Business and human rights: Pioneering a socially responsible business model

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Introduction

As multinational companies seek to demonstrate their leadership in the areas of ethics, transparency, workplace safety, the rule of law and environmental stewardship, the adoption of human rights policies is becoming increasingly common among companies. If current trends continue, business and human rights policies will soon become as common as anti-bribery policies. Shareholders, investors, governments and local communities are increasingly demanding that corporations promote human rights and environmental stewardship as fundamental company principles. In response, many companies have adopted global human rights policies that institute self-reporting mechanisms and require global supply chains to uphold international human rights standards. Dentons has experience in developing protocols that mitigate the risk of human rights abuses and that support socially responsible and sustainable business models.

UN Guiding Principles

Perhaps the most prominent of the business and human rights instruments are the UN Guiding Principles on Business and Human Rights, endorsed by UN Human Rights Council Resolution A/HRC/RES/17/4, dated 16 June 2011 (the UN Guiding Principles). The UN Guiding Principles are a set of guidelines for states and companies to prevent, address and remedy human rights abuses committed in business operations. The Guiding Principles provide a global standard to implement the “Protect, Respect and Remedy” Framework and prevent and address the risk of adverse impacts on human rights resulting from business activity.

The Guiding Principles outline steps that states can take to encourage business respect for human rights; provide a blueprint for businesses to know and show that they respect human rights; and reduce the risk of causing or contributing to human rights violations. The Principles are organised under three pillars:

  • the state duty to protect human rights;
  • the corporate responsibility to respect human rights; and
  • access to remedies.

UN Special Representative on human rights and business enterprises

UN Commission on Human Rights Resolution E/CN.4/RES/2005/69, dated 20 April 2005, mandated the UN Secretary-General to appoint a UN Special Representative of the Secretary-General on human rights and transnational corporations and other business enterprises. The Special Representative was mandated to identify and clarify standards of corporate responsibility and accountability for transnational corporations and other business enterprises with regard to human rights; elaborate on the role of states in effectively regulating and adjudicating the role of transnational corporations and other business enterprises with regard to human rights; and research and clarify the implications for transnational corporations and other business enterprises of concepts such as “complicity” and “sphere of influence”. In addition, the Special Representative was mandated to compile a compendium of best practices.

In 2005, the UN Secretary-General appointed Mr. John Ruggie as the Special Representative on human rights and transnational corporations and other business enterprises. In his final report under the 2005-2011 mandate, the Special Representative proposed a “Protect, Respect and Remedy” Framework that comprised three principles:

  1. Protect: the state duty to protect against human rights abuses by third parties, including business;
  2. Respect: the corporate responsibility to respect human rights (i.e. to act with due diligence to avoid infringing on the rights of others); and
  3. Remedy: the need for greater access by victims to effective remedies.

Promoting human rights and environmental stewardship as company policy

Businesses have a variety of tools at their disposal for promoting human rights and environmental stewardship as core company principles. In particular, businesses may participate in the UN Guiding Principles Reporting Framework (UN Reporting Framework or Framework), self-report through the Business & Human Rights Resource Centre, adopt global human rights policies and ensure that their global supply chains commit to comply with such policies. 

i. UN Guiding Principles Reporting Framework

The UN Reporting Framework is a joint initiative launched in February 2015 by the Shift Project, a non-profit consultancy, and Mazars, an accounting company. It is the first standardised framework for companies to report human rights issues related to their businesses. After companies and businesses commit to the UN Guiding Principles, the Framework guides companies on identifying major human rights issues related to their businesses and on monitoring their progress in addressing these issues.

Encouraging businesses to focus and prioritise their resources where they are needed most, the UN Reporting Framework focuses on "salient human rights issues". The Framework consists of brief, straightforward questions that allow companies to "know internally and show externally" their understanding and effective management of human rights risks. It provides implementation guidance for participating companies and assurance guidance for internal auditors and external assurance providers. The aim of the UN Reporting Framework is to foster a better conversation among all business stakeholders and expand the conversation from social compliance departments to other relevant business departments for greater engagement.

The UN Reporting Framework is designed to be flexible. It is comprised of 31 questions, eight of which companies just beginning to use the Framework must respond to in order to meet the minimum threshold for using the Framework. This phased approach is designed to incentivise companies to improve and expand their engagement over time. Because the UN Reporting Framework requests information that companies are mandated to report under various emerging regulations and related questionnaires, the flexibility of the Framework enables companies to conform to global standards on human rights issues.

ii. Business & Human Rights Resource Centre

Working towards the goals of the UN Guiding Principles to build corporate transparency and strengthen corporate accountability, the Business & Human Rights Resource Centre (BHRRC) works to advance human rights in business and eradicate and seek accountability for abuse.

The BHRRC maintains a database of companies that have adopted human rights policies or business codes of conduct.  Many of these companies report on compliance with and breaches of their internal policies and voluntarily disclose shortcomings with respect to business practices that may infringe on human rights, workplace health and safety norms or environmental stewardship.

While self-reporting promotes some degree of accountability, some critics argue that because reporting is voluntary, it lacks verification and enforcement mechanisms, thereby limiting its value. However, such policies can ensure that the employees and affiliates of multinational companies aspire to a uniform transnational human rights standard and set an expectation of global compliance with baseline ethics standards.

iii. Adoption of business and human rights policies

Human rights policies are becoming increasingly common among multinational companies that seek to demonstrate their leadership in the areas of ethics, transparency, environmental stewardship, workplace safety, indigenous rights and the rule of law. Just as regional human rights treaties vary from one region to another, the specific provisions of human rights policies vary from one location to another. What may be culturally accepted in one country may not be in another. Very often, the rights deemed to be central in the dominant culture of a multinational company’s headquarters tend to inform the content of the company’s human rights policy globally. Yet, regional differences aside, company human rights policies generally include, as a baseline minimum, the following provisions:

  • respect for the human rights of company employees, including the right to just and favourable working conditions, physical integrity, workplace safety, privacy and family life, and to freedom from harassment and bullying in the workplace;
  • a covenant to protect the right of employees to be free from discrimination on the basis of nationality, race, gender or any other protected class, regardless of employees’ location, function, role or seniority within the company;
  • respect for the right of employees to express their opinions or their faith in the workplace;
  • a commitment to environmental stewardship and to comply with applicable local, national and international norms relating to environmental protection and preservation;
  • a commitment to act in accordance with national and international standards of business transparency and integrity, and to combat bribery and corruption at all levels of the company and among companies’ agents and assigns;
  • support for the rule of law and for the institutions, processes and frameworks that ensure accountability, predictability and justice in governing economic transactions, social relations and resolving disputes;
  • a covenant to combat human trafficking and eradicate modern slavery and all its forms, and to report incidences of the same to local authorities when discovered among supply chains; and
  • a requirement for local agents, vendors, service providers and partners to comply with companies’ business and human rights policies or adopt their own policies having similar baseline standards.

iv. Human rights risks relating to supply chains

Human rights violations are an inherent risk that may arise indirectly within a company’s global supply chains. Such violations may relate to the rights of employees working within those supply chains and the impacts of such supply chains on the environment. Such supply chains can include property leases, catering and cleaning services, recruitment agencies, vendors of IT equipment and other goods and outsourced business process services.

Companies with global operations face a risk that their impact on local communities and the environment may adversely impact human rights through their supply chains. This risk can be mitigated by appropriately vetting local vendors, undertaking due diligence on local partners and ensuring that local vendors, services providers and partners commit to comply with all applicable local laws.

Multinational companies can further mitigate risk by ensuring that their supply chains adopt business and human rights policies at least as rigorous as the companies’ own policies or codes. In addition, companies may go a step further by implementing annual or biannual training on their local supply chain partners to ensure that they understand, respect and ensure the respect of universal human rights standards in their local operations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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