with one of the two partners who are implementing the program on behalf of the Federal Ministry: the DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH or the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

Further information: Supplier management

In the guide “Sustainable supply chain management for medium-sized companies in the chemical industry” (in German only) you can find relevant cross-sectoral process information on how to set up a code of conduct, supplier evaluation and follow-up measures (such as competence building).

The guide “Sustainable Supply Chain Management in Practice” (in German only) includes examples for dealing with suppliers.

The Decent Work Toolkit for Sustainable Procurement by the UN Global Compact provides practical guidance and examples for improving working conditions in the supply chain.

The Standards Tool within the Standards Compass is an interactive application that allows you to compare the requirements of certifications and member initiatives with the requirements for corporate due diligence. This will help you to better assess what the sustainability standards that your suppliers use as evidence of their sustainability commitment or that are required by your business customers can achieve.

 

Continue with phase …

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