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Since this analysis was published in 2012, the FLA has made a number of changes to its standards and processes. | Also see our Collaborations page on this work

Summary

Following the adoption of the Guiding Principles in 2011, the Fair Labor Association (FLA) asked Shift to conduct a review of the implications of the Guiding Principles for its own work. Established in 1999, the FLA is a collaborative effort of universities, civil society organizations and socially responsible companies dedicated to protecting workers’ rights around the world.

The review was conducted through a high-level desk-based analysis of the FLA’s written policies and procedures, its programs, complaints mechanism, governance structures, and information on its website portal to identify correlations, strengths and weaknesses with regard to the Guiding Principles.

The review focused on the second pillar of the Guiding Principles – the corporate responsibility to respect human rights. This focuses on the kinds of policies and processes that a business needs to have in place in order to ensure that it avoids infringing on human rights and addresses any adverse impacts with which it is involved.

This review is not an assessment of the impact of the FLA’s work on the lives of workers; nor is it an assessment of how far company participants in the FLA meet the Guiding Principles. Rather, it focuses on what the FLA itself requires of its Participating Companies and how it knows and shows whether they meet those requirements in practice. The review sought to take into account new developments in the FLA’s evolving approach to the improvement of labor standards.

There are many ways in which the FLA’s policies, processes and practices are well aligned with the Guiding Principles. The revised Workplace Code of Conduct provides a clear set of labor rights outcomes, in line with international standards, and the Principles of Fair Labor and Responsible Sourcing closely parallel the Guiding Principles’ six core requirements regarding a policy commitment, four due diligence steps and remediation processes. The inclusion in the Principles of Fair Labor and Responsible Sourcing of key aspects of purchasing/sourcing practices is notable in filling a previous gap with regard to embedding respect for human rights across all relevant company departments.

Also noteworthy is the FLA’s recent move away from pure compliance auditing towards the incorporation of more root cause analysis and capacity building approaches, aimed at more effective and sustainable mitigation of risks to workers’ rights. The FLA has strong verification and reporting practices with regard to Participating Companies’ suppliers, and provides considerable transparency through the publication of its independent monitoring/assessment reports. Transparency has also been a strong feature of the FLA’s Third Party Complaints mechanism, which has achieved some notable remediations of complex labor rights impacts over the years. The FLA also has a strong set of commitments and practices regarding stakeholder engagement.

In order to achieve further alignment with the Guiding Principles, Shift recommends that the FLA:

• improve its ability to track the performance of Participating Companies with regard to the Principles of Fair Labor and Responsible Sourcing, including by helping Participating Companies develop the capacity to know and show that their own activities (including sourcing/purchasing decisions) are consistent with respect for human rights.
• pay particular attention to the role that performance incentives for staff making purchasing decisions play in driving respect for labor rights compliance in the supply chain. Participating Companies could be requested to include information on this in their annual reporting to the FLA.
• define a process for coming into line with its own Charter commitments with regard to reporting on the performance of Participating Companies, and keep external stakeholders appraised of its plans and progress in this regard.
• clarify the grievance mechanism requirements in the Workplace Code, including with regard to what makes for an effective grievance mechanism. This might be elaborated in supporting materials to the Code and based on Guiding Principle 31.
• provide greater clarity on what Participating Companies should themselves provide by way of grievance reporting channels for workers, with due allowance for their varying resources and capacities.
• ensure a full description of the FLA’s Third Party Complaints process is again made available on its website in key languages, pending the completion of the current review process.
• ensure that the FLA Charter is updated to be consistent with revised FLA policies and principles, and keep stakeholders appraised via its website and other communications of current or future FLA reforms.

The FLA might also consider:

• Discussing with Participating Companies the extent to which they apply the same standards to their corporate employees as they expect their suppliers to apply to workers, and the implications of any discrepancies for the FLA’s mission.
• Using the move to its new Sustainable Compliance program to promote more explicitly the development of human rights due diligence processes at the suppliers of Participating Companies, and sharing the learning about how to achieve this in a small factory setting.
• Providing clearer timelines and pathways for smaller licensees to meet the full range of FLA standards in a manner appropriate to their resources and human rights impacts, to avoid the risk of these companies having de facto exemptions from provisions that are integral to the Guiding Principles.

Summary

A company’s ability to carry out human rights due diligence depends on the extent to which respect for human rights is embedded in company culture. Company personnel should be:

• aware of the human rights risks related to their functional responsibilities;
• empowered and incentivized to conduct their work in a manner that respects human rights.

The challenge of embedding new values within company culture is not exclusive to human rights. The field of change management and environmental, health, and safety management processes both seek to transform corporate cultures that are insufficiently responsive to issues that inhibit improved business performance.

Based on twelve interviews with company representatives and corporate sustainability advisors spanning four continents, this study identifies four common gaps in progress towards embedding respect for human rights in corporate culture:

1. Abstract language used to frame human rights: Although the International Bill of Human Rights and the ILO’s Declaration on Fundamental Principles and Rights at Work enumerate internationally recognized human rights and can be an important reference point for corporate-level policies, personnel’s national and professional cultures shape their understanding of how human rights relate to their business activities. If human rights issues are not described in a manner that is consistent with their national and professional background, people fail to appreciate the scope of applicable human rights and the scale of individuals and communities that can be affected by their work. Consequently, corporate-level commitments will not be incorporated into operational practices.
2. Excessive “happy talk”: Companies publicize their positive human rights performance and community leadership internally. Yet, employees are only exposed to potential and actual human rights impacts through such happy talk. The geographic distance of desk-based staff from vulnerable individuals and the narrow functional responsibilities of operational-level staff prevent adequate recognition of the human rights risks linked to their professional conduct. Without explicit guidance, training, or incentives to consider the connection between business practices and human rights, internal happy talk fosters a culture of complacency regarding human rights risks.
3. Delegating ownership of impacts to those who can’t fix them directly: While human rights specialists are needed to provide expertise, the responsibility for human rights compliance is rarely shared between specialists and the appropriate functions or business units. The dependence of both business unit managers and operational-level staff on such specialists separates the responsibility for exercising due diligence from the actual function or business unit associated with the risk. When this responsibility is delegated almost entirely to specialists, the effectiveness of human rights due diligence processes depends on their ability to convince business functions to modify their conduct. Yet, they often lack the necessary seniority and influence internally to do so.
4. Toothless cross-functional committees: Cross-functional working groups are intended to facilitate the coordinated implementation of human rights commitments but several company representatives reported no involvement by business unit management. The participation of business units provides such committees with the influence, credibility, and expertise needed to change operational-level conduct.

An in-depth analysis of change management literature, and environmental, health, and safety consultancy guidelines reveals processes that have been successful in promoting the shared ownership of other forms of due diligence. Companies can apply the following five lessons on embedding to more effectively exercise human rights due diligence:

1. Consistently communicate human rights in accessible terms.
2. “Seeing is believing”: expose relevant personnel to the realities of the company’s impact on human rights, and its management of those impacts.
3. Tailor guidance on human rights risk management for specific functions, to make human rights risk management more tangible and actionable on a day-to-day basis.
4. Develop leading human rights indicators: Leading indicators focus peoples’ attention on the consequences of their own decisions and practices.
5. Create broad-based performance evaluation criteria for exercising due diligence: Peoples’ sense of professional responsibility is reinforced by explicit incentive and accountability measures.

These lessons demonstrate that the successful embedding of human rights occurs neither unintentionally nor as the result of a single incident. Rather, embedding involves a deliberate set of processes that incrementally foster a company culture that respects human rights.