Real Leaders

5 Key Business Stakeholders Driving Change

Five years ago last month, the Rana Plaza tragedy in Bangladesh was a stark reminder of the need to improve corporate management of human rights. Half a decade on, we can reflect on some positive signs of progress on human rights from the corporate world and its wider stakeholders.

1. The corporate world is getting out of first gear

In 2017 the first ever Corporate Human Rights Benchmark (CHRB) assessed 100 leading food, apparel and extractive companies and found disappointing levels of human rights management and disclosure – with the average performer being a poor performer. However, this week a Progress Report from CHRB found encouraging signs that more companies are committing to investors to improve their absolute human rights performance and are implementing improvement plans. For example, it reported that law firms, specialist consultancies and advisors such as Freshfields Bruckhaus Deringer and ERM are witnessing increased demand for human rights support from major corporates, partly in response to the 2017 results.

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Non-profit organisation Shift has also recorded a four-fold increase from 2015 to 2017 in the number of corporations submitting human rights reports and over 5,000 companies have now reported on their public commitments to avoid modern slavery in their supply chain. This all suggests that although progress is slow, the corporate world is headed in the right direction.

2. Investors pushing progress

Investors are playing an increasingly important role in this progress. Part of this has been using benchmarking to foster competition on human rights and create a ‘race to the top’. That is why CHRB is backed by Aviva Investors, APG Asset Management and Nordea and has been endorsed by the $5 trillion UNGP Reporting investor coalition.

Simply put, it is becoming a major investment risk to invest in companies that don’t respect human rights as they could face reduced share prices, restricted access to capital due to reputational damage and regulatory backlash. Issues such as modern slavery, worker safety and freedom of association can be material to the financial performance of these companies. Investors outside of the CHRB are already using the CHRB results to guide engagements, put expectations on companies and in some (confidential) cases, move to divest based on rankings.

3. The UN is providing a framework

Progress can only be made if everyone is pulling in the same direction, and that is why the establishment of the UN Guiding Principles on Business and Human Rights (UNGPs) seven years ago was a watershed moment for human rights.

Although the UNGPs are not without their shortcomings, the existence of an authoritative global standard for preventing and addressing the risk of adverse human rights impacts linked to business activity has been vital. It creates a framework that all companies have to measure themselves against and the CHRB Methodology is firmly grounded in the UNGPs.

4. Governments stepping up to the plate

National governments are also beginning to provide leadership. In 2015, the British government brought the issue to the fore with the introduction of its Modern Slavery Act, which required all major UK companies to report on the steps they are taking to eliminate slavery and human trafficking from their operations and supply chains.

Other governments are also taking action. The Australian government has indicated that it plans to release draft legislation for a Modern Slavery Act this year, while the California Transparency in Supply Chains Act has put increased attention on accountability and disclosure for retailers and manufacturers.

The issue of binding legislation for human rights due diligence is an increasingly hot topic, following the French Vigilance law and the ongoing efforts of the German government to assess the level of due diligence implementation (to inform the need for further legislation).

5. Civil society’s role is growing

There is always an important role for civil society to play in tackling human rights abuses. Now, more than ever before, social media platforms are being harnessed by NGOs to both aid victims and mobilise groups to take action. For instance, a video from a witness can both protect a victim from future exploitation and trigger a huge social media campaign in an instant. With civil society groups now having more tools at their disposal, they possess the ability to direct assistance, collect accurate information, campaign and lobby, raising their ability to bring about positive change in human rights issues.

While CHRB provides publicly available data and ranks companies on their disclosed performance, it relies on civil society to follow up and hold those companies to account where they fail to meet their own standards.

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