25 Metrics to Measure Due Diligence in Global Supply Chain
Cornell ILR’s Global Labor Institute (GLI) launched its Labor Outcomes Metrics on May 29. The new set of 25 quantitative measures allows regulators, firms and unions to score, track and compare impacts over time.
The launch webinar showcased the metrics and the accompanying policy brief, followed by a panel discussion moderated by GLI’s Executive Director Jason Judd.
“I think it is a watershed moment in regulation,” said Sarosh Kuruvilla, professor of Industrial Relations, Asian Studies and Public Affairs at Cornell.
“There’s a shift from voluntary private regulation to mandatory public regulation, so we have a plethora of new legislation in France, Germany, Norway and in the European Union, and I think that the fact that all of these are happening at the same time frame reflects policymakers’ acceptance of the failure of 25 years of private regulation by companies.”
GLI’s 25 metrics could unintentionally represent the 25 years of private regulation, which resulted in some uneven gains and historic tragedies such as the Rana Plaza collapse in 2013 that killed more than 1,100 workers, and constant struggles over wages and the right to organize.
The 25 metrics form six categories: sourcing, workforce, working conditions, work climate impacts, representation rights and intelligence/audit.
“Considering outputs and measurements, not just inputs–process, policy and programs–is critical to this dialogue,” said James McMichael, founder and CEO of MOSAIC Responsible Supplier Resource.
“I think companies need these types of outputs and measurements when doing their human rights impact assessments and creating their inputs.”
“These metrics can also inspire legislators to identify the gaps that new legislation can fill,” said Samira Rafaela, a member of the European Parliament for the Dutch social-liberal party D66. “Incorporating these metrics in trade negotiations can be very helpful,” said Rafaela from experience, having leveraged metrics as lead negotiator on the EU Pay Transparency Directive.
Rafaela will join GLI as a visiting fellow in the coming year, and her European parliamentary experience will undoubtedly open new legislative horizons for the Institute.
“When companies have to identify, prevent, mitigate and account for their adverse impacts on human rights, trade unions then have to take a central stage in due diligence, and they have an important role to play because they need to, first of all, make aware the workers and companies to the need to take on board the unions as their important stakeholders,” said Shahnaz Rafique, of the Indian National Trade Union Congress. “There should be a transparent and meaningful two-way engagement.”
“There is this built-up involuntary world that has been created for the past 25 years, and I think without really clear guidance of what needs to be done exactly, there's a lot of hangover that needs to be dealt with in these voluntary programs,” said McMichael.
The transition may not be entirely painless, but the metrics will ultimately ease the reporting and analytical burdens on firms and their regulators. Simple, quantitative outcomes will readily reveal which firms are progressing and fulfilling their due diligence obligations.
“I think it's [companies] holding on tight to something that they did in the past,” began McMichael, “thinking that it has value when in reality the reason we have these laws is because those programs have limited value. And so, that migration is going to be a big challenge that we're all going to go through together.”
“I think that collecting this kind of data is not a big deal, to be honest,” continued McMichael. The experts pointed out that many companies already collect risk-associated data; however, there is no sufficient due diligence to make that data public, bringing accountability along with it. With a shift from voluntary to mandatory regulation, the value of GLI’s metrics using this already-collected data comes to the fore. Simply, it’s all about transparency.
“This measurement can help liberate us from the larger measurement industry, which creates very complex systems around measurement and starts working in silos with very vested interests, so that's where I see a lot of scope for these metrics,” said Dheeraj, program director for Praxis, based in Delhi.
“There's a need to build an ecosystem around these metrics so that there's more transparency and engagement with data, which will further strengthen the quality.”
“Given that we are in a new age–we have mandatory due diligence, a new age of transparency– the more data that is shared, the better,” concluded Kuruvilla. “And not just by firms,” added Judd, “but by workers.”
GLI’s 25 metrics tighten up 25 years of slack, providing clear outcome measures for regulators, lead firms, investors and unions to act on and allow ready comparisons over time between firms and across industries.