On 2023, new legislation on human rights and business is being developed, and one of the most prominent issues is mandatory human rights and environmental due diligence (HREDD), an issue that is under legislative discussion in the European Union and has other markets waiting for its development and incorporation into international trade.

As part of the Fairtrade system, and in line with its Strategic Plan 2022-2024, CLAC has developed pilot projects to implement Human Rights and Environmental Due Diligence (HREDD) systems with four coffee and cocoa organizations in Honduras, the Dominican Republic, Peru and Brazil.

With regard to HREDD, the United Nations organization points out that it is a process for companies to proactively identify actual or potential violations of human and environmental rights in their operations and supply chains, with the aim of taking action to prevent, stop or mitigate such situations.

The HREDD applies to all of a company’s business relationships with suppliers (producer organizations), franchisees, licensees, joint ventures, investors, customers, contractors, consumers, consultants, advisors, and any nongovernmental or governmental entities related to its business activities, products, or services.

In this context, CLAC’s work with these pilot projects aims to:

1. To contribute to local and international discussions with evidence of how HREDD is applied in practice in Fairtrade organizations, the times, costs and tools required to implement and maintain it in a sustainable way over time.

2. To adapt the OECD Guidelines and the Fairtrade Guide on the Implementation of HREDD to the context and reality of small-scale producers and workers in Latin America and the Caribbean; and through this exercise, to develop the tools and methodologies to enable members to implement these processes as required by the market, taking into account their capacities, resources and level of coverage in terms of human and environmental rights.

Due Diligence Steps

Based on the UN Guiding Principles on Business and Human Rights, the Organization for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Business Conduct, and the Fairtrade Guidance for the Implementation of the HREDD, building a due diligence system involves a series of steps that are outlined below:

Step 1 consists of a public commitment by organizations to respect human and environmental rights, with the process of raising awareness and assigning responsibilities to enable future work; Step 2 consists of identifying and prioritizing potential adverse impacts that operations, products, or services may have on human rights and the environment; Step 3 consists of addressing prioritized risks, which are translated into policies and action plans to prevent, mitigate, cease, and remediate the identified risks or issues according to their level of priority and impact; Step 4 consists of monitoring the progress and effectiveness of the DDDHA activities; and Step 5 consists of communicating DDDHA efforts and progress to stakeholders.

About the pilot projects

By 2023, organizations participating in the pilots will have followed the steps described above, with varying degrees of progress, and will have implemented processes to build tools and methodologies internally to institutionalize them.

Given the growing demand for this issue and the development of standards for coffee and cocoa products, CLAC has worked with two coffee organizations in Honduras and Brazil, and two cocoa organizations in the Dominican Republic and Peru repesctively. 

All pilots have made significant progress and are now in the process of developing tools and methodologies for steps 1 to 4, i.e. risk assessment, that will provide a comprehensive view of an organization’s impact on human and environmental rights, while focusing efforts, policies and action plans on what is most urgent for organizations according to their capabilities, resources and scope.

It should be emphasized that these pilot projects are pioneers in the region and have contributed to the strengthening of institutional alliances with entities such as the UN International Trade Center, which is piloting HREDD in Africa, and with which we are technically collaborating in the exchange of experiences and tools to contribute to the discussion of policies to accompany and support producers in various forums with the European Union and its representations in the different countries of Latin America and the Caribbean. This also has the effect of raising the interest of the market and potential buyers in the work of the Fairtrade organizations in the HREDD.

For organizations, these pilots have added value. In Peru, the organization Colpa de Loros emphasizes that “the contribution being made by the pilot here in the cooperative is of great importance, since many members are being trained on human and environmental rights, and in this way, they are becoming aware of their rights,” said Heidy Medina Velázquez, in charge of certification for the organization.

In terms of how the work has been adapted to the context of the organizations, Heidy explained that the methodology for dissemination has been carried out using tools such as socio-dramas and theater. “That is the goal, to reach the partner and for the partner to appreciate it and see what is being done well and what is being done badly in their area of life and in their community,” she said.

For her part, Marta Irene Chamaya, who is a producer, considered that the training received “helps us a lot to improve every day with this due diligence. It is how to mitigate and how to see, promote, improve and make a plan that is well directed for Colpa de Loros and be able to put it into practice. We do it according to our reality and for what can be improved, according to our possibilities”.

Mauro Alberca Lavan also emphasized that by participating he was able to better understand the purpose of Due Diligence, “it is something that helps us to organize ourselves, to organize ourselves, and perhaps to consider and highlight practices, things that we had ignored. So for us, as members of the cooperative, it is a motivation to do something that we thought was useless, but at the time becomes very useful to help us”.

Thus, with the implementation of the pilot, the participating organizations have received advice from CLAC’s interdisciplinary team, not only from the Human Rights and Cross-Cutting Themes Unit, but also from the Climate Change and Sustainable Production Units.

Human Rights and Environmental Due Diligence is an issue that will become even more important for trade in the coming years, and CLAC’s commitment to these pilot projects and the work of training and support for its members is to prepare them not only for compliance and its permanence in the market, but also for the creation of alliances between the different actors in the value chain and co-investment in shared risks that allow for sustainable results that positively impact the quality of life and respect for environmental human rights in our organizations in Latin America and the Caribbean.