A/HRC/35/32 child labour, establish fair working hours, strengthen monitoring fair work and pay and provide multiple training and consultation programmes for suppliers and new employees. 35. One survey on small and medium-sized enterprises showed some of the ways they are connected to large businesses. There may be connections through formal supply chain relationships, as well as more informal or general links with larger business enterprises. A large proportion of such enterprises (77 per cent) who responded to the survey considered that they were part of a supply chain, with the largest supply relationship contributing between one quarter and one half of the their total turnover in 30 per cent of cases. 48 Their role in the supply chain tended to harness their ability to provide a niche product or service that larger businesses were unable to provide themselves or could not provide as cheaply. Of the businesses who considered that they were part of a supply chain, two thirds provided a standardized product or service, half provided a bespoke product service and one in five provided some form of research and development. 36. Almost half of small and medium-sized enterprises form non-supply chain relationships with larger business enterprises, primarily to become more established in their marketplace and with the hope of gaining additional business. This networking is crucial for such enterprises in sectors dominated by large businesses, which can spur on smaller enterprises in the supply chain to improve technological and human capital. 49 In the abovementioned survey, one quarter of small and medium-sized enterprises were involved in research and development partnerships with larger business enterprises, while 15 per cent were in more formal joint ventures with large enterprises. A further 15 per cent received some mentoring from a larger business as the latter sought to enhance productivity through their supply chain. Links with larger businesses may provide opportunities for small and medium-sized enterprises to alleviate some of the problems that their resource poverty may cause for the business and human rights agenda. With existing supply-chain relationships already in place, and a culture of mentoring and advice-giving, it is possible to see how human rights due diligence can be implemented through a partnership between smaller and larger businesses and how the latter can both set standards that dictate conditions to the former and support capacity-building to enhance due diligence procedures.50 37. Human rights criteria may be a precondition in calls for tender or a factor when choosing suppliers. This seems to work in practice, at least in some instances, and it has been claimed that supply chain pressures are proving to be a more powerful force for social and environmental change than local regulation. 51 38. In practice, contractual clauses on “respect for human rights” raise a number of questions and challenges. In using such formal business-to-business measures to incentivize alignment with the Guiding Principles, one fundamental challenge is the fact that a typical business contract involving immediate parties may not be able to take account of actors throughout a long supply chain. However, this is primarily a challenge for larger business enterprises with multi-tiered supply chains that, in line with the Guiding Principles, are expected to exercise human rights due diligence across all tiers, beginning with the areas where the risk of adverse human rights impacts is the most significant. For business enterprises with large supply chains, the use of contractual clauses to incentivize suppliers to meet their responsibility to respect human rights can thus potentially provide a useful tool for managing risks throughout extensive networks. There is a risk, however that small and medium-sized enterprises could simply avoid such demands by marketing their products to other competitors that do not utilize contractual clauses and do not prioritize 48 49 50 51 D. Jamieson et al, Large Businesses and SMEs: Exploring how SMEs interact with large businesses (ORC International, 2012). Available from www.gov.uk/government/uploads/system/uploads/attachment_data/file/34639/12-1196-exploringhow-smes-interact-with-large-businesses.pdf. See “Small business: a global agenda”, p. 22 (footnote 28 above). See L. Spence, “CSR and Small Business in a European Policy Context: The Five ‘C’s of CSR and Small Business Research Agenda 2007”, Business and Society Review, Vol. 112, Iss. 4 (December 2007), p. 533. See G. Starcher, “Responsible Entrepreneurship: Engaging SMEs in Socially and Environmentally Responsible Practices” (European Bahá’í Business Forum, 2005) p. 23. 11