December 10 was the International Human Rights Day. This article explores an area in business often seen as contradictory but is increasingly critical: Human rights. Do businesses genuinely care about human rights? This question demands attention with India becoming a pivotal part of global supply chains.
Significant progress has been made in international and national spheres in the past few years. The European Union adopted the Corporate Sustainability Due Diligence Directive (CSDDD) in 2024, requiring companies to address human rights and environmental impacts across their value chains. This directive is considered a landmark step in ensuring that businesses adopt responsible practices that account for the well-being of workers and the environment globally. The CSDDD translates the concept of Human Rights and Environment Due Diligence (HREDD) into binding legal obligations, ensuring that companies in the EU and their value chains adopt sustainable and responsible business practices. Both the HREDD and CSDDD are rooted in the United Nations Guiding Principles on Business and Human Rights (UNGP) and other international frameworks.
India, in alignment with UNGPs, introduced the National Guidelines for Responsible Business Conduct (NGRBC) in 2019, and the nine principles indicate that businesses should remain responsible towards their supply chains, mainly following the aspects of environment, social and governance (ESG). The Business Responsibility and Sustainability Report (for 1,000 listed companies) goes a step further — it mandates companies to report against the nine principles of the NGRBC.
The above set is particularly relevant for global supply chains, which are predominantly buyer-driven, with Western buyers engaging with domestic producers, suppliers, and agents. Each entity in the chain must comply with international frameworks like HREDD and the CSDDD for global markets, while also adhering to domestic responsible business conduct standards.
Are these only for compliance or are they transforming business supply chains from within? Are these ensuring minimum wages for workers, considering their welfare, preventing occupational hazards and ensuring women’s safety?
A reality check on India’s tea and sugar supply chains reveals stark challenges for workers and farmers. Assam’s tea workers, for instance, earn as little as between Rs 250 to 300 per day while enduring poor health, inadequate education, and minimal social protection. In the sugar supply chain, the “koyta” system of labour persists in western India. This exploitative system not only renders women workers invisible but also subjects them to severe exploitation, including unfair wages and inadequate access to essential services. Human rights violations in the garment, electronics, and automobile sectors — for which India is a cheap labour-producing country — are well known.
Production patterns in buyer-driven markets are often structured to shield buyers, relying on certifications or their own due diligence mechanisms. These processes, supported by standard-defining agents, frequently obscure ground realities rather than address them. Western buyers contract producers in supply countries, who, in turn, operate through highly opaque supply chains.
This opacity allows practices like employing informal workers without social security benefits such as medical or accident coverage. Producers’ reports typically focus only on formal employee conditions and environmental measures within their direct operations, leaving significant gaps in accountability for informal workers. Whether frameworks like the NGRBC and BRSR can effectively dismantle this opacity and encourage producers and agents to adopt responsible business practices remains to be seen.
The HREDD and CSDDD now require buyer companies to conduct due diligence in countries, raising anticipation about whether this will involve on-ground assessments to uncover human rights and environmental violations. Meanwhile, the NGRBC and BRSR frameworks aim to ensure Indian companies respect human rights, address grievances, uphold workers’ rights, and mitigate environmental issues. Whether these measures will effectively bridge the gap between policy and practice remains a critical question.
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While HREDD must evaluate how Indian businesses align with NGRBC guidelines, a comprehensive ground-level assessment is equally essential. Such reports must accurately reflect worker conditions and the environmental impact of business activities. For businesses to genuinely uphold human rights, they must engage with local organisations advocating for workers, addressing the existing distrust.
Buyers could use the NGRBC as a framework, referencing Indian BRSR reports and collaborating with local civil society organisations (CSOs) for on-ground verification. However, a limitation is that BRSR reporting applies only to listed companies, excluding unlisted producers, many of whom are MSMEs. Notably, MSMEs accounted for 45.79 per cent of India’s export supply chain as of May this year. While orienting MSMEs toward responsible business practices is critical, they face significant challenges in adopting these due to financial constraints and limited awareness.
While business and human rights have historically been seen as disconnected, new policies and legislation present a significant opportunity for change. It is crucial to centre workers’ rights and environmental concerns to transform businesses into truly responsible entities that uphold human rights. By aligning business operations with these values, companies can contribute to a more ethical and sustainable global supply chain.
The writer is advisor, Markzin Young Private Limited
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