Integrating Logistics & Transportation Service Providers into your Human Rights Due Diligence: Legal Requirements & Approach

Let’s start with a quick recap of the facts, as widely reported in the German media: Drivers from a Polish logistics company had been on strike for weeks at the Gräfenhausen highway service station because they had not been paid. In August 2023, the drivers revealed the names of companies that had allegedly commissioned transports from the exploitative company. After the story broke, Hubertus Heil, the Minister of Labor and Social Affairs, not only declared war on the logistics company, but also called on the companies affected by the German Supply Chain Act to "live up to their responsibilities when selecting their transport companies." Since then, the Federal Office for Economic Affairs and Export Control, responsible for the monitoring and enforcement of the Supply Chain Act, has been examining 58 companies to determine whether the due diligence requirements were met when selecting their transportation service providers.

While the outcome of the investigation remains to be seen, the message itself is clear: companies affected by human rights due diligence legislation need to incorporate the selection and management of transportation providers into their human rights due diligence. And even though this specific case originated in Germany, the learnings are relevant for all other companies affected by supply chain due diligence regulation, regardless of the country.

Human rights due diligence & transport providers: Should you consider transportation providers in the risk assessment?

Intuitively, many companies focus on suppliers of raw materials when assessing risks. By contrast, suppliers of services are not checked or not checked with the same intensity. This tendency is reinforced by the fact that many companies prioritize supplier assessments by spend. However, these distinctions have no legal basis and do not liberate companies from their due diligence obligations. Even ad-hoc supplier-buyer relationships, as in the case of contracts awarded on freight exchange platforms, also constitute a supplier relationship and trigger due diligence obligations. In the case of the German Supply Chain Act, this interpretation was confirmed by the monitoring agency in this webinar by IntegrityNext and VerkehrsRundschau.

For this reason, it is recommended to carry out an appropriate risk analysis at least once a year, in which human rights and environmental risks at transportation service providers are to be assessed.

After the risk assessment: Audits as a risk-based control measure

Supply chain due diligence regulation typically requires affected companies to implement risk-based control measures with their suppliers. In the case of the German Supply Chain Act, it does not specify the type of control measures. Rather, it is up to companies themselves to decide which control measures are appropriate.

In certain cases, an on-site visit or a supplier audit may be the only means of fulfilling the obligation to carry out risk-based control measures. This applies in particular to the assessment of occupational health and safety, as well as for all risks where worker interviews are necessary. Both points generally apply to the assessment of road transport providers: the actual working conditions cannot be assessed solely on the basis of a document review or questionnaire.

Which standards can be used for auditing road transport providers?

Human rights due diligence regulation typically recognizes that certificates and audits can serve as important evidence for the fulfilment of due diligence obligations, provided that they demonstrably meet the legal due diligence requirements, even they do not constitute a safe haven. Standards and audit protocols such as SA 8000, Sedex SMETA, RBA, FSSC 24000 and Together for Sustainability cover the relevant topics, with few or no exceptions.

If no reliable audit results and/or certificates are available, companies can carry out audits themselves or commission third parties to do so. As many social standards have been designed for production facilities, we recommend usingindustry-specific audit criteria. This is the only way to ensure that the auditor(s) take the specifics of the road transport sector into account. These include, among other things

• Legal regulations on driving times and rest periods
• Access to suitable and gender-appropriate accommodation with adequate sleeping and sanitary facilities
• Occupational health and safety in company-owned vehicle workshops and warehouses
• Dealing with subcontractors and passing on the relevant codes of conduct
• Payment of living wages
• Dealing with language barriers; drivers' awareness of their rights in a highly international working environment
• Ethical recruitment of drivers by recruitment agencies
• ... and many more

Audits of road transport service providers: a topic for experts

It is clear from the above list that audits in the transportation sector are not the same as audits in production environments. It is imperative that auditors are familiar with the legal regulations and specifics of the transportation sector. In addition, auditors need in-depth knowledge of audit criteria, labor law, environmental and human rights agreements and conventions, occupational safety, environmental impact, payroll systems, diversity and non-discrimination, as well as the soft skills to conduct effective employee interviews.

The explanatory memorandum to the Supply Chain Act (see Bundestag Drucksache 19/28649, p. 44 and p. 48) expressly mentions that the commissioning of third parties should be considered both for the risk assessment and for the implementation of the control measures. In particular, third parties should be involved if the company does not have the relevant expertise and the involvement of external knowledge is therefore necessary and sensible. Using an independent third party also strengthens the credibility of the audit results.