Critics of EU corporate sustainability laws argue that small and medium-sized suppliers are struggling with the “bureaucratic burden” of the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD).
Establishing an effective human rights due diligence (HRDD) system undoubtedly requires effort, particularly in the initial stages before processes become well integrated. However, we argue that some of the perceived bureaucratic burden—prominent in the current EU omnibus debate—is partly the result of some existing corporate practices that may not always be the most effective or efficient when applied to HRDD.
In this CORE Message, we aim to help companies critically assess one of these established practices–namely, the use of supplier self-assessment questionnaires (SAQs) in the context of human rights risk management.
Corporate sustainability laws don’t mandate a specific software, tool or method for mapping your supply chain or collecting supplier data. Yet it has become common practice for businesses to use SAQs–something that has been used for example to conduct health and safety checks – to identify human rights risks at supplier level. The widely adopted practice is to send lengthy, generic self-assessment questionnaires to all suppliers, leaving sustainability teams with the task of reviewing thousands of responses.
But how many of us challenge current practices? We invite you to do so – because taking a step back and reflecting can help strengthen procurement processes, build stronger supplier relationships, improve data quality, optimize resource use and, most importantly, achieve better human rights outcomes.
We invite you to reflect on the following questions before deploying SAQs:
- Are SAQs embedded into a holistic human rights due diligence approach?
- Is the current use of SAQs in our organization an effective way to identify and address risks and impacts on people? Is it contributing to collaboration and trust-based relationships with our suppliers?
- Is the purpose of using SAQs clearly defined and understood by all teams that are involved in it or benefit from it?
- How will the data suppliers provide be used? Which corporate processes will they inform? What are the next steps after SAQs and why?
Regulation has sparked innovation – despite arguments by the EU Commission to the contrary. Both buying and supplying companies that been implementing human rights due diligence are rethinking their approaches:
- To reduce redundancy cause by similar requests from multiple customers via multiple platforms, some suppliers have begun streamlining their answers by creating a single profile on one of the platforms where they store their human rights data and share it with customers.
- To avoid duplication of efforts, buying companies are collaborating to map shared suppliers in a common database. One example is the Open Supply Hub.
Our experience shows that while SAQs can play a role in HRDD, they are most effective when used at the right stage and in a meaningful way. If employed as part of a holistic risk management system, SAQs can help engage suppliers, for example, by assessing their maturity levels with the aim of identifying those that need more support in addressing human rights risks and impacts versus those that are relatively advanced and need less assistance to close gaps. SAQs can also be used as part of a deeper risk analysis for specific purchasing categories, informing targeted action such as in relation to temporary workforces.
However, before deploying SAQs, companies need to be clear on their purpose, how the resulting data will add value to different functions, how the results will be used in the overall human rights due diligence system, what the follow-up actions after the SAQ will be and how their use will contribute to improving human rights conditions in the supply chain. The use of SAQs should be aligned with a clear purpose understood by all internal departments involved.
Here are some examples of how some companies have improved the effectiveness of their SAQs:
- Prioritize suppliers: Following a risk-based approach, send SAQs primarily to a selected group of prioritized high-risk suppliers.
- Reduce the number of questions: Avoid sending an excessive number of questions. Focus on those that will provide the critical data you to help identify risks.
- Tailor the questions: Adapt your questions, for example according to the human rights maturity of the supplier, their industry, their region or the product category they supply.
- Share the costs: Assume a part of or the full amount of access fees, that most SAQ platforms require suppliers to pay. These fees impose a financial burden, often even before a company is approved as a supplier. Cost sharing or providing financial support to a supplier is also aligned with CSDDD’s provisions on adequate measures to support SME business partners.
- Simplify the language: Use clear, concise and accessible wording.
- Explain the purpose: Before sending an SAQ, organize a call or a webinar with relevant suppliers to clarify why you are seeking information, which questions are most critical and how the data will be used.
- Start a dialogue: Go beyond digital forms with this selected group of suppliers. Build relationships with them. Where in person engagement is not possible, connect live online.
One last critical point: At every step in your engagement with suppliers, reflect collaboration, not compliance. For example, when following up on SAQ findings, convey your intention to work together with your supplier to address root causes. In case of overtime, for instance, ask them why workers are working excessive hours and what you as the buyer can change to reduce overtime.
At CORE, we regularly challenge not only companies’ human rights practices but also our own advisory approaches—seeking ways to improve “risk management as usual” and build on what works. We are always on the lookout for effective tools and approaches to identifying human rights risks in supply chains. The above suggestions are based on our discussions within the team, with various subject matter experts and with clients, as well as based on our review of different procurement practices.
It’s still the early days of human rights due diligence processes. We need to acknowledge that – just as it is the case with any new corporate process – HRDD will be improved through the learnings gained in the practical implementation of corporate sustainability laws. Instead of replicating and insisting on common practice, we invite everyone to challenge and adapt ineffective ones to get to good practice.
We’d love to hear from you on your current procurement practices, including SAQs, and how you’ve adapted them for human rights due diligence. Write to us at serra@peopleatcore.com.
Serra for the CORE team
