We are on a mission to provide value-adding assessments in order to guide organizations toward sustainable success.
We are 2500 auditors from 85 offices performing 125 000 audit days per year at 65 000 sites in 130 countries around the world.
And we are on a journey since February 1985 when DIN (German Institute for Standardization) and DGQ (German Society for Quality) founded DQS as the first Certification Body in Germany. Operations commenced under the first Managing Director Dr. Wolfgang Hansen just five months before the first draft of what would become ISO 9001 was published.
Join us as we explore our history, and make plans for our future:
How exactly do you define sustainable economic activity? This is still a tricky question. However, a common language is the basis for effective and target-oriented action. For this reason, the news from December 18, 2019 is a milestone for the future of our planet: The European Commission has welcomed the world’s first-ever “green list” – a classification system for sustainable economic activities, referred to as taxonomy.
Financial markets play a vital role in preventing a climate crisis: the European Commission wants to redirect capital to economic activities and projects that are truly sustainable. Social responsibility and ecological economic activity shall become a competitive advantage.
This new taxonomy is an important cornerstone of the Commission’s action plan: the taxonomy helps determine which activities can be considered sustainable and will be the basis for standards and labels that characterize sustainable finance investments, such as the Climate Bonds Standard or the European Green Bond Standard. For the first time, investors will be provided consistent, comparable and transparent information, enabling them to verify whether their investments are truly sustainable.
Commission Executive Vice-President Valdis Dombrovskis for an Economy that Works for People, said: “This piece of legislation will be a game-changer in terms of tackling climate change, because it will enable billions in green investments to flow. Thanks to this green list, or taxonomy, investors and industry will for the first time have a definition of what is ‘green’, which will give a real boost to sustainable investments. That will be crucial for the European Green Deal to become a reality.”
Context: The European Green Deal
The European Green Deal has been introduced on December 11, 2019 by the European Commission. This new strategy for growth aims for Europe to be the first continent to become carbon neutral.
In order to trigger sustainable investments in the region of 1 trillion Euro the Green Deal Investment Plan has been set up on January 14, 2020. Funds are to enable public as well as private investments in their quest for a carbon neutral, green yet competitive and incorporating economy.
“Ecologically Sustainable Economic Activities” – what exactly does that mean?
Now, let’s go back to the taxonomy and the problem of properly defining “ecologically sustainable economic activities”.
The taxonomy provides a framework of six objectives outlining “ecologically sustainable economic activities”:
1) Climate change mitigation
2) Climate change adaption
3) Sustainable use and protection of water and marine resources
4) Transition to a circular economy
5) Pollution prevention and control
6) Protection and restoration of biodiversity and ecosystems
Moreover, the taxonomy contains four requirements for sustainable activities:
- They provide a substantial contribution to at least one of the six environmental objectives above
- They cause “no significant harm” to any of the other environmental objectives
- Compliance with the robust and science-based technical screening criteria AND
- Compliance with minimum social and governance safeguards
The Next Steps
In September 2020, the European Commission will present an updated Sustainable Finance Strategy. This link will direct you to the factsheet “Financing Sustainable Growth”
What DQS Can Do For You
DQS is globally approved for the verification of Climate Bonds. This link will provide you with all the important information.
HUMAN RIGHTS DUE DILIGENCE: WHAT IS THE NEW ROLE FOR SOCIAL AUDITS?
While the debate is still ongoing in Germany, many other countries have already introduced binding legislation on human rights due diligence. Mandatory human rights due diligence forces businesses to rethink the role of social audits. How can social audits contribute to compliance with human rights due diligence?
With human rights legislation on the rise, social audits are increasingly being used in a due diligence context. But in order to make sure that social audits truly contribute to compliance with due diligence laws, we need to rethink their:
- Motive: from a voluntary to a legally regulated context
- Function: whereas businesses assigned a wide range of functions to social auditing, its role within a due diligence context is a clearly defined diagnostic function
- Audit Focus: from supplier codes of conduct to the universally accepted catalogue of human rights
- Consequences: from a matter of reputation to a matter of liability
In this article, we will explore the question of how social audits should be set up in order to contribute to compliance with human rights due diligence legislation.
How do social audits contribute to compliance with human rights due diligence laws?
Almost all human rights due diligence legislation is based on the UN Guiding Principles on Business and Human Rights. These principles require all companies to install “a human rights due diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights”.
The Guiding Principles do not specify whether and how social audits should be used. However, it stands to reason that their main function is to assess the status of human rights throughout the supply chain, and to identify actual and potential human rights violations. As such, their function is primarily diagnostic.
On top of that, social audits also have a preventive and corrective function:
– Because suppliers know that regular social audits occur, they are confronted with the need to protect the rights of workers
– For all non-compliances found during social audits, corrective action plans need to be drawn up and implemented
However, as numerous NGOs and human rights activists have emphasized, social audits by themselves do not yield significant long-term benefits for workers. They can only contribute to human rights compliance when the audit results are acknowledged, understood and acted upon by all stakeholders.
What criteria should be covered in social audits, in order to contribute to human rights due diligence?
The UN Guiding Principles are based on the internationally recognized human rights and labor standards, as defined in the International Bill of Human Rights as well as the conventions of the International Labour Organization (ILO). These have been incorporated into a wide range of standards and initiatives. These include, but are not limited to, Sedex SMETA, SA8000, the Responsible Business Alliance, Together for Sustainability, the Aluminium Stewardship Initiative, and the Farm Sustainability Assessment.
What are the implications of human rights liability risks for social audits?
Business who fail to implement an effective human rights due diligence process face significant liability risks. In order to reduce liability risks, we recommend sticking to good industry practice. That means:
– Using international standards, rather than developing custom checklists
– Joining industry sector initiatives when available
– Only trust audit reports from APSCA-recognized audit firms
– Implement documented procedures for processing audit results, keeping records of both the corrective actions taken by suppliers as well as your own decision-making regarding the relationship with the supplier
DQS – YOUR PARTNER FOR SOCIAL AUDITS
The reputation of DQS as a reliable and credible audit partner is the result of our strict policy on auditor qualification. We are convinced that a social audit can only be effective if the auditor team has the required technical competence, sector experience, soft skills and integrity. On top of that, the auditors must also be familiar with local languages and regulations.