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 labour, forced labour, freedom of association) at the same time.

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:

• Responsible Business Alliance (RBA) Code of Conduct
• Ethical Trading Initiative (ETI) Base Code
• amfori BSCI Code of Conduct
• Fair Labor Association (FLA) Code of Conduct

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?

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)?

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 groups: Companiesmay 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.

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.

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.

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.