Seeking a “Smart Mix”: Multi-Stakeholder Initiatives and Mandatory Human Rights Due Diligence

This white paper finds that multi-stakeholder initiatives (MSIs) are critical for the protection of labor rights in supply chains across the world, and makes recommendations to ensure they are effectively involved in helping governments craft human rights legislation. The paper, “Seeking a ‘Smart Mix’: Multi-Stakeholder Initiatives and Mandatory Human Rights Due Diligence (PDF)”, offers critical guidance and expertise for governments working to curb labor abuses through the adoption of mandatory human rights due diligence (mHRDD) laws. The paper is from the NYU Stern Center for Business and Human Rights and the Geneva Center for Business and Human Rights at the University of Geneva’s School of Economics and Management.

The paper asserts that strong MSIs - those that bring together civil society groups, labor unions and companies to set and enforce labor standards in supply chains - are critical for the implementation of mHRDD by governments around the world. It insists that these MSIs should serve as an essential substantive resource to national governments and supranational bodies, like the European Union, that have the power to set and enforce adequate labor standards, and the responsibility to do so. The paper recommends that governments pursuing mHRDD legislation turn to MSIs to inform and provide guidance on legislative requirements. Without this guidance, workers in global supply chains will remain highly vulnerable.

Recognizing that not all MSIs are created equal, the paper identifies a “typology” of five requirements that all MSIs should follow. It concludes that MSIs that abide by all five requirements should be seen as a reliable resource for governments and policymakers:

  1. Governance: The governing bodies of MSIs should reflect all relevant stakeholders—civil society, labor and companies—and give each of them equal decision-making power.
  2. Standards: All standards and benchmarks set by MSIs should accord with international law and be informed by relevant industry-specific technical expertise.
  3. Monitoring: All benchmark metrics set by MSIs must be established with independent monitoring mechanisms in place to ensure compliance.
  4. Penalties: Rules and benchmarks set by MSIs must be mandatory and sanctions must be enforceable for violations, with an escalating scale of penalties, all the way up to expulsion.
  5. Transparency: MSIs must demand a reasonable degree of transparency from companies to ensure they are accountable to the public.

The paper identifies several distinct benefits of MSIs that fulfill each of these requirements, including that they serve as a venue for shared expertise and good-faith experimentation on solutions; they help develop ambitious but practical labor standards that enjoy legitimacy across diverse stakeholders; and they offer tangible incentives for companies to comply with standards they help create. Based on these benefits, the paper recommends that governments in the U.S., Europe and elsewhere turn to MSIs that fulfill these criteria for guidance in crafting new mHRDD legislation, such as the EU Directive on Mandatory Human Rights, Environmental and Good Governance Due Diligence.

“Mandatory human rights due diligence is emerging as a powerful tool that is being adopted by European governments to ensure that fair labor standards are upheld in our increasingly complex global supply chains,” said Dorothée Baumann-Pauly, director of the Geneva Center for Business and Human Rights and co-author of the paper. “However, in order to be effective, mHRDD policies must be accompanied by concrete standards that clarify governments’ expectations of companies under their jurisdictions—that’s where multi-stakeholder initiatives come in. Across different sectors, MSIs are a key means of ensuring that these standards are clear, defined and enforceable.”

“As the EU moves to adopt arguably the world’s strongest labor rights protection regime with the passage of the Directive on Mandatory Human Rights, Environmental and Good Governance Due Diligence, other governments around the world are likely to follow suit,” said Isabelle Glimcher, litigation associate at Debevoise & Plimpton LLP and co-author of the paper. “In this era of increasing enforcement of human and labor rights standards, it’s critical that mHRDD legislation be informed by input from those closest to the issue—MSIs with truly representative decision-making bodies. By relying on MSIs that fulfill all of the criteria outlined in our paper, governments can help ensure we make meaningful progress on labor standards for workers and companies.”

Authors: Dorothée Baumann-Pauly & Isabelle W. Glimcher
Date: 4 October 2021

Online publication

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