Evaluation of the role of rightsholders in existing due diligence assurance schemes

The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD MNE Guidelines) and the UN Guiding Principles on Business and Human Rights (UNGPs) require companies to conduct human rights and environmental due diligence (HREDD). When performing due diligence, companies identify if and how their operations and/or value chains cause, contribute or are directly linked to potential or actual adverse impacts on people and the environment, and how to best address these impacts. The fundamental purpose of this due diligence is to improve outcomes for people and environments affected by business activities. In the past 14 years since the concept of due diligence was set out in the UNGPs, many companies, including those operating in minerals and metals value chains, have turned to voluntary sustainability standards (VSS) and related assurance schemes to support their
due diligence efforts.

However, many of these assurance schemes have been criticised for failing to deliver positive outcomes for (potentially) affected rightsholders,i such as workers, community members, Indigenous Peoples, and artisanal miners. These shortcomings are frequently attributed, at least in part, to the failure to integrate rightsholders into assurance processes. Over the past five years, numerous studiesii have examined the assurance scheme landscape and reached broadly unanimous conclusions regarding the limited role of rightsholders in assurance processes. These evaluations conclude that rightsholders are underrepresented in the governance of many assurance schemes, often lack access to transparent assurance reporting, and are not consistently required by schemes to be integrated into companies’ due diligence processes.iii According to these critical studies, due diligence cannot be considered effective if
rightsholders are confined to a bystander role rather than engaged as active participants.

Many of the studies mentioned above give somewhat lesser consideration to the ways in which the due diligence requirements of standards and their associated assurance (audit) processes enable meaningful rightsholder engagement. Addressing this information gap is crucial, as meaningful rightsholder engagement in assurance processes serves as a key indicator of the schemes’ ability to effectively advance positive outcomes for (potentially) affected people and environments, in line with the due diligence expectations set out in global normative frameworks of the UNGPs and the OECD MNE Guidelines.

This assessment of voluntary sustainability standards and assurance schemes aims to bridge this information gap regarding meaningful engagement with rightsholders. The objective of the assessment is to evaluate how effectively standards and assurance schemes incorporate the perspectives of (potentially) affected rightsholders into their governance structures, due diligence requirements, and assurance processes.

As the assessment is focused on identifying trends of rightsholder engagement in standards and their related assurance schemes used in the minerals sector, its purpose is not to provide a detailed gap analysis of individual standards or schemes. By focusing on trends among a larger set of standards and schemes, the assessment aims to identify broader areas of strength as well as where there is room for improvement. By providing this analysis of the landscape of practice by standards and schemes regarding rightsholder engagement, the assessment informs subsequent activities as part of the broader DiliCHANCE project, which are designed to identify and test those practices that standards and schemes can adopt to deliver improvements regarding rightsholder engagement.

The selection of voluntary standards and assurance schemes for this assessment is based on the following criteria:

1. The standard focuses on addressing human rights and environmental risks at facility level and/or in mineral supply chains.
2. The standard goes beyond articulating human rights and environmental principles and clearly defines specific requirements that members committing to the standard must comply with.
3. Compliance with the standard is verified through a third-party assurance scheme.
4. In line with DiliCHANCE’s focus on critical minerals supply chains, the selection is limited to standards and schemes applied within mineral supply chains which are relevant to the renewable energy, mobility and electronics sectors.
The assessment included two newer standards and related assurance schemes that are still under development. The assessment team determined, however, that they are sufficiently developed to provide relevant insights into trends in minerals sector schemes more broadly, which is the purpose of this assessment.

The assessment takes a desk-based approach, assessing key documentation from 20 standards and their related assurance schemes for mineral and metals supply chains. The key documentation includes sustainability standards, guidance manuals, assurance manuals, governance documents, grievance mechanism procedures, as well as information available on the websites of the respective schemes.

As part of the assessment, a set of core minimum requirements was developed. These requirements were then translated into key indicators for adequate due diligence and meaningful rightsholder engagement. The indicators are derived from the UNGPs and OECD MNE Guidelines and are further informed by broader feedback on sustainability standards and the role of rightsholders developed in existing studies. The development of the indicators, their application, and findings were shared with civil society representatives who closely follow the use of VSS in minerals value chains and their feedback was solicited and incorporated. Developers and users of voluntary sustainability schemes were consulted in particular regarding identifying leading practices in stakeholder engagement in VSS. These consultations complemented the assessment team’s existing expert knowledge, which builds on multiple years of conducting such assessments in consultation with multi-stakeholder groupings including industry, government, and civil society representatives.

The indicators are organised into three groups:
1. Governance structures and transparency, focusing on the schemes’ strengths and weaknesses in governance, transparency in assurance reporting, and the mechanisms operated by the schemes which are designed to enable rightsholders to raise concerns about assurance processes and findings.
2. Due diligence requirements, assessing how clearly the scheme’s due diligence requirements communicate the importance of rightsholder involvement in effectively managing salient issues both at facility level as well as throughout minerals supply chains.
3. Assurance and post-assurance processes, examining the extent to which rightsholders are involved in assurance processes and corrective action planning (CAPs).

Each of these requirements has been awarded a maximum of 3 points. A 0-3 point scoring system was chosen to provide differentiation between the levels of fulfilment: 0. Non-fulfilment; 1. Partial fulfilment; 2. Substantial fulfilment; and 3. Full fulfilment.

The following 20 assurance schemes were assessed:

This deliverable bundles together a series of eight policy briefs that encapsulate thematic key findings from the assessment. Each policy brief focuses on a particular theme and synthesises existing strengths and opportunities for improvement in standard-setting and assurance practices. Each brief concludes with theme-specific recommendations to inform practices and policy discussions, support effective decision-making, and suggest avenues for improvement and enhanced incorporation of (potentially) affected rightsholders’ perspectives. This series includes the following briefs:

1. Policy brief 1: Equal multistakeholder governance
2. Policy brief 2: Transparency
3. Policy brief 3: Grievance mechanisms
4. Policy brief 4: Rightsholders’ engagement in due diligence requirements I
5. Policy brief 5: Rightsholders’ engagement in due diligence requirements II: remedy
6. Policy brief 6: Rightsholders’ role in assurance processes I: CAPs and rightsholder representation
7. Policy brief 7: Rightsholders’ role in assurance processes II: Meaningful engagement
8. Policy brief 8: Rightsholders’ role in assurance processes III: Safe and timely engagement