Peru – Supply chains

A 2019 study prepared by Confiep (2019) with support from the ILO identified the good practices of the business sector in terms of human rights in Peru, based on information reported by 252 companies between 2016 and 2017. Regarding corporate commitments to human rights and other related policies, the sample evidenced the following: 5% stated their alignment with the Guiding Principles, 7% adopted human rights policies, 31% declared having human rights declarations, and 57% did not report specific information on human rights (Confiep, 2019, pp. 13-15). Regarding their corporate policies, those identified are related to labor rights (86%), supply chains or suppliers (75%), the environment (71%), and communities and local development (63%) (Confiep, 2019, pp. 18-19). Of the companies analyzed in the study, 63% reported having integrated management systems and 79% with risk management tools (Confiep, 2019, pp. 15-17), which contribute to due diligence. – page 32

Given the relevance in Peru of MSMEs to guarantee human rights, according to international standards, specialized technical assistance for this sector of the economy is vital, “simplifying requirements […] and offering capacity-building opportunities” and to ensure, in alliance with companies, transnational associations, trade unions, civil society organizations, academia, and other stakeholders, for the respect of human rights in all phases of business supply chains (UN. Working Group on the issue of human rights and transnational corporations and other business enterprises, 2017, §§ 73-77). – page 35

In terms of transparency and integrity, it is necessary to have specific trade union instruments on the implementation of integrity and anti-corruption policies in the value chains. In this regard, the initia- tive to adopt codes of ethics and the explicit anti-corruption commitment adopted by associations such as Confiep should be highlighted. – page 37

CHAPTER III DIAGNOSIS AND BASELINE: ACTION AREAS

3.2. Conclusions of the specific issues

Due diligence mechanisms

The findings of the diagnostics show across the board that an important aspect that needs to be incorporated in companies is the adoption of due diligence measures. The OECD (2021) survey22 reports that 43% of respondents require all first-tier suppliers and business partners to meet RBC ex- pectations as part of a contract or agreement. 42% claim to always adopt an enhanced due diligence process when risks are identified in the supply chain and 25% conduct risk assessments beyond Tier 1 in the supply chain or on their products, raw materials, or services.

In this sense, the survey identifies significant progress in the installation of a culture of business and human rights, RBC, and due diligence actions within companies, but at the same time, just over 50% do not apply due diligence processes to risks in the supply chain. This shows the need for a strategic articulation between the State, civil society, and the business sector so that an increasing number of companies incorporate these measures into their activities, as well as strengthen their practical application. – page 42

Table 8: NAP strategic guidelines and objectives, and alignment with the axes of the Peru Vision 2050

Strategic guideline No. 2: Design of public protection policies to prevent human rights violations in the business environment. Objective No. 1: Promote regulatory actions to prevent human rights violations in the corporate sphere

23.

Action: Evaluate, based on the status assessment report, the incorporation of appropriate measures to contribute to formalization through the public procurement system; as well as to prevent the State from contracting with companies that commit serious human rights violations, specifically those related to forced labor and the worst forms of child labor, directly or through their supply chain; and promote and guarantee respect for human rights by companies in their supply chains.

Background: Informality, a widespread phenomenon in the country, is a wide area of human rights violations. The GP-RBC are an important opportunity to contribute to its reduction, as well as to promote the formalization of small, medium, and micro enterprises, including those that are part of the supply chains. Peru should also continue to make progress in ensuring that public procurement excludes companies that directly or through their supply chains engage in forced labor, the worst forms of child labor, and other serious human rights violations. Likewise, the State should promote measures so that through public procurement, companies and their supply chains are encouraged to respect human rights.

Indicator: Report that, based on the assessment of the situation, identifies appropriate measures to contribute to formalization, prevent the State from contracting with companies that incur serious human rights violations, directly or through their supply chain; and promote that companies and their supply chains respect human rights. – page 71

82.

Action: Provide information and raise awareness on the importance of not contracting with the State in the case of companies sanctioned for forced labor and the worst forms of child labor, making visible the harmfulness of this practice.

Background: Despite the international instruments on business and human rights, our country has not yet issued any specific regulation that includes mechanisms to require companies to ensure that their supply chains do not contract with companies that have been sanctioned for forced labor and/or worse forms of child labor. These mechanisms should also consider micro and small companies.

Indicator: Information booklet on the importance of not contracting with the State in the case of companies sanctioned for forced labor and the worst forms of child labor, making visible the harmfulness of this practice.  – page 116

84.

Action: Provide information and raise awareness on collective labor rights due diligence throughout the supply chain.

Background: There is a need to provide information and raise awareness on the adoption of due diligence measures for the respect of collective labor rights throughout the supply chain. This information should include small and medium-sized enterprises, as well as the context of the Covid-19 pandemic.

Indicator: Information booklet on due diligence measures for respecting collective labor rights throughout the supply chain.  – page 117