In the evolving landscape of global supply chains, traditional due diligence practices are being enhanced by innovative methods that emphasise human rights and social responsibility. One such approach gaining momentum is the integration of worker voice and ethical auditing into supply chain due diligence (SCDD). This not only ensures compliance with legal standards but also enhances the ethical footprint of businesses, making it a cornerstone of modern supply chain management.
Ethical auditing involves evaluating a company's operations and supply chain practices to ensure they meet not only legal requirements but also ethical standards concerning labour conditions, environmental impact, and human rights practices. This type of auditing looks beyond financial performance to assess labour conditions, environmental impact, and human rights practices. Third-party organisations often conduct these audits, providing an unbiased perspective on the company's supply chain activities.
Our newly launched digital tool, the Supply Chain Risk Assessment Navigator (SCAN-R) can be used as a baseline to conduct ethical audits by providing a comprehensive assessment of a company's supply chain activities and highlighting areas that need improvement to meet ethical standards. It is designed to assess the SCDD readiness of your company’s processes and facilitate stakeholder engagement. SCAN-R offers several features that support this innovative approach:
- An assessment of an SME’s capabilities in implementing due diligence processes,
- Actionable management recommendations that can contribute to sustainable business growth, and
- A curated list of country- and sector-specific human rights and environmental risks.
Another pillar of an effective SCDD is integrating worker voice. It refers to the active participation of employees in decision-making processes and their ability to freely express concerns and suggestions. In the context of supply chains, this concept extends to workers and other stakeholders at every level, from raw material extraction to final product assembly – more broadly known as stakeholder engagement. Incorporating worker voice into SCDD means creating mechanisms that allow these workers to report issues, provide feedback, and participate in audits without fear of retaliation.
At the Indo-German Chamber of Commerce we believe in the fundamental importance of this pillar and have therefore developed FairVoice, an all-in-one grievance handling solution providing multiple secure and anonymous channels for workers to report abuses, unsafe conditions, or other concerns. The system ensures workers can speak up without fear of retaliation, fostering a culture of openness and transparency. Legal professionals manage case handling, with statuses visible on a digital dashboard. Detailed findings and recommendations for preventive and remedial actions are provided.
Benefits of integrating worker voice include:
- Improved Compliance: Incorporating worker feedback helps companies accurately identify and address compliance issues, reducing the risk of legal violations and reputational damage.
- Enhanced Trust and Transparency: Transparent communication with workers fosters trust and leads to better working conditions and higher employee satisfaction, enhancing the overall integrity of the supply chain.
- Proactive Risk Management: Regular input from workers helps companies proactively identify potential risks and address them before they escalate.
- Strengthened Ethical Standards: Valuing worker input demonstrates a commitment to ethical practices beyond legal compliance, positioning companies as leaders in responsible business conduct.
Incorporating worker voice and ethical auditing into supply chain due diligence is not just a legal necessity but a strategic advantage. Through FairVoice and SCAN-R, IGCC offers a comprehensive portfolio of services to support companies in enhancing their sustainable business practices.
Companies can build more resilient, transparent, and ethical supply chains that withstand the scrutiny of increasingly conscientious consumers and stakeholders. As the global market evolves, embracing these practices with the support of innovative tools like SCAN-R and FairVoice will be essential for companies aiming to lead with integrity and responsibility.
For more information about FairVoice, SCAN-R, and related support services at the Indo-German Chamber of Commerce, please write to sustainmarkets(at)indo-german.com