Created in partnership with the Helpdesk on Business & Human Rights

Due Diligence Considerations

This section outlines due diligence steps that companies can take to address discrimination in their operations and supply chains. The described due diligence steps are aligned with the UN Guiding Principles on Business and Human Rights (UNGPs). Further information on UNGPs is provided in the ‘Key Human Rights Due Diligence Frameworks’ section below or in the Introduction.

While the below steps provide guidance on non-discrimination in particular, it is generally more resource-efficient for companies to ‘streamline’ their human rights due diligence processes by also identifying and addressing other relevant human rights issues (e.g. child labourforced labourfreedom of association) at the same time.

Key Human Rights Due Diligence Frameworks

Several human rights frameworks describe the due diligence steps that businesses should ideally implement to address human rights issues, including non-discrimination. The primary framework is the UN Guiding Principles on Business and Human Rights (UNGPs). Launched in 2011, the UNGPs offer guidance on how to implement the United Nations “Protect, Respect and Remedy” Framework, which establishes the respective responsibilities of Governments and businesses — and where they intersect.

The UNGPs set out how companies, in meeting their responsibility to respect human rights, should put in place due diligence and other related policies and process, which include:

  • A publicly available policy setting out the company’s commitment to respect human rights;
  • Assessment of any actual or potential adverse human rights impacts with which the company may be involved across its entire value chain;
  • Integration of the findings from their impact assessments into relevant internal functions/processes — and the taking of effective action to manage the same;
  • Tracking of the effectiveness of the company’s management actions;
  • Reporting on how the company is addressing its actual or potential adverse impacts; and
  • Remediation of adverse impacts that the company has caused or contributed to.

The steps outlined below follow the UNGPs framework and can be considered a process which a business looking to start implementing human rights due diligence processes can follow.

Additionally, the OECD Guidelines on Multinational Enterprises define the elements of responsible business conduct, including human and labour rights.

Another important reference document is the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration), which contains the most detailed guidance on due diligence as it pertains to labour rights. These instruments, articulating principles of responsible business conduct, draw on international standards enjoying widespread consensus.

Companies can seek specific guidance on this and other issues relating to international labour standards from the ILO Helpdesk for Business. The ILO Helpdesk assists company managers and workers that want to align their policies and practices with principles of international labour standards and build good industrial relations. It has a specific section on non-discrimination and equality. The ILO Helpdesk has developed a factsheet specifically on non-discrimination, which provides practical guidance for managers.

Additionally, the SME Compass offers guidance on the overall human rights due diligence process by taking businesses through five key due diligence phases. The SME Compass has been developed in particular to address the needs of SMEs but is freely available and can be used by other companies as well. The tool, available in English and German, is a joint project by the German Government’s Helpdesk on Business & Human Rights and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

1. Develop a Policy Commitment on Non-Discrimination

UNGP Requirements

As per the UNGPs, a human rights policy should be:

  • “Approved at the most senior level” of the company;
  • “Informed by relevant internal and/or external expertise”;
  • Specific about company’s “human rights expectations of personnel, business partners and other parties directly linked to its operations, products or services”;
  • “Publicly available and communicated internally and externally to all personnel, business partners and other relevant parties”; and
  • “Reflected in operational policies and procedures necessary to embed it throughout the business”.

The starting point for any business to tackle discrimination is to develop a company commitment to non-discrimination. First, any company introducing policies to promote equality and avoid discrimination needs to be aware of the diversities of language, culture and family circumstances that may exist in the workforce. For example, both business services firm Ernst & Young and investment bank Citigroup have stand-alone anti-racism policies. The integration of non-discrimination aspects into a human rights policy is another option that companies such as Microsoft have adopted. Where companies do not have a human rights policy, non-discrimination is often addressed in other documentation, such as a business code of conduct or ethics and/or a supplier code of conduct.

Businesses may also consider aligning their non-discrimination policies with relevant industry-wide and cross-sector policy commitments, for example:

In addition to these overarching industry-wide initiatives, businesses could consider joining non-discrimination-specific global initiatives, such as the Partnering for Racial Justice in Business initiative launched by the World Economic Forum in January 2021. To join the Initiative, three steps are required from businesses:

  • Racial and ethnic equity must be placed on the board’s agenda;
  • Companies must make at least one commitment towards racial and ethnic justice in their organizations; and
  • Companies must put a long-term strategy in place towards becoming an anti-racist organization.

Among the founding members of the Partnering for Racial Justice in Business initiative are global companies such as AstraZeneca, Deutsche Bank, H&M, HP, Johnson & Johnson, Microsoft, Nestlé, PepsiCo, Coca-Cola and Unilever.

Businesses may want to check the ILO Helpdesk for Business, which provides answers to the most common questions that businesses may encounter while developing their non-discrimination policies — or integrating non-discrimination commitments into other policy documents. Examples include:

  • What are the prohibited bases of discrimination in employment?
  • Is there any distinction that is not considered discriminatory?
  • A company wants to recruit a worker for a job that requires physical strength. This job cannot be adapted, so as a consequence, the company does not want to receive applications from older people, persons of smaller builds, women or disabled persons. To what extent can this recruitment practice be considered a breach of ILO conventions related to discrimination? How can a company respect ILO principles related to discrimination without putting at risk the health and safety of its workers?
Helpful Resources
  • ILO, Promoting Equity, Chapter 2: This guide provides information on how to create an ethnic diversity policy for businesses, including a sample policy and a sample plan for implementing proactive measures.
  • United Nations Global Compact, A Guide for Business: How to Develop a Human Rights Policy: This guidance provides recommendations on how to develop a human rights policy and includes extracts from companies’ policies referencing non-discrimination.
  • United Nations Global Compact, Guide for Business on the Rights of Persons with Disabilities: A guide for businesses to help improve their understanding of how to respect and support the rights of people with disabilities and close the opportunity gap while at the same time improving their company’s competitiveness and sustainability.
  • Ethical Trading Initiative, Base Code Guidance: Gender Equality (B) — Gender and Human Rights Due Diligence: A detailed guide on human rights due diligence on gender equality, including a section on building company leadership and commitment to gender equality and women’s rights.
  • Business in the Community, Anti-racism and Allyship in the Workplace Toolkit: A collection of tools and resources to support businesses in becoming anti-racist.

2. Assess Actual and Potential Discrimination Impacts

UNGP Requirements

The UNGPs note that impact assessments:

  • Will vary in complexity depending on “the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations”;
  • Should cover impacts that the company may “cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships”;
  • Should involve “meaningful consultation with potentially affected groups and other relevant stakeholders” in addition to other sources of information such as audits; and
  • Should be ongoing.

Impact assessments should look at both actual and potential impacts, i.e. impacts that have already manifested or could manifest. This compares to risk assessment that would only look at potential impacts and may not satisfy all of the above criteria.

Businesses should seek to develop an understanding of the different types of discrimination and how it can affect people in their own operations and their value chains. For example, women constitute a growing proportion of the world’s workforce, but on average continue to earn less than their male counterparts or are not provided with the same opportunities. Another example is employees with disabilities who may have particular needs that should be met, where reasonable, in order to ensure that they have the same opportunities (e.g. for training and advancement) as their peers.

Impact assessments focusing on discrimination could include the following:

  • The prevalence of discrimination (in access to employment, education, land, capital, economic opportunities etc.) based on ethnicity, religion and other grounds;
  • The potential for such discrimination to impact on the company and its workforce — and vice-versa.

Assessing the prevalence of intersectional discrimination will also help companies gain a better picture of the different layers of discrimination people (potentially) affected by their operations and value chains may face. Intersectional discrimination occurs when an individual is discriminated against on two or multiple grounds that interact simultaneously and in an inseparable manner. For example, women may face discrimination not only based on their gender, but also because of their age, disability, social and economic status, ethnicity and race.

Any such assessment should be commensurate with operational requirements and may range from a desk-based assessment to on-site and corporate-level exercises. Depending on the sector and expanse of operations, companies might consider integrating customers, business partners, suppliers and contractors into the assessment — to ensure the full range of potential and actual risks and impacts are addressed.

When conducting an assessment, companies might focus on three key areas:

1. External context

  • Does the country of operation have a history of divisiveness (e.g. on religious, ethnic or national grounds) and does it demonstrate evidence of discrimination within broader society? Does the company have adequate anti-discrimination policies and processes to ensure workers in their global supply chains are not discriminated against in the workplace?
  • What are the relevant laws pertaining to equal opportunity and non-discrimination? Do these provide adequate protection to marginalized groups to ensure equal opportunity — or are additional measures required?
  • Are there local affirmative action requirements for particular groups of employees that may be applicable to your business? If not, would historical circumstances justify unilateral action on the part of the company (in line with relevant legal controls)?
  • What are the views of civil society groups in the country or region of operation regarding discrimination faced by marginalized groups in the workplace? Does the company consider such stakeholder concerns and is there a need to facilitate stakeholder partnerships to tackle issues pertaining to discrimination?

2. Internal context

  • What is the current makeup of your workforce (e.g. its ethnic, religious, cultural, national or age composition)? And to what extent do current company policies and procedures address discrimination against various groups of employees in all aspects of employment and occupation?

3. Relationships (State/non-State business partners, civil society, value chain actors)

  • What is the current makeup of your suppliers’ workforces (e.g. their ethnic, religious, cultural or national compositions)? And what is the current makeup of your customers?
  • To what extent do business partners in your value chain (including suppliers and contractors) ensure that people have equal opportunities and treatment (i.e. workers are not discriminated against in their recruitment, hiring and employment practices, and specific groups in the local communities are not harassed and/or discriminated against by security service providers)?
Helpful Resources
    • Ethical Trading Initiative, Base Code Guidance: Gender Equality (B) — Gender and Human Rights Due Diligence: A detailed guide on human rights due diligence on gender equality, including ‘Assessment and Analysis’ section that provides guidance on a graduated approach to gender assessments.
    • Race Forward, Racial Equity Impact Assessment: This toolkit provides tips and information on conducting a racial equity impact assessment, which can be used to inform various business decisions.
    • International Dalit Solidarity Network, Dalit Discrimination Check: This guidance provides guidance on conducting Dalit discrimination checks, including impact assessments, and can be adapted to focus on other discrimination criteria, such as other ethnic minorities or races.
    • CSR Risk Check: A tool allowing companies to check which international CSR risks (including related to discrimination) businesses are exposed to and what can be done to manage them. The tool provides tailor-made information on the local human rights situation as well as environmental, social and governance issues. It allows users to filter by product/raw material and country of origin. The tool was developed by MVO Netherland; the German version is funded and implemented by the German Government’s Helpdesk on Business & Human Rights and UPJ.
    • SME Compass: Provides advice on how to assess actual and potential human rights risks and how to assess and prioritize risks.
    • SME Compass, Risk Analysis Tool: This tool helps companies to locate, asses and prioritize significant human rights and environmental risks long their value chains.
    • SME Compass, Supplier review: This practical guide helps companies to find an approach to manage and review their suppliers with respect to human rights impacts.

3. Integrate and Take Action to Address Discrimination Impacts

UNGP Requirements

As per the UNGPs, effective integration requires that:

  • “Responsibility for addressing [human rights] impacts is assigned to the appropriate level and function within the business enterprise” (e.g. senior leadership, executive and board level); and
  • “Internal decision-making, budget allocations and oversight processes enable effective responses to such impacts”.

Examples of company actions to address discrimination include the following:

  • Removing existing obstacles to non-discrimination practices: This may involve checking whether existing policies and processes (covering employees, contractors and other third parties) are intentionally or unintentionally discriminatory and implementing corrective measures if required.
  • Affinity groups: Affinity groups are voluntary groups consisting of employees sharing a common identity and having the objective of promoting workplace tolerance. Supporting the establishment of affinity groups could be an effective strategy to complement other structural measures to tackle discrimination. The groups are commonly organized along ethnic, religious, cultural and linguistic lines, providing a useful support network to employees of a particular identity. In addition, they are intended to raise awareness and understanding of particular groups and persons belonging to ethnic, cultural and other identities within the general workforce. Examples of companies that have facilitated the creation of affinity groups include HSBCand PwC.
  • Diversity training: Examples of companies that conduct diversity training for their employees and suppliers include Unileverand Mitsubishi Motors. Conducting unconscious bias training can also help staff understand possible implicit biases that may impact recruitment and/or promotions and provide tools to adjust possible patterns of thinking that lead to discriminatory behaviours.
  • Capability building for disadvantaged groupsCompaniesmay wish to engage in employee mentoring, skills training or sponsoring of programmes to combat discrimination and/or to bolster the career prospects of disadvantaged groups. Such capability-building activities may include employee mentoring (for example through formal programmes involving senior managers and other staff); targeted recruitment to increase the representation of disadvantaged groups; and scholarships and language courses. For example, technology company Lenovo offers support and community around disability, early-career professionals and religious affiliation.
  • Engaging with workers’ representatives: Tackling discrimination in the workplace often requires a cultural transformation across all levels of the enterprise. Buy-in from the workers is essential; workers’ representatives can — and should — play a leading role in this process.
  • Promoting diversity in procurement: Companies may promote or require compliance with a specific code of conduct for key business partners (e.g. suppliers and sub-contractors), which contains non-discrimination requirements. Companies can (subject to local laws) also apply preferential procurement to increase the proportion they spend with minority suppliers — or suppliers who benefit minority individuals. For example, Walmart procured goods through 2,800 suppliers through its Supplier Inclusion Programme in 2019. The promotion of diversity within procurement can be subject to official requirements. For example, the Broad-Based Black Economic Empowerment (BBBEE) policy in South Africa includes criteria requiring companies to procure from recognized BBBEE suppliers as part of their overall qualification.
Helpful resources
  • ILO, Promoting Equity, Chapter 3: This guide provides information on how to implement an ethnic diversity policy.
  • Ethical Trading Initiative, Base Code Guidance: Disability Inclusion in the Global Supply Chain: A detailed guide on actions that businesses can take to promote the employment of people with disabilities in global supply chains.
  • Ethical Trading Initiative, Base Code Guidance: Gender Equality (B) — Gender and Human Rights Due Diligence: A detailed guide on human rights due diligence on gender equality, including a section on concrete steps for addressing gender inequality in the supply chain.
  • Diversity Best Practices: website featuring interviews, resources and company activities and best practices on diversity, including anti-racism.
  • SME Compass: Provides adviceon how to take action on human rights by embedding them in your company, creating and implementing an action plan, and conducting a supplier review and capacity building.
  • SME Compass, Identifying stakeholders and cooperation partners: This practical guide is intended to help companies identify and classify relevant stakeholders and cooperation partners
  • SME Compass, Standards Compass: This online tool offers guidance on what to pay attention to when selecting sustainability standards or when participating in multi-stakeholder initiatives. It allows comparing standards and initiatives with respect to their contribution to human rights due diligence and their potential limitations.

4. Track Performance on Non-Discrimination

UNGP Requirements

As per the UNGPs, tracking should:

  • “Be based on appropriate qualitative and quantitative indicators”; and
  • “Draw on feedback from both internal and external sources, including affected stakeholders” (e.g. through grievance mechanisms).

There are several ways to track performance on discrimination. However, it is important to note that discrimination may go unnoticed, especially where the victim feels vulnerable or afraid to report the issue. As such, making sure any tracking mechanisms are anonymous and as safe as possible is important. Steps on how companies can ensure workers have access to remedy and grievance mechanisms are detailed in the Remedy and Grievance Mechanisms section below.

The most common way of tracking performance on discrimination is through employee engagement and surveys, particularly anonymous ones. Gathering the experiences of employees will help companies determine the impact of their policies and processes and identify areas for improvement or remediation.

Supplier audits can help identify instances of discrimination in supply chains and allow a company to monitor performance. However, as with own operations, engagement with workers is likely to be the best way to understand discrimination within suppliers’ operations as visiting auditors are unlikely to view any discrimination, in particular indirect discrimination, which requires discussion with workers to understand disparate impacts of prima facie neutral criteria. Where workers feel unable to speak about their experiences, using anonymous feedback processes or ‘worker voice’ technologies can be helpful.

Responsibility for tracking performance on discrimination should be clearly allocated to relevant roles within the company and performance KPIs should be clearly defined. For example, HP has defined the following goals in relation to racial equality:

  • Double the number of Black and African American executives by 2025;
  • Double Black and African American promotion rates and technical representation by 2025; and
  • Achieve 90% (up from 84%) in inclusion index score for Black and African American employees in 2021.

Another example of a company that has set KPIs with respect to diversity and inclusion is Japanese food company Calbee, which has a 30% target of female managers by FY2023/24, an increase of its current rate of 20.4% as of April 2020.

Helpful Resources
  • ILO, Promoting Equity, Chapters 1 and 4: This guide provides information on how to conduct an ethnic diversity audit in business, and how to monitor and review an ethnic diversity policy.
  • Ethical Trading Initiative, Base Code Guidance: Gender Equality (B) — Gender and Human Rights Due Diligence: A detailed guide on human rights due diligence on gender equality, including a section on tracking performance.
  • SME Compass: Key performance indicators for due diligence: Companies can use this overview of selected quantitative key performance indicators to measure implementation, manage it internally and/or report it externally.
  • SME Compass: Measuring and reporting on progress: This resource provides an overview of how to measure and report on the progress of the actions taken to address human rights impacts.

5. Communicate Performance on Non-Discrimination

UNGP Requirements

As per the UNGPs, regular communications of performance should:

  • “Be of a form and frequency that reflect an enterprise’s human rights impacts and that are accessible to its intended audiences”;
  • “Provide information that is sufficient to evaluate the adequacy of an enterprise’s response to the particular human rights impact involved”; and
  • “Not pose risks to affected stakeholders, personnel or to legitimate requirements of commercial confidentiality”.

Companies are expected to communicate their performance on non-discrimination in a formal public report. This can take the form of a standalone report such as Barclays’ 2020 Diversity and Inclusion Report or GM’s Diversity and Inclusion Report; alternatively, communication can be made via companies’ broader sustainability or human rights reporting or in their annual Communication on Progress (CoP) in implementing the Ten Principles of the UN Global Compact. Examples of companies covering non-discrimination aspects in their annual sustainability reports include Pertamina and Samsung. Other forms of communication may include in-person meetings, online dialogues and consultation with affected stakeholders.

Helpful Resources
  • Global Reporting Initiative, GRI 405: Diversity and Equal Opportunity: The 2016 standard lists the disclosures and activities needed for a business to achieve the standard on an annual basis.
  • Global Compact Network UK, Black Lives Matter & Business: This report gives information on how companies can report on ethnicity and race in the workplace, as well as other tips.
  • Women’s Empowerment Principles, WEPs Guidance Note: How to Report Progress: This step-by-step guide is designed to help WEPs Signatories report on progress against eight Essential Indicators of the WEPs Transparency and Accountability Framework.
  • IFC, Embedding Gender in Sustainability Reporting: A Practitioner’s Guide: This resource offers practical steps on how to embed gender in sustainability reporting.
  • UNGP Reporting Framework: A short series of smart questions (‘Reporting Framework’), implementation guidance for reporting companies, and assurance guidance for internal auditors and external assurance providers.
  • United Nations Global Compact, Communication on Progress (CoP): The CoP ensures further strengthening of corporate transparency and accountability, allowing companies to better track progress, inspire leadership, foster goal-setting and provide learning opportunities across the Ten Principles and SDGs.
  • The Sustainability Code: A framework for reporting on non-financial performance that includes 20 criteria, including on human rights and employee rights.

6. Remedy and Grievance Mechanisms

UNGP Requirements

s per the UNGPs, remedy and grievance mechanisms should include the following considerations:

  • “Where business enterprises identify that they have caused or contributed to adverse impacts, they should provide for or cooperate in their remediation through legitimate processes”; and
  • “Operational-level grievance mechanisms for those potentially impacted by the business enterprise’s activities can be one effective means of enabling remediation when they meet certain core criteria”.

To ensure their effectiveness, grievance mechanisms should be:

  • Legitimate: “enabling trust from the stakeholder groups for whose use they are intended, and being accountable for the fair conduct of grievance processes”
  • Accessible: “being known to all stakeholder groups for whose use they are intended, and providing adequate assistance for those who may face particular barriers to access”
  • Predictable: “providing a clear and known procedure with an indicative time frame for each stage, and clarity on the types of process and outcome available and means of monitoring implementation”
  • Equitable: “seeking to ensure that aggrieved parties have reasonable access to sources of information, advice and expertise necessary to engage in a grievance process on fair, informed and respectful terms”
  • Transparent: “keeping parties to a grievance informed about its progress, and providing sufficient information about the mechanism’s performance to build confidence in its effectiveness and meet any public interest at stake”
  • Rights-compatible: “ensuring that outcomes and remedies accord with internationally recognized human rights”
  • A source of continuous learning: “drawing on relevant measures to identify lessons for improving the mechanism and preventing future grievances and harms”
  • Based on engagement and dialogue: “consulting the stakeholder groups for whose use they are intended on their design and performance, and focusing on dialogue as the means to address and resolve grievances”

Grievance mechanisms can play an important role in helping to identify and remediate discrimination issues in operations and supply chains. It is however important to be conscious of the fact that formal structures and informal cultural issues can prevent employees from raising concerns and grievances. Grievance mechanisms should be:

  • Created with input from the affected groups they are intended to help; and
  • Available in multiple formats and languages to accommodate workers’ needs.

It is important that businesses provide grievance mechanisms that prioritize the safety and well-being of the complainant, and that there are anonymous mechanisms available for those who are fearful of repercussions.

Remediating the issues of discrimination can be difficult and should be handled sensitively, as the harm caused to the victim could be significant. If legal proceedings have been taken against the business regarding discrimination, the business should seek legal advice and cooperate in good faith with such proceedings.

It is advisable that businesses have a remediation plan included in their human resources policies and procedures, which can guide responsible employees in remediating the situation in an effective and sufficient way. Examples of remediation actions may include the following:

  • Disciplinary measures against the actor(s) responsible for, and management tolerant of, the discriminatory behaviour;
  • Return of lost earnings or property lost through discrimination to the victim;
  • Altering processes, policies and procedures to ensure that the situation does not arise again; and
  • Depending on the type of discrimination, there may also need to be physical changes to a business, such as ensuring accessibility in the workplace for employees with disabilities or offering separate working spaces for men and women.
Helpful Resources
  • Ethical Trading Initiative, Access to Remedy: Practical Guidance for Companies: This guidance explains key components of the mechanisms that allow workers to submit complaints and enable businesses to provide remedy.
  • Global Compact Network Germany, Worth Listening: Understanding and Implementing Human Rights Grievance Management: A business guide intended to assist companies in designing effective human rights grievance mechanisms, including practical advice and case studies. Also available in German.
  • SME Compass: Provides advice on how to establish grievance mechanisms and manage complaints.
  • SME Compass, Managing grievances effectively: Companies can use this guide to design their grievance mechanisms more effectively – along the eight UNGP effectiveness criteria – and it includes practical examples from companies.
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