Responsible business and migrant workers series: closing the gap between policies and actions [Part 2]

Jean-Baptiste Collovray is a Senior Consultant at Kumi specialising in responsible business practices in the electronics industry. This is the second blog in his three-part series about migrant workers.

Part two: are audits and grievance mechanisms meeting downstream policy and compliance commitments?

Since I started working on responsible sourcing in global supply chains, social audits have often been presented as the main tool on which companies rely to ensure that workers’ rights are being protected. The increase in mandatory human rights due diligence laws in recent years has continued to drive this view and, as company and industry scheme policies and codes of conduct increase in complexity and expectations, so too have audit checklists and their application. But despite there being more audits, human rights are increasingly impacted by business activities and risks, such as child labour, are deepening where zero-tolerance compliance approaches are failing [1].

A recent legal case taken against a multinational technology company relating to alleged labour abuses in their supply chain highlights the consequences that an over-reliance on audits can have. In 2019, the company had been notified by whistleblowers that Nepalese and Bangladeshi migrant workers operating at a subcontractor’s factory in Malaysia were reportedly working in conditions of forced labour, including debt bondage, passport retention, excessive working-hours, and abusive working conditions.

The company had reportedly conducted social audits and determined that the allegations of forced labour were not substantiated. However, following a new third-party audit which confirmed the allegations, the company terminated their relationship with their subcontractor in 2021. This allegedly left workers in fear of losing their livelihoods and facing retaliation for speaking up. The absence of remediation and involvement of workers in the company’s process led workers to seek remediation by taking it to court in 2022.

This company is by no means an outlier in its reliance on audits to identify or investigate allegations of rights violations in supply chains. While audits do have a place in human rights due diligence, they are ineffective if not combined with other tools and mechanisms.

  • We know that audits provide a snapshot of a supplier or factory site at a particular time, with the results often being used to inform decisions about the performance of a supplier for many years.
  • We also know that this snapshot is very poor at detecting systemic human rights issues, particularly where vulnerable workers are prepared by employers on what to say to auditors, or kept away from the workplace on the day of the audit.
  • There are also well-rehearsed concerns such as auditor training and experience, language and cultural barriers, a focus on compliance, and resource constraints that can impact the effectiveness of a social audit.  

As the above case highlights, and my own experience of complex supply chains shows, audits tend to be over-used and ineffective, and worker-centric mechanisms are a crucial and often missing part of the picture that would be far more effective in delivering company due diligence. This includes community engagement to ensure local communities are represented, collaborations with NGOs and civil society to offer alternative, expert perspectives, and capacity building to educate employers on how to ensure policy is understood and implemented. It also includes creating safe channels for employees to express concerns with their employment conditions without fear of retaliation; more on that in a moment.

 Further, in my experience, prior engagement and dialogue with suppliers, at the earliest opportunity in a relationship, has proven to be far more efficient in identifying risk and delivering impact.

Moving beyond audits: a comprehensive approach to due diligence

At this point, you may conclude that I’m not an advocate of social audits, but you’d be wrong! In my experience, although audits have in many ways become a “safe harbour” or “insurance” approach for companies, if supported by other mechanisms they definitely have a part to play in a due diligence process or system. Audits can be a great tool to foster continuous improvement and drive positive impact by identifying gaps and areas for improvement in existing systems. But audits should not be used in isolation and need to be delivered properly (and this costs more resources!). They certainly should not  be delivered without also delivering risk-based engagement with suppliers to help them build capacity and address issues based on information which they have already supplied (more on that later).

A significant part of the challenge is that downstream buyers are seeking black and white answers to a supplier’s social performance when the reality is many shades of grey. In doing so, they are fuelling an overreliance on audits and this is a situation that will increase as compliance with due diligence laws requires further scrutiny upstream.

“We need audits to collect reliable information on working conditions and start acting on findings.”

Having worked with businesses at different supply chain tiers, these companies often assumed that audits were necessary to gather reliable information as suppliers would be likely to hide issues in their operations. But before a pen is even put to a clipboard, there is often much information already available to identify supplier risks from worker-paid recruitment fees and other poor recruitment practices.

Through self-assessment questionnaires, suppliers often provide enough details about migrant workers and recruitment processes to enable risks to be flagged and dialogue to begin on these issues. Along with other risk information, such as country and sector information, this helps to ensure that when audits are used, they are targeted effectively or are not needed altogether.  

I have also seen far more impactful outcomes, including successful remediation (going beyond simple repayment of recruitment fees), through collaborative engagement, that included workers, and open and transparent dialogue with the supplier.

“We have an open-door policy, workers can raise a grievance with us at any time.”

As I mentioned earlier, one of the key worker-centric tools that support audits are grievance mechanisms. Nearly all due diligence laws and guidelines require companies to provide a formal system or process through which individuals or groups can raise concerns, complaints, or allegations that a company’s practices have impacted their rights. Yet most companies I have worked with don’t have a mechanism that would meet the effectiveness criteria recommended by the UN guiding principles (see below). This is often because grievance mechanisms are often thought of as a particular platform, such as a call line, rather than a multi-channel process that accounts for the different rights holders in a supply chain, such as workers and communities, and which includes an effective remediation process.

When asked about their grievance mechanism, a common response from suppliers that I’ve worked with is that they “have an open-door policy” expecting workers to report employment concerns directly to a company representative. Many of these suppliers are keen to highlight their good performance by observing that they have “never had a complaint” from a worker. This is not an effective grievance mechanism; it is typically a red flag.

Where a single grievance channel is in place for workers in a supply chain or operation, this can be ineffective with workers unwilling to use them due to:

  • A lack of trust in the mechanism – results are not communicated and it is unclear what remediation will happen.
  • A lack of protection and safeguards – leading to fear of reprisals by an employer.
  • Accessibility – the channel is not communicated or doesn’t account for the language, culture or technology barriers of the rights holders.

Like successful audits, effective grievance mechanisms that work well are those that are people-centric and designed with the involvement of rights holders. This includes ensuring that impacted rights holders have access to effective remedy and strengthening work to support worker or trade union-led approaches to grievance mechanisms.

The effectiveness criteria of a grievance mechanism (UN guiding principles on business and human rights):

  • Legitimacy: The mechanism must be trusted by its users and stakeholders. It should be transparent and accountable in its operation.
  • Accessibility: It should be easily accessible to all stakeholders, taking into account potential barriers like language, technology, and geography.
  • Predictability: The process should have a clear and known procedure with an indicative timeframe for each stage.
  • Equitability: Stakeholders should have reasonable access to sources of information, advice, and expertise necessary to engage in a grievance process on fair and equitable terms.
  • Transparency: The mechanism should be transparent in its operations, keeping stakeholders informed about its progress and outcomes.
  • Rights-Compatibility: The outcomes should be in line with internationally recognized human rights standards.
  • Continuous Learning: The mechanism should focus on continuous learning to improve its effectiveness.

Due diligence on suppliers employing migrant workers in global supply chains – practical areas of focus:

Business can be a force for good, and companies have a key role to play in ensuring their human rights due diligence is meaningful and drives positive impact for migrant workers. Many companies have made commitments to best practices through policies and codes of conduct, but need to ensure that their audit practices add value and that grievance mechanisms are effective in providing vulnerable workers with a voice if they want to live up to their commitments.

Practical ways to do this include:

  • Adopt a risk-based approach to conduct continuous due diligence and engage in dialogue with suppliers to understand their challenges and capacity building needs before turning to audits.
  • Implement worker-centric grievance mechanisms that empower workers to play an active role throughout the entire grievance and remediation process, from design to oversight (including strengthening work to support worker or trade union approaches).
  • Ensure that grievance mechanisms are available below tier one of supply chains where risk is greatest.

Stay tuned, as part three of this blog series is just around the corner and will focus on the role of industry coalitions and multi multi-stakeholder initiatives (MSIs) to harmonize companies’ approach to due diligence and enhance sectoral collaboration to boost impact for workers and limit supplier fatigue.

[1] Save the Children International: