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It is critical for companies to conduct human rights due diligence (HRDD) throughout their supply chains. The idea that companies should identify, mitigate and remediate human rights risks in their supply chains is common sense - but in practice, it’s a relatively new expectation, emerging in the late 20th Century and only enshrined in the UN Guiding Principles on Business and Human Rights in the early 2010s. And it’s all been voluntary to date: no company has been legally required to do it, nor has it had to be done particularly well.
All that is about to change. We are entering the era of mandatory HRDD. Some planned legislation – such as the EU’s Corporate Sustainability Due Diligence Directive, the German Supply Chain Act or the newly announced Thai Government plans – has proved contentious. But the direction of travel feels clear. Whether by law, investor pressure, or public expectation, business is being asked – and increasingly required – to know and show how it protects the rights of people in its supply chains.
What is just as encouraging is these legislative plans are also seeking to address the biggest fault line in most business HRDD efforts to date, which is the failure to meaningfully engage workers, communities and their representatives in the design and implementation of those efforts. Instead, we see supplier audits that too often fail to identify the most serious issues or lead to lasting improvement; top-down policies written by remote company risk officers; self-assessment questionnaires that create data for company reports but don’t influence decision-making; and human rights teams kept many corridors away from the boardroom.
These practices are under threat, because the requirement of new legislation is that companies will need to demonstrate they have conducted ‘Meaningful Stakeholder Engagement’ – a newly-coined piece of jargon that actually means exactly what it says.
Why meaningful stakeholder engagement matters
First and foremost, it is about ensuring people’s fundamental rights are respected. But treating people decently also increases poverty reduction, and makes supply chains more resilient, sustainable, and commercially successful. What is essential, however, is that it has to be done well: if plans are not rooted in listening to the very people whose rights are affected and who are best placed to identify what changes will make a difference, they won’t deliver on their potential.
Meaningful Stakeholder Engagement (MSE) is the solution to this. It means engaging seriously and sincerely with the people affected, and their representatives, and then doing things differently depending on what emerges. But there is a key challenge here for companies: doing MSE can be resource intensive, and companies source from many different suppliers and supply chains. How can companies, unions and NGOs resolve this dilemma and make the most of the MSE opportunity?
This is where the Ethical Trading Initiative (ETI) comes in, and especially our core principle of collective action. When companies come together around shared supply chains, resources can be pooled. And when those companies in turn come together with trade unions and civil society to engage collectively – the barriers start to fall. Trust grows. Leverage increases. And real, practical change becomes possible.
What does MSE look like in practice?
MSE means more than consultation. It requires companies to listen actively, engage openly, and respond constructively to stakeholders - particularly those most at risk. This includes but is not limited to trade unions, local NGOs, and of course, workers themselves. It is a critical component of HRDD and a requirement for all companies under the UNGPs and OECD guidelines. Not to mention, both the original text of the CSDDD and recent Omnibus look to enshrine MSE in European law.
Done well, this engagement:
- Prioritises inclusion of marginalised voices.
- Creates safe spaces for dialogue.
- Fosters long-term relationships built on trust.
- Embeds stakeholder perspectives into business decisions and remediation efforts.
Why MSE makes business sense
Businesses that embrace MSE gain real benefits:
- Better risk visibility and earlier warning signs of harm.
- Improved relationships with suppliers, workers, and local communities.
- Greater resilience in times of crisis.
- Enhanced reputation and alignment with legal and investor expectations.
- Stronger collaboration, unlocking collective leverage for change.
What’s holding businesses back
Even the most committed businesses face real obstacles when working to conduct MSE as part of their HRDD, these include:
- Difficulty identifying credible stakeholders
In unfamiliar sourcing regions, businesses can struggle to find legitimate and trusted stakeholders, risking poor-quality information or exposure to conflicting agendas. - Resistance from stakeholders
Suppliers may fear disruption or brand disengagement, while workers may fear job loss, making them reluctant to participate. - Resource strain on stakeholders
Suppliers, trade unions, and local civil society organisations (CSOs) may receive multiple MSE requests from different buyers, leading to fatigue and limited capacity. - Internal and external leverage limitations
Even with quality stakeholder insights, businesses may lack the internal influence or external clout to drive meaningful change within policy or decision-making structures.
The power of collective engagement
Collective MSE - when businesses, trade unions, and civil society work together - can overcome these barriers. ETI’s unique tripartite model brings these groups to the same table, offering a space where diverse perspectives can converge to tackle shared challenges.
Through ETI’s membership, businesses can access support and information to identify legitimate and credible stakeholders with which to engage - through global trade union federations, international NGO networks and local partners.
Collective MSE can also support staff within these businesses to grow their capacity, resource, and internal leverage. By working jointly with other businesses, those with smaller teams can benefit from others with more capacity, resource, and teams in-country – and the power of being able to explain internally that competitor businesses sharing the same supply chains are on the same journey.
From compliance to collaboration
At ETI, we are committed to supporting our members to integrate stakeholder engagement into the heart of their HRDD and take collective action. This means shifting from transactional, compliance-focused relationships to long-term, collaborative partnerships that centre rightsholders.
Our Corporate Transparency Framework, HRDD workshops, guidance and tools all reflect this ethos: that change is only meaningful when it includes those it’s meant to benefit. As a member of the STITCH Partnership, ETI co-developed the MSE Framework, built on five principles. This framework moves beyond the check-the-box approach, driving real value for workers and businesses.
Looking ahead
As legislation and public scrutiny evolve, stakeholder engagement is no longer optional - it’s essential. But more importantly, it is the right thing to do.
Later this year, we’re proud to launch the STITCH Partnership’s Technical Guidance on MSE for the apparel and textile sector. Developed in collaboration with consortium members, it provides detailed practical advice on how businesses can implement effective MSE, in line with the framework. Look out for more on MSE from ETI in the intervening period and contact Emilie.Paradise@eti.org.uk to learn more.