Step 1 of the OECD due diligence framework is about having robust policies and corporate management systems in place. This chapter outlines what this means for companies undertaking due diligence in cocoa supply chains in relation to human rights impacts, such as child labour and forced labour.
Business Handbook on Due Diligence in the Cocoa Sector
Addressing Child Labour and Forced Labour
Report
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Step 1: Embed responsible business conduct and due diligence into policies and management systems
Abstract
Strategic questions for enterprises to ask
Does your company have a public policy document in which it commits to respecting internationally recognised human rights, including children rights, and the right to be free from forced labour?
Does this policy reference relevant international standards from the ILO relating to child labour and forced labour and make a commitment to carry out due diligence, using the OECD approach?
Has this policy been approved at the most senior level of your company and is it clear who is responsible for overseeing the implementation of this policy?
Have you established a system of controls and transparency along the cocoa supply chain? This could be a chain of custody system (e.g. using documents) or a traceability scheme, or the identification of upstream actors in the cocoa supply chain.
Do your suppliers understand how to comply with your company policy on human rights, including child labour and forced labour issues? Is it incorporated into supplier contracts or written agreements?
Is there a system for collecting and reacting to grievances/issues pertaining to child labour and forced labour raised by staff, business partners, and local communities and others?
Embed responsible business conduct due diligence into policies and management systems
Establish and/or update policies with clear references to child labour and forced labour
Corporate policies should reflect your company’s commitment to address child labour and forced labour, respecting child rights in line with national and international standards (e.g. ILO) as well as the OECD recommendations on risk-based due diligence. While child labour and forced labour are recognised as human rights issues in the cocoa sector, policies may also include other human rights concerns, such as freedom of association, gender equality, worker health and safety, tenure rights, access to land as well as the sustainable use of natural resources (land and water) and the protection of forests and biodiversity (OECD/FAO, 2016[2]).
Companies are encouraged to state that the policy is valid throughout the entire supply chain including at the farm level.
Standards should apply equally to all people.
Policies should be approved at the most senior level of the company and be reviewed regularly to reflect new risks in the enterprise’s cocoa operations, supply chain and other business relationships. For example, policies may be updated to reflect changes to sourcing areas, new human rights risks in the cocoa supply chain, and evolving international standards and national legislation.1
Policies may include a commitment to work with farmers and their communities, governments, civil society and other relevant stakeholders to collectively address the root causes of child labour and forced labour.
Structure internal management systems and human resources to support due diligence
Based on policies developed, internal management systems and human resources can further support due diligence through additional actions, such as:
Define management commitment and secure budget to train staff and develop a programme to address human rights risks and impacts such as child labour and forced labour
Strengthen supplier and SME capacity to conduct effective due diligence to address human rights risks and impacts, including child labour and forced labour
Train staff on issues of child labour and forced labour, making sure that they understand the complexities of how to best address these adverse impacts
Establish a system of controls and transparency along the supply chain
To adequately identify and address actual and potential adverse human rights impacts such as child labour and forced labour in the supply chain, the OECD recommends that companies (upstream and downstream) establish a system of controls and transparency over the supply chain. Establishing such a system depends on where companies operate in the supply chain and how much visibility and control they have over the supply chain.
Establishing a system of controls can be done through a chain of custody approach (which is document driven, such as through keeping records of the age of workers), or a traceability/certification system. Such systems, and how they are embedded into the company’s management systems, should be explained in the company’s policy. It should be noted that industry certification schemes may help support a company’s due diligence but should not replace a company’s due diligence. Individual responsibility for due diligence remains with the company.
Make the policy publicly available and communicate it to all personnel, suppliers, business partners and relevant stakeholders
The policy should be communicated widely to employees and business partners such as farmers, traders or processors, exporters and importers of cocoa beans. Relevant additional stakeholders may include industry or multi-stakeholder initiatives, national/regional governments in producing countries, local NGOs, and community-based organisations. Companies are encouraged to:
Ensure that personnel and suppliers in your cocoa supply chain have a baseline understanding of human rights, especially of child labour and forced labour issues, as well as the sector and issue‑specific indicators that can be used to assess those risks and impacts in the supply chain, and how to alert management if such adverse impacts are found.
Build the commercial business case for the policy, clarifying departments’ specific responsibilities and tying actions to legal requirements and customer demands. Assign responsibility for implementing the policies across relevant departments, for example legal, procurement, stakeholder engagement, supplier engagement and public affairs, among others.
Develop, communicate and maintain an internal reporting structure within your company at key junctures. Cross-functional groups can share information and decision-making about risks and actual impacts and the progress of your company’s due diligence activities in the cocoa supply chain.
Incorporate due diligence expectations into supplier contracts or written agreements
Include provisions on child labour and forced labour and any other relevant human rights risks in supplier contracts, supplier codes of conduct or other forms of written agreements. Company expectations, including contractual obligations with defined penalties for breaches, should be clearly communicated. Policy materials should be translated and provided to suppliers and business relationships in their own language.
Communicate the expectation on suppliers to cascade your company’s policies through the supply chain and to establish a system of controls and transparency. Supplier or vendor summits can communicate your company’s due diligence requirements and showcase better performing peers to promote learning.
Where a company sources from a supplier where child labour or forced labour are a risk, consider including contractual language to undertake unannounced visits of suppliers’ activities or require them to participate in the business’ system of controls.
Train suppliers – especially SMEs – to operationalise risk-based due diligence to address adverse impacts especially child labour and forced labour. This could include, for example the promotion of this Handbook amongst suppliers, developing a standardised reporting framework on risks and actual impacts, sharing examples of suppliers’ policies on child labour and forced labour, and helping them strengthen assessment systems to ensure compliance such as age verification systems.
Work with suppliers to address barriers to the implementation of due diligence, for example, by increasing the percentage of directly sourced cocoa and engaging with national traceability systems to improve visibility where cocoa is sourced from middlemen and traders.
Box 3. Considerations for SMEs
Consult with local employer associations, industry or multi-stakeholder initiatives when developing policies on due diligence as they may have good practice examples that can be drawn upon. Many of these materials are publicly available.
Work with peers and organisations in the cocoa sector that can help engage stakeholders on the ground or internationally or support trainings of staff and suppliers on due diligence and in particular addressing child labour and forced labour risks.
Check publicly available resources from international organisations such as the OECD, ILO, United Nations Children's Fund (UNICEF) and Food and Agriculture Organization of the United Nations (FAO) on child labour for business and what companies can do to address these risks.
Appoint someone responsible for human rights, even if not in a full-time role. Simpler hierarchies and less siloed structures can provide an advantage for smaller business, including cross-functional co‑ordination and more direct involvement of senior decision-makers.
Note
← 1. OECD recommendations underscore that obeying domestic laws in the jurisdictions in which the enterprise operates and/or where they are domiciled is the first obligation of enterprises.