Interview with Michaela Schmiedchen, KPMG

Human rights are not a marginal issue.

Issue 90 - spring 2021

Michaela Schmiedchen, Senior Manager in the Sustainability Services department at KPMG, sees a lot of room for improvement when domestic companies are addressing the issue of human rights.

Michaela Schmiedchen, KPMG
Michaela Schmiedchen, KPMG

corporAID: Where is the issue of human rights due diligence currently at Austrian companies?

Blacksmith: My impression is that many Austrian companies are still grappling with the fundamental commitment to respecting human rights, but less with the formal due diligence processes that go with it. Of course, this should not be generalized too much, but human rights violations are often reduced to child and forced labor, so that domestic companies wrongly view this as a marginal issue that is not an essential issue for them. That is a mistake, because issues such as occupational safety or workers' rights are aspects of respect for human rights. However, significantly more awareness must be created for this breadth of the topic.

How can companies establish human rights due diligence processes as efficiently as possible?

Blacksmith: It is important to analyze existing management systems and see how one can integrate human rights and environmental due diligence processes. You don't necessarily have to create fundamentally new processes - on the contrary. There is a lot of potential for synergies in the due diligence area. This is about mechanisms that can be applied to all possible aspects of sustainability and compliance - be it anti-corruption or anti-money laundering. On the basis of an impact analysis, it must be looked at where the risks lie and must be addressed. Such an analysis enables established processes in the areas of purchasing, compliance or personnel management to be highlighted and subsequently optimized.

How can you ensure that these processes not only become an avoidance strategy, but that problems identified at suppliers are also proactively addressed?

Blacksmith: Such an engagement approach is generally still far too short - similar to investments, where exclusion criteria are still the prevailing sustainable investment strategy. Of course, it is sometimes the simplest solution for a company to terminate the business relationship with a supplier as soon as possible if it becomes known. But that doesn't change the situation, especially not where the problems are in the value chains. What has to change about that? You have to create awareness through more transparency and more openness on the part of companies to face their risks, to name them and to say: "We don't have the quick solution here, but we want to tackle it."

Thank you for the interview.

Photo: KPMG

To the whole story:

Supply chains in the textile sector go back to developing countries.

A closer look at the supply chain

Only every third company in the EU currently carefully checks its global suppliers with a view to decent working conditions and compliance with environmental standards. However, human rights and environmental due diligence are not only coming to the fore on the political agenda, but also in companies.