Promoting Trust in Corporate Reporting on Human Rights
The rise of social media has been a huge wake up call for companies and their policies on human rights. Having negative news seen by millions within minutes can not only wipe billions off a company’s value, but the damage to reputation can have serious consequences for the company/customer relationship. Trust that has been built up over years can be lost as soon as that screen shot or video of poor practice, either within the company or one of its suppliers, hits YouTube.
The transparency that the internet and social media afford means a company’s operational practices are essentially an open book. Organisations such as the Business and Human Rights Resource Centre track the abuses and advances of company activities – whether it’s the exploitation of Chinese migrants in clothing sweatshops in Italy and Spain, African and Eastern European tomato-pickers in Italy or the lessons learned from corporate grievance mechanisms.
So, why do companies wait for someone else to tell the story, when they can do it themselves? The idea of writing on a negative issue in the annual report is perhaps counter-intuitive to companies. However, not only in the sphere of human rights will it say much about a company’s willingness to respect, more generally, it will promote trust between the company and the reader, given that the company is prepared to be self-critical.
The company could acknowledge in the annual report, for example, that although controls to monitor human rights are in place, when operations are on a global scale they have not worked as effectively as anticipated with certain suppliers. The company can then explain the steps being taken to remedy the position and to strengthen the processes to ensure the same issue doesn’t arise again there or elsewhere.
This reporting will also provide the opportunity for the company to explain the thinking behind decisions made. For example, it may be important to publicize the benefits of maintaining a position in a country where State related human rights abuses have arisen. That it will be necessary to work, for example, with government, NGOs and suppliers to improve working conditions, rather than pull out completely putting local workers and their families back into poverty. It may also provide a workable base to create an ongoing dialogue between stakeholders to implement changes for improving conditions and for providing clear targets.
The annual report also provides companies with the ideal tool to explain how they embed respect for human rights in how they earn their profits, rather than how they spend them. This distinction between philanthropic spending and how a company conducts its business operations is an area that stakeholders and investors are increasingly wanting to understand. For example, the company should not think there is any benefit in spending money building a school and yet use suppliers which have schoolchildren as part of their workforce?
It is by exploring new ways to report in a fully transparent way that stakeholders will have greater trust in a company’s overall reporting. Having the confidence to talk about issues that have in the past been swept under the carpet indicates a culture of openness. It’s an approach that may not always achieve the desired media response in the short-term, but over time it’s one that will earn respect and greater confidence in its reporting.
How we play our part
Following 18 months of research and consultation on the Human Rights Reporting and Assurance Frameworks Initiative (RAFI) co-facilitated by Mazars and independent, non-profit center for business and human rights practice, Shift, the draft UN Guiding Principles Reporting Framework is now available for review and feedback.
Due to launch in February 2015, the framework is the first comprehensive guidance for companies to report on how they meet their responsibility to respect human rights in line with the United Nations Guiding Principles on Business and Human Rights.
On 24 February 2015, Mazars and Shift will be hosting the official launch of the Reporting Framework at the Tate Modern in London. Professor John Ruggie, the lead author of the UNGPs will be presenting, together with UK minister for Employment Relations and Consumer Affairs, Jo Swinson. Richard Howitt MEP will be chairing the panel which also includes Marcela Manubens of Unilever. We strongly believe that the Framework can help companies provide robust human rights reporting that meets the expectations of their investors and civil society stakeholders.
Richard Karmel. Partner and Global Head of Business and Human Rights. Mazars UK.
Read more on Richard’s blog by clicking here.