Human rights reporting - what’s the view from the ground amidst evolving EU regulation?

Discussion on the 'simplification' of EU sustainability regulation is continuing in Brussels. Amidst these developments, what is useful and what really matters when it comes to corporate transparency and accountability?

IHRB’s Vicky Bowman explores the role of voluntary standards and reporting to strengthen transparency in global supply chains and how these link to evolving regulatory requirements. 

In this episode Vicky speaks to Giles Bolton from membership body Ethical Trading Initiative (ETI); Natalie Grillon from Open Supply Hub; and Emily Casswell from clothing retailer Bestseller. 

ETI has developed voluntary standards to help encourage company reporting and disclosure in line with the UN Guiding Principles on Business and Human rights, and they work with Open Supply Hub, a website that helps companies, civil society and consumers to track where goods are manufactured. Retailer Bestseller is an ETI member who have been applying these voluntary standards among others in how they report and disclose their human rights due diligence.

In this conversation, you’ll get an insight into how mandatory and voluntary requirements come together; how businesses can go beyond legal box-ticking; and what the increasingly popular concept of ‘meaningful engagement’ means in practice.

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Host: Deborah Sagoe, IHRB's Communications Coordinator
Producer & Editor: Helen Brown
Additional Contributors: Sam Simmons, IHRB's Head of Communications

Transcript

Giles Bolton: Fundamentally, ETI's requirements for companies are based in the UN Guiding Principles, and that's both because they're really well-designed, but it's also because we're future-proofing our members from future legislation because pretty much all the legislation that's emerging is itself based around the UN Guiding Principles.

Deborah Sagoe: Hi there, and welcome to Voices from the Institute for Human Rights and Business, all also known as IHRB. I am Deborah Sagoe, and in this podcast you'll hear from people working to make respect for human rights part of everyday business. You just heard from Giles Bolton, the executive director of the Ethical Trading Initiative, or ETI. ETI, supports companies to create better labour conditions through collaboration and transparency about their supply chains. Reporting and disclosure is a key part of that process and in this episode you'll hear from Giles about how businesses can go beyond box-sticking to put meaningful human rights due diligence into practise. You'll also hear from Natalie Grillon from Open Supply Hub and Emily Casswell from clothing company, BESTSELLER.

BESTSELLER is known for the [inaudible 00:01:07] human rights reporting and Open Supply Hub is a website that shows where companies make their goods to make it easier to track and understand the information that companies share. My colleague, Vicky Bowman, has engaged with ETI, Open Supply Hub and BESTSELLER while leading IHRB's partner organisation the Myanmar Centre for Responsible Business. As part of IHRB's work and commodity trading in human rights, Vicky is tracking how monetary and voluntary requirements for transparency are evolving in legislation and standards. Vicky, can you tell me more about the evolution of recent developments in human rights reporting for companies?

Vicky Bowman: Yes. So the concept of knowing show was first introduced and popularised under the UN Guiding Principles on Business and Human rights, which were adopted in 2011, and the idea there was that companies should know, through doing human rights due diligence, and then they should show how they were managing their human rights impacts.

Deborah Sagoe: Now there's a lot happening in this area in the EU at the moment, isn't there?

Vicky Bowman: Yes. In fact, some politicians seem to think there's too much happening, too much legislation, which is why we saw, in February this year, that the commission, that the European Commission proposed a stop the clock on the rollout of the Corporate Sustainability Reporting Directive, and then it also proposed a change to thresholds so that some 80 per cent of the companies that were meant to be reporting actually wouldn't. And the proposal is to only companies with more than a thousand employees, and some parliamentarians are even arguing that thresholds should be higher. So there were also changes at the time proposed to the Corporate Sustainability Due Diligence Directive.

Now, all of these are still under discussion in Brussels and it's unclear what the outcome is going to be, but it's pretty certain that there's going to be fewer companies caught by these mandatory human rights reporting requirements and there's also an expectation that some of the more detailed social and human rights criteria to be reported under the European Sustainability Reporting Standards, ESRS, that they're going to be simplified too because there's been quite a lot of pushback on those with people saying, "There's just too much detail. They're too gold-plated."

Deborah Sagoe: Where does this leave then companies in the reporting and disclosure?

Vicky Bowman: Well, some of the larger European companies had already published reports which were compliant with the Corporate Sustainability Reporting Directive because they were caught up in year one of the requirements. And I think really what's important now is to read those reports and give the companies feedback because the companies themselves want to know what's useful. They've spent a lot of effort and quite a bit of resources on trying to put these reports together and it was quite painful, I think, because it was the first time for many of them to really do something so extensive. And I think we need to read those reports and show that they're useful because otherwise there will be pressure to water down the reporting requirements and there's always going to be pushback from the finance people in companies. There's going to be a limited budget available to sustainability departments for all of their work, including reporting.

And there's a risk that mandatory reporting requirements also divert resources away from more meaningful stakeholder engagement, direct face-to-face work. There was a mining company the other day that told me that they've now got more disclosure and reporting experts than they have actual sustainability management experts, which does seem to be a bit too much tilting in the reporting direction. We don't see all of this as being a cost. We see engagement, including reporting, as being an investment in building trust, in reducing conflict. We're working in IHRB on the Cost of Conflict project, which is intended to demonstrate that getting human rights due diligence right, getting engagement right, reduces costs in the medium-term because it reduces the conflict. Particularly we're looking at the renewable sector for that.

But I still think there is going to be an important debate to be had about what is the most useful out of this reporting and out of engagement more widely. And I think it's also really important that we don't lose sight that engagement and transparency is not just about compliance. We don't want to see it turning into just a legalistic approach to disclosing information because that can reduce its usefulness, and sometimes companies are less open about opening up about the challenges they face because it might open them up to legal jeopardy in some way. So they have their lawyers crawling all over the words that get used in reports.

Deborah Sagoe: Okay. So why did you want to speak to ETI, Open Supply Hub and the Danish Company, BESTSELLER, about this?

Vicky Bowman: Well, so all three of them, I know them from my work in Myanmar, and they're all significant players in the field of supply chain transparency. Ethical trading initiative, a well-known multi-stakeholder initiative, who are increasingly now working with Open Supply Hub because ETI is pushing for its members to report, and then Open Supply Hub can get the information out there in a useful format. And BESTSELLER is a member of ETI and is widely, at least from my experience, considered a front-runner on the reporting that it's doing. So what I was keen to do is hear from all of them how they view this question of what's useful in reporting, particularly mandatory reporting versus voluntary reporting, and above all, what kind of transparency is useful to them and to the rights holders and stakeholders and how are those stakeholders using the information that companies are disclosing?

So I mean, we are seeing ETI doing really useful work in ending human rights abuses at work. And what we see at IHRB is that's a pre-competitive space. But one of the things that we sometimes hear working from companies is there's a tension that although companies want to engage, they want to be transparent, but there are concerns about market sensitivity, about confidentiality, about their legal exposure, legal obligations, anti-competition concerns. I mean, we even see this actually mentioned in the Corporate Sustainability Due Diligence Directive, that companies should do meaningful engagement but that they shouldn't do it without prejudice to a different directive, the 2016 directive on trade secrets. So that's why I wanted to know from Giles Bolton, from the industry, who joined as executive director of Ethical Trading Initiative about a year ago, how is ETI navigating around these kinds of tensions?

Giles Bolton: We are really supportive of more disclosure. We're supportive of more requirements on companies. Why? Because it's such a building block of enabling progress. So it's certainly not a conflict in our minds. The voluntary measures which ETI has been working with its company members on for 27 years since we were founded, I mean they've been really important, but they're definitely not enough by themselves. We really welcome the legislation. A bit worried, obviously, about the Omnibus proposals as they're called, which is really the proposals to water them down a bit, but very supportive of them. I think the key thing that is a concern at the moment, and it's probably inevitable, is when new regulatory requirements come in and it becomes often, in a lot of companies, a regulatory compliance issue, which really means suddenly you bring the legal teams-

Vicky Bowman: The lawyers are all over it.

Giles Bolton: Yeah, exactly. You bring the legal teams in it, you bring in the legal companies they usually work with, maybe the management consultancy firms and the focus goes down on, "Have we ticked the right boxes? We got the right policy?" Now in the medium and long-term, I think that's a really good thing, but it can clearly take attention and resource away in the short term from really thinking about the underlying issues and how you work. Generally it has to be in collaboration with the people if you're going to address a really thorny challenge, and it can take people away there, and I think the work we try and do in ETI is to make sure we're always complementing legislation.

I mean, fundamentally ETI's requirements for companies are based in the UN Guiding Principles, and that's both because they're really well-designed, but it's also because we're future proofing our members from future legislation, because pretty much all the legislation that's emerging is itself based around the UN Guiding Principles. So we try and build on that. We emphasise the transparency, and some of the work that we've done with Open Supply Hub about first-tier supply chains being put out into the public domain, it's all about making it easier, but we are consciously not an organisation that wants to add to the reporting burden. So there's some negligible things we ask for that isn't already required in mandatory reporting but we're just trying to pull out the things that we think really make an impact.

Vicky Bowman: So you've got the ETI Corporate Transparency Framework. Can you say a little bit more about what that comprises, what it's intended to achieve?

Giles Bolton: I mean, it's there to drive up transparency and transparency specifically about the human rights due diligence, that sensible approach that says, "You work with partners, you work with society, you work with worker representatives to identify what are the risks, what's the mitigation, what, when needed, is a remediation, what will make a lasting impact?" So that's always what we're trying to serve. So the key goals of the corporate transparency framework, which is the name for our transparency requirements, is to build stakeholder trust, first of all, to drive accountability. And that really helps with us. I mean, it's one thing just being accountable, for example to us in the ETI team, the ETI secretary. It's much more useful if that information is made publicly available, can be seen by anybody. It's open source accountability if you like.

The third thing would be to improve business practises. There's a lot of evidence, I think, that suggests that as companies become more open about what they're doing, that really increases the drive internally to make sure that action is being taken. And I think the comparability is also important there as well. Not just if you're an investor or a stakeholder or a campaigner, but often when you're within a company as well, being able to compare how you're doing against some of your peers. "What are they doing? What might I learn from? Where actually might we be ahead? What could I share with others that's useful?" So all of those are reasons about why we do it, but as I talked about before, the core of what's required, it's always rooted in the UN Guiding Principles.

Vicky Bowman: In your work now you are not requiring them to send in a internal memo for ETI, so how are they disclosing the information they share? How are they disclosing it to the wider public? And what are examples of good practise of companies in this area?

Giles Bolton: Well, I'll give you a couple of examples of good practise as a way of answering all parts of your question. At the big end of our membership, you've got someone like BESTSELLER, globally, really large apparel and textile business with a whole range of brands. We really like the way they structured their report around the UN Guiding Principles. So one of our requirements is you put the information out there, but we don't want to tell you exactly how to do it. We don't want to duplicate other reports. So they structured it around the UNGPs. They've incorporated all the requirements that we set out into one report, and to make it really simple and useful, what they've done is added a simple foot mode system which highlights exactly where each of our framework requirements can be found. But it's not just big companies who can do it. There's another company member, Margaret Howell, who, if you know your fashion stuff, high-

Vicky Bowman: Which I don't anymore.

Giles Bolton: ... quality... I'm sure you do. Unlike the listeners to this podcast, I can see your picture on camera, so I know that's not true, but really good fashion brand, quite high end, but in a similar way, despite being a much smaller organisation, they've set out their reports, obviously different in length, but very clearly against the UN Guiding Principles framework. And then within that captured the elements that we require of them. So they set up really well. And it also means, as they evolve their work, like so many other companies, they can already see how they want to progress.

Vicky Bowman: And how is this information being used? Are you getting any feedback, particularly from unions? And obviously unions are a very important part of ETI's governance. How are unions on the ground making use of this information?

Giles Bolton: Well, we've had a few different examples of bits of feedback. It probably comes to mind most of all when we have sometimes tragic events in supply chains, it does happen and then it's then easy to find out who is sourcing somewhere. I mean, that's the most powerful, but I'll try and turn it into a really good tangible example. Just last week, there was a really serious incident actually within a secondary supplier to some clothing businesses. A really, really difficult industrial accident with terrible effect on people. But because we had that data, it was very, very fast to be able to find out who was sourcing there, who had a connection to it, and start to bring those different people together, make sure they were aware of it, and then make sure they've all got good communication with the primary supplier that the organisation have their direct commercial relationship with, who was using that secondary facility and speed up that transparency about what's happening, speed up the response, and of course, apart from the immediate response, then make sure that there is follow through so that these things can't recur.

So that's the most common way that we see it coming up. And it's worth saying, "How do you do that?" You do that by making clear what information you want people to provide, but in the case of that supply chain tier information, it's making sure that it's in a really accessible place so you don't have to go through trying to search engine your way through everybody's separate report and find it. You can go and find it in one place, which is with our partners at Open Supply Hub.

Vicky Bowman: And you've mentioned, obviously, the number of companies that are in scope of these bigger legislative pushes, and you talked a bit about the Omnibus, which is still under discussion. What would be your advice to the people working on that Omnibus legislation and what would be the best outcome, particularly in terms of being complementary with what ETI is trying to achieve?

Giles Bolton: Well, two things. First of all, absolutely, please do not lose the focus on the UN Guiding Principles. It's so important, and particularly as you see that sort of gradual growth in legislation globally, and particularly when you think of multinational companies here, it's so important that people use a consistent framework because otherwise it's going to get highly complicated and duplicative and take almost more resources into trying to get all the reporting right rather than the actual action that it should be reporting against. The other thing I'd say, specifically about the EU legislation, is there's something so hugely important in there, which talks to maybe the very biggest weakness in business and human rights efforts historically, which is the EU legislation makes clear there's a requirement for something called meaningful stakeholder engagement. And in a lot of ways, it's yet more jargon. And I have to say, our space is just way too full of jargon.

To be fair to this phrase, it pretty much is what it says on the tin. It means you need to talk to the stakeholders and supply chain, the people whose rights are effected and understand it. So workers, worker representatives, trade unions, other civil society groups. So you need to engage with them. The meaningful bit is the critical part. So you don't need to just talk to these people. You've actually got to then do something different in response to what you learn. And that might sound the most obvious thing in the world and in a huge number of ways. It's not new. It's basically already there in the UN Guiding Principles. And yet in the very significant majority of current business human rights programmes, because this is quite hard because people are managing quite diverse supply chains, they're not, for the most part, really engaging with workers, their absences in civil society nearly enough, and they're often not really changing what they do as a result.

This MSE, as it's called, a meaningful stakeholder engagement, is written into the legislation. It's become a regulatory requirement, assuming that the legislation goes through. That, for me, is a really radical moment because it means that in a regulatory sense, companies are going to have to explain, "Well, what did we do? What did we do to engage workers and others about what the risks are about what the mitigation might be, about what the remediation looks like, and transparency in the following up?" That's so, so important and it could be a real break with some of the very top-down approaches that, with good intentions, that companies, a lot of them, are still quite stuck with.

So I would say if I had the ear of anyone in Brussels at the moment, that's the most important part of the legislation and it absolutely needs to be maintained. And it's really exciting because it will help to change and strengthen the way companies interact. And what I also hope it will do is make more companies work together with each other, but also with more civil society people to even figure out those answers. Why go and do your engagement with stakeholders all separately when you have a shared supply chain?

Vicky Bowman: Exactly.

Giles Bolton: Work with other people, and it's something that, at ETI, we've done for a number of years, and we're further strengthening our capability because we can see the demand for this coming and we really hope we can help members. ETI itself, as you know, is a fairly unique proposition because we have unions and NGOs and companies all around the table in a safe space. So we see this as a huge opportunity to drive really meaningful progress, and we're setting ourselves up to make sure we can facilitate that.

Vicky Bowman: So let's hear now from Open Supply Hub. This is the online resource that the Ethical Trading Initiative has been working with, and it's now made disclosure of tier one suppliers on the hub, part of their corporate transparency framework. So I spoke to Natalie Grillon, who's the executive director, and she told me more about who they are and what they do.

Natalie Grillon: So Open Supply Hub is a non-profit platform, and we are powering the transition to safe and sustainable supply chains with the world's most open, complete, accessible map of global locations. We work with users from around the globe and from across stakeholder groups to build this map, and we're at almost 1.5 million locations in the database from around the world now. We have over 1,500 contributors of data to the platform, and those contributors include some of the world's best known brands, Disney, Amazon, Asda, as well as human rights, labour and environmental groups using the data and contributing the data. Anyone can contribute, download, search the data to identify opportunities, to build partnerships, drive investment, drive impact, solve problems, and our thesis is that by collectively working together on a open data set, that the data is better quality, it's more timely, it's more up to date, and that organisations can finally pursue targeted collaboration in the way that we all talk about and want to do.

It started in the apparel sector actually. We were founded in 2019. The apparel sector had obviously been through a lot of terrible reckoning, frankly, after Rana Plaza and looking around and saying, in a situation, even in a dire crisis like Rana Plaza, we couldn't figure out who was sourcing from those facilities in that building. People were digging through the rubble for months and months trying to pull out the clothes and look at the labels. And there was a really concerted effort, and I would argue successful push from civil society for transparency in the apparel sector. Many brands and retailers started publishing lists of their suppliers on their website in PDFs or tables, but the data was all over the place in different silos and not usable.

And so the concept behind Open Apparel Registry was, "Let's pull all that data together, standardise it, collate it, put it on a map, make it easy to search, and then we can see the overlaps in these different locations and organisations can easily access the information and keep it up to date". And now we are Open Supply Hub, serving agriculture, consumer goods, apparel, electronics, automotive and beyond, upstream into the supply chain,

Vicky Bowman: Are there other use cases, other users, that you've come across where there've been real outcomes from making use of this data?

Natalie Grillon: Yeah. So there's a couple different groups of outcomes. One is definitely on the labour rights and environmental advocacy and collaboration case study where organisations identify an issue in a specific facility or a group of facilities. They're able to go on Open Supply Hub, see who is affiliated with that facility. It may be brands and retailers, but it may also be a certification organisation, it may be a service provider, it may be other civil society organisations who've said, "We work with this facility in some capacity." And they're able to, with that research, go and advocate and resolve the issue.

And one of the more interesting recent examples of this was the Justice for Jeyasre campaign where a garment worker was killed in a facility, and using OS Hub, they were able to very quickly look up the information of who was affiliated with that factory. They did it in a matter of hours rather than having to research for days or trying to dig through information, and ultimately with that information, they were able to develop an agreement. I'm going to mispronounce it because of my lack of knowledge of the local language, but Dindigul Agreement, to prevent gender-based violence in the workplace in the aftermath of that.

Vicky Bowman: And that was Sri Lanka, wasn't it, I think?

Natalie Grillon: I believe so, yeah. And then you've got the case studies where we've got the service providers in the space who are either measuring GHG emissions or who are working on reducing audit fatigue in facilities. They're using our data and the OS ID, the unique identifier that we assign to each facility, they're using that to exchange data across different service providers and between their users and members and their platform to eliminate confusion about which facility they're talking about and which facility they're aggregating data about. So a great example of that is Amfori in the garment and apparel industry, a compliance and social auditing provider and ZDHC on the chemical side, they're exchanging data across their platform using the OS ID.

One of the other ones that I think is most helpful in terms of some of the things that we're facing in industry and in due diligence in supply chains is the research that's being done, layered on top of our data. Which factories are going to be most impacted by heat stress? Which factories are under threat of sea level rise? There's been really great research done. WWF has done a great research report using our data around water risk and tying the organisations who need to be worried about this risk and who need to take action and come together and work together using our data that layers over some of this risk mapping.

Vicky Bowman: That's great. And I remember immediately after the earthquake in Myanmar a few months ago, Open Supply Hub did some immediate mapping of where the greatest risk was likely to be to which facilities. So that's all being done in a voluntary world, isn't it? Although it came out of Rana Plaza, this has not been a mandatory requirement in any supply chain to disclose to other suppliers. How do you see what Open Supply Hub is doing as linking to these debates and to some extent adoption or perhaps retraction of mandatory human rights due diligence legislation and reporting standards?

Natalie Grillon: My belief and the belief of our organisation, and I think a lot of our users as well who've adopted the platform, is that supply chain mapping is the absolute first step you need to take in order to conduct due diligence, whether voluntary or mandatory, whatever regime you're under. You need to know where your supply chain is and if you show where your supply chain is, openly sharing your data, it puts you in a stronger position to implement effective due diligence because you're able to identify, through Open Supply Hub, who else is affiliated with these same facilities as you. And when you think about stakeholder engagement, you can see who those stakeholders are. The second piece, I think, the second benefit to openly mapping your supply chain as that first step in due diligence is making your data interoperable. And what I mean by interoperable, this is a word that I think a lot of people are hearing more and more, but it essentially means easy facilitated data exchange. One computer can talk to another computer.

Really, there's no one platform that is going to solve all your due diligence needs. There's so many different providers out there, there's so many different issues that you want to be thinking about in terms of the materiality of the things you're facing and so you're going to need to work with others and your data is better if it's not in a black box silo. If you have open interoperable data, you're going to be able to pull in these different pieces of information more easily. And frankly, it's a cost savings from the perspective of pulling in other things. And then finally remediation. When you do find an issue, you can easily look and see, "Who should I be remediating with? Who can I remediate with? How can we solve this problem and share the burden, maximise the effectiveness of the solution?"

Vicky Bowman: So ETI is obviously converted or, I think, has been a great supporter of supplier disclosure, but that is voluntary. Do you ever see a world in which disclosure of tier one suppliers is going to be mandatory? Has there ever been any debate about that amongst regulators?

Natalie Grillon: I haven't seen it in any of the EU, the CSDDDs and CSRDs and all of that unfortunately. I do think that it's in the sector specific requests or regulation that they're developing on the EU side. On some of the legislation in states in the US, it's something that's been included in draughts that tier one or tier two or even moving upstream, that it's all mandated. I think sometimes we like to point out that it almost seems like a no-brainer, like, "Well, of course you're going to do that." But I think that it's important for us, and it's a big thing of what we've been trying to do is explain to the legislators why mapping in the open, why disclosure leads to such better outcomes as opposed to someone doing it internally.

We are trying to move towards better and better quality data, but it's not going to get better if we don't have organisations coming in and sharing and so we all benefit. There's a lot of reasons that disclosure can ultimately lead to better outcomes, but one of them for all interested parties is that we all get better data by contributing to a digital comments.

Vicky Bowman: So earlier on, you heard Giles Bolton from the Ethical Trading Initiative talk about the Danish retailer, BESTSELLER, and their approach to reporting, and particularly how they are tailoring that reporting around the UN Guiding Principles. BESTSELLER is an ETI member, and that means it's bound by the corporate transparency framework that Giles was telling us about. I caught up with Emily Casswell. She's the reporting and transparency specialist at the brand. She told me a bit about the company and how they go about meeting their commitments under the ETI framework.

Emily Casswell: So BESTSELLER is a Danish fashion group. We have a number of brands, listeners might be familiar with would be Jack and Jones, ONLY and Selected, Name It. We've got a few more. And basically, yes, I sit in the responsible sourcing team, which is the supply chain management function. It's my job as reporting and transparency specialist to deliver the transparency externally about all the things we've got going on in the supply chain to manage human rights risks, but also the environmental impact risks. So the ETI Transparency Framework is very useful for us. So the seven minimum reporting requirements, and then there's also better and best ones. So if you're a bit ahead of the pack, then you can be a bit more transparent and you'll get the pat on the back accordingly. The intention of these reporting requirements is to show what is being done in your supply chain and benchmark that against best practises.

So how we do that. Traditionally, we embed this information into our annual reporting. So we have our sustainability statement, which sits in our annual report, and will go into detail about how we identify risks, what risks we see and then the systems we have for managing that on a day-to-day basis. And then we also reference things like our code of conduct and our human rights policies. And so it's all dotted in various places in our reporting. So that's how we basically try and make sure that we cover all bases there. This year we actually tried something a bit new. We made a supply chain due diligence report, a special report where we try and put in all of the reporting requirements and all the information in one big place to make sure that all the different stakeholders who we are trying to satisfy with the reporting can find the information they want in an organised... Well, we try to be organised about it, but there's lots of data points which need to be in different places.

Vicky Bowman: And how much of that is mandatory? Are you required by any Danish or other regulatory requirements to disclose the information you're disclosing? How much of it is voluntary?

Emily Casswell: It's a mix and it's shifting. So a few years ago, there was very little mandatory legal requirements. So we have a big list of all the reporting requirements that are on the supply chain. We call it a transparency index. So at the top of the transparency index is the legal reporting requirements. So it's got the UK Modern Slavery Disclosures, it's got the German Supply Chain Due Diligence Act and the disclosures that are needed under that, the Norwegian Transparency Act, and then a couple of others who we are trying to keep happy, and then you've got the voluntary requirements. In total about 8% of the disclosures are on this big long list. They're legally mandated, but there is a big overlap. About 30% of the stakeholder expectations are also the same as the legal expectations. They want to understand, do you know your risks? How are you managing them and disclosing data about that. So the format can be different, but the general intention of disclosure is pretty much the same. So yeah, that's how it's shifting, and I think going forward it will be more legal.

Vicky Bowman: How does that play out within the company? Because often one sees as soon as a mandatory reporting requirement is introduced, the lawyers are all over it and sometimes transparency reduces. So have you seen any differences, depending on whether you're communicating things because of a legal requirement or not?

Emily Casswell: For me personally, it makes my life easier. If I can go to the team and say, "Look, this is a legal reporting requirement and we need to find a way to get this data out of our systems," then that speeds things up for sure. But nonetheless, how I've seen it over the past few years, the voluntary reporting requirements preempt the legal reporting requirements. So for example, the ETI, one of their good practise requirements is that you've got to report on the causes of salient human rights risks in your supply chain, which is basically a double materiality assessment reporting requirement and that's what we are now seeing under the CSRD. So if you were already looking at the ETI's requirements a few years ago, then you're probably on the journey to meeting the CSRD.

And I find that's quite helpful internally 'cause if I say, "Look, these are the voluntary requirements which we're aiming to get to," and everyone's aware of them, they're on the back of the mind, then that helps push things along because at the end of the day, we have to have the systems in place, step one, but they have to be delivering the data and in the format we want. So that requires processes behind the scenes to be adjusted and changed, and naturally we've got a lot of human rights specialists and water specialists and environmental impact specialists who are busy just getting the work done, and you have to make sure that they're getting the work done. And part of that is the transparency and delivering that in a format we can use to share externally.

Vicky Bowman: So clearly you have multiple stakeholders, some of whom have a specific interest in carbon emissions, some of them in water, but you also have stakeholders who are very country focused. And you and I came across one another over our discussions on Myanmar. So Myanmar is a country where BESTSELLER has a country specific report. Can you tell me a bit about the background, why you decided to do that and what have been the challenges and benefits of doing a country report? And indeed, do you do it for any other country or are you planning to?

Emily Casswell: For context, every six months we publish an enhanced due diligence report, which is focused on our sourcing in Myanmar. And it came about because we had to. After the coup in 2021, BESTSELLER received quite a lot of scrutiny, probably a bit more than some of our peer brands who are operating in the region. And it is related to allegations made in a newspaper in Denmark and then which ultimately resulted in an NCP case. So we had a lot of scrutiny on our systems, like for these more formal formats. And thankfully because we had good systems in place, we already had KYC requirements for our suppliers, it was a strange situation where we're already on the back foot PR wise because the narrative is already out there, that BESTSELLER has done something wrong.

And even though we had an independent investigation and the NCP found that we had the right systems in place, nonetheless, we were on the back foot. At the same time as this was playing out, the ETI commissioned an investigation into responsible business conduct in Myanmar and spent a lot of time talking about the specific challenges and all that was expected of brands. And basically the long and short of all of this dynamic was that if a brand wanted to stay in Myanmar, they have to be able to justify that decision within the framework of the OECD and the UNGDP due diligence expectations. And the key of that is communication. So you have to be able to communicate what you're doing, how you're doing it, why you're doing it, the learnings you're having, and that has to be accessible so that external parties can evaluate the adequacy of your due diligence systems.

From a comms perspective, the comms team got on board quite quickly. They were like, "Okay, yeah, great. We need to deliver the transparency." The challenge was practical. It was new territory for me. Personally, I'd never done anything like this before, and there wasn't a particularly clear roadmap. There was a list of information we had to provide, but no sort of guidance or structure on how we're meant to do it. I think I can politely say that our first attempts were quite rudimentary. It was basically a Word document where we got everything in. Now, a few years later down the road, we think it's a lot better. Gone up to 37 pages and it goes into a lot of detail about how we see the risks, how these risks change, all of the enhanced due diligence processes we have, the stakeholders we engage, how we engage with them in different parts of the due diligence cycle. And it's been an intuitive process, and there's a lot of anxiety about, "Oh, there's lots of nuances in human rights." It's not a simple black or white yes, no, right, wrong.

And it was a challenge to convince everybody internally that we could inject that nuance into the conversation. That was a process, and I think it's one which has been quite a good learning process. So then when we had the change of government in Bangladesh, then we immediately went, "Oh, okay, well, let's just do another report about how we see things there and what we're doing there 'cause it was a new and involved situation, and we wanted to make sure that we were able to deliver transparency as we were expected to do.

Vicky Bowman: So has your Bangladesh report now been published or is it on the way?

Emily Casswell: Already published. We did it following the change of government there. So it was just a one-time report because the risks were big and scary at the beginning, and then it settled down and it wasn't really a need to do further reporting because our systems were covering it quite safely, so we weren't too worried about it now.

Vicky Bowman: Well, certainly your Myanmar report, I mean, you've written a roadmap really for the other brands that are there, and I'm constantly using it in my own presentations to say, "Look, if BESTSELLER can do this, the rest of you can as well." When did you start disclosing tier one suppliers and what have you found as to the challenges and advantages of doing that?

Emily Casswell: Well, it's been surprisingly difficult to find a clear answer to that question. I joined in 2020 and it was before I joined, and then I've been asking colleagues in the office when it was released, and most people are saying 10 years ago, but I think they want cake to celebrate the anniversary. But the earliest online version I can find is 2019. So yes, a while ago, I think, is the summary of when we started publishing our tier one list. And when I first joined in 2020, we published it twice a year. So every two months we updated and it includes the factory, what type of factory they are, the processes there, the address, the size of the workforce, and then we're also sort of expanding that into tier two as we're building transparency down there.

So the challenges. There's not really too many. There's a bit of data cleaning, got to make sure that the addresses match things and especially in different languages, that can be a bit challenging to make sure that everything is aligned. But to us it's mainly a list of benefits. At the end of the day, from a PR perspective, it's good faith and transparency, it indicates that you're confident in your systems. And then just from a human rights perspective, at the end of the day, our due diligence systems aren't an Orwellian oversight system. We're not in the factory every single day, and if something bad is happening, we need to know. So if you are public about your factory list, then people can get in touch with you and say, "Oh, you should have a look and check that things are as you think they are." So we see that as a good thing. Some people are scared of it, but in our experience it's generally people getting in touch for the right reasons. For us, it's been mainly a positive process.

Vicky Bowman: And certainly it's something that's recognised by Ethical Trading Initiative as absolutely essential, hence they've made it part of the 2024 Corporate Transparency Framework. Finally, I mean we've talked a little bit about mandatory versus voluntary requirements and the evolution in the space of mandatory requirements around both human rights due diligence and reporting. Do you see those requirements within the EU in particular but perhaps beyond that? Just the other day in Korea, for example, a mandatory human rights due diligence draught law was reintroduced. Do you see these things as having an impact on the way you are currently reporting, or do you think you are fully ready for whatever the law may throw at you?

Emily Casswell: I'd like to think I'm fully ready, but no, we're not. And I think that's a good thing because the laws keep getting more ambitious and there's lots of different reporting requirements coming, and these are basically to sort of make sure that you are managing your risks properly. As the risks change, the requirements will change and so they should. So from a personal perspective, I don't imagine that I'd be out of a job anytime soon because reporting requirements keep getting bigger and more robust and deeper, and I'll have to go further into the supply chain. So that will require a lot. In my experience, I'm a little bit worried about a few aspects of that because the supply chain is a strangely non-competitive space. You've got brands who often work together on addressing the risks that we see in individual factories, and if you had to check our reporting with other peer brand reporting, we're all talking about the same risks, the same problems, even if we just have different strategies for dealing with them.

And I am worried about the different strategies thing because there's a lot of data needed for us to get from our supply chain and then move externally. And I think a lot of that weight is now falling on our suppliers, which I'm very worried about because every different... I mean if you go to any conference right now about supply chain risk management, there's a new data platform provider or solution tech company. And ultimately for our suppliers, their main concern is they're the ones who are dealing all with requests. From each brand they supply to has got a different data system, a different management system.

One of our Pakistani suppliers the other day, and he was saying how he's spent... He got really annoyed because he had to spend the whole day trying to work out whether he can upload a certificate in a PNG format or a JPEG format, and he says, "I just want to do my job." He's a HR manager, so he's looking after people in factories and we want him to be focused on that. How I see my job and what I want to focus on, going forward with this new legislation and it's getting more complicated. I've got to remember that we can't just push that reporting requirement down the drain. It's on us as the brands to manage that and take a bit of ownership over it. So that's what I'm thinking about.

Vicky Bowman: That's a very important point, which I think sometimes we forget about, that usually the burden of reporting is not on the main company. It's on people who are busy trying to make the garments or whatever in the factory level and trying to keep their workers safe. So thank you very much, Emily Casswell from BESTSELLER. We look forward to reading your next reports.

Deborah Sagoe: It's good to hear how ETI is working collaboratively with organisations like Open Supply Hub to make this process easier for companies like BESTSELLER. Vicky, what do you want companies to take away from the work that's being done here?

Vicky Bowman: I think that above all, it's to understand that there's real value in providing factual information about tier one suppliers, particularly in a labour intensive sector like apparel, where workers are also more at risk of being exploited. I'm not saying it's essential to disclose tier one suppliers across the board. It's not really too important which florist a PR agency is using in their office or which lawyers are advising the mining company, but I think for the facilities from which the apparel industry and some of the other consumer goods, food and beverage supply for, it's really important. And it also, to disclose, then builds trust with rights holders and it's going to stimulate a more focused discussion on conditions in the supply chain rather than abstract conversations. And I think it also, as we heard from BESTSELLER, it helps the company to ensure that it's really able to track what's going on further down the supply chain and step in and remediate it if necessary.

We also heard how it can be useful disclosing suppliers to help with collective action because if you see that you share a supplier with another company, then you can work together with them. Now that can be a double-edged sword for the supplier, of course. They might feel that their buyers are ganging up on them, but on the other hand, it's also potentially useful for the supplier because then they can push their multiple clients to coordinate better, particularly on things like requirements for audits, reporting information, and to make that more streamlined from the facility so they spend more time making the goods and less time filling in forms. And also we've seen, including in the Myanmar context, that where you've got companies sourcing from factories in the same geographical area, even if it's in different sectors, so they may not normally talk to one another, but having those suppliers disclosed and mapped out on a facility like Open Supply Hub can then help build collaboration across the sectors on things like working together on humanitarian relief for earthquakes or floods.

So really, for me, this disclosure of suppliers is probably one of the most important steps that a company can take in its reporting. Even though it's not actually something that's required by legislation, it's probably one of the most important steps for really ensuring that it's doing its human rights due diligence properly.

Deborah Sagoe: Thank you, Vicky, for giving us those insights and thank you for listening to this episode of Voices, which was brought to you from the Institute for Human Rights and Business. Until next time, be sure to share and follow this podcast. That way you'll never miss an episode. And if you would like to find out more about the work that we do at IHRB, then head to ihrb.org.