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No or Poor Communication about the Initiative and Its Objectives and Requirements to All Stakeholders

Reputational risk Legal risk

What this means

Why investors should care

What to look for

For an initiative to be effective, nurture best practices, and build a culture of accountability, all stakeholders—including rights holders and those responsible for implementing and upholding the standards, such as farmers, farmworkers, mill workers, and mill managers—need to understand the initiative and its objectives.

Affected rights holders are especially in need of timely, direct, and accessible information. Rights holders are often unaware of any new requirements of an initiative that could affect them or available options for addressing harms. This can include access to grievance mechanisms, changes to standards, audit findings, and corrective action plans. In addition, initiatives should require that auditors have a separate channel to rights holders and provide adequate information in advance about audits, so that they are prepared to meaningfully engage.

The ISEAL “Transparency” principle, one of 10 Credibility Principles, is designed to enable “stakeholders to understand and evaluate the system’s processes, decision-making, results, and impacts,” because “stakeholders [should] have the information they need to actively participate in decisions or raise concerns.”¹

When companies do not inform stakeholders about the initiative, the stakeholders may withhold their support for changes in corporate practice taken to meet the initiative’s standards. Moreover, in the case of affected rights holders, they may not be aware of their rights under it.

In 2023, Corporate Accountability Lab (CAL) reported that workers in the Mexican produce industry faced retaliation for reporting abuses including wage theft and other signals of forced labor, on farms certified by the Equitable Food Initiative (EFI) and Fair Trade USA (FTUSA):

“Few farmworkers who work on plantations certified by EFI and FTUSA know their rights under federal labor law. Neither certification[’s] standards emphasize know-your-rights training for workers.”¹

CAL also spotlighted the importance of adequately communicating the initiative standards to key participants in a 2021 lawsuit it brought against the Hershey Company and Rainforest Alliance: “Farmers that sold their cocoa to certified cooperatives were often unable to explain what labor standards they were supposed to be complying with and how these standards differed from the standards for non-certified cooperatives.”² In the year prior to the lawsuit, Rainforest Alliance revised its certification program to ensure the policy is communicated to all stakeholders whether through training or ongoing engagement.³

A failure to inform sometimes undermines audits. In January 2024, Inclusive Development International (IDI), CECIDE, and ADREMGUI published a letter asserting that the Aluminum Stewardship Initiative (ASI) left pre-audit community preparation entirely to the company being assessed, Compagnie des Bauxites de Guinée (CBG). Communities received notice of auditor visits only one to two days in advance, auditors arrived in company vehicles, undermining any sense of independence, and leaving the community feeling pressure to speak positively about the mine.⁴

→ Demonstrates: Reputational risk, legal risk

Investors can look for a statement on the website of the initiative that details how requirements are explained or shared with key participants. Here are two good practice examples:

➔ Education is a central part of the Fair Food Program. The Coalition of Immokalee Workers (CIW) conducts on-the-clock education sessions for workers at all of the growers’ farms throughout the season. The sessions are led by farm workers for farm workers using the curriculum they developed. Workers also receive a booklet and video training in either English, Spanish, or Haitian Creole detailing their rights and responsibilities as part of new employee orientation.

➔ Lesotho-based trade unions, women’s rights organizations and US-based workers’ rights organizations worked together to create the Program to End Gender-Based Violence and Harassment in Lesotho (Anti-GBVH Program). As detailed in the Program’s 2021–2022 annual report, implementation includes a two-day worker GBVH education workshop, jointly facilitated by union leadership and women’s rights advocates. The workshop is focused on the program’s complaint process and provides payment for the workers time to attend.

➔ IRMA requires that affected rights holders be given the opportunity to engage independent experts and review draft and finalized versions of company impact assessment reports before they are completed. This way communities can verify whether findings accurately reflect conditions on the ground and raise concerns before outcomes are finalized.

Checklist for Red Flag 12

Does the scheme require member companies to clearly communicate the purpose and expectations of the scheme to all actors throughout the supply chain?

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Red Flags in Sustainability Initiatives

No or Poor Communication about the Initiative and Its Objectives and Requirements to All Stakeholders