Bringing human rights into focus

Why should you care about human rights in your business?
It’s simple: because your stakeholders do.

In 2011, the United Nations Guiding Principles on Business and Human Rights (the UNGPs) were unanimously endorsed by the UN Human Rights Council. The UNGPs outline the state duty to protect and corporate responsibility to respect human rights and have been quickly adopted as the international standard for defining business’ role in society.

Since that time, a number of high profile events around the world have linked human rights and business impacts. From climate change, to supply chains and labour rights, to the rights of Indigenous Peoples here in Canada and abroad, increasingly people are using the language of rights to talk about corporate responsibility.

Here are some common questions we, at INLE Social Performance, are asked by our clients and peers regarding business and human rights:

 

Q: Our business already has a strong social responsibility program. Why switch the focus to human rights?

A: Corporate social responsibility (CSR) has become an integral part of how business operates; it is now the baseline expectation that businesses ‘do no harm’ and there is a growing movement to reward companies that ‘do good’ as part of their social impact management.

Customers, shareholders and communities are watching your business’ performance and making decisions about which products to buy and where to invest. Strong social performance is key to earning and maintaining a social license to operate.

There is a tendency for CSR programs to be segregated from how a business makes decisions and to invest in social programs and initiatives that may be strategically separate from business goals. By leveraging human rights as a framework to understand and address risks to your business as well as your business impacts, you are effectively reframing the scope of your CSR program, making it easier to identify the links between social investment and risk management to advance your business priorities.

Think of it as moving from sustainability 1.0 to sustainability 2.0 – this doesn’t mean you need to start from scratch and create new policies, systems and processes; it’s about a shift in perspective and thinking. All businesses are moving in this direction of greater sustainability integration and it’s a matter of deciding when your business is going to make that shift and where you want to be performing among your peers.

Example in action: In a 2012 guide on human rights in the mining industry, the International Council on Mining & Metals (ICMM) highlights how the Cerrejón Mine – a joint venture between Anglo American, BHP Billiton and Xstrata – used a human rights framework to enhance its social performance by addressing impacts and improving community engagement practices. Through a series of Human Rights Impact Assessments (HRIAs) and stakeholder engagement, the mine has been able to identify risks and impacts as a result of its operations and build a more comprehensive social impact program.

 

Q: We have a well-established risk management and issue identification system in place. How would incorporating human rights make a difference?

A: Traditional methods of risk assessment look to identify and prioritize material risks to the business, with little consideration of the impacts of business activities on stakeholders. A rights-based approach introduces the concept of salience, which considers actual and potential risk to stakeholders as a result of your business activities. It may seem like a subtle shift, but putting the focus on people rather than on your business can help illuminate blind spots, allowing you to significantly reduce risk your company had not previously identified, making it good for people and good for business.

Example in action: Nestlé has begun complementing their company risk assessment with salient rights assessments. In their 2015 sustainability report, they explain how the shift in emphasis from risk to the company (materiality) to risk to rights holders (salience) has not significantly changed the outcomes associated with the risk assessment and mitigation process; rather it has served to highlight additional risks that they had previously been unaware of and allow for more focused strategic planning.

 

Q: We have a responsible sourcing policy and strong supplier code of conduct in place, isn’t that enough?

A: Having policies in place outlining the responsibility of the company and its suppliers to respect human rights is an important part of ensuring safe and fair working conditions, avoiding the use of child labour, advancing gender equity and managing other key risks. Many companies conduct supplier audits and have strong working relationships with their primary suppliers.

A report by Human Rights Watch highlighted the issue of human rights abuses in Cambodian subcontractor factories providing goods to larger suppliers that are, in turn, selling to large global retailers. The primary suppliers are expected to follow the practices outlined in supplier code of conduct policies and are subject to regular audits; however, retailers are frequently not aware of the subcontracting agreements or are not actively monitoring second tier suppliers. Several large retailers have faced consumer backlash over these abuses, regardless of the strength of their policy positions.

The reality is that supply chains are often large and complex, and depending on the industry, your business may have thousands of suppliers when considering direct and indirect relationships. Human rights approaches encourage systems thinking, helping to advance understanding of the impacts that your business can have beyond your immediate supplier relationships.

Policy commitments are a first step in aligning with international standards such as the UNGPs and provide high-level guidance for an organization and its suppliers on how to ensure alignment with company values. This commitment must be complemented by tangible efforts to operationalize those values through actions such as: executive decision making; training at all levels and across departments; and systems and practices that embed policy commitment. Ultimately, it is these actions that a company’s overall performance will be judged upon.

Example in action: Beginning in 2017, Walmart has launched a pilot program using blockchain technology to support increased transparency, traceability and real-time data tracking in its supply chain. The pilot will focus on produce initially, as the company looks to find ways to ensure field workers, farmers and others have the technology available to enter data into the chain. Ultimately, the goal is to enhance food safety for consumers.

One resource for businesses looking to better understand and address forced labour risks within their supply chains is Know the Chain, which provides learning tools, up-to-date industry benchmarking, and practical tools and guidance.

 

Q: We operate in Canada (or another stable Western democracy) where the government protects human rights through various legislative and regulatory instruments. Why would we need to focus on human rights specifically?

A: The UNGPs have become the global standard for companies and are shaping the way that stakeholders (including investors and shareholders) evaluate business performance. A UN working group is currently exploring how to move the UN Guiding Principles from ‘soft’ to ‘hard’ law and we have seen legislation such as the French corporate duty of care law, the UK Modern Slavery Act and the EU Directive on Non-Financial Disclosure come into effect in Europe, with other regions set to follow.

Human rights NGOs are shining a spotlight on corporate human rights due diligence efforts at home as much as abroad, through initiatives such as the Corporate Human Rights Benchmark that are encouraging business to demonstrate greater transparency and disclosure. Reporting on human rights is gaining traction with many leading companies creating integrated or stand-alone human rights reports based on the UN Guiding Principles Reporting Framework.

With so many watching, it is essential to know what is happening across your business’ value chain, because if you don’t know your business’ story, then someone else might tell it for you. Integrating human rights considerations throughout your organization strengthens your risk management and improves capacity for accurate and timely disclosure.

Example in action: In the financial sector, Toronto-Dominion Bank has a responsible procurement policy that speaks specifically to human rights, diversity and environmental management, as well as making a commitment to respect human rights through diversity and inclusion in human resource management. The company has been recognized for its efforts in sustainability, environmental performance and diversity and inclusion in Canada as well as the United States.

 

Q: Human rights are legally protected. In starting to use human rights language, is there greater exposure to legal risk?

A: The UNGPs and other voluntary corporate performance standards outline the responsibility of companies to respect human rights. Legal experts explain that, “In the near term, mandatory corporate human rights reporting is more likely than more human rights litigation.  Few companies face material litigation risk stemming from human rights abuses…On the contrary, widespread adoption of the UN Framework and Guiding Principles by governments and companies is likely to reduce overall litigation risk while increasing the likelihood of required human rights reporting by companies.  Effective due diligence reduces legal risk by identifying human rights issues before they trigger litigation, countering claims of intent or negligence, and protecting against shareholders suits for misrepresentation.”[1]

The International Bar Association has recognized the significance of human rights frameworks and in their Practical Guide on Business and Human Rights for Business Lawyers, recommended that: “Familiarity with the UN [Guiding Principles] presents significant opportunities for all lawyers who advise business, both for internal and external counsel.”

Ultimately, in order to effectively manage risk and accurately address issues, decision-makers must understand where their businesses are connected to human rights impacts. Those impacts must always be understood in context and the UNGPs provide a shared language with which to talk about those impacts.

Example in action: Leading global companies have recognized the movement toward greater transparency around human rights and have made human rights reporting part of their external disclosure programs. The UN Guiding Principles Reporting Framework provides human rights reporting guidance and early adopters include brands such as: Unilever, Ericsson, H&M, Nestlé, Newmont and ABN-Amro.

 

Bringing human rights into focus

Our understanding of the role of business in society has evolved so rapidly in recent years that the lines between the responsibilities of governments and business have blurred. This has simultaneously exposed companies to new risks but also created new opportunities to advance shared goals. Business leaders need the best information possible when making decisions to ensure the social and environmental sustainability of their organizations, while supporting continued economic returns.

Incorporating respect for human rights into existing policies, practices and culture brings the human environment into focus and allows for contextualized strategy and decision-making, effective risk management and opportunity realization. INLE Social Performance works with organizations to seamlessly integrate human rights and other social considerations into existing strategy, systems, and activitis, accelerating social performance and making it a better way to do business.

 

[1] Anthony Ewing (aewing@law.columbia.edu) teaches Business and Human Rights at Columbia Law School and advises companies on corporate responsibility as a Partner at Logos Consulting Group in New York. An earlier version of this article appeared on Ethicalcorp.com. https://business-humanrights.org/en/what-executives-need-to-know-and-do-about-human-rights-anthony-ewing-columbia-law-school-logos-consulting-group#c70669