A Look at a New Template for Collecting Forced Labor Due Diligence Information from Suppliers

The Automotive Industry Action Group (AIAG) recently published Version 2.0 of its new Due Diligence Reporting Template (DDRT). The DDRT supports AIAG’s Forced Labor Due Diligence Program for the automotive industry. 

According to the announcement put out by AIAG, several of the largest Original Equipment Manufacturers (OEMs) – Ford, General Motors, Honda, Nissan, Stellantis and Toyota – will request selected supplier submissions on the DDRT beginning this September. The DDRT is discussed in more detail in this post.

AIAG is a not-for-profit organization founded in 1982 by Ford, General Motors and Chrysler. It aims to enhance the automotive supply chain’s efficiency and quality through collaboration among industry stakeholders.

The Excel-based DDRT is a free standardized reporting tool that was developed by AIAG in collaboration with participating OEMs for at least annual completion by suppliers. It is intended to provide a streamlined, common approach to the exchange of supply chain forced labor risk information by suppliers to OEMs to facilitate risk mitigation, including by supporting compliance with industry standards and applicable global forced labor legislation. The DDRT is available for download here.

The Template allows for company-wide and customer-specific declarations. The Template inputs pertaining to supplier forced labor due diligence include the following:

• The forced labor risk screening resource used. The DDRT indicates that Kharon is the preferred resource.
• The online third-party software service used for supply chain analysis, including supply chain visualizations, identification and management of risks.
• A description of the risk-based approach to selecting screened suppliers. There are 12 pull-down menu options, ranging from all tier 1 suppliers to more tailored approaches, such as country of export or import, manufacturing location, business volume and various indicia of potential forced labor or diligence concerns.
• The total number of tier 1 suppliers and the number screened, and the number of screened tier 2 suppliers.
• The number of suppliers identified through the risk analysis that may have used forced labor. These suppliers are to be identified on a subsequent tab of the Template.

The inputted information generates a Supply Chain Due Diligence Declaration. 

It is clear the DDRT will gain traction in the automotive industry, given its use by at least six large automakers. Suppliers reporting on the DDRT will, if given the option, likely want to use the Template to report to other commercial customers on forced labor compliance, further driving use of the Template.

The interesting question is whether the Template also will see widespread use by other industries. It is still very early days, but this is all a bit reminiscent of the roll-out of the Conflict Minerals Reporting Template (CMRT) more than ten years ago, by a predecessor of the Responsible Minerals Initiative, to provide a standardized approach for reporting out information relating to conflict minerals usage and related compliance measures. By the second year of US Conflict Minerals Rule compliance, the CMRT had achieved widespread acceptance across all industries and its later versions (now up to Revision 6.5) are still the prevailing means for suppliers to annually report conflict minerals-related information to their commercial customers. 

But, it also bears mentioning that the DDRT is not the only tool in use for collecting information relating to forced labor compliance. The Slavery & Trafficking Risk Template is a free, open-source industry-agnostic template that many companies use as part of their efforts to comply with human trafficking and modern slavery legislation and improve their supply chain-related public disclosures.

The STRT collects information at a more granular level than the DDRT. The STRT has been developed under the auspices of the Social Responsibility Alliance (SRA), which was initially established by Assent Compliance. The SRA, founded in 2017, describes itself as “an initiative focused on providing companies with the open-source tools, resources, and support they need to build socially responsible supply chains through the collection of responsible sourcing data.” (Ropes & Gray representatives have been involved with the SRA since its inception and have provided input on the STRT.)

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