Getting Corporate Human Rights Regulations Right Means Finding a “Smart Mix”

We’re in an age where anyone with a cell phone can break a story. And when it comes to human rights violations, we’ve seen time and again how one video, even one tweet, can make a public relations team struggle to respond. But, is that the main mechanism that should govern how we hold companies accountable for human rights violations they cause or contribute to?

This was one of the key challenges discussed at the first session of this year’s United Nations Forum on Business and Human Rights, held in Geneva just before Thanksgiving, where panelists delivered a sobering one-two punch: While 2021 will mark the ten-year anniversary of the U.N. Guiding Principles on Business and Human Rights (UNGPs), the Corporate Human Rights Benchmark shows that the majority of companies surveyed haven’t even begun to meaningfully address human rights issues.  In fact, nearly half of companies in sectors with a high prevalence of human rights violations (agricultural products, apparel, extractives and ICT manufacturing) aren’t disclosing any information on their human rights due diligence process. It seems that many companies are still just crossing their fingers and hoping they won’t be @ mentioned in a tweet.

As we mark International Human Rights Day this week, we have to ask: shouldn’t companies be doing better by now?

The lack of progress comes at a time when human rights violations continue to rise in prominence and pose increasingly severe business risks. Stories about child labor being used to mine mica in Madagascar, agribusiness driving the displacement of indigenous tribes, and U.S. warehouse workers protesting unsafe working conditions are shaping the way consumers and investors understand their relationships with businesses.

But with ten years down and ten to go before the deadline to deliver on the U.N.’s  overarching Sustainable Development Goals (SDGs) companies now need to accelerate their adoption and integration of the UNGPs--the recommended ways to achieve the SDGs-- if they are to make meaningful progress on critical human rights risks like child and forced labor, sexual harassment and discrimination, and the denial of collective bargaining and association rights.

While company and NGO leaders and representatives discussed many different salient human rights risks at the Forum, stakeholders from all constituencies united around one critical idea: it will take a “smart mix” of international and national legal, regulatory and voluntary measures to both compel and incentivize deeper, more meaningful strategies for respecting human rights across global value chains.

Voluntary disclosure efforts on human rights, including the GRI, UNGP Reporting Framework, and the more recently developed Workforce Disclosure Initiatives are helpful tools for stakeholders, including investors, in assessing companies’ respect for human rights. But companies that already leverage multiple voluntary disclosure frameworks increasingly see mandatory due diligence and disclosure regulations as opportunities to level the playing field.

Just this week, 42 companies, including Nestle, signed a joint statement calling for legislation in Germany which would require companies to conduct human rights and environmental due diligence. And last week, a group of influential food and beverage companies, including Mars Wrigley and Mondelēz International, signed a letter urging the EU to establish a regulatory and policy framework to ensure that companies conduct human rights and environmental due diligence in their supply chains.

To date, most companies have focused exclusively on the human rights risks within their particular spheres of influence. Leading companies have also leveraged industry associations and partners to develop sector-specific guidance on human rights due diligence. And companies operating in sectors with a diversity of salient human rights risks can look to the OECD’s comprehensive, sector-agnostic guidance on human rights due diligence.

These voluntary systems have helped external stakeholders understand how leading companies manage human rights risks, but they are ineffective unless there is a system that also compels the laggards to disclose more of the right information. Companies that are skating by--and perhaps complicit in human rights violations--won’t voluntarily disclose. So a smart mix of regulations (with the correct enforcement and accountability mechanisms) and voluntary standards is critical to ensuring respect for human rights becomes  standard operating procedure--not just a priority of the few well-meaning leaders.

In following installments of this series I’ll explore the role of companies and investors in centering sustainability strategies around respect for human rights and mitigating negative impacts on communities.