At this stage, companies have undertaken a thorough assessment of the human and labour rights risks and environmental risks, as well as specific gender risks to which their activities contribute or could contribute and their (potential) adverse impacts. The next step is to take action to prevent any further negative impacts on stakeholders and to mitigate risks for the future.
Risk mitigation means taking proactive and reactive actions that help reduce the identified risks. Taking effective action might require budget allocation as well as adjustments in operational and decision-making processes. Appropriate action can take the form of preventing or mitigating actions (e.g. by providing training for suppliers) or – if no other options are available – stopping activities altogether. Risk mitigation should not be confused with remediation of actual adverse impacts as this is included in Step 6.
Risks identified in the scoping assessment could include labour and human rights, environmental and gender-specific risks. In Step 3 it is important to:
- Consider the impact of your actions on all workers when determining and implementing appropriate action tackling human rights, labour rights and environmental risks.
- Address gender-specific risks.
When determining appropriate action, it is important to address both the immediate effects of adverse impacts as well as its root causes. This helps to ensure that your actions are effective in the long-term and that short-term action does not accidentally exacerbate or aggravate existing gender inequalities. For example, women are responsible for most of the food production consumed in developing countries, yet agricultural land is still often owned by their male relatives. Therefore they are often overlooked when access to land is being negotiated prior to extractive or infrastructure projects, which means they lose out on compensation. This results in adverse impacts, not only for the women themselves, but also for their children and communities.
The level of involvement of a company influences the type of action that can be implemented to address an adverse impact. The diagram below gives a high level overview of this.
CREDIT: OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
1. Stop company activities that are causing or contributing to adverse impacts on human rights issues and develop and implement plans to prevent and mitigate potential adverse impacts.
When a company is causing or contributing to adverse impacts through its own business activities, it has several options:
- Remedy an actual impact
- Eg. When a company comes to the conclusion that it has a gender pay gap, it can compensate women for lost income and ensure that moving forward women earn the same as men for the same work.
- Prevent a potential impact
- Eg. A company with many employees who are young women or mothers needs to ensure that it retains these employees after child birth. It grants extensive parental leave and introduces a workplace nursery which mitigates the disproportionate loss of women employees due to childcare.
- Cease an activity with an adverse impact or that contributes to one
- Eg. a company can decide to stop using environmentally unfriendly materials in its production process to cease its contribution to pollution.
- Use its leverage to help mitigate adverse impacts
- Eg. a company lobbies with its peers to jointly sign an agreement that bans plastic packaging.
When determining an appropriate response, a company should investigate the root causes of adverse impacts. The following example shows why this is important.