In each of the above areas, companies should report regularly and publicly on policies and processes as well as on performance against measureable and time-bound targets. We encourage a combination of quantitative reporting, such as the G4 Sustainability Reporting Guidelines, and qualitative reporting, such as the UN Guiding Principles Reporting Framework, including on incidents of noncompliance.

Background

Reporting helps companies to respond to increasing demands from stakeholders, improve relationships with them and improve access to related business opportunities. Reporting helps investors to judge to what extent their investee companies understand risks and opportunities and are managing those appropriately. Meaningful reporting can improve companies’ ability to preserve reputation when negative impacts occur.

Engagement questions

Note that some reporting questions, in particular questions regarding reporting on outcomes, are integrated in Expectations 1-6.

Opening questions

Targets

  • Which measurable and time-bound targets has the company set in each of the above areas (Expectations 1-6) to measure its supply chain labour performance, and why?
  • Does the company assess progress against its targets on a regular basis, and provide an analysis on trends over time?

Follow-up questions

Policies and processes

  • Does the company regularly and publicly report on relevant processes in each of the above areas (Expectations 1-6)?

Robustness

  • Does the company assure its human rights and labourrelated reporting, or commission a relevant third party to evaluate its performance and report on the findings?

Performance

  • Does the company provide evidence that it has implemented its processes?
  • Does the company report on negative performance, or conversely that no negative performance has been identified?
  • In its qualitative reporting, does the company go beyond activity-based reporting and describe the impact of its measures (such as remediation) on workers?

Company examples

Reporting against measurable and time-bound targets over time and on impact of measures on supply chain workers: The US beverage company The Coca-Cola Company (“Coca-Cola”) reported how it implements the UN Guiding Principles on Business and Human Rights, and has set measureable and time-bound targets against which it reports progress over time. By the end of 2014, 90% of Coca-Cola’s direct suppliers achieved compliance with Coca Cola’s Supplier Guiding Principles, exceeding the 2014 target of 89%. The company’s 2020 target is to achieve at least 95% compliance with the code. It further describes the impact of its activities on workers. These include eliminating recruitment fees for migrant workers in Singapore and mitigation efforts in Myanmar, which include efforts to address issues around overtime hours, wages and benefits as well as worker health and safety and well-being, such as medical clinics and childcare facilities.

Reporting on positive and negative performance and validating performance by internationally recognised human rights experts: The Swiss food and beverage company Nestlé has been working with the Danish Institute for Human Rights since 2008, especially in the area of human rights impact assessments. The company reported on its human rights impacts in seven country operations. The report included positive and negative impacts, related to supply chain workers’ wages and working conditions and steps the company has undertaken to address those.

The company commissioned the independent labour consultancy Verité to investigate six production sites in Thailand to improve its understanding of risks related to forced labour and human trafficking. Verité found indicators of forced labour, trafficking, and child labour at the production sites, many of which are systemic. Understanding and publicly acknowledging negative impacts is an important step for any company to address these impacts.

Tools and further guidance

The following resource provides guidance on how to set goals – from internal performance to supplier performance, how to measure processes and practices and how to communicate this:

  • BSR, UN Global Compact (2015) - Supply Chain Sustainability - A Practical Guide for Continuous Improvement, Second Edition, chapter 8: Establishing Goals & Tracking and Communicating Performance, p. 67ff.

The following resources are a compilation of the most established qualitative and quantitative indicators and reporting framework:

  • G4 – Reporting Principles and Standard Disclosures (quantitative indicators)
  • UN Guiding Principles Reporting Framework (qualitative indicators)
  • Sustainability Accounting Standards Board (SASB) – Consumption I Standards and Consumption II standards (focus on strategy, certification and sourcing standards) 50 Nestlé (2013) – “Talking the Human Rights Walk. Nestlé’s Experience Assessing Human Rights Impacts in its Business Activities”. Accessed 26 February 2016. 51 Verite (2015) – “Recruitment Practices and Migrant Labor Conditions in Nestlé’s Thai Shrimp Supply Chain”.
  • Oxfam – Behind the Brands: Interactive Excel spreadsheet of indicator data. (Transparency tab: sections on corporate governance, sustainable sourcing volumes by commodity, buying agents and sourcing countries, audits; Workers tab: section on awareness and programmes, impact, commitment to good labour practices, supply chain management).
  • Fair Labor Association, Pensions and Capital Stewardship Project at Harvard Law School, Funding from IRRC Institute (2012) – Key Performance Indicators for Investors to Assess Labor & Human Rights Risks Faced by Global Corporations in Supply Chains.

The following resource provides guidance on how to develop a supply chain CSR report:

  • SAI, IFC (2010) – Measure & Improve Your Labor Standards Performance. Performance standard 2 handbook for labor and working conditions, chapter ‘Toolkit: Labor Standards Performance In Your Supply Chain’: section ‘Supply Chain CSR Report’, p. 179ff.

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    From poor working conditions to forced labour - what's hidden in your portfolio?

    June 2016