Strengthening Human Rights Policies
The endorsement of Professor John Ruggie’s Guiding Principles on Business and Human Rights by the United Nations Human Rights Council in 2011 was a huge step in encouraging companies to address human rights issues. Since then, companies have struggled to fully adopt the United Nations Guiding Principles on Business and Human Rights (UNGPs) and have been unclear about how to implement them.
In terms of adoption, legislation will be a key driver. Looking at Europe alone, new requirements as from 2017 will see 6,000 companies having to report on their principal risks of severe impacts, the due diligence processes implemented by the undertaking and information on the prevention of human rights abuses. The United States and other countries are also in the process of putting into place National Action Plans on business and human rights. To date most of these reference the UNGPs as the authoritative guidance to help companies fulfil these requirements.
However, it’s not just about complying with legislation; it’s about improving the behaviour of companies on a global basis. This should lead to greater performance and provide companies with greater access to investment. Yet while the business case for adopting the UNGPs is becoming clearer, how companies can implement such principles is more complex. One of the fundamental philosophies of the UNGPs is ‘know and show’. This basically means companies need to understand their most salient issues in respecting human rights – those which pose the greatest risk of leading to severe negative impacts. They then need to demonstrate to stakeholders that they understand what those risks are. It requires better interpretation, transparency and greater understanding of the implications across all company activities.
An important step towards this has been the introduction of the United Nations Guiding Principles Reporting Framework. Launched in February 2015 the Framework is the result of an 18 month collaboration between Mazars and human rights experts, Shift, and in consultation with governments and stakeholders worldwide. The experience of companies piloting the framework, such as Unilever, tells us a lot about what the framework can do. In Unilever’s case it has enabled them to have “more interesting and difficult conversations across the whole of the business.” So rather than having human rights as an ‘addition’ to current reporting practice, it becomes fully aligned with all company actions and strategies. The result is a more coherent message to stakeholders and the wider community.
The approach of the Framework is to help companies think about their most salient risks to human rights, rather than the material risks to themselves. Basically, the Framework provides a different lens for companies to look through – one that allows companies to gauge any potential negative impact to people on the ground, whether that is employees, communities, or workers in their supply chains, rather than looking at the risk to the business.
An important consideration of this approach was to avoid human rights policies becoming a ‘tick-box’ exercise. Instead of telling companies what to write, the Framework poses eight over-arching questions and 23 sub-questions for companies to consider. It’s a format that is designed to reveal how serious a company is in respecting human rights in business. Whether a company is complying with the spirit, rather than a literal interpretation, of the questions will become apparent in the answers.
Equally important is that implementation of the Framework is accessible to all companies – no matter if they are SMEs or large multi-nationals. As such, the Reporting Framework is designed as a tool for cultural change within companies. It pushes companies in the direction of having to change behaviours and having the appropriate policies, process and controls to embed within their practices.
In terms of the next step for companies on their human rights journey, strengthening the assurance mechanism of reporting is going to be key. It’s particularly important that when people read disclosures on human rights that they believe what is disclosed is credible and trustworthy. Greater trust on human rights reporting is what the market is looking for. And with greater trust comes improved profitability and a more sustainable business model.
For further information on Mazars’ work in the field of human rights, please click here.
Richard Karmel. Partner and Global Head of Business and Human Rights. Mazars in the UK.
Further reading on this topic: Mazars Unveils Major New Reporting Framework