How Can Businesses Ensure Circular Supply Chains Uphold Workers’ Rights and Human Rights? Insights from the ETI x The Centre Webinar

As businesses accelerate their circular economy goals, there’s a growing risk that the people at the heart of recycling are being left behind. That was the central theme of a joint webinar hosted by the Ethical Trading Initiative (ETI) and The Centre for Child Rights and Business (The Centre) on June 25, bringing together diverse voices from business, civil society and tech.

The event spotlighted new research from The Centre on human rights risks in circular supply chains, especially in the textile recycling and lead-acid battery sectors. This was followed by a fireside chat featuring Mr Price Group, Reverse Resources, ETI and The Centre.

When Circularity Risks Becoming Exclusive

The Centre’s research reveals a troubling disconnect: many circular economy strategies rely heavily on informal workers — the people who often collect, sort, and process waste — yet these workers are often excluded from formal business practices and protections.

From exposure to toxic chemicals in battery recycling to low pay and unsafe conditions in textile waste sorting, the risks are real. Businesses have a clear responsibility to carry out effective human rights due diligence (HRDD) in these emerging circular models. The OECD Due Diligence Guidelines and UNGPs, which call for a risk-based approach to due diligence, clearly set out this expectation, as do a growing body of existing and emerging legislations. Responsible companies cannot afford to overlook risks simply because they fall outside traditional, linear supply chains. Failing to address these risks could carry operational and legal consequences.

“Know your supply chain. Understand who these actors are – because it’s often very fragmented, especially in waste management – and understand why the informal workforce is there to fill the gap,” Gayang Ho, Director of Research, The Centre

What can businesses do?

During the fireside chat, participants explored how companies can integrate informal workers responsibly into circular value chains:

• Understand your supply chain’s grey zones:
Gayang Ho from The Centre emphasised that businesses must first “lift the lid” on the informal parts of their supply chains. Mapping actors, understanding local socio-economic drivers of informality, and clarifying what ‘formalisation’ means in context are key to designing effective and ethical circular strategies. She also called on businesses to understand the socio-economic drivers of informality, and clarify what ‘formalisation’ actually means in each context. “It’s too idealistic to think formal employment is always the answer,” she said. “We’re seeing creativity in social entrepreneurship that can offer new paths forward.”

• Build inclusive partnerships:
Adile Dludla from Mr Price Group shared how the company is partnering with community-based recycling initiatives in South Africa. By offering non-cash incentives (such as store vouchers) and collaborating with NGOs and recyclers, they’ve successfully diverted over 23 tons of plastic waste from landfills while creating livelihood opportunities for informal waste collectors.

• Create a business case for inclusion:
Nin Castle from Reverse Resources introduced a certification system for waste handlers that verifies basic compliance and traceability, helping brands identify and engage responsible recyclers. This “RRR Network Certificate” allows for a step-by-step improvement model rather than an all-or-nothing compliance approach.

• Balance formalisation with livelihoods:
George Williams from ETI stressed the need for long-term engagement, especially in sectors like textiles. In some cases, efforts to improve supply chains have unintentionally pushed out vulnerable people whose livelihoods depend on informal work. Instead, he argued for long-term partnerships and progressive improvement, particularly in the textile sector. But in other, more high-risk sectors such as lead-acid batteries, he argued, companies must advocate for stricter law enforcement and the safe shutdown of dangerous operations because the impacts on workers from this unregulated and hazardous work can quite simply be life-threatening.

“In reality, there are no perfect supply chains — but there are improving supply chains, and what we need to be doing is working with the improving ones,” George Williams, Just Transitions Manager, ETI

Key Takeaways for Business

• Go beyond formalisation: Don't default to making everything "formal." Instead, integrate the informal workforce responsibly, with oversight and rights protections.
  
  

• Protect livelihoods: Formalisation done poorly can displace workers and cut off vital income streams. Be cautious, context-aware and inclusive in your approach.
  
  

• Scale with inclusion: As demand for recycled inputs grows, ensure that sourcing models work for small, local, and informal actors too, such as by enabling freedom of association, engaging trade unions, and conducting meaningful stakeholder engagement as part of a robust HRDD approach.
  
  

• Partner for impact: Work with local NGOs, recyclers, suppliers and civil society groups to co-create viable, inclusive and long-term solutions.
  
  

• Value progress, not perfection: Reward improvements and make space for suppliers and recyclers on a compliance journey - not just those who are already fully aligned.

“If we don't promote the actors who are trying to improve, we risk letting others undercut them - and stall real progress,” Nin Castle, Co-Founder, Reverse Resources

As the push toward circularity accelerates, the message is clear: sustainability must work for people, not just materials. Businesses have a critical role to play; not only in scaling recycling, but in ensuring that no worker is left behind in the process.