As ESG and human rights due diligence initiatives are increasing around the world, advocacy groups and non-government organizations (NGOs) are accordingly ramping up their strategies. With governments cracking down on human rights violations, NGOs have new momentum to investigate and collect raw data on the progress (or lack thereof) that businesses are making to ensure human rights standards and practices are promoted through a company’s supply chain.
NGOs and advocacy groups are driving collaborative action while engaging with stakeholders to promote an emphasis on human rights. While there is sometimes a disconnect between the goals of businesses and NGOs, businesses have a real opportunity — in addition to conducting typical best practice due diligence research — to leverage collected NGO data to evaluate and improve human rights due diligence processes.
The recent launch of both regional and national legislation requiring companies to carry out human rights due diligence, such as the EU Directive on Corporate Sustainability Due Diligence, has created a newfound opportunity for NGOs to be creative and ambitious in testing advocacy strategies and changing corporate conduct around human rights.
As NGOs dig in and investigate human rights due diligence protocols within the private sector, they can be particularly effective at exposing problematic firms. Robert Blood, founder and managing director of Sigwatch, says NGOs, “Are not afraid to call out corporate misbehavior wherever they find it, while their extended networks of local allies mean intelligence on even obscure or unlisted companies will be exposed, which can be very revealing if they are suppliers to well-known firms.”
A prime example of the power of NGO connections took place during the events of the 2013 Rana Plaza factory collapse, which killed over 1,000 mainly female garment workers. Within days of the collapse, NGOs in Europe and North America used their local network to identify which Western brands had been sourcing from firms in the factory, publishing the lists and empowering the legal system to hold them responsible for compensating the victims’ families through the creation of the Rana Plaza Donor’s Trust Fund. This accountability pushed by the NGOs created avenues for businesses to seek out and implement improved remediation and grievance mechanisms in order to address instances of human rights violations and improve working conditions. More recently, collaboration among NGOs, Indian company Natchi Apparel Ltd., its parent company Eastman Exports, and U.S. Customs and Border Protection (CBP), resulted in the modification of a Withhold Release Order (WRO) in September 2022 — only a month after the initial WRO was issued due to concerns of forced labor used in the detained apparel shipments. According to the CBP’s press release, an NGO was able to assist Eastman Exports and Natchi Apparel in proving that the company had addressed the five International Labor Organization indicators of forced labor that were outlined in the original WRO. AnnMarie R. Highsmith, Executive Assistant Commissioner for the CBP Office of Trade, noted the contributions of NGOs to the protection of human rights in supply chains, stating: “Our efforts reinforce the dynamic work of non-governmental organizations on the ground to protect workers suffering under conditions of forced labor and of importers to source products ethically from suppliers who treat workers fairly and with dignity.”
The International Cooperation for Development and Solidarity (CIDSE) has been one prominent player among NGOs investigating human rights due diligence within corporations. The CIDSE has published a number of policy papers, including many recommendations that impacted the development of the EU’s Directive on Corporate Sustainability and Due Diligence and contributed to the Intergovernmental Working Group (IGWG) in developing National Action Plans on business and human rights. Their data is crucial not only for the development and benchmarking of human rights policy, but also for accountability and identification of gaps in due diligence procedures.
“Despite an understandably dogged legacy of mistrust between civil society and corporations,” Blood says, “There is a momentum for human rights organizations to engage productively with businesses, responsible investors, and other private actors that hold increasing market power, leverage, and are subject to new human rights legislation.”
With the power they hold, global corporations are becoming increasingly relevant in international conflicts. The resources of global companies — internally and externally via trusted diligence providers — combined with the knowledge and data of NGOs have the potential to create a powerful team for advancing human rights agendas with governments and across sectors.
Government and regulatory bodies, in some cases, have begun to embrace the potential for further collaboration among government agencies, NGOs, and businesses. For example, resources and official documents concerning the United States’ Uyghur Forced Labor Prevention Act (UFLPA) include both NGO data and recommendations and frameworks for supply chain screenings. In fact, a practical guide from the Human Trafficking Legal Center is included on the Department of Homeland Security’s UFLPA webpage. A major point within the Forced Labor Enforcement Task Force (FLETF) Enforcement Strategy for the UFLPA, which was released in June 2022, also highlights planned coordination between NGOs and other private-sector entities in order to appropriate updates and revisions to the annual enforcement strategy.
Data from various NGOs regarding companies who have been accused of engaging in forced labor practices, specifically in the Xinjiang region of China, was also utilized and referenced in the creation of the FLETF Strategy, and will likely inform future additions or modifications to the UFLPA Entity List. Additionally, recommendations have been made for corporations to closely monitor NGO activity related to forced labor, as well as relevant media, in order to identify companies or suppliers that may be facing allegations of wrongdoings, and, thus, carry heightened levels of risk.
Prior to the legislation’s enforcement, some NGOs expressed a strong desire for more stringent enforcement rules during the open comment period in March and April. International law firm Mayer Brown reported that “Human and worker’s rights groups wanted strict enforcement of the UFPLA, with limited exceptions,” and others “even called for all companies and products with links to the XUAR to be subject to a blanket WRO, which would streamline enforcement and reduce the need for hundreds of individual WROs.” With a greater sense of importance placed on the reports released by NGOs, businesses will need to remain vigilant of updates from human and workers’ rights groups in order to stay ahead of compliance and due diligence requirements.
In addition to standard open-source supply chain diligence, some investment professionals are turning to the raw data collected by NGOs to inform their opinions on corporate ESG performance, rather than relying on black-box ratings from index providers. One executive told Waters Technology, “We are more interested in raw data than we are in ESG ratings. We would rather draw our own conclusions based on raw company data that is either disclosed by the companies themselves or collected by third parties like NGOs.”
As initiators of issue trends, NGOs are often the first to identify emerging problems that can affect or disrupt whole industries and their long-term value. Being able to reliably predict external forces that could impact them directly or through their portfolios is crucial to financial institutions. For example, greenwashing has been a major factor as ESG trends swell and brands try to cut corners and still appear as though they are meeting environmental standards. NGO campaigns can get ahead of trends like these, revealing where the media may inevitably misconstrue what standards need to be upheld and create opportunities for brands to be deceived.
In addition to broader due diligence on your supply chain, NGOs provide an alternative dataset that doesn’t come from the company itself (which may not be independently vetted). While the media can be too broad and first-hand company data can be biased or simply inaccurate, NGO data can show specifically which sectors receive negative attention and break it down by region, country, and even individual companies. This unbiased data provides companies with unique on-the-ground insight, with a focus on critical ESG factors that have become increasingly significant in the decision to conduct business or continue conducting business with a company.
For example, Global Witness is an NGO that campaigns against natural resource-related conflict and corruption, and one of its major focuses has been the sourcing of “conflict” diamonds: gems sourced in areas that do not enforce governmental resource regulations. By tapping into Global Witness’ extensive sourcing data, jewelry manufacturers can ensure that all its gem-sourcing supply chain partners are compliant with ethical sourcing regulations.
NGO data has clear benefits in helping companies evaluate, improve, and develop their human rights due diligence processes, but that data is only helpful when companies have direct access to it. They need a human rights due diligence solution, such as IntegrityRisk, that gathers and analyzes intelligence data from a variety of corroborated sources, including on-the-ground NGO networks. To learn more about how IntegrityRisk can help you maintain human rights compliance, contact us today.