Social and environmental sustainability increases long-term business viability and results. 

As environmental, social and governance (ESG) reporting continues to gain momentum globally, companies have made significant progress tracking and documenting environmental and governance practices. Heightened awareness of issues like wealth disparity, discrimination, unhealthy and unsafe workplaces, and violations of fundamental human rights has been escalating the need for companies to address the social pillar of ESG. 

Consumers report interest in purchasing from companies with positive human rights practices, investors incorporate ESG factors into their risk analyses, and new human rights due diligence and supply chain transparency laws emerge globally. 

At the same time, a trend is towards making human rights due diligence mandatory and enforceable, as shown by UK’s Global Human Rights Sanctions Regulations 2020 and the Dutch Child Labor Act 2019. In Switzerland, Germany and Norway, legislation on transparency and due diligence in the supply chain is also emerging. 

Rarely, however, do the critical links between human rights due diligence and ESG draw any recognition.  

Yet, as the UN Environment Programme notes, “Human rights and the environment are intertwined; human rights cannot be enjoyed without a safe, clean and healthy environment; and sustainable environmental governance cannot exist without the establishment of and respect for human rights.”  

Attention to labor and human rights throughout a value chain can positively amplify environmental outcomes. As it turns out, treating people fairly at work can contribute to higher levels of hopeful thinking, which, in turn, makes employees more likely to engage in environmentally responsible behaviors at work.  In short, attending to the S of your corporate ESG program can have positive and potentially more lasting E impacts than addressing the E alone. 

As social practices and environmental sustainability grow as topics of concern, organizations continue to grapple with the most meaningful ways to capture, measure, respond to and report on social and environmental performance across the supply chain. Audits and supplier self-assessments have long helped monitor social impacts, but they lack complete visibility and objectivity and require additional meaningful interventions to drive improvements. To make measurable and credible progress, manufacturers and retailers should partner with a trusted third party that can provide responsible sourcing capabilities at both the facility and supply chain level as well as product-level environmental and sustainability certifications. 

Sustainability experts at UL, a global safety science leader, suggest several actions companies can take: 

• Establish grievance mechanisms – Companies, communities, institutions and non-governmental organizations all play a role in establishing effective grievance mechanisms that should provide clear channels for raising concerns, offer easy and confidential accessibility, document and analyze reported infractions over time to identify patterns and/or recurring violations, and provide for investigation, resolution and restitution. Companies can offer some grievance mechanisms in the way of policies that protect whistleblowers and confidential hotlines. However, multistakeholder mechanisms may offer more effective grievance channels. Consider collaborations with civil society, labor unions, industry trade associations and other institutions that can offer extrajudicial support for remediating social grievances and preventing environmental contamination. Multistakeholder collaborations have the added benefit of addressing human rights and sustainability violations across entire industries and communities.

• Engage with local communities – This can help lay a foundation for fair and equitable treatment of workers and greener environmental practices through education and local action and better understand regional culture, challenges and economic situations to uncover the greatest risk areas and prevalent issues in that region. Partnerships with local authorities, institutions and civil society can reveal vulnerable populations and keep a watchful eye out for violations.

• Take remediation action – Companies should conduct a root-cause analysis to identify causes of social injustice and environmental contamination and invest in remediation. In many cases, root cause analyses and remediation actions will enhance social and environmental impacts and may yield cost savings.

• Evaluate company policies for unintended consequences – A company’s practices may inadvertently trigger the use of unfair social practices and environmental contamination in the supply chain. For example, short product release cycles may pressure suppliers to deliver new products in an extremely short time frame, incentivizing the use of undeclared subcontracting, child labor or excessive overtime. Time pressures may also result in less attention paid to conservation and sustainability efforts. The immense pressure to maintain low costs may result in the use of inferior materials or lower-expense resources, which may prompt the use of unfair labor practices or present health risks to workers as well as environmental damage. By carefully considering how policies can inadvertently encourage unfair labor practices and sustainability shortcuts, companies can reduce unintended consequences.

As you work toward meaningful social impact and environmental sustainability visibility, UL offers solutions to guide you through the process of understanding the supply chain, forging partnerships with greater visibility and strategically positioning your program for maximum effectiveness. UL’s software and advisory services can help you collect and validate data from your supply chain to evaluate the sustainability and human health impact of your materials, products and suppliers, assessing where you are today and where you’d like to go from here. 

Action on environmental and social sustainability missions, visions, goals, operations and reporting plays an integral role in company culture and strategy. Companies that focus on strong ESG practices can outpace the competition, forge stronger relationships with consumers and help preserve the planet and the people who live on it.  

Sources 

https://www.tandfonline.com/doi/full/10.1080/15487733.2020.1820701 

To find out more about UL and the services they provide to the retail industry, click here.

This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.

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