While the debate is still ongoing in Germany, human rights due diligence is already a done deal in many countries. The introduction of legal obligations is forcing many companies to redefine the function of social audits. In this article, we discuss what role social audits can play in the context of human rights due diligence.

What has already happened:
In September 2017, the German National Business and Human Rights Action Plan was published. This plan requires companies to identify the human rights impacts of their economic activities and take appropriate measures to avoid potential adverse impacts. However, there is no provision for sanctions for companies that do not comply with the action plan - the plan is not a law and is not legally enforceable. This is precisely the gap that the so-called Value Chain Act is intended to close.
We have compiled further information on the proposed legislation for you here.

Rethinking social audits

Social audits are increasingly being used to meet corporate due diligence obligations with regard to human rights. This requires a rethinking of the traditional social audit:

- Motivation: from voluntary to legally required
- Function: from a freely definable function within the CSR strategy to a supportive and diagnostic function in a clearly defined due diligence approach
- Criteria: From a freely definable code of conduct for suppliers to a human rights catalog
- Consequences: From a reputation question to a liability question

In the following, we explore the question of how social audits should be designed to contribute to effective compliance with human rights due diligence.

How do social audits contribute to compliance with
human rights due diligence?

Nearly all legal requirements for human rights due diligence stem from the United Nations Guiding Principles on Business and Human Rights. According to these, all companies must develop a "human rights due diligence process" to "identify the human rights impacts of their operations, prevent violations, mitigate impacts, and take responsibility."

The Guiding Principles do not describe what role social audits can play in this process. However, it stands to reason that they primarily help to determine the status quo in the supply chain and identify actual and potential human rights violations. In this respect, their function is mainly diagnostic.

In addition, social audits can also have a preventive and even corrective effect:

  • By letting suppliers know that inspections may take place, measures are taken to protect employees.
  • Corrective action plans are usually drawn up for any deviations found during an audit.

However, as NGOs and human rights activists rightly point out, social audits alone are not enough to significantly and permanently improve working conditions. Social audits in themselves only contribute to compliance with human rights due diligence when audit findings are taken into account, follow-up actions are initiated, and root causes are addressed.

What criteria must be covered by the audit
for it to contribute to compliance with
human rights due diligence?

The United Nations Guiding Principles are based on internationally recognized human rights as well as international labor standards as set out in the International Bill of Human Rights and the International Labor Organization (ILO) Conventions.

A number of standards and initiatives exist that have established audit protocols based on these documents. These include general standards such as Sedex SMETA and SA 8000, as well as industry-specific initiatives such as the Responsible Business Alliance, Together for Sustainability, Aluminum Stewardship Initiative, Farm Sustainability Assessments and many more.

What are the liability implications for
conducting social audits?

Companies facing human rights violations in the supply chain are exposed to liability risks. To minimize risks, it is advisable to follow best practices. Specifically, this means:

  • Applying international standards rather than developing your own audit checklists.
  • Join industry initiatives when available
  • Only accept audits from recognized audit organizations (keyword APSCA)
  • Adhere to audit follow-up procedures and document both the corrective actions taken by audited suppliers and your own actions related to the supplier relationship.

DQS CFS GMBH - German Association for Sustainability

All offices of DQS Group have a common goal:
To contribute to the sustainable success of our customers by providing value-added assessments. Within the Group, DQS CFS GmbH bundles all certification and audit services related to sustainability and consumer safety. In addition to the certification of quality and product safety management systems, this also includes the performance of supplier audits, inspections, product certifications and the verification of sustainability reports and indicators.

Dr. Thijs Willaert

Dr. Thijs Willaert is Global Director Sustainability Services. In this role, he is responsible for the entire ESG service portfolio of DQS. His areas of interest include sustainable procurement, human rights due diligence and ESG audits.