On visits this year to illegal mines in the Tisri subdistrict in the Indian state of Jharkhand, investigative journalists noticed how children of only 12 years old were at work in hazardous mineshafts underground. The children were extracting mica, a mineral that gives car paint its metallic shine, while young girls were sorting the extracted mica for processing. Following the report, German car manufacturer BMW, a major buyer of the mica in India, is being criticised for having child labour in its supply chain. How can lawyers help BMW?
Discovery of child labour in BMW's supply chain
The journalists from The Guardian newspaper discovered that mica harvested in the mines was likely bought by BMW. The car manufacturer is being called to answer for a lack of oversight and for underperforming on its corporate social responsibility (CSR). In response to the report, BMW has passed the blame on to companies further down the supply chain. The car manufacturer states that “it does not tolerate child labour in its supply chain”, The Guardian reports, and has asked its mica suppliers to respond to the allegations.
CSR commitments of multinational corporations
BMW's pointing towards others may come back to bite the corporation. Being at the top of the supply chain, it has convening power and leverage like no other company, and therefore bears maximum social responsibilities. For support, one only has to look at the OECD guidelines for responsible behaviour of multinational enterprises and BMW's own CSR policies which promote a positive impact on society.
From a CSR perspective, the issue in India of children being sent out to work to gather income or due to a lack of schools is not merely a local issue but one that warrants a response from BMW headquarters too. Being a multinational corporation, setting foot in a developing country such as India creates responsibilities that extend beyond the immediate supplies to be obtained to include the social challenges of children and the families they are part of. Being a driver of the demand for mica, BMW can pursue its CSR by working side by side with mica suppliers, not only on measures to prevent child labour but also to offer perspective to children and their families.
Allow CSR advice to influence supply chain decisions
CSR-educated lawyers can help with BMW's due diligence by presenting the full picture of both risks and responsibilities in the supply chain. This does not require a new procedure; a broader scope suffices. As the OECD states (Commentary on General Policies, B.14, p. 23):
'Due diligence can be included within broader enterprise risk management systems, provided that it goes beyond simply identifying and managing material risks to the enterprise itself, to include the risks of adverse impacts related to matters covered by the Guidelines. (..) The Guidelines concern those adverse impacts that are either caused or contributed to by the enterprise, or are directly linked to their operations, products or services by a business relationship'.
The 'risks of adverse impacts' stretch to social challenges such as child labour that become visible when a multinational corporation decides to obtain its supplies such as mica for car paint from a business partner in a developing country. It is a logical step for BMW to include the social challenges in India in the due diligence assessment of its suppliers. CSR lawyers can define the positive impact of BMW in India and present approaches to corporate directors and the boards. Their assessment has to carry weight in the decision-making process or it will not make a difference in the end.
A role for internal and external lawyers
In fact, a company’s legal department is usually already involved in the execution of CSR policies by rendering “internal” judgements on CSR cases, as described in legal literature (J. Pitts III). It is important that the right kind of lawyer is included in this task, meaning that the judgments are not limited to determining material risks to the corporation. In addition, law firms hired to offer advice to the corporation are expected to do so from their own CSR policies, providing incentive for asking the tough questions that are within the scope of the work between the lawyer and the client. Those questions include the implementation of a client's own stated commitments to society.
No doubt further - and future - damage to corporate reputation and the children that work in the mica mines can be avoided, if CSR-infused advice is allowed to influence BMW's decision-making on supplies.