Assess risk to people, environment and climate in your business operations
Risk assessment in practice
Here you identify risks with regards to negative impacts on human rights, environmental and climate within your value chain, and then prioritise where specific action and follow-up must be implemented.
The process of human rights, environmetal and climate due diligence requires that you assess risks to the people within your value chain – not your company. Put on your human rights glasses and focus on where and how your activities can have a negative impact. Talk to experts and organisations who know about the issues. They are friends who can take a critical look and point to any blind spots.
There are two elements to your risk assessment. First, you develop a risk overview. Second, you prioritise your efforts. For each area you can find more information and specific tools in the sub-pages.
For whom is the company minimizing the risk?
Remember to put on your human rights glasses!
In making your risk assessment, you must keep an eye on those affected people and environment. This is an exercise requiring some training. Several companies have been successfully involving local unions and NGOs to help identify risks. For human rights encompassing everybody from supplier employees, local farmers, fruit pickers, factory workers and cleaning staff to local residents near your production, the people who transport things to and from production, and those who use your products. On the environment and climate page, you can look at CO2 emissions, water consumption, pollution, deforestation, biodiversity and other issues throughout the value chain.
Risk assessment questions
Relevant questions when looking at your value chain through human rights glasses:
– Which individual is affected?
– Which human rights are involved?
– Which ecosystem, animal or plant may be affected?
– What are the negative environmental and climate impacts to consider?
– What is negative environmental and climate impact?
– How is it related to your company’s activities?
– What is the probability that negative environmental and climate impacts will occur?
You are not expected to find the answers to these questions by yourself. Talk to others about it. You might find answers amongst employees, trade unions or NGOs. Look for opportunities to collaborate across sectors. For example, different food and feed companies work together in the Danish Alliance for Responsible Soy to discuss risks such as deforestation or labour rights in the value chain.
How serious is the negative impact?
Use the following criteria in assessing the severity of adverse effects or injury:
- Severity: How serious is the negative impact or harm to humans or environment?
- Scale: How many people may be affected?
- Possible remediation: Can the damage be rectified?
An example of human rights in practice
How does the following right relate to your business?
No one shall be held in slavery or servitude; slavery and the slave trade in all forms must be prohibited.
The employment of seasonal and migrant workers is relatively widespread, particularly in agriculture and the food industry. Therefore, you should examine general recruitment practices in your supplier’s country or region.
Is there a risk that the process is harmful or inappropriate for the people that are being hired?
For example, migrant workers may be forced to pay a large fee in order to get the job. Some will end up being forced to “pay” this fee with their labour – leaving them in bonded labour.
If you suspect that something is happening on improper terms, we recommend that you investigate the supplier’s recruitment process thoroughly.
If you ask them to elaborate on the following, you will get an indication of whether there is a risk of any form of slavery in your value chain:
– How are the working conditions?
– How does the recruitment process take place?
– Is it internal or outsourced to a recruitment agency?
Read all the human rights and see examples of negative impacts in “My company and human rights”.
What is negative environmental and climate impact?
A rule of thumb is that all production involves potential environmental and climate impact, so how are companies expected to deal with this?
The EU is targeting the largest European companies, through their business models and strategy, to contribute to the union’s green transition as well as to avoid more than 1.5 degrees of warming as stipulated by the Paris agreement. Companies opposing these two objectives are thus at risk of having a negative impact on the environment and climate.
Assess climate impact by understanding where in the value chain CO2 is emitted. After that, you can work specifically to reduce emissions where possible and where they are most significant. For example, material use accounts for 70% of all CO2 emissions.
Use the Climate Compass which provides an overview of the company’s CO2 emissions and can help you identify the points in the value chain that have the largest emissions.
Assess environmental impact by mapping environmentally harmful materials and processes. Materials must be cultivated or reclaimed and processed, transported and disposed of. In addition, water and chemicals are used in many production processes.
Benefits of risk assessment
- You know the relevant risks of negative impact on people, environment and climate
- You can prioritize your efforts
- Ask the right questions to suppliers and stakeholders
Here’s how to get started
There are two parts to your risk assessment. First, you create a risk overview. Second, you must prioritise your efforts. Click on the boxes below to get more information and specific tools.
Take responsibility for the value chain your company is part of. You cannot put all of the responsibility on the supplier, but you can make sure to choose only suppliers who are aware of human rights, environment and climate and can account for what they do in the field.
See how others are working with human rights, environment and climate
About this guide
This guide is aimed at small and medium-sized businesses - i.e. companies with 2 to 250 employees, across industries. Human rights due diligence is relevant whether you are in the B2C or B2B market, import, export or have your own production in Denmark.
The purpose of the guide is to help SMEs in their work with human rights, environmental and climate due diligence - regardless of company size and resources. The guide provides inspiration on where to start and how to strengthen your current processes.
The guide has been prepared by Ethical Trade Denmark. A first version of the guide - focused on human rights and targeted at the food cluster - was developed in collaboration with the Danish Agriculture & Food Council and Arla, co-financed by the Danish Business Authority.
The guide may not be modified, reproduced or translated without prior written agreement with Ethical Trade Denmark. The guide may only be used in educational contexts with clear credit to Ethical Trade Denmark, including a clear logo.