Supply-Chain Labor and Human Rights Policies

In a recent survey 45% of the 657 largest companies reported adopted a supply-chain LHR policy.

Some 28% of global companies -- including nearly half of those with market capitalizations of more than $10 billion -- have labor and human rights (LHR) policies covering their global supply chains.

However, materially fewer have established follow-up monitoring and enforcement procedures, according to a study conducted by Harvard Law School Pensions Project and ASSET4, and funded by the not-for-profit IRRC Institute.

Geographically, LHR supply-chain policies are close to the norm among European companies, but the U.S. and Asia lag behind.

"The fact that 45% of the 657 largest companies in the sample have adopted a supply-chain LHR policy -- and that 25% have published a specific supplier code of conduct -- suggests such approaches may be an emerging best practice that is prudent to emulate. The implication is that LHR concerns are close to the norm for large global corporations, while those lacking LHR policies may come under pressure to adopt them," said Aaron Bernstein, senior research fellow at the Pensions and Capital Stewardship Project at Harvard Law School's Labor and Worklife Program.

Highlights of the study include:

  • LHR policies are more likely in sectors of the economy that have been subject to the most exposes of LHR abuse. They are most prevalent in the consumer discretionary or consumer staples sectors, which include industries such as apparel and personal products. Some 49% of firms in these sectors have a policy and 32% have published a code of conduct. Such policies are found in only 15% of financial firms. The energy sector is the least likely to have supply-chain LHR policies, at 14%.
  • The five industries with the highest prevalence of corporate policies have experienced relatively greater negative LHR supplier publicity. Some 65% of household and personal products firms have policies and 55% have a code. In three other industries, a majority of companies have policies as well: consumer durables and apparel; retailing; and food staples retailing.

The full report is available at www.irrcinstitute.org

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