Responsible business and migrant workers series: closing the gap between policies and actions [Part 3]

Jean-Baptiste Collovray is a Senior Consultant at Kumi, specialising in responsible business practices in the electronics industry. This is the third and final insight in our Responsible Business and Migrant Workers series.

Fostering impact at scale, the key role of stakeholder collaboration and capacity building in turning policies into actions

Multi-stakeholder initiatives (MSIs) and industry coalitions [1] build knowledge, share experiences, and drive collaborative efforts to harmonise and strengthen due diligence practices. In this insight, I will explore how companies can leverage participation in MSIs to conduct thorough supply chain due diligence and enhance supply chain capacity building, focusing on improving migrant workers’ conditions.

My four takeaway messages are:

1. Collaboration through industry coalitions and MSIs can boost companies’ impact.
2. Collaboration is key, but so is action. MSIs must have specific targets to hold members accountable and avoid initiatives becoming mere safe harbours.
3. Suppliers often lack knowledge and understanding about responsible business issues, and long-term results cannot be achieved without capacity building.
4. Facilitating engagement between companies and non-governmental organisations (NGOs) is crucial, and MSIs serve as a pivotal platform to formalise such collaborations.

I conclude with practical guidance on how companies should engage in MSIs and industry coalitions to support their responsible sourcing and due diligence efforts.

[1] I distinguish MSIs, which include different types of stakeholders (companies, NGOs, trade associations, etc.), from industry coalitions which are exclusively composed of companies.

Delivering impact through industry collaboration

A key challenge in addressing human rights impacts in supply chains is the lack of commonality in how each company applies its own criteria, surveys, audits and compliance requirements. Inconsistent language, different standards, and different communication channels can undermine the impact of the message delivered regarding requirements such as the Employer Pays Principle [2]. For suppliers, this creates confusion and complexity, often leading to push-back on ESG and responsible sourcing requirements.

Collaboration through industry coalitions and MSIs can play a pivotal role in harmonising standards and streamlining processes, providing companies with a wealth of resources to support their efforts, including structured guidance, standardised tools and training materials.

For example, while I was working in the electronics supply chain in 2019, there were allegations made by an NGO of forced labour linked to a labour agent used by a Malaysian supplier to the semiconductor industry. The allegations included the payment of illegal recruitment fees, unpaid wages, unfair wage deductions for work permits, and the confiscation of passports from migrant workers. At the time, the Responsible Business Alliance (RBA) directed its member companies sourcing from the supplier to investigate the allegations. As a result of this collaborative engagement, long-overdue wages were disbursed, and deductions were reimbursed to workers. Workers also had their passports returned and were repatriated where requested.

[2] https://www.ihrb.org/employerpays/the-employer-pays-principle

Other similar cases followed, reinforcing the role of MSIs in the risk identification, mitigation and remediation process. In the past five years, I have seen momentum building around responsible recruitment of migrant workers as semiconductor manufacturers started addressing their supply chains with consistent and aligned expectations, using common tools.

This harmonised approach turned what was once considered a mere customer request into a baseline standard suppliers should meet to access the semiconductor manufacturing market. Incentives are essential but often missing or insufficient to encourage responsible business practices, and market access has proven to be a better incentive for these suppliers.

“Collaboration is key”… but so is action

While I am a firm believer that progress at scale can only be achieved through collaborative efforts, this implies that members of any collaborative initiative actively participate in the collective effort by consistently implementing agreed standards in their supply chain.

From what I have experienced, the lack of involvement or resistance from even a minority of members can significantly delay the remediation process. This can lead to suppliers starting to challenge inconsistencies in their customers’ approaches and wondering whether this “industry requirement” is really essential to the industry they are serving.

More members do not always bring more leverage. On the contrary, having members who do not conduct appropriate due diligence on their suppliers will discredit an initiative and let suppliers think that complying with these requirements is unnecessary to access the market.

Five key success factors for MSIs and industry coalitions to drive action and deliver impact:

• Frame the scope and mission from the beginning, with specific targets and a clear definition of what the initiative aims to achieve.
• Monitor progress and adherence to agreed targets through Key Performance Indicators.
• Designate skilled leaders and facilitators, ideally third parties free of political or competitive interests, who will keep directing the organisation towards the best interests of its mission.
• Define membership requirements in line with the initiative’s mission and hold members accountable to these requirements. Have a process to suspend or exclude members who are not meeting the requirements.
• Prevent systems where a minority of influential members could drive the initiative in a direction which does not serve the initiative’s mission.

Capacity building: the key to sustainable and lasting impact

Almost all the facilities where I have seen labour violations relating to migrant workers had signed engagement letters or codes of conduct expressively prohibiting worker-paid recruitment fees, document retention or withholding of wages.

Most midstream suppliers I have engaged with had very limited knowledge of the recruitment processes – and associated risks – for migrant workers. Increasing pressure on these suppliers through collective leverage was insufficient to remediate the recruitment process. Instead, developing their knowledge of recruitment supply chains (notably the multiple tiers of brokers in workers’ origin countries that feed into their counterpart labour agency in the receiving country) and educating them about bonded labour risks was much more impactful, enabling suppliers to conduct enhanced due diligence when directly or indirectly recruiting migrant workers.

Companies can only expect lasting changes in their suppliers’ recruitment practices if suppliers understand the risks and rationale behind each requirement. Only then will suppliers implement sound, responsible recruitment practices and conduct enhanced due diligence when directly or indirectly recruiting migrant workers.

Training and communication with workers should not be forgotten in this process. I found that migrant workers in Southeast Asian companies were afraid they would not be provided with the same level of administrative support from the labour agency if they were not paying any fees. Including workers is always essential when conducting due diligence, and recruitment practices are no exception to this rule. Industry coalitions can help provide workers with accessible learning and communication platforms.

Facilitating collaboration between companies and NGOs

Although companies and NGOs can share common interests in tackling forced labour in global supply chains, they do not always work in synergy. If an NGO publicly discloses allegations of forced labour in a supply chain without first adequately engaging with companies, those companies tend to adopt a defensive approach, often involving lawyers rather than responsible sourcing experts. In extreme cases, workers in the supply chain can face retaliation from their employers, worsening their situation further.

Instead, the preferred approach is for NGOs to engage with companies sourcing from suppliers where forced labour is suspected or identified and to discuss how to use the companies’ influence to address the issue in the best interest of the workers. MSIs and industry coalitions can be a good platform to formalise communications with NGOs, providing structured mechanisms for NGOs to contact them when they have identified issues relating to their members directly or through their supply chains. Such mechanisms provide safeguards on both sides, allowing the companies to be informed and act before the issue goes public but still holding companies accountable for delivering results and evidence of remediation activities.

The Terms of Engagement [3] signed between the Responsible Business Alliance (RBA) and Electronics Watch is an example of such a framework. It capitalises on lessons learned and provides safeguards for companies and NGOs to collaborate in the best interest of workers.

[3] https://www.responsiblebusiness.org/news/rba-ew/, https://electronicswatch.org/en/electronics-watch-and-rba-sign-terms-of-engagement_2587028

Using the power of the collective to deliver impact – practical areas of focus

When addressing systemic issues such as forced labour in global supply chains, “collaboration is key”, and industry coalitions and MSIs have an important role in that space. However, this collaboration must lead to actions and involve all relevant stakeholders to close the gaps between policies and actions.
Practical ways for companies to do this include:

• Actively participate in MSIs or industry coalitions to leverage common requirements and collectively increase supply chain maturity.
• Ensure the MSI or industry coalition has a clear mission, specific targets and consistently deployed standards.  Continue to conduct due diligence in your supply chain, and ensure all members are held accountable to do the same.
• Focus on capacity building, and do not forget the workers in this process. Increasing maturity and awareness is the only way to instigate enduring change and prevent recurring issues.
• Engage and collaborate with all relevant stakeholders, including NGOs, through agreed mechanisms designed in the best interest of the workers.

This final part marks the end of the series, but certainly not the end of the dialogue. Feel free to contact me directly via the orange tab to the right to keep the conversation going!