Look at the smartphone in your hand, the clothing in your closet, or the sneakers on your feet. How can you be sure they were made without the use of child or trafficked labor, or that human rights weren’t violated somehow in the making of these items? Thanks to the work of Rutgers Law School Professor Sarah Dadush and an American Bar Association (ABA) working group, it’s easier than ever for companies to incorporate next generation human rights clauses into their international supply contracts and, hopefully, make a positive impact on global supply chains.
If you ask Dadush, many contracts for the manufacturing and supply of goods do not contain human rights obligations, and the ones that do fall short. Why? They often include static promises by the supplier to uphold human rights, but no obligations to put processes in place to ensure that such promises are kept. They tend to put all the responsibility for upholding human rights solely on the supplier, without considering how the buyer’s own behaviors and purchasing practices can severely limit the supplier’s ability to perform. And they typically allow the buyer to terminate the contract immediately if something bad happens, without providing remedy to the actual victims of human rights abuses—the workers themselves.
To address the shortfalls of traditional contracting, the ABA working group created a set of model contract clauses, the MCCs 2.0, which companies can integrate right into their international supply contracts. These new model clauses say that it’s not enough for the buyer to simply prohibit child and trafficked labor, inadequate health and safety standards, or wage theft. Instead, both buyers and suppliers should carry out ongoing human rights due diligence (HRDD), by proactively examining their supply chain, identifying where the most severe human rights risks appear, recording where and what these are, and then taking affirmative measures to prevent those risks from graduating into harm.
Another attribute that sets these clauses apart from the status quo is the involvement of workers throughout the due diligence process and, especially, the remediation process. Essentially, the clauses require that suppliers have transparent and accessible internal grievance mechanisms in place and that, if an adverse impact occurs, the worker-victims are involved in the preparation and implementation of a remediation plan.
Getting the Word Out
Once the clauses were published in 2021, it was time to publicize them and get uptake by a wide range of stakeholders, including buyers, suppliers, investors, private standards-setters, policymakers, and others; however, the working group wasn’t created for this task. This is why Dadush and her close collaborator, business and human rights specialist Olivia Windham Stewart, launched the Responsible Contracting Project (RCP). RCP is the flagship project of the Rutgers Law School Business & Human Rights Law Program, which is run out of the law school’s Center for Corporate Law and Governance.
RCP is currently working to integrate responsible contracting principles into commercial contracts and develop guidance for companies on HRDD alignment and legal compliance, and recently launched its own toolkit. RCP is also available to work one-to-one with companies, law firms, investors, and others, to rework their contracts to improve human rights outcomes and achieve legal compliance.
“The dream is that our work shifts how companies engage with one another and moves them toward a more cooperative and relational type of contracting that can do a much better job of protecting human rights,” says Dadush. “By no means do we think that contracts alone are the solution, but we do believe that they are a critical component of supply chain governance that, if done right, can lead to major improvements for human rights domestically and internationally.”