Problem: Global supply chains are the dominant way to organize production in the world economy. One of the most pervasive problems in this context is the violation of human rights in developing and emerging nations that provide labour inputs; often with very low wages. During the past three decades, the global supply chains have been governed by guidelines and initiatives that seek to promote socially responsible business conduct through industry self-regulation and voluntary participation. In particular, brands formulate codes of conduct (ethical rules) and require from suppliers to obey them. They hire professional auditors or NGOs to conduct occasional on-site inspections to ensure compliance with these norms. When there is a deviation corrective action is required. Thus, brands represent their corporate interests, determine how workers’ interests are protected, and hire those who are supposed to act on behalf of them. Obviously, this firm-centred system of rights enforcement entails substantial risks of biased, false, or incomplete reporting on labour and other social issues.
Why it matters: The lack of accurate and comprehensive information imposes rising challenges to (multinational) corporations, institutional investors, and public procurement agencies because workers and communities in developing and emerging countries are more prepared to resist rights infringements. Also, consumers are more sensitised to unsustainable and unfair practices, which impacts their buying decisions. At the same time, a global regime of ethical principles and guidelines is emerging that supports and leverages bottom-up pressure from citizens and consumers. For example, the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, and the Public Procurement Directive 2014/24/EU of the European Parliament and of the Council all emphasize the need for effective social risk management with a view to protecting workers and other stakeholders’ legitimate rights and claims.
Project objective: Globalworks Lund AB developed a data analysis system that can satisfy the demand for information that is qualitatively, and quantitatively meaningful for social risk analyses; i.e. identifying the extent and pervasiveness of material risks. Every day workers and other stakeholders in developing countries write about their grievances on social media in order to protest, reach out for help, seek advice, or share experiences. These voices provide rich and detailed accounts of labour and other human rights violations.
We developed and tested together with pilot customers the prototype of a platform, social@risk™, which collects these voices and transforms them into social risk assessments of sectors, regions, and individual suppliers. social@risk represents an intelligent, fully transparent system where experts and stakeholders of an issue inform the algorithms that facilitate data structuring and analysis.
The overall project objective is to transform our prototype into a scalable system that covers major risk countries, key export-processing sectors, and multiple social media platforms. We seek to expand and further develop our analytical capabilities in collaboration with a network of pilot clients and other stakeholders. Collaboration with clients is a straightforward approach to remain focused on the value proposition of our service.
