Due Diligence: Practical Actions for Companies

12 Actions to Be Implemented in the Company’s Policies and Management Systems

What Actions Can You Take within Your Company?

1. Determine a strategy for making responsible business conduct part of the company’s DNA.
2. Assign responsibility for due diligence implementation and monitoring to senior management and the broader responsibility for responsible business conduct (RBC) issues to the company's board of directors or supervisory board.
3. Identify experts (internal and/or external to the company) in the areas covered by the Guidelines to bring their expertise to the process.
4. Set up communication channels or use existing ones, between senior managers and the departments responsible for implementing due diligence.
5. Make the company's policies on RBC issues public, for example by publishing them on the website or displaying them on the company's premises. If necessary, have these policies translated into local languages.
6. Communicate the company's policies on RBC issues to employees and other workers concerned, for instance during integration seminars or training workshops, by repeating this operation at regular intervals to maintain a good level of awareness.
7. Organise training workshops for the workers concerned in order to help them understand and implement the company's policies on RBC issues.
8. Develop complaint procedures, build on existing ones or adapt them to allow workers to report any problems or complaints related to RBC issues.

What Actions Can You Take Regarding Your Suppliers? 

9. Communicate with your suppliers on key aspects of policies related to the company's RBC issues. 
10. Support your suppliers in order for them to be able to understand and apply RBC policies and implement their own due diligence (workshops, training, etc.).
11. Include clauses and rules regarding RBC issues in your contracts or other written agreements that your company makes with its suppliers and other business partners.
12. Develop and implement pre-qualification procedures for your company's suppliers and other business partners.

10 Actions to Identify and Assess Negative Impacts in Operations, Supply Chain and Business Relationships

What Actions Can You Take within Your Company?

1. Make an initial and comprehensive overview of your company's fields of activity and types of business relationships in order to determine which information to collect.
2. Collect the information necessary to identify the risks related to the most significant RBC issues and rank them according to priority. Relevant elements to look for include risk factors related to the company's business sector, region of location and products. Focus specifically on the real risks to which the company has already been exposed or is likely to be exposed. Some ideas for useful sources: reports published by civil society organisations, government agencies, trade unions, employers' federations, the local press, etc. If necessary, call on the services of experts in the fields related to RBC issues.
3. Update the research results whenever the company's situation changes significantly, e.g., when it operates in or gets its supplies from a new country, when it develops a new range of products or services.

You can consult this sample tool to assess the country and product risks.

What Actions Can You Take Regarding Your Suppliers? 

4. List the activities, suppliers and other business relationships of your company that are affected by the risks identified as priorities. By mapping out the structure of your supply chain, your company will be able to better identify which activities, geographical areas, products and business relationships are most at risk.
5. Obtain, if necessary and possible, information on your company's business relationships beyond direct contractual relations (e.g., "tier 2" suppliers and beyond, further down the chain).
6. Assess the nature and severity of actual and potential negative impacts of the company's activities, suppliers and other business relationships identified as priorities.
7. Reassess the negative impacts of the company's activities or business relationships at regular intervals and whenever the situation requires.

Examples of supplier assessment tools: 

What Actions Can You Take Regarding External Stakeholders?

8. Consult with affected stakeholders and rights holders or their legitimate representatives.
9. For human rights impacts: interact and consult with affected or potentially affected rights holders.
10. Consult with internal or external experts if necessary.

A risk matrix (sometimes also called analysis of materiality) can help you present the two assessment criteria "severity" and "probability of occurrence" of risks:

11 Actions to Stop, Prevent or Mitigate Negative Impacts

What Actions Can You Take within Your Company? 

1. Entrust competent internal or external experts with the task of determining actions to prevent and, if necessary, mitigate and stop the identified negative impacts. Propose these actions to the company's management.
2. Give competent senior managers responsibility for ensuring the implementation of actions to reduce or eliminate negative impacts caused or promoted by the company's activities.
3. Include guidelines in the company’s policies on how to avoid and deal with negative impacts in the future and ensure compliance with these guidelines.
4. If your company is contributing to risks or negative impacts that are primarily caused by another entity, take action to stop contributing now and in the future. 

What Actions Can You Take Regarding Your Suppliers? 

5. Wherever possible, use your influence on your company's business relationships to encourage them to prevent or mitigate their risks or negative impacts.
6. Help your company's business relationships to develop appropriate plans to prevent and mitigate their negative impacts based on a clear and reasonable timetable and on qualitative and quantitative indicators to measure progress.
7. Help your company's suppliers and other business relationships to prevent or mitigate their risks or negative impacts, for example by organising training, enhancing their equipment or strengthening their management systems, with a view to continuous improvement.
8. Include in contracts the consequences of non-compliance with commitments made to prevent or mitigate identified risks of negative impacts, and identify and determine situations where a contract with a business partner may, as a last resort, be terminated on this basis or in case of failure of the measures implemented.
9. If your company decides not to terminate the business relationship, be prepared to report on the steps taken to mitigate the identified risks. You will need to be prepared to address image, financial or legal risks that your company might face in pursuing this relationship.

What Actions Can You Take Regarding External Stakeholders?

10. Consult and interact with affected or potentially affected stakeholders and rights holders and their representatives to develop and implement an appropriate action plan.
11. Cooperate with other actors to exert collective influence, for example by collaborating through sector associations or by interacting with public authorities on sector-specific risks and different types of available support.

Monitor the Implementation and Results of Your Actions

• Monitor the implementation and effectiveness of the company's own due diligence commitments, its activities and objectives in this field, for example by conducting surveys or audits, either internally or with the assistance of third parties.

• Regularly assess the company's business relationships in order to ensure that they are actually taking steps to mitigate their risks and preventing or mitigating their negative impacts.
• For negative impacts that the company is causing or may cause regarding human rights and the environment, or to which it is contributing or may contribute, consult and interact with affected or potentially affected rights holders (workers, workers' representatives and unions, environmental organisations, etc.).

Communicate on How Impacts Are Being Addressed

• Make information on the due diligence processes adopted by your company public, e.g. by including this information in the annual RBC reports or other appropriate material.
• Disseminate information in an accessible and appropriate format, for example by publishing it on your company's website, displaying it on its premises and translating it into local languages.
• Your company can also consider communicating with impacted stakeholders and rights holders by sharing the results of assessment studies or audits on labour rights, human rights or the environment while respecting confidentiality requirements.

Repair Damage Caused by Your Own Means or in Cooperation with Other Actors

• Provide compensation commensurate to the significance and the extent of negative impacts. This may include apologies, restitution or rehabilitation, financial compensation or actions to address current impacts and prevent future ones.
• Propose a company-specific compensation mechanism or cooperate in good faith with a legitimate redress mechanism (judicial and non-judicial).
• Set up complaint management systems and make them operational, e.g. internal worker’s complaint management systems or third-party complaint management systems. 
• Interact with worker’s representatives and trade unions to establish a procedure allowing workers to bring complaints to your company.