Photo by Doran Clark on iStock
May 2, 2024
Authors
Key Points
- Human rights risks and impacts in the transport & logistics sector have historically been overlooked, despite the criticality of these operations for many businesses.
- COVID-19 brought widespread awareness of the difficult working conditions of many “essential workers” in our global supply chains, including seafarers, delivery drivers, and warehouse workers.
- Emerging sustainability regulations, including the EU Corporate Sustainability Due Diligence Directive, require companies to conduct human rights due diligence on their transport & logistics activities.
Most companies have focused initial human rights due diligence efforts on their own operations and supply chains feeding directly into their products and/or services. Transport & logistics (T&L) services, despite being critical to company operations and inherently risky for human rights, have been overlooked as part of companies’ ‘indirect’ or ‘operational’ supply chain. However, the changing regulatory context is increasingly requiring that companies look beyond these traditional areas of risk to consider, and prioritize, high-risk segments of their broader value chains. As they do, T&L services are expected to rise to their attention as an inherently high-risk sector for human rights, in every part of the world.
To help companies begin to understand these risks, BSR is pleased to release its updated primer on human rights in the transport and logistics sector. This primer draws on extensive work conducted by BSR with T&L companies and customers of such services. This work has confirmed the importance of conducting due diligence on these activities and emphasized the urgent need for collective action by customers and suppliers of T&L services to raise human rights standards across the value chain.
What Human Rights Risks?
Transport & logistics includes a wide range of activities, covering the actual transport of goods by various modes (air, rail, road, sea) and physical sites where goods are transferred (ports) or stored (warehouses), as well as many intermediary and ancillary services. T&L is a crucial link in the operation of the modern economy and global trade. Almost every company relies on T&L services in some manner, with a trend toward outsourcing of these activities to specialized third parties. Outsourcing has the unintended consequence of raising challenges to ensuring respect of human rights for workers, by both increasing the risks of exploitation and reducing the visibility and control over these risks. Indeed, many workers in T&L value chains—including seafarers, delivery drivers, and warehouse workers—face a serious lack of standards and protections.
A recent convergence of factors serves to exacerbate the human rights risks within transport & logistics:
- Fragmented supply chains reduce company leverage, put downward pressure on wages and make due diligence more difficult
- Cross-border operations means variable wages and other labor protections, and challenges to enforcing consistent standards;
- Labor shortages, which are forecasted to continue, increase the risks of labor exploitation;
- A mobile, and sometimes informal, workforce creates challenges for monitoring working conditions; and
- Ever growing consumer demand and delivery speeds pressure companies to maximize productivity at the expense of workers and labor standards.
Growing Scrutiny of Transport & Logistics Value Chains
The COVID-19 pandemic shone a spotlight on the difficult working conditions of many essential workers, including those keeping global trade and supply chains running. Reports about hundreds of thousands of seafarers being abandoned and unable to return home, delivery drivers lacking basic protections while struggling to meet surging demand, and warehouse workers facing widespread COVID outbreaks were all too common.
Emerging due diligence laws that require companies to conduct risk-based due diligence of their supply chains (such as the French Duty of Vigilance Law and German Supply Chain Act) are bringing to the attention of companies, as well as their investors and customers, that T&L activities present high risks of human rights violations and should be prioritized for prevention and mitigation measures.
- The first decision under the French Duty of Vigilance Law implicated a transport company – La Poste, France’s national parcel delivery provider. The decision found that La Poste had failed to comply with its duty of vigilance by not adequately identifying and addressing the human rights risks linked to their subcontractors. La Poste was ordered to improve its risk mapping and establish procedures to assess its subcontractors against the risks identified.
- The EU Corporate Sustainability Due Diligence Directive also explicitly extends due diligence obligations to “the activities of a company’s downstream business partners related to the distribution, transport and storage of the product, where the business partners carry out those activities for the company or on behalf of the company”.
There is little doubt that human rights risks linked to T&L are now on the radar of stakeholders and regulators and companies must begin to understand and address these risks more closely.
Recommended Actions
Key steps to begin to address human rights in your T&L value chain include:
- Map your T&L activities, including to what extent these activities are outsourced and subcontracted and where they take place.
- Review the fitness of your supplier risk management policies and processes are fit to detect human rights risks linked to T&L services.
- Review whether your contracts with T&L providers 1) set the right expectations on respecting human rights and 2) enable you to verify their workforce’s working conditions.
- Engage with workers in your T&L value chain directly or through trade unions and other organizations representing the interests of T&L workers.
- Identify opportunities to engage in collective or multi-stakeholder efforts to drive improved human rights conditions in this sector, acknowledging the limited leverage many single companies have over their T&L service providers.
BSR’s human rights team advises business from across sectors on due diligence, assessment, and management of risks. We are particularly interested in bringing together interested companies to further explore the potential for collective action on the risks and impacts in the T&L sector. Please get in touch with any questions or if you are interested in joining such a collective conversation.
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