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Guide your company’s sustainability journey

3

KEY CHALLENGES

3.1

MATERIALITY

ANALYSIS

3.2

External Reporting

3.3

Mapping Stakeholder Expectations

3.4

Sustainability Training

3.6

Social Innovation

3.5

HUMAN

RIGHTS

WHAT IS IT?

Emerging expectation drawing
lot of attention

MIA RESULTS

TRENDS

3.5

HUMAN RIGHTS

WHAT IS IT?

 

Business and Human Rights (BHR) deals with the (potential and actual) impact of business operations on human rights.

 

The GRI G4 standard defines human rights as “the extent to which processes have been implemented, incidents of human rights violations, and changes in stakeholders’ ability to enjoy and exercise their human rights. Among the human rights issues included are non-discrimination, gender equality, freedom of association, collective bargaining, child labor, forced or compulsory labor, and indigenous rights.”

 

The tool assesses the company’s approach to human rights based on this definition.

 

 

The legal and “paralegal” framework

 

The international legal framework for human rights is comprised of a body of law made up of treaties, conventions, declarations and other instruments.

 

The corner stone of human rights is the United Nations (UN) International Bill of Rights.

 

When looking more specifically at human rights in business, the UN Guiding Principles of Business & Human Rights (UNGPs) are of particular relevance: unanimously endorsed by the UN Human Rights Council in 2011, they represent the main framework for preventing and addressing the risk of adverse impact on human rights linked to business activity.

 

 

WHY IS IT IMPORTANT?

 

There is a growing accountability movement today that looks at the fine print and challenges companies on whether their rhetoric matches their practices and impact.

 

Companies need to embed the respect for human rights to achieve operational excellence in their sustainability programmes, hence delivering also tangible benefits to their shareholders and society overall.  Direct impact on companies can be witnessed too, such as avoiding commercial costs related to human rights incidents, enhancing reputation, and favouring future investment opportunities.

 

Respecting human rights is not only based on business voluntary initiative: governments around the world have followed suit with increasing expectations on corporations to respect human rights in all their activities.

 

Two important developments are the recent EU Directive on Non-Financial Information Disclosure and launch of UNGPs reporting framework, endorsed by investors with $3.91 trillion assets under management.

 

IDEAL SCENARIO

 

Embedding respect for human rights and measuring the impact of practices adopted are essential to corporate efficiency and competitiveness. It starts with building a so-called ‘rights-aware culture’ through policies, trainings, incentives and the sharing of successes, failures and lessons learned within the company and its supply chain. This is a large scale, step-by-step and long-term process, which is unique to every company.

 

In the MIA assessment, we benchmark companies’ performance against an ideal situation, set according to the factors of maturity in policy, performance management and reporting:

MIA RESULTS

 

The companies assessed were mostly considering human rights as a set of regulations to comply with, rather than a strategic area to put on the agenda.

In terms of maturity of management, we observe that the assessed companies in general:

 

  1. do not include human rights in their formal management systems and target setting mechanisms, but
  2. assess top and middle managers’ performance also against human rights-related indicators.

 

The second result is promising, and hints at the fact these companies do pay attention to emerging sustainability challenges by linking results with internal performance indicators. However, the assessment did not check qualitative implications: what are those KPIs? How to cascade them into the entire organisation? On this front, the insights from CSR Europe`s strategic work-stream on business & human rights tell that setting meaningful KPIs and developing metrics to help the company and its suppliers manage their (sustainability) performance is still a challenge today.

 

TRENDS

 

Most multinationals today have been working on tackling human rights issues internally and externally for a number of years and the path for smaller companies is being built.

 

Challenges and trends can be identified in all the steps necessary to embed human rights into company functions. The results below come from CSR Europe’s work with European-based companies.

 

 

 

POLICY COMMITMENT & ACTION PLAN

 

A large majority of companies today have approved a human rights commitment without having experienced major issues.

 

For the few of them that formalise this commitment (through a human rights policy), they consult and engage different stakeholder groups along the process.

 

This consultation process proves to be challenging especially in identifying and involving all the relevant stakeholder groups.

 

Following the process, effective dissemination of the policy is challenging due to the size of multinational companies.

 

 

 

ORGANISATIONAL ANCHORING (EMBEDDING)

 

When operationalising their duty to respect human rights i.e. when embedding human rights in companies, responsibility often falls under the scope of CSR, HR or legal/compliance departments.

 

For global companies with interconnected supply chains it is central yet difficult to define a strategy to embed human rights that is practical and relevant for procurement & product development, abstracting from human rights language.

 

Experts and first-movers are promoting a move from the traditional ‘fail compliance’ model to a continuous improvement approach: tackling issues step by step and improving slowly but steadily is a successful and sustainable model.

 

In this light, in the coming years, we will assist to the realisation/identification of the appropriate goals/objectives/targets/KPIs in tackling human rights issues are for individual companies and a natural consequence will be to also incorporate human rights into individual performance evaluation.

 

 

 

HUMAN RIGHTS DUE DILIGENCE

 

The results of the MIA Assessment prove also that materiality analysis is used more and more often to identify and prioritise the most important issues for both the company and stakeholders, based on their severity and likelihood.

 

Conscious of the importance of this exercise, we are witnessing an increasing involvement of external expertise when developing Human Rights Impact Assessments.

 

Many challenges are still present for companies:

  • Define measurable performance objectives & regular review of suppliers.
  • Integrate capacity building activities for suppliers to improve the social and environmental performance and impact.
  • Adopt a dialogical approach to auditing, by focusing on the root causes of problems.

 

 

 

HUMAN RIGHTS TRAINING

 

Training represents a prime opportunity to expand the knowledge base of all employees and drive a change from within.

 

Inclusion of human rights-related topics (or more rarely stand-alone human rights training) is present in companies today, especially targeting mostly top and middle management from procurement, operations and HR functions. The number of companies training suppliers is steadily increasing.

 

Tailoring the training content to provide adequate support and guidance to the different functions and locations is a challenging element for many companies, which often struggle to design training that can instill behavioural change and the capability to address impacts.

 

 

 

GRIEVANCE MECHANISMS

 

The UNGPs devote a specific pillar to access to remedy for the victims of human rights abuses. Companies with large operations still find difficult to coordinate an external grievance mechanism (mechanisms initiated and/or run by companies themselves to handle grievances coming from the communities impacted by their operations, their suppliers/contractors) but the large majority of them have an established grievance mechanism to address only internal complaints (coming from the workforce).

 

Even when running internal mechanisms, the sensitivity of the topics faced and the geographical and cultural scope of the operations create a number of challenges, such as:

  • Overcoming cultural differences when implementing corporate policies at a local level
  • Investing sufficient time and efforts in the design of the mechanisms
  • Adopt a continuous improvement approach to learn and avoid issues in the future
  • Set meaningful KPIs to measure performance of grievance mechanisms

 

For more information see CSR Europe`s benchmark results on effective grievance mechanisms.

 

 

 

MONITORING & REPORTING

 

The last step of a good framework to embed human rights is to monitor and report on the results/progress: we are seeing an increase in external reporting, using mostly annual CSR reports, corporate websites (for reasons mentioned above).

 

When reporting externally, companies focus more often on information related to stakeholder inclusion and the implementation of human rights-related policies and processes.

 

As the results from the MIA assessment clearly show, the level of integration of human rights issues into other sections of sustainability reports is still low. The new tools (UNGP reporting framework, EU Directive on Non-Financial Information and Diversity) that are now available will bring a change in this trend.

 

A parallel step is development of metrics to help suppliers manage their sustainability performance as well.

 

RESOURCES FOR THE JOURNEY

 

In order to start your journey you may consult the following key documents:

 

For examples of how company practices can have an impact on each human right access Human rights translated – a business reference guide.

 

If you are starting, setting up or reviewing your internal or external grievance mechanism check out CSR Europe`s assessment and benchmarking tool (MOC-A), which can help you identify gaps and get management buy-in for necessary updates.

 

For a comprehensive approach on how to embed human rights into company operations join the European Hub on Business and Human Rights, coordinated by CSR Europe.