The following engagement recommendations are based on findings from the engagement, as well as findings from other stakeholders and sources.
From 2013 to 2015, the PRI coordinated phase 1 of a collaborative investor engagement with food and beverage companies on supply chain labour standards. The engagement resulted in 23 out of 34 target companies (67%) improving their reporting and, in many cases, also their practices. The largest improvements were in governance and certified sourcing, with good improvements also in the areas of penalising negative performance, incentivising positive performance and building suppliers’ capacity. A few companies now report on supplier names and remediation activities – areas that none of the companies were reporting on before the engagement. Detailed findings can be found in Appendix 1. Phase 2 of the engagement will start in 2016.
When engaging an investee company, investors can start by asking the company to implement the UN Guiding Principles on Business and Human Rights, and to manage supply chain labour risks in alignment with the international standards such as IFC’s Performance Standard 2 and the OECDFAO Guidance for Responsible Agricultural Supply Chains. Investors can also review any information captured in public benchmarks, or information on corporate incidents and allegations which is available on sites such as the Business & Human Rights Resource Centre.
Beyond these first steps, investor expectations for companies in seven key areas are outlined below. While all companies are expected to implement all elements, investors should prioritise engagement asks and focus on feasible next steps depending on where a particular company currently stands. The seven expectations start with relatively more basic steps and proceed to more advanced practices, with the exception of Expectation 7 on transparency, which is relevant for companies at all stages.
Investors with very limited resources can build the “opening questions” under each of the expectations into existing and ongoing dialogue with companies. In order to have a more in-depth dialogue on supply chain labour practices specifically, investors can consider the “follow-up questions” under each expectation.
Each expectation below is supported by additional information for engagement:
- Background to the expectation
- Engagement questions
- Examples of company practices and disclosure
- Tools and further guidance
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From poor working conditions to forced labour - what's hidden in your portfolio?