Corporate respect for human rights: sustainability's new black?
by Claire Methven O'Brien, published in the Guardian, Thursday 14 Feb 2013.
Until recently, and in spite of worldwide civil society campaigns to the contrary, businesses refuted that corporations should be held accountable for human rights abuses. Human rights, it was said, existed to protect individuals from governments. Businesses, as "non-state actors", didn't come into the picture.
How times have changed. In 2011, the UN's human rights council finally adopted a new standard proclaiming that businesses do have responsibility to respect human rights. The UN's Guiding Principles on Business and Human Rights, devised by Harvard professor John Ruggie, spell out that, while states retain a duty to protect populations against corporate human rights abuses, businesses have a concurrent responsibility to avoid human rights abuses resulting from their own activities or those of business partners, at home or abroad. When the Guiding Principles were unanimously approved by governments from Argentina to India, big business chimed its support. Opportunistic posturing rather than enduring change of position? Apparently not: according to BSR's annual State of Sustainable Business poll, 500 executives from 300 companies ranked human rights as their top sustainability priority in both 2011 and 2012.
So why the change of heart? Why should the Guiding Principles win business support when two earlier UN initiatives to set international standards on business and human rights had failed?
A central feature of the Guiding Principles, and one distinguishing them from earlier UN endeavours, is that while they clearly confirm the principle of business responsibility to respect human rights, their main focus is on describing how businesses should give effect to that responsibility in practice. Here, the core idea of Guiding Principles is that companies operationalise their responsibility for human rights by undertaking human rights due diligence – a process which every business can undertake, from the smallest owner-employee outfit to mega-corps like the Anglo-Swiss extractive giant Glencore.
What then does due diligence comprise of? In its essentials, it means that a business does the following: i) makes a public commitment to respect human rights; ii) assesses, in a systematic way, its impacts on human rights, whether these are direct, resulting from the activities of its own employees or operations, or occur indirectly via suppliers, subcontractors, customers or other business partners; iii) where it detects adverse impacts, acts to stop these; iv) continues to monitor its impacts on human rights; and v) reports publicly on impacts and measures to address them. Finally, any business which causes or is caught up in human rights abuses needs to co-operate in providing remedies to victims, which may include by itself setting up a human rights grievance mechanism.
Without doubt, the apparent simplicity of human rights due diligence on this model has had an important role in winning it and the Guiding Principles so many business fans. But is it as easy as it looks?
Few things in life are easy and seeing through a robust and effective human rights due diligence from start to finish is unlikely to be one of them. However, the good news is that, since 2011, a raft of material has been produced by business associations and others that picks up the Guiding Principles' due diligence model, adapts it and applies it to specific industry sectors, such as oil and gas, mining and minerals, and information technology; to types of businesses, such as SMEs; and to specific issues, such as mineral supply chains and specific categories of rights-holder (eg indigenous peoples and children). Individual companies, such as Rio Tinto, are also starting to go public with outlines of internal due diligence measures.
Given that, within companies, as well as in the broader CSR community, human rights expertise is still thin on the ground, such material can be extremely valuable to businesses – and indeed rights-holders and other stakeholders. It can reduce the time and resources required to understand how to conduct due diligence in a given business context or location, flag typical risks, and provide public benchmarks by which the performance of laggard companies, as well as leaders, can be judged, especially in jurisdictions where legislation or enforcement are wanting (such as Sierra Leone).
Yet, even equipped with tailor-made tools, substantial challenges remain. Most obviously, this is the case for SMEs. The Guiding Principles are clear that the scope and intensity of the due diligence process should reflect the size of a business, among other factors (Guiding Principle 14). Nonetheless, non-negotiable elements of impact assessment, such as screening key suppliers, are still likely to entail a significant commitment of resources in the short-term.
Typically, for the largest companies, cascading group-level human rights commitments downwards so that they influence day-to-day practices in scores of local subsidiaries in diverse areas such as hiring, procurement, security, lobbying and community investments also requires a major injection of effort, including in terms of communication, capacity-building and review of existing management systems and performance standards. And even in an MNE setting, with revenues in the billions, human rights policy-owners usually face tough internal battles to secure the requisite financial and human resources.
Likewise, even for MNEs, where human rights issues affecting business are complex and multi-dimensional (such as in areas affected by conflict or the risk of conflict) sourcing local expertise to conduct a site-level human rights impact assessment, in a human rights-based way, may be difficult to do in the short term, due to lack of capacity. This also applies to the legal profession: generally speaking (with a few notable exceptions), business lawyers are still far from au fait with the Guiding Principles and their implications. A further challenge for businesses big and small is that of having due diligence efforts undermined, either by less scrupulous competitors offering seemingly preferable terms, or by governments authorities keener to cut costs than respect human rights or seeking to benefit improperly from the award of public. Taking all such complications out of the equation, persistent dilemmas will remain: one, which the Arc of Human Rights tries to help address) is how to prioritise remedial action across a number of negative impacts occurring in parallel; another, how to control the ultimate application of multi-use products or technologies; a third, how to account, in the course of due diligence, corporate contributions to human rights abuses with aggregate, trans-boundary causes, such as those deriving from climate change.
Intuitively straightforward, process-focused and context-responsive, the idea of human rights due diligence is in large part responsible for new willingness by business to shoulder its share of responsibility for human rights. At the same time, its loose definition, as well as implementation challenges of the kind noted above, have left some in civil society sceptical of its overall adequacy, with international legislation still the preferred option. Though it may for now be de rigueur, if due diligence is to have the durability of black, businesses, along with other stakeholders, will need to ensure such reservations are gradually overcome.