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With regulatory pressures increasing, and customers and consumers demanding transparency, the need for reliable HRDD data has never been greater. To meet this need, many companies are turning to innovative technology solutions offered by third-party service providers.
In some instances, this may be unavoidable; for example, smaller organisations complying with the EU Deforestation Regulation (EUDR) may need a degree of automation to carry out large-scale checks of satellite locations of suppliers. Equally, for larger companies to prepare for compliance with the Corporate Sustainability Due Diligence Directive, technology platforms offer a scalable means of conducting risk assessments of large numbers of suppliers, while limiting the burden on their internal teams.
It is understandable that organisations are relying on third parties for HRDD given the appeal of drawing on external expertise, benefitting from faster assessments and a lower internal workload. They’re indispensable for scaling diligence efforts across international operations, where physical audits are often impractical.
However, as valuable as these systems are, organisations cannot rely solely on technology to discharge their obligations under the law and the UN Guiding Principles on Business and Human Rights (UNGPs). Under the CSDDD, companies can delegate certain due diligence tasks to third parties, but delegation does not release them from liability. Similarly, EUDR specifies that ultimate responsibility remains with the company to ensure that any third-party’s due diligence has been done properly.
Another reason to exercise caution when looking to outsource aspects of HRDD is the approach that this precipitates within an organisation. There is a danger of weakening internal accountability and encouraging a ‘tick-box’ mentality that contradicts the spirit of legislation and international standards. These require meaningful stakeholder involvement and proactive continuous improvement.
It should also be noted that, in a time when every organisation is being subjected to an increasing number of data requests and intensifying audit schedules, the burden of compliance is being pushed upstream. It can be all too easy to onboard a technology platform and start sending automated requests for information to suppliers.
Organisations should bear in mind the burden this places on their suppliers and the unintended consequences that this can lead to. It is crucial to prioritise suppliers and ensure that requests are reasonable and proportionate, being cognisant of the imbalance in the effort required from suppliers and buyers when making these requests.
There is a distinction to be drawn between supporting and outsourcing. Technology platforms that support due diligence, allowing the organisation’s framework to retain human oversight and participation, are available on the market. These systems might be used for risk mapping, supplier communication or as part of grievance mechanisms. Where these systems bring value is as part of a broader HRDD framework that aligns with the principles of the UNGPs and OECD Guidelines.
There is also a benefit to codifying processes using these tools, enabling internal teams to manage the overall functioning of the organisation’s HRDD framework.
When tech solutions play a supporting role within an HRDD framework, there will be elements that have to sit outside of them such as stakeholder engagement. This is a core component of HRDD and one that benefits from real human interaction.
Engaging vulnerable groups or those with limited access to technology, such as smallholder farmers, is best done through in-person interaction where trust and understanding can be fostered. It is therefore important to identify where technology brings the most value, and clearly delineate between aspects that should be undertaken through a more personal approach.
From a buyer’s perspective, the main benefit of integrating tech solutions into HRDD is the reduction in administrative burden. To this day we see examples of companies using hundreds of copies of questionnaire spreadsheets and shared folders to compile basic information on their suppliers.
Not only is that an inefficient use of time, but it makes it difficult to collate multiple sources of information such as mobile surveys, messaging tools, GPS mapping, or photo evidence at scale. A key principle of due diligence is continuous improvement. The ability to conduct due diligence at scale, without having to wait for responses and manual processing of information enables businesses to react quickly and intervene as issues arise.
Technology solutions can also strengthen internal ownership. By giving procurement, sustainability, and compliance teams direct access to real-time data, it reinforces the idea that due diligence is a core business function, not an outsourced activity. This aligns with regulatory expectations that responsibility and liability cannot be delegated.
For suppliers, technology can lift a significant amount of the burden that their buyers place on them when conducting due diligence. By streamlining data collection processes, be it through more streamlined questionnaires or flexible language capabilities, buyers can reduce costs and audit fatigue amongst suppliers.
Another benefit for suppliers is the opportunity for collaborative, two-way communication through tech platforms. This means that data doesn’t just flow upwards in an extractive manner and encourages suppliers to communicate proactively.
I have seen firsthand how clients have benefited from integrating technology solutions into their broader HRDD framework. A recent example was an agriculture company sourcing from smallholder farmers. We supported them to develop digital farmer engagement surveys to collect data to meet the needs of sustainability reporting and customer expectations without over-burdening the farmers they engaged with.
These were used for data collection and were underpinned by farmer training, proactive support to embed responsible labour practices, and alternative communication channels. However, the real work was in creating a process and questions that were thoroughly thought through, making sure that both sides of the transaction could see the value of what was being asked of them. This resulted in higher supplier participation, quicker risk identification, and reduced audit fatigue.
We have also seen this in piloting the Taberah Platform, an online due diligence platform being used by a client in the coffee sector to support EUDR compliance. Using the platform to engage suppliers has been invaluable in identifying suppliers that present a compliance risk to the client. Crucially, this exercise was undertaken alongside one-to-one engagement with suppliers that were deemed to present a risk. This enabled the client to communicate candidly with suppliers and ensure that they understood that the client valued openness and would be on hand to support suppliers that had gaps in their policies and processes.
These examples illustrate some key principles to apply when building a tech-enabled HRDD framework. It is critical that human oversight and stakeholder engagement remain at the centre of any HRDD system. This ensures that internal teams are able to capitalise on time and resource savings facilitated by technology in order to strengthen HRDD, rather than simply casting a wider net for the collection of information.
Technology should also be seen as an opportunity to enhance efficiency, but not a means of replacing entirely manual, sometimes on-the-ground, verification to cross-reference results. However, technology can only take a supply chain so far. To build resilience, organisations still need to develop relationships with suppliers and ensure that their capacity is built over time. This is critical to embed the principle of continuous improvement and requires a mutual understanding of shared responsibility between parties.
While digital tools can strengthen visibility, participation, and risk management across complex supply chains, they cannot replace the core duty of companies to understand and address their own human rights risks. Emerging regulations make it clear that due-diligence responsibility cannot simply be delegated away. By using technology to enhance internal ownership and support suppliers with practical, accessible solutions, businesses can build more resilient and transparent, supply chains, meeting both the letter and the spirit of HRDD.
Rory Oake is a consultant at Ardea International
