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How to safeguard human well-being across supply chains

Authors: Fabiana Spinelli Programme Officer, UNEP-WCMC and Heli Sihvonen, Programme Officer, UNEP-WCMC

Global trade plays a crucial role in shaping economies. While it has provided opportunities and better income for some, these benefits are unevenly distributed, with consumption regions in the Global North benefiting the most.  In addition, these benefits have often been achieved at the cost of negative impacts on ecosystems and human well-being. As a result – in many cases – Indigenous Peoples, local communities, farmers, and rural workers have lost access to vital ecosystem services and faced social conflicts that undermine their overall well-being. 

As unsustainable resource extraction and production practices come under scrutiny, all value chain actors – producers, traders, retailers, brands, and financiers – need to play a role in addressing the negative externalities of trade. With growing regulatory measures and public pressure to enforce social and environmental safeguards, some questions arise: if you benefit from a natural resource or a commodity, should you also take responsibility for its impact? The answer is increasingly clear: yes. 

Multidimensional well-being: A framework for understanding social impacts  

While traditional measures of human well-being have focused solely on income, recent studies have looked at it in a more comprehensive way. Understanding the social impacts of resource extraction and production activities requires considering multiple dimensions of well-being, including food and nutrition, health, education, cultural values, and living standards. For instance, in many cases soy trade has boosted GDP and average income in producing countries. But it has often brought significant social challenges, including land appropriation and heightened community conflicts. While income and living standards may improve, intangible aspects like cultural values and freedom of choice often suffer, with limited evidence supporting the effectiveness of sustainable value chain policies to mitigate these issues. 

Just transitions in the agri-food sector: A focus on cocoa producers in Cameroon 
 
Cocoa production in Cameroon has significant social impacts, both positive and negative, on smallholder farmers. While international trade in cocoa can improve living standards and provide a sense of security, the economic benefits remain disproportionately distributed. Farmers often receive only a small fraction of the final price of chocolate, with most profits retained by manufacturers and retailers. Despite the large export values, cocoa farmers often work below living income levels and get only between 40 to 50% of the world market price and 6% of the price of chocolate paid by final consumers. 
 
Initiatives such as training on sustainable agricultural practices, the establishment of cooperatives, and certification schemes like FairTrade and UTZ/Rainforest Alliance have shown potential to enhance farmer well-being by reducing child labour and improving working conditions. However, these measures alone are insufficient to lift farmers above the poverty line. Sustainable interventions must start from ensuring that a fair price for the produce is paid. Additionally, integrating smallholder voices into policy discussions, as highlighted in the documentary A Smallholder's Voice, is critical to achieving supply chains that truly respect the well-being of the producer communities. 

How business actions can influence different dimensions of well-being 

Business operations can impact human well-being in several ways. Expanding mining activities or commodity production, for example, can displace Indigenous Peoples and local communities from their ancestral lands and territories. That is why corporate sustainability initiatives require careful consideration, particularly of the multiple dimensions of well-being. For instance, well-intentioned, biodiversity offset projects can inadvertently infringe on well-being if local communities are left out of decisions about creating nature reserves for ecological compensation. 

Addressing these challenges requires businesses to adopt strategies that integrate environmental and social well-being into their supply chains. How this is done depends on their position in the overall supply chain. A manufacturer has direct control over working conditions in their facilities, while a retailer must navigate the complexities of influencing practices several steps removed from their immediate operations. Their level of direct control shapes how businesses approach their social responsibilities and multiple dimensions of well-being. 

A just transition in the mining sector: A focus on Indigenous Peoples 
 
The mining sector supplies critical raw materials for industries from construction to technology. It generates significant economic growth, boosts GDP and supports community and export-oriented infrastructure. Minerals extracted from the Earth are essential for powering devices such as computers and car batteries, with this demand surging due to the rise in electric vehicles. 
 
However, the mining sector also causes extensive environmental, social and human-rights damage to Indigenous Peoples, including deforestation and water pollution, with these factors disrupting their cultural and spiritual ties to their land. In regions like the Amazon, mining also fuels land grabbing, violence and the spread of diseases such as malaria and tuberculosis. 
 
Business operations and projects are likely to have negative consequences when they proceed with mining projects without meaningful consultation or obtaining free, prior and informed consent (FPIC). When Indigenous communities are included, they are often treated as stakeholders to be compensated rather than rights-holders or equal partners in decision-making. Recognizing FPIC as a fundamental right, as outlined in the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) is key. Companies can go further in ensuring mining projects are co-developed with these communities. They can also use landscape-level approaches, one useful framework to adopt to ensure meaningful engagement.

How can business safeguard  human well-being across supply chains? A call to action 

Truly addressing the social impacts at extraction sites and across production supply chains requires factoring in broader dimensions of human well-being to business operations and project planning. The path forwards requires companies to move beyond traditional approaches to social responsibility. Better understanding the deep relationships between human communities, the natural environments they inhabit, and associated impacts is an important step. This will include actions to: 

  1. Incorporate the interconnectedness between social and environmental issues into nature strategies: companies must recognize that social and environmental challenges are deeply interconnected. When production and extraction threaten local ecosystems, it also impacts communities that depend on those natural resources. Addressing these interlinked sustainability questions requires dialogue and collaboration between the environment and social issues experts of sustainability teams. The Beta Framework for Integrated Decision-making by the Capitals Coalition aims to provide a roadmap to navigate this. 
  1. Adopt a holistic approach to well-being impacts of supply chains: This means embracing a perspective that places human well-being at the centre of business sustainability strategy – one that not only avoids harm but actively promotes food nutrition, health, education, freedom of choice and cultural values, going beyond pure income measures throughout supply chains. Many companies are already familiar with climate and nature focused initiatives like the Taskforce on Climate-Related Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TNFD). Addressing human well-being dimensions requires similar attention. One pragmatic step for companies to better understand, monitor and address their impacts on multiple dimensions of well-being is to join the Taskforce on Inequality and Social-related Financial Disclosures. The TISFD initiative is designed to help companies and financial institutions better understand, measure, report and manage their impacts on social inequalities. 
  1. Conduct meaningful consultations and respect Free Prior Informed Consent (FPIC): Businesses must prioritize meaningful consultations with Indigenous Peoples, local communities and smallholder farmers, treating them as equal partners rather than mere stakeholders. By respecting FPIC, companies can foster long-term well-being, integrate traditional and local knowledge into their strategies and practices, and create solutions that benefit both communities and business operations. To help that process, businesses can use the Accountability Framework, a roadmap for addressing ecosystem conversion and human rights, which provides FPIC operational guidance. 

World leaders continue to adopt environmental and social regulations, from the EU Deforestation-free regulation to sustainable socio-economic development commitments under frameworks such as the G20 and BRICS. These policies and commitments will impact business operations, so companies must stay attuned to these shifts. By closely monitoring these developments, companies can better align their strategies with the multilateral shift towards multidimensional well-being, just transitions, and inclusive growth, ensuring that they not only comply with new regulations but also actively contribute to environmental and social sustainability goals globally. 

At the upcoming Nature Action Dialogues in March 2025, business and finance leaders will come together with nature experts to accelerate integrated action at the nexus of social and environmental sustainability. Find out more on our web page here. 

Main image: what took you so long.

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