Our Approach
<
>
The EU Corporate Sustainability Due Diligence Directive (CSDDD) positions multi-stakeholder initiatives, including those with certifications, as an element of a company’s due diligence plan and a means of demonstrating compliance with the law. Click here to learn more. In January 2022, Rights CoLab, serving as a knowledge partner to the Value Reporting Foundation,[1] convened its Expert Group of labor rights specialists to develop recommendations on how to treat certifications within the SASB (Sustainability Accounting Standards Board) Standards. Certifications was a key issue that the SASB Standards Board was grappling with as part of its project to update the Raw Materials Sourcing in Apparel, Accessories & Footwear industry standard.[2] Eventually, the Standards Board approved an indicator that asks companies to report on
The Expert Group generally agreed with the Standards Board’s decision not to define a set of principles – doing so would be insufficient since the strength of a certification cannot be assessed without also understanding how a given certification operates in practice. It also urged caution in including a list of approved certifications in the standard, as the original version of this and other SASB industry standards had done. The Expert Group reasoned that investors would benefit from additional guidance to be able to judge the information that companies disclose about certifications against the indicator and to support their corporate engagement on this topic.
The idea of Certifications Red Flags, inspired by Shift’s Business Model Red Flags,[4] was born out of this conversation. To build out an initial concept, Expert Group members brainstormed red flags and shared the resulting matrix with SASB research staff as a potential starting point for guidance that could support the new SASB indicators. [1] The Value Reporting Foundation housed the standards until the organization’s consolidation into the newly formed International Sustainability Standards Board (ISSB) of the IFRS Foundation in 2022. [2] Beginning in January 2020, Rights CoLab worked as a knowledge partner to the SASB research team, assembling a group of labor rights experts – the Expert Group – to support recommendations. This later developed into an MoU (memorandum of understanding) with the Value Reporting Foundation. For more on the work, see “Rights CoLab and Value Reporting Foundation Formalize Partnership by Signing MOU,” Rights CoLab, September 27, 2021, https://rightscolab.org/rights-colab-and-sasb-formalize-partnership-by-signing-mou/. [3] For the full standard, see Sustainability Accounting Standards Board, Apparel, Accessories & Footwear: Sustainability Accounting Standard, (2023), 6, 26, https://www.ifrs.org/issued-standards/sasb-standards/. [4] Shift, Business Model Red Flags: 24 Ways in Which Businesses Could be Wired to Put People at Risk, (February 2021), https://shiftproject.org/resource/business-model-red-flags/red-flags-about/. Building off an initial concept developed with the Expert Group that Rights CoLab convened to support the Value Reporting Foundation's human capital work, we conducted a comprehensive literature review in early 2023 across NGO reports, scholarly articles, and judicial and non-judicial complaints involving certifications, and created the Certifications Red Flags prototype. To test it, we co-led the Equitable Global Supply Chain workshop at the ICCR’s (Interfaith Center on Corporate Responsibility) 2023 Fall Conference, where we invited participants to provide feedback after taking part in a role play using the Red Flags. We then revised the prototype to reflect these comments.
In December 2023 to January 2024, we held three additional investor roundtables to solicit input into the tool’s use case and suggestions to enhance its usability for diverse investors: two online small group sessions with a total of 22 European and North American investors, and a roundtable in Melbourne, Australia hosted by Investors Against Slavery and Trafficking in the Asia Pacific (IAST APAC) with 20 investor members. In March 2024, we conducted an expert review of the draft. As our project partners evaluated the tool, we commissioned five human rights in supply chain experts to examine the content and provide comments. We also contacted all the schemes mentioned in the report to ensure accuracy and invite them to share any updates to their standards or procedures subsequent to the event highlighted in the tool.[1] Throughout the process, we drew from the deep experience of leading scholars and human rights advocates, who generously gave their time to review this tool. As previously mentioned, we also incorporated the documentation of certification risks and opportunities found in published articles, reports, and judicial and non-judicial complaints. We provide these key resources as a supplement to the tool (see Further Reading). We also invited the certification schemes and initiatives named in the report to review Certifications Red Flags, and adapted the text based on their feedback. In April 2024, Rights CoLab met with The ISEAL Alliance, a non-profit organization focused on identifying best practices within the social and environmental auditing industry to “accelerate positive change by improving the impacts of ambitious sustainability systems and their partners.”[2] With members in over one hundred countries, in various sectors, ISEAL is well placed to influence and convene market players to disseminate and define what good practices look like. Throughout this tool, we reference ISEAL’s Credibility Principles, the Assurance Code of Good Practices, and the Impacts Code of Good Practices. During the meeting with ISEAL we discussed Certifications Red Flags and how to ensure alignment with ISEAL standards. Finally, we also kept in mind the International Organization for Standardization (ISO), a non-governmental international organization, convenes experts to standardize various business processes. Particularly, ISO 17053, “Conformity Assessment – Requirements for Bodies Certifying Products, Processes, and Services,” which focuses on sustainability certifications. This tool contains references to key elements of this standard as it relates to the Red Flags.[3] [1] We were unsuccessful in reaching the following initiatives: amfori's Business Social Compliance Initiative, C.A.F.E Practices, Indonesia Sustainable Palm Oil (ISPO), Kimberley Process, and RINA. All other schemes reviewed the report and replied with comments and information about updates to their standards. [2] “Our Mission,” ISEAL Alliance, accessed June 7, 2024, https://www.isealalliance.org/about-iseal/our-mission. [3] Since ISO standards are not publicly available, we focused on the key elements of ISO 17065 that are accessible to the public. The case examples featured within this tool are drawn from publicly available sources. Those in the “Why Investors Should Care” section include claims implicating the scheme within lawsuits or non-judicial grievance mechanisms, including OECD National Contact Point complaints. They also include highly publicized incidents that occurred despite certification found in NGO and media reports, which have incurred costs for companies and investors. Not all the initiatives we point to are certifications; they may be examples from other third-party auditing, including industry specific or multi-stakeholder initiatives, which have a standard of conduct required for membership but do not offer certification. These initiatives have in common attestations about their corporate members’ human rights and environmental commitments. We include such initiatives when we think they are helpful in demonstrating the Red Flag or a good practice that avoids the Red Flag. In using examples to highlight risks, we are not making judgments about the scheme or initiative, nor are we doing so when we cite examples of good practices. A critical feature of a good initiative is its dedication to continuous learning and improvement. In cases where the tool spotlights a weakness of a scheme to demonstrate a red flag and that scheme has subsequently, in part or in whole, addressed the problem through a revision of the standard, guidance or procedures, we make note of it. While we think we got a lot right, we need investors to use the tool to confirm it. Through the rest of 2024 we will be hosting interactive learning and feedback sessions with role plays to give investors a chance to test drive this tool. With that feedback we will finalize the tool in early 2025. Opportunities to participate in these sessions will be publicized here. Certifications Red Flags is authored by Joanne Bauer and Silvana Zapata-Ramirez, with contributions from Shauna Curphey. Manuela Corredor Vásquez and Julia Falkow contributed to the research.
Certifications Red Flags is part of the Investor HREDD (Human Rights and Environmental Due Diligence) Precision Tools Project, a collaborative initiative led by Rights CoLab in partnership with EIRIS Foundation, ESG Inteligente, Interfaith Center on Corporate Responsibility/Investor Alliance for Human Rights, Principles for Responsible Investments, Responsible Contracting Project, and Workforce Disclosure Initiative. Special thanks to partners Caroline Boden, Chavi Keeney Nana, Melina Fachin, Jana Hoess, Polly Marsh, Rebecca DeWinter-Schmitt, Rémi Fernandez, Rita Sebestyén, and Sarah Dadush for their input. This tool also greatly benefitted from the expertise of Anna Canning (Worker-Driven Social Responsibility Network), Mark Wielga (NomoGaia), Olivia Windham Stewart (Independent Consultant), and Shawn MacDonald (Verité) who reviewed and provided detailed comments on the draft. The Investor HREDD Precision Tools Project was made possible through the generous support of the Generation Foundation, Global Commons Alliance, a sponsored project of Rockefeller Philanthropy Advisors, and Humanity United. |