Stakeholders in supply chain due diligence - who are they?

"The times they are a-changing" as Bob Dylan sang.

There is an increasing appreciation that business has responsibility for the way that workers are treated in its supply chains.

No business wants to profit from cheaper products obtained through the exploitation of labour; no consumer should want to buy them.

And legislation is slowly but surely also catching up.

A common theme is emerging

There are new laws and regulations coming into force and most of them focus on two main principles, here taking the language of recent proposals to upgrade the UK Modern Slavery Act:

1. Business should undertake "reasonable due diligence" to make sure that its supply chains are free from "serious human rights harm".

2. Reasonable due diligence must include appropriate "consultation with stakeholders".

Serious human rights harm is quite broadly defined and goes significantly beyond forced labour and modern slavery.

It includes, amongst other human rights, a worker's labour rights such as to:

• Be paid at least the legal minimum required

• Work in safe and hygenic conditions, and not excessive hours

• Have freedom to choose where to work, how much to work and to work without discrimination or harassment

These are typical worker labour rights as set out in the ILO standards and ETI base codes.

This approach is emerging as a common standard - see CSDDD Article 13 for example.

Who are "stakeholders" for supply chain due diligence purposes?

I asked Google the following question - and Google gave a decent answer:

"For labour rights due diligence purposes, who are the stakeholders in a supply chain?

Here is what Google says (sections 2-4 shortened for the purpose of this post):

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For labor rights due diligence purposes, stakeholders in a supply chain are individuals, groups, or entities whose interests are or may be affected—positively or negatively—by a company’s activities, as well as those who can influence the company's actions.

Effective due diligence requires focusing on "rights holders" (those directly affected) and engaging a broad range of internal and external actors.

1. Rights Holders (Directly Affected Workers)

These are the most critical stakeholders, as their rights may be violated.

• Direct Employees: Workers in the company’s own operations.

• Supply Chain Workers: Employees in the factories, farms, or facilities of direct and indirect suppliers (tiers 1, 2, and beyond).

• Vulnerable Groups: Migrant workers, victims of caste discrimination, women, and religious/ethnic minorities, who are often most affected.

• Informal Workers: Workers in the lower tiers or undocumented, temporary, or informal labor.

• Contract/Agency Workers: Staff provided through third-party agencies or subcontractors.

• Smallholder Farmers: Particularly in agricultural supply chains.

  
  

2. Internal Stakeholders such as Procurement/Buying Teams,

Human Resources/Compliance, Legal Teams, Board of Directors/Senior Management

3. External Stakeholders such as suppliers and subcontractors,

Trade Unions and Worker Representatives, Civil Society Organizations (CSOs) & NGOs, Government Agencies & Regulators, Investors and Shareholders, Customers and Consumers Local Communities

4. Supporting Stakeholders such as Industry Initiatives & Multi-Stakeholder Initiatives (MSIs), Logistics and Transportation Providers, Auditors and Certification Bodies

Key Principle: "Meaningful Engagement"

Stakeholder engagement should be a continuous dialogue rather than a one-off event, and it should particularly focus on enabling workers to raise concerns without fear of retaliation.

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Are workers the principal stakeholders?

Google's response is powered by its new AI engines - and is likely based on a review of what has been written across the web, distiling the sentiment and content from the mass of words globally written on these subjects.

The fact that Google provides this very clear answer - including the rider that meaningful engagement means continuous dialogue - is revealing.

Interpreting laws generally means asking what the law-makers were intending and what the common understanding of the words used might be. And so what Google says here is important.

If Google says that workers are the stakeholders to consult, then this is a strong indicator that this is what these words mean in the new laws and regulations.

It makes sense, since workers are the rights-holders principally affected by breaches of labour rights in supply chains.

How do we consult the workers as stakeholders?

There are economic and authentic ways to be in touch with workers in your supply chains.

If, as Google suggests, that contact should be continuous rather than a one-off event, then emerging platforms like Ask The Workers would be an obvious choice.

Ask The Workers is not expensive to set up and operate - and it provides a wealth of authentic, direct feedback from workers who remain truly anonymous and safeguarded throughout.

Get with the times - Ask The Workers

Find out more about Ask The Workers by contacting us. You can email us here or set up a call here.

Make sure your "reasonable due diligence" measures up to the new standards.

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• Just send an email to info@es3g.com

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