The apparel and fashion industry in general is aware of the scale of the social, societal and environmental issues at stake. Increasingly under scrutiny, several players have been moving swiftly to make commitments in an attempt to limit these risks – first in their direct activities, and then across their entire value chain.
Ksapa worked with an American company renowned for its strong commitment to human rights, and more broadly for its management of ESG risks. The aim was to innovate in the evaluation of its practices and the scope assessed across its entire value chain: from the harvesting of raw materials to customer use.
The development of this risk matrix took into account current standards, notably the UN Guiding Principles on Business & Human Rights and the OECD Guidelines on Responsible Business Conduct.
This assessment was carried out at Group level, by evaluating the company’s risk management organization according to each scope and issue.
The initial identification of risks relevant to the Group’s activities, based on a list of over 150 human rights risks identified by Ksapa in relation to various international conventions, enabled us to gain a better understanding of the universe of risks to be assessed.
With regard to the sector and its ESG risks, Ksapa has established a set of relevant rights that are not only social, but also environmental and societal. This translates, for example, into environmental issues specific to local communities (ecosystem services, water management, protection against environmental pollution, etc.). According to Ksapa, integrating the environmental prism is essential if we are to build a risk matrix that truly takes into account human rights in the broadest sense.
The assessment was then carried out in stages:
- Qualification of the right in terms of “gross risk” (risk assessment without any means of control in place);
- Qualification of the right in terms of “net risk” (assessment of the risk taking into account the means of control put in place by the company).
And this for each of the key stages in the value chain.
In addition to an exhaustive document review, a wide range of exchanges with personnel located all over the world working on the management of their activities in the territories enabled us to confirm, or not, the robustness of the commitments and associated approaches.
This exercise made it possible to prioritize risks for the Group, and to gain a more granular understanding of the customer’s ability to respond to the various challenges according to different expectations (employees, local communities, suppliers, etc.).
RESULTS & NEXT STEPS
Once each risk had been qualified, it was prioritized. The higher the stakes and the more poorly managed the company, the higher the risk. This double qualification has enabled us to highlight the company’s key issues for the coming years.
This work enabled Ksapa to provide a set of both strategic and operational recommendations to limit risks and innovate in the creation of positive-impact solutions, so that our client can continue its leadership in the proper management of E,S and G issues.
Human rights being a key issue for the sector, the recommendations were obviously identified to meet both specific regulatory expectations (C3SD, German Supply Chain Act, Norwegian Transparency Act) and the ever-changing expectations of external stakeholders (investors, civil society, affected communities…).