Retail and consumer services

FIs should develop specific policies and procedures to address the most salient human rights risks in relation to retail and consumer services.

Retail and consumer services policies and procedures should include a recognition of the corporate responsibility to respect human rights as set out in the UNGPs, including implementing human rights due diligence which reflects sector-specific risks. It should also include a commitment to human rights standards based on the International Bill of Human Rights and the ILO Fundamental Conventions.

Policies and procedures can also include a commitment to key sector-specific standards, as well as to standards which address the most salient human rights issues in the sector. For consumer retail this may include frameworks relating to human rights in upstream retail value chains, such as those highlighted in ‘Manufacturing’ and ‘Agriculture, fisheries and forestry’, as well as the ISO 20400 Standard on Sustainable Procurement. In relation to transport and logistics involving shipping, this could include a commitment to the ILO Maritime Labour Convention (MLC), and the Neptune Declaration on Seafarer Wellbeing and Crew Change. For tourism and leisure, this can include reference to the UN WTO Global Code of Ethics for Tourism, the Global Sustainable Tourism Council (GSTC) Criteria, and The Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism. In the case of employment agencies, this may include reference to ILO Convention 181 on Private Employment Agencies, the ILO General Principles and Operational Guidelines for Fair Recruitment and the IOM IRIS (International Recruitment Integrity System) Standard.

Any commitments by FIs to these standards, or any concrete expectations for clients/investee based on these standards, should be accompanied by an explanation of how the human rights-related expectations embedded in these standards will be implemented.  FIs’ Retail and consumer services policies should set clear expectations and requirements of how to address human rights risks by clients/investee and throughout the value chain. This can include setting out minimum human rights criteria for the provision of financial services, such as:

• Integration of human rights considerations into all relevant environmental and social documents.
• Requesting specific documents to address specific human rights risks, for example labour rights, and consumer privacy and data protection.

In relation to their own-operations, FIs should adopt responsible recruitment policies and practices with regards to third-party service providers and contractors in transport and logistics, as well as other service provision such as cleaning, catering and security.

For further information, see ‘Taking Action – Strengthen human rights in FI policies’.

See also ‘Policy commitments and human rights’ for practical guidance on how to develop policy commitments which are consistent with the UNGPs, and how to integrate relevant human rights commitments in other policies and procedures.

Human rights screening and risk assessment should include contractors and sub-contractors, as well as other key entities in the upstream and downstream value chain, for example clients’ / investees’ business partners. FI should also assess risks in outsourced ‘direct’ workforces, including platform economy workers, third-party workforces and operations (e.g. stores and warehouse construction – see ‘Infrastructure’ sector.

For upstream value chain (supply chain) considerations, refer to the sector overviews for:

• Agribusiness – including supply chains to garments, FMCG, paper products, food and fresh produce
• Manufacturing – including entities which supply or incorporate retail and consumer services.

FIs should screen their portfolio to map and identity salient human rights risks of the FI retail and consumer services portfolio, whether their clients’ / investees’ activities in the sector are likely to impact on vulnerable groups (including among workers and consumers), and to evaluate the systems that their clients / investees have in place to mitigate and prevent these impacts.

FIs can seek to ensure that screening and risk assessments reflect key contextual risk factors in the retail and consumer services sector:

• Operational and geographical context: particular attention should be paid to clients / investees in high-risk countries (such as conflict-affected or occupied areas, weak governance areas, economies with a high prevalence of informality in the labour market, or areas with high economic dependence on a particular sub-sector, such as tourism).
• Type of business relationship: in retail and consumer services, FIs should assess upstream business relationships – including high-risk upstream value chains, use of third-party labour agencies and intermediaries – and downstream business relationships, including consumer and end-use-related risks; FIs should be aware of governance challenges in the context of retail franchise systems, especially with limited central oversight and monitoring
• Client / investee specific risk factors: FIs should refer to public and proprietary risk databases to assess known and reported human rights risks or abuses associated with the company and its value chain, focusing particularly on reliance on high-risk suppliers, as well as inadequate or absent human rights policies and procedures.
• Presence of vulnerable groups: initial assessment should identify vulnerable groups associated with the company and its business relationships – these may include upstream value chain workers (particularly migrant workers and women workers), vulnerable consumers (marginalised and minority communities, low-income groups, older and disabled people) and vulnerable workers in the direct workforce (including minority, migrant, women, LGBTQI+, disabled and contract workers).

See ‘Taking Action – Strengthen FI risk management systems and processes’. See also ‘Human Rights Screening and Risk Assessment’ for practical guidance on developing risk screening and assessment systems and processes.

Effective client engagement helps to build a common understanding of risks, gaps, and required actions. This ensures that measures can be adequately appropriated and implemented.

Throughout the financial cycle, FIs should gather information on how clients / investees are managing specific human rights risks and impacts relevant to retail and, if relevant, propose actions to prevent, reduce and mitigate the risks. This could include requiring clients / investees to provide information on:

• Labour and occupational safety and health incidents and / or worker complaints, as well as the mitigation / prevention measures taken: for example, this can seek to understand whether production planning systems support reasonable working hours; whether root causes of excessive overtime have been identified and mitigated. Engagement can also focus on whether the company effective and accessible worker grievance mechanisms in place.
• Workforce: understanding the workforce, including its segments (women migrant workers, agency workers and young workers), as well as the extent to which just-in-time scheduling, zero-hours contracts and on-call contracts are utilized.
• Value chain: FIs can engage on the extent to which the company has mapped its upstream value chain, the level of company awareness of which areas of its chain pose the highest risks, and the measures it has put in place to prevent key risks, including breaches of the ILO Fundamental Conventions in its upstream value chain.
• Technology and AI: extent to which the client / investee is using technology, including AI (for example: surveillance, in-store automation, ‘frictionless shopping’, e-commerce). FIs can focus on the protection of privacy and personal data within company policies, such as protocols for data management from a human rights perspective, and transparent in its use of AI and the criteria employed for its use.
• Consultation: approach to consultation with potentially affected groups and other relevant stakeholders, including processes, participants, findings and outcomes.

FIs can also engage directly with Retail and consumer services clients / investees and use or build leverage to require, facilitate, and incentivize respect for human rights throughout the financing cycle. This might include a focus on the following areas:

• Privacy and data protection. FIs should also engage with retail and consumer services companies in relation to the development robust protocols on data privacy (at least in line with national legal requirements and ideally in line with the highest international standards beyond regulatory compliance), to safeguard customer information and ensure that all collected data is protected through regular security upgrades and adequate employee training.
• Downstream value chain. Engage with clients and investees in relation to companies’ responsibilities regarding their downstream product or services, and potential impact on end-use consumers.
• Gender discrimination and GBVH. Gender discrimination is a key risk issue in across the retail sector. There is scope to work with clients / investees to put in place effective measures, such as developing codes of conduct covering GBVH; conducting regular gender-sensitive safety audits of workplaces; adapting the grievance mechanism to provide for anonymous complaints.
• Purchasing practices. Retail clients and investees can adopt changes to their purchasing practices, as they often form the basis for negative human rights impacts within upstream value chains. Short-term planning, last minute order changes, inaccurate forecasting, pricing below production cost and late payments can all lead to issues related to excessive overtime and low wages for workers in the upstream value chain. Investing time and resources into reviewing and improving purchasing practices (for example, through stable, long-term sourcing agreements, collaborative planning and fair payment terms) can play an important role in addressing these issues.

See also ‘Taking Action – Client / Investee Engagement’.

Contractual requirements are a common tool to build leverage, and FIs should consider integrating human rights considerations into financing contracts with clients, based on organisational human rights policies and commitments.

Pending financing modality, FIs can seek to use contractual leverage with clients to encourage the ‘cascading’ of human rights-respecting business practice along the value chain. This may commence with the requirement that the client / investee develops and implements a supplier of code conduct aligned with the international standards which responds to all identified human rights risks for a defined scope of the value chain. Where appropriate, specific risk mitigants and process requirements – including monitoring, reporting and stakeholder engagement – can be elaborated in the action plan and covenanted in contractual agreements. Specific considerations for Retail and consumer clients/investees may include: establishing and communicating a code of conduct for suppliers and (sub-)contractors that requires good practice in relation to labour rights, land rights, GBVH and community health and safety, information disclosure, non-retaliation, access to grievance and stakeholder engagement. Where possible, these requirements can be supported through contracting requirements and ongoing risk-based due diligence on key human rights risk areas.

See also ‘Taking Action – Contractual provisions’.

Where risk assessments have identified potential human rights impacts, action needs to be taken. The type of action will depend on the severity and likelihood of the impacts, as well as on how the FI is involved with the human rights impact/s. In some financing contexts, such as project finance, environmental and social action plans (ESAPs) are an important and common tool for developing specific mitigants and responses in view of risks. In other cases, particularly where greater risks are identified, specific additional plans might be required.

FIs working with clients / investees in retail and consumer services can focus efforts in all the following areas:

• HR (direct employment) policies and procedures: Decentralised retail networks and franchise models can impede oversight of human rights risk management. Companies should apply the same consistent and effective HR and management practices (on workforce issues such as paying minimum wages, setting limits to overtime and giving guaranteed time off work) even if local laws, standards or enforcement are lower than internationally accepted good practice. Notably, companies should have in place policies and procedures on anti-discrimination and equal opportunities (including the protection and welfare of migrant workers); employment and protection of children and young workers; prohibition of the use of forced and trafficked labour; risk management plans for the transport and storage of hazardous materials, including driver training and awareness of risks.
• Responsible recruitment and contractor management: Retail and consumer services companies should adopt responsible recruitment policies and practices with regards to third-party service providers and contractors in transport and logistics, as well as other service provision such as cleaning, catering and security. They should notably carry out thorough background checks and screening of recruitment agencies, establish minimum contract terms, and conduct due diligence and monitoring. This is particularly relevant for the mitigation of forced labour risks.
• Ensure appropriate occupational health and safety policies and procedures: Retail and consumer services companies can implement adequate health and safety standards and mitigate risks of harm to the health and wellbeing of workers, for example through the implementation, monitoring and reporting on provision of PPE, training in safe lifting and handling of goods, disclosure of OHS information, monitoring of working hours and break patterns.

For more general information, see ‘Taking Action – Action Plans and Specific Mitigations’.

In relation to retail and consumer services, this could entail refraining from financing maritime and road transport companies associated with risks of human trafficking, unless the company is able to demonstrate a robust approach to risk identification and appropriate prevention and mitigation measures.

See ‘Taking Action – Avoid actions and omissions that facilitate or incentivise human rights abuses’.

FIs should work collaboratively with relevant stakeholders to inform their policies, identify risks, improve monitoring systems and grievance mechanisms, as well as to address entrenched human rights challenges in the retail and consumer services sector. This should involve meaningful consultation with potentially affected groups and other relevant stakeholders, as appropriate to the nature and context of the operation.The relevant stakeholders for FIs with investment and lending portfolios in retail and consumer sector would include: other banks and investors with similar portfolios, industry associations, regulators (such as Ministries/Secretaries of Tourism), manufacturers, multilateral organisations, NGOs working on human rights issues linked to the sector, trade unions, academics, and rightsholders affected or potentially affected by client / investee activities such as migrant workers or women workers. and their legitimate representatives.

In particular, FIs can engage with credible multi-stakeholder initiatives that promote human rights principles and standards in retail and consumer services– see ‘Sectoral initiatives and partnerships’.

FIs should ensure that clients / investees in the retail and consumer services sector engage with community stakeholders – including local communities, indigenous peoples and civil society organizations – at all stages of project development by establishing mechanisms for ongoing dialogue and consultation. Affected communities – which may include those in the vicinity of large retail developments or tourism / leisure facilities – should have a right to participate in decisions which affect them, as well as access relevant information, including in relation to any environmental and health risks. FIs should require clients / investees to provide information on community consultation processes, participants, findings and outcomes.

See ‘Taking Action – Stakeholder engagement and collaboration’. See also ‘Stakeholder engagement’ for guidance on collaborating, engaging and pursuing collective action.

FIs can enhance transparency and disclosure practices by providing stakeholders with access to sufficient, relevant and frequent information about finance and investments in the retail and consumer services sector, including potential human rights impacts, mitigation measures, and grievance mechanisms. FIs can also develop and publish reports against clear indicators reflecting a human rights perspective, including salient issues, measures, and results.

FIs can enhance their own transparency by disclosing information about the projects they finance, as well as in the risks and impacts detected, and measures implemented. This could include:

• Information on the bank’s human rights policy/policies as they relate to Retail and consumer services.
• Criteria used to select Retail and consumer services companies for investment, including how human rights considerations are integrated into decision-making processes.
• Human rights risk assessment processes used to screen potential investments and summary findings of human rights risk and impact assessments conducted before and after making investments.
• Mechanisms in place for ongoing monitoring of human rights performance in investee / client companies and specific human rights indicators and KPIs used to track performance, such as consumer data privacy and labour rights compliance.
• How the FI engages with stakeholders, including affected communities, employees, customers, and civil society organizations, to gather input and address human rights concerns.
• Information on feedback and grievance mechanisms available to stakeholders, and remediation actions taken to address and resolve human rights issues identified in investee / client companies.
• Reporting requirements imposed on investee / client companies regarding their human rights performance, including links to the transparency reports of investee companies, covering areas such as consumer data privacy and labour rights compliance.
• Challenges or shortcomings encountered in upholding human rights in investments.

Consumers are increasingly demanding transparency and sustainability from brands and retailers in relation to human rights. FIs should encourage retail and consumer services companies to disclose activities relevant to access to human rights. While specific areas of disclosure will vary between sub-sectors, it may include mapping and disclosing information on value chains (including sourcing location); information related to the workforce (for example wages, working hours, recruitment fees and health and safety).

See also ‘Taking Action – Transparency and disclosure’.

In relation to retail and consumer services, FIs can provide training and capacity building for FI staff on key human rights issues the identification, prevention, and mitigation of human rights abuses in the sector. FIs should also ensure that clients / investees have sufficient technical, financial and logistical resources available, including an interdisciplinary team that includes qualified with human rights expertise and knowledge on the local context. For example, it is important that procurement professionals are aware of salient human rights issues to improve screening and monitoring of supplier practices. 

See also ‘Taking Action – Capacity building and training’.

FIs can work with clients / investees to establish robust monitoring and evaluation mechanisms to track the effectiveness of measures taken to prevent and mitigate human rights abuses at the portfolio level. This should focus on mechanisms which allow for continuous feedback and improvement, ensuring that the FI’s human rights practices evolve based on sector (and region) specific lessons learned and emerging best practices. The complaints received through the grievance mechanism should also be used as input to evaluate the effectiveness of the measures implemented.

At the operational level, FIs can support clients / investees to adopt monitoring mechanisms that are appropriate to the level of risk, and led by teams with relevant skills and expertise. In relation to retail and consumer services, FIs can focus on labour issues (including monitoring the us new working arrangements in the sector, including just-in-time scheduling, zero-hours contracts and on-call contracts), as well as specific issues relating to the sub-subsector (for example, road safety in relation to transport and logistics companies).

FIs should also ensure that clients / investees have appropriate procedures in place to cascade monitoring through the value chain. Such measures include, improved grievance mechanisms, dialogue with worker committees / unions, KPIs to track potential negative impacts.

See ‘Taking Action – Monitoring and evaluation’ for practical guidance on monitoring and evaluation processes to track human rights risks and impacts associated with business activities

FIs should ensure that accessible and effective grievance mechanisms are in place to enable affected stakeholders to raise concerns and seek redress for any alleged human rights abuses related to their investment or lending activities in Retail and consumer services transactions and investments. This includes requiring clients/investees to have in place or to participate in a grievance mechanism aligned with Principle 31 of the UNGPs.

FIs can set up their own grievance mechanisms, participate in one or more grievance mechanisms established together with other FIs, or participate systematically in clients’ / investees’ grievance mechanisms. In relation to workers, note that grievance mechanisms established by existing industrial relations systems and collective bargaining agreements can constitute effective and credible mechanisms to respect labour rights.

FIs can work with clients / investees to ensure that all workers, including contractor and subcontractor workers, have access to a safe and effective grievance mechanism. Key considerations for the retail and consumer services sector, include understanding how companies ensure access to a grievance mechanism for workers across different work locations and business units. Where workers are engaged through third-party labour agencies (for example outsourced cleaning services), it can be more difficult for workers to raise and resolve grievances, and for different actors along the chain to cooperate in the provision of effective remedy.

FIs can work with downstream investees / clients to develop a policy on how they expect suppliers to handle human rights grievances, and the actions that investee / client will take if the supplier fails to take appropriate action. Assessment of suppliers’ grievance management mechanisms can be integrated into initial human rights due diligence, enabling buyer companies to gauge their suppliers’ human rights management frameworks, and hence to prioritise supplier engagement and support for suppliers’ capabilities in grievance handling.

See ‘Taking Action – Improve and support the effectiveness of grievance mechanisms to ensure and enable remedy’.