Remediation in supply chains | KPMG | AU

Remediation in supply chains

Remediation in supply chains

Companies that look deeper into their supply chains often uncover poor labour practices – a reflection of a responsible sourcing program. When this happens, leading practice is not to ‘cut and run’ from the supplier, but to implement a remediation plan.

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Global Head, KPMG Business & Human Rights Network

KPMG Australia

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Workers in a garment factory

KPMG and Sedex, a non-profit organisation dedicated to improving global supply chains, hosted a Responsible Sourcing Conference in Sydney in 2017. In a breakout session, led by Amelia Bruce and Madeline Greer, both from KPMG’s Human Rights & Social Impact services, a panel and attendees discussed what ‘access to remedy’ means, what remediation looks like, who is out there to help, and the key steps to take. Carly Richards, Director, Internal Audit Risk & Compliance, KPMG, and Andrew Martin, Senior Manager (Monitoring & Continuous Improvement), Foreign Trade Association, were also key speakers. Here are some takeaways.

Access to remedy

The UN Guiding Principles define ‘access to remedy’ as businesses having a responsibility to respect human rights, prevent human rights issues from happening, and to provide reparation if a human rights issue has occurred. The discussion made it clear this involves responding to issues as soon as they are identified. Recognising the need to remedy practices comes from conducting supplier audits, finding out what the issues are, and what impact that has on your business.

Transparency

A key theme was ‘transparency’ in supply chains, and the importance of understanding what the potential issues are. This means that building trust with suppliers becomes critical, to encourage sharing of information.

The discussion focused on how a culture of strong remediation can drive greater transparency. If there is a mindset of ‘cut and run’, there is a risk that you will drive reduced transparency. In turn, a strong focus on remediation and partnership can lead to shared discovery.

Many other factors were discussed that can influence a suppliers’ willingness to engage, including volume and spend. Suppliers are impacted by having to complete multiple audits, and the criticality of identified issues.

Quality of relationships was also viewed as important. Turnover within organisations can impact on supplier relationships, and can limit willingness to remedy.

The root cause of non-compliances

It was clear from discussion that businesses need to consider the role that information sharing can play in understanding the root cause of non-compliance. Not having enough ownership, and placing too much onus on auditors to complete audits in compressed timelines can have an impact on compliance.

Agents can play a role in providing access to remediation. However it still begs the question: has the retail industry failed suppliers, and do they need more support from buyers, systems, and associations?

Grievance mechanisms

The UN Guiding Principles have guiding criteria on what an effective grievance system should include. It should be fair, trusted, legitimate, known, culturally compatible, easy to use and be rights-compatible.

The panel explored the crux of access to remedy, and said there needs to be a channel in place for workers or people affected by the supply chain to raise issues and seek remedy. They agreed that remedy can also mean providing support.

A consistent method

It was discussed how access to remediation is key, however workers have different levels of access in different organisations and countries. Access to technology such as computers and mobile phones can play a key role in remediation opportunities. For example, expressing views on social media, which organisations can monitor with a view to making change.

The panel agreed that when there is strong management buy-in to the grievance mechanism, the system works well. Where management is not prepared to engage, tools like whistleblowing can be more successful. It is important to have multiple ways to raise issues.

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