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HRDD is essential for responsible business conduct in international supply chains and forms a central part of the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.

The OECD has developed the OECD Due Diligence Guidance for Responsible Business Conduct: a comprehensive guidance to support companies through the HRDD process. This Guidance acts as the basis for responsible sourcing standards and has been adopted by multiple governments, including The Netherlands . The OECD Guidance outlines six steps that make up the HRDD process:

The first step calls for strong management systems. As a company, it is important to have a comprehensive policy framework that includes a commitment to respecting human rights, labour rights and the environment. Companies should also be able to present a commitment to compliance with national and international laws and regulations. In this step, companies evaluate their current policies and develop new ones if needed. These policies should also cover supply chain relations and the activities of other business partners. Therefore, it is important to engage suppliers and support any needs for capacity building.

Through a human rights risk assessment, the potential and actual adverse impacts of a company’s operations, supply chains and business relationships are assessed. Based on further analysis, companies determine which risks need to be prioritised and addressed first.

If a company causes or contributes to adverse impacts, the next step involves addressing these impacts.  Following the risk assessment, plans need to be developed to prevent and mitigate current and potential future adverse impacts. The company then implements appropriate action in close collaboration with suppliers, buyers and any other business partners involved.

Once plans are in place and executed, the fourth step is to monitor the implementation and effectiveness of the company’s due diligence measures. Furthermore, assessment results can be used to improve the human rights due diligence process.

Communication is key in order to align activities with other organisations and to raise awareness within the sector and beyond. In this step, companies are encouraged to publish information on their responsible business conduct to address any identified human rights impacts. This is typically done in an annual report or other public communications on sustainability.

If actual adverse impacts have been identified, then appropriate remediation needs to be provided. Companies should have a grievance mechanism in place for affected parties to use. Access to remediation should be provided by the company when appropriate.

In addition to the six steps, the OECD Guidance provides further clarification for important aspects of the due diligence process, including meaningful stakeholder engagement, policy development, and prioritisation of  adverse impacts. While the Guidance does give companies pointers to support the integration of gender in the Annex, this is not a central focus. For information on what gender-responsive due diligence is and how it differs from HRDD, visit the next page.

Related resources

Making sense of managing human rights issues in supply chains (Norton Rose Fulbright and BI ICL)

The research provides a comprehensive overview of the legal and regulatory framework relevant to the management of human rights in supply chains, sets out observations of current practice amongst businesses and provides best practice recommendations. It considers questions such as addressing human rights impacts beyond first tier suppliers, how to use leverage in the absence of a contractual relationship, and how to undertake HRDD when information about human rights risks is not readily available.

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OECD Due Diligence Guidance for Responsible Business Conduct (Organisation for Economic Co-operation and Development (OECD))

The OECD Due Diligence Guidance for Responsible Business Conduct provides practical support to enterprises on the implementation of the OECD Guidelines for Multinational Enterprises by providing plain-language explanations of its due diligence recommendations and associated provisions. Implementing these recommendations helps enterprises avoid and address adverse impacts related to workers, human rights, the environment, bribery, consumers and corporate governance that may be associated with their operations, supply chains and other business relationships.

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UN Guiding Principles on Business and Human Rights (United Nations)

The UN Guiding Principles on Business and Human Rights are a set of guidelines for States and companies to prevent, address and remedy human rights abuses committed in business operations.

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