Human rights due diligence (HRDD)
Human rights due diligence (HRDD) is a systematic process for businesses to proactively manage their potential and actual human rights impacts. It involves identifying, preventing, and mitigating adverse effects connected to a company's operations, supply chains, and business relationships. This framework enables organisations to account for how they address these impacts, moving beyond reactive compliance to build more resilient and ethical value chains.
Why it matters
For procurement professionals, understanding and implementing HRDD is no longer optional—it is fundamental to robust risk management and sustainable sourcing. As global regulations tighten and stakeholder expectations rise, a formal HRDD process is crucial for maintaining market access and brand reputation.
Integrating HRDD into your procurement strategy helps you:
- Mitigate supply chain risks: Proactively identify and address human rights issues like forced labour, poor working conditions, and inadequate pay before they escalate into major disruptions, legal penalties, or reputational damage.
- Strengthen supplier relationships: Move beyond simple compliance checks. HRDD fosters deeper engagement with suppliers, encouraging collaboration on improvement plans and building long-term, resilient partnerships based on shared values.
- Enhance compliance and reporting: A structured HRDD process provides the verifiable evidence needed to meet the demands of legislation like the German Supply Chain Act (LkSG) and the EU’s Corporate Sustainability Due Diligence Directive (CSDDD). It ensures you can confidently report your activities to regulators, investors, and customers.
- Improve operational efficiency: By pinpointing risks early, you can prioritise resources, focus on high-risk suppliers, and streamline corrective actions, making your compliance efforts more effective and cost-efficient.
How it works / key points
The first step is to gain visibility into your supply chain to understand where risks may lie. This involves mapping your suppliers and using risk data—such as country-specific risk levels, sector-specific challenges, and site-level information from audits and self-assessments—to prioritise areas for deeper investigation. The goal is to identify your most salient human rights issues and focus your resources where the risk of harm is greatest.
Once risks are identified, the focus shifts to action. This stage involves implementing measures to prevent potential harm and mitigate any existing impacts. Key activities include setting clear supplier code of conduct requirements, developing and implementing corrective action plans (CAPs) for identified issues, and providing training and capacity-building programmes for suppliers. Prevention is about establishing robust systems that reduce the likelihood of negative impacts occurring.
Due diligence is an ongoing process, not a one-time event. It is essential to track the effectiveness of the actions you have taken. This means monitoring the progress of corrective actions, verifying that improvements have been sustained over time, and regularly reassessing risks. Tracking could involve follow-up audits, analysing worker feedback, and reviewing evidence submitted by suppliers to confirm that your interventions are delivering real, positive change.
The final stage involves being transparent about your HRDD efforts and their outcomes. This includes reporting on your processes, the risks you have identified, the actions you have taken, and the results you have achieved. Clear communication, backed by consistent data and evidence, demonstrates accountability to stakeholders, including investors, regulators, and consumers. It builds trust and shows a credible commitment to respecting human rights.
Examples
A procurement manager for electronics brand uses country-risk data to identify a high discriminatory hiring practices in a region known for sourcing critical raw materials. Consequently, they require all potential suppliers from that region to undergo a SMETA audit before being onboarded, prioritising engagement with those who demonstrate strong management systems.
An apparel company discovers through a third-party SMETA audit that a key supplier has issues with excessive overtime. The brand works with the supplier to develop a Corrective Action Plan (CAP). The procurement team then tracks the supplier's progress through the Sedex platform, verifying uploaded evidence of revised work schedules and payroll records to ensure the issue is resolved and remains so.
In its annual sustainability report, a food and beverage corporation details its HRDD process. It transparently discloses that its highest-risk category is modern dlavery in its supply chain. The report outlines the specific prevention programmes it has funded, the number of suppliers engaged, and the measurable reduction in modern slavery incidents recorded over the past year.
About Sedex
Sedex is a global technology company that specialises in data, insights and professional services to empower supply chain sustainability. Our platform, tools and services enable businesses to easily manage and improve their environmental, social and governance (ESG) performance to meet their supply chain sustainability goals.
