Month: January 2019

The countdown is on! If you handle reporting for a company covered by the French Loi relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre (the « Duty of Vigilance law »), you know it’s almost time to publish the first annual update on the implementation of your vigilance plan.  

Here are 5 things to keep in mind when preparing the report:

1. You need to do better in 2019.
   
   Last year, Shift examined the human rights reporting of the top 20 largest companies in France, and concluded that, before the law came into force, the majority of those companies did not meet the expectations of the UN Guiding Principles on Business and Human Rights (the global authoritative standard). This raises questions about whether they meet the requirements of the Duty of Vigilance law.
   
   We have begun examining the vigilance plans of those same 20 companies, and early results are consistent with our previous conclusion: most vigilance plans still have a long way to go.
   
   To improve, encourage your company to align its reporting and actions with the UN Guiding Principles. This can help you meet the requirements of the French law, while positioning the company as a leader on future compliance concerns. You can use the UNGP Reporting Framework’s straightforward questions for guidance.
   
    (Learn more about how the UNGPs and the French Duty of Vigilance Law are aligned here.)
2. Clearly identify the company’s salient issues.
   
   The first step of the human rights due diligence process is to identify the negative impacts a company and its business relationships can have on people. All companies are expected (and, under the French law, required) to disclose their salient (i.e., most severe) human rights impacts. (Learn more about salient issues and why they matter in this video.)
   
   Prioritizing salient issues allows companies to focus resources on managing risks to human rights, and related risks to the business. When it comes to reporting, it’s also what investors and other stakeholders ­– including directly affected people – want to see companies disclosing.
   
   If your company hasn’t identified its salient human rights issues, explain any steps taken so far, and offer a preview based on the company’s experience and due diligence to date. After all, nothing is set in stone. As some challenges are met, others arise, and a regular salient issues evaluation will keep you on track. 
3. Be transparent about where you are doing well, and where you’re falling short.
   
   Be confident about sharing breakthroughs; everyone needs examples of what works! Be precise about your procedures, initiatives and strategies for ameliorating your most severe human rights risks, and be forthright about things that still need more work.
   
   As in any other risk management process, no company is ever “done” managing human rights issues. The idea is to deliver authentic reporting by being transparent, demonstrating diligence and improvement through lessons learned, and sharing implementation challenges to contextualize the company’s efforts.
   
   You may not yet be able to demonstrate robust implementation of the UN Guiding Principles, but you can certainly convey your seriousness to your stakeholders with your commitment to transparency and accountability on human rights.
4. Get inspired and encouraged by other companies and their journeys.
   
   Moving forward on the UN Guiding Principles and the French law can take time, but you are certainly not the only company trying to do so. Many companies in and outside of France have already begun pushing the boundaries on meaningfully acting and reporting on human rights issues. Companies like Unilever, ABN AMRO, ING, Ford, Ericsson, Microsoft, H&M, Nestlé and Newmont have made great strides in their efforts to improve their disclosure, publishing generally stronger and more transparent sustainability reports.
   
   To highlight one example in France, our early research shows that Orange made a significant jump in maturity from previous years. Orange’s vigilance plan is much more comprehensive and transparent than most of its peers’, making clear the company’s process for identifying its salient human rights issues, and implementing its obligations under the Duty of Vigilance law and its responsibility to respect human rights under the UN Guiding Principles.
   
   If reporting processes spark the right kinds of conversations inside the company and glean meaningful information, they become an integral part of how the company identifies and manages human rights risks. 
5. View reporting processes as a risk management investment.
   
   If reporting processes spark the right kinds of conversations inside the company and glean meaningful information, they become an integral part of how the company identifies and manages human rights risks. This process can illuminate potential gaps in management, providing an annual opportunity to assess, redress and improve.

For more guidance, check out Sherpa’s new Guide de Référence pour les Plans de Vigilance , Elsa Savourey’s “Trois Recommendations pour Avancer”, and our most recent report  Human Rights Reporting in France: A Baseline for Assessing the Impact of the Duty of Vigilance Law”.

The global mining industry is a large, profitable sector, with a particularly strong presence in Canada. Revenue from the top 40 global mining companies, 15% of which are Canadian, amounted to more than $600 billion in 2017. Additionally, 57% of the world’s public mining companies are listed on the Toronto Stock Exchange (TSX).

In contrast to the global mining industry’s financial achievements, its activities across many regions are often criticized for negative impacts on human rights, including long-term health impacts, violations of indigenous peoples’ rights, forced displacement, and harm to local communities. Canada’s own mining sector has allegedly contributed to numerous human rights abuses around the world (such as increased violence near mining sites, threats to the rights of children, and environmental harms).

Promisingly, however, the Canadian government is increasingly focused on responsible international corporate activity. In January 2018, Canada’s Ministry of Trade announced a new independent function—the Canadian Ombudsperson for Responsible Enterprise (CORE)—to investigate human rights abuses connected to corporate activity abroad. (The Ombudsperson has yet to be appointed.) Additionally, the Ministry created a multi-stakeholder Advisory Body -with John Ruggie (who chairs Shift’s Board of Trustees) serving as Honorary Chair- to advise the government and the CORE on responsible international business conduct. Meanwhile, a proposed Modern Slavery Bill, currently up for discussion in the House of Commons, would require enhanced annual reporting by business, and impose fines on companies not engaging in due diligence on modern slavery and child labour.

The majority of the companies we analyzed are failing to communicate a comprehensive narrative around human rights, cherry-picking instead a limited set of issues.

Given the long history of human rights impacts associated with the mining industry and these changes in Canada’s regulatory framework, Shift has analyzed the human rights disclosure of 18 of the top TSX-listed Canadian mining companies.

Our aim is to highlight opportunities, as suggested by the companies’ own reporting, for improving how they address human rights risks and impacts.

Shift’s methodology is two-fold: first, our team maps companies’ human rights reporting against the expectation that companies know and show how they respect for human rights, as set out in the UN Guiding Principles on Business and Human Rights (UNGPs). We analyze this using the UNGP Reporting Framework, the world’s first comprehensive guidance for company reporting on respect for human rights. Next, we apply Shift’s unique maturity analysis, establishing indicators of mature reporting, and distinguishing laggards from leaders along a tiered maturity scale. While we recognize that reporting is not a mirror of companies’ actual performance in this area, it is an important window into the company’s approach and practices, giving insight into likely strengths, weaknesses, and gaps.

Our team identified notable trends in conducting this research, some of which were comparable to those in previous analyses of other industries available in the UNGP Reporting Database. However, Shift found that the overall maturity of reporting by Canadian mining companies is slightly lower than for other industries already assessed. The majority of the companies we analyzed are failing to communicate a comprehensive narrative around human rights, cherry-picking instead a limited set of human rights issues without justifying their selection, or reporting in general on sustainability and corporate social responsibility issues without acknowledging their specific responsibility to respect human rights.

Similarly, even though some disclosure may highlight policies in place around human rights, or even provide examples that demonstrate the company is addressing some human rights concerns, most disclosure in this group lacks a cohesive narrative, structure, and insight into how companies understand, prioritize, and address risks to human rights connected with their business. Of the 18 companies analyzed, only two solidly attained Mature levels (4 out of 5 on Shift’s tiered maturity scale). Both of these companies illustrated their strong human rights policy commitments, reported on operational-level grievance mechanisms and remedy provided for impacts, and provided robust information about stakeholder engagement practices.

Based on the detailed findings outlined in our report, we produced a set of recommendations, some of which are highlighted below, and most of which can be applied more broadly across industries:

Highlighted Recommendations:

• Sharing a policy commitment is important, but only a first step: companies should also share how human rights policies are developed and communicated, and build on their policy commitments by identifying their specific salient human rights issues. Additionally, quality disclosure distinguishes between the management of human rights risks and philanthropic or charitable activities—and ensures the two are not conflated.
  
• Meaningful reporting is key to gaining stakeholders’ trust in a company’s ability to provide effective remedy. Thus, companies should disclose specific processes employed to address grievances, information about complaint outcomes, and details about independent reviews or oversight of grievance mechanisms.
  
• Insightful reporting requires frank and honest sharing of challenges faced by a company, and is bolstered by specific examples that shed light on a company’s approach to addressing them. Honest discussions can provide positive insights and confidence in a company’s ability and efforts to improve their performance, while a defensive narrative can decrease such confidence.

At Shift, we regularly see how reporting processes serve as a powerful driver of improved performance. We hope that these recommendations prove useful to Canadian mining companies, and in turn raise expectations for the sector as a whole, aiding mining companies in Canada and beyond in collectively improving their human rights reporting and performance. Read our full list of recommendations and analysis in, Human Rights Reporting in the Canadian Mining Sector: Maturity Trends and Insights. 

This article was published in Ethical Corporation Magazine, December Issue, 2018.

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Caroline Rees of Shift says that high-level corporate commitments and piecemeal initiatives have often masked resistance to the structural changes companies need to make to attack the root causes of inequality. That must end.

As the year comes to an end, it is only natural to think back to the many business and human rights happenings of 2018: Facebook’s inaction as its platform was used to incite rape and murder in Myanmar; the continuing stories of displaced communities in Thailand and Indonesia, forced labour in nail salons in the UK and child labour in brick production in Uganda and Brazil. The appalling stories of sexual harassment across western workplaces, and gender-based discrimination in China. And the growth in attacks on human rights defenders who speak out against business abuses.

The easy formula would be, of course, to write yet another “top five issues in 2018 and what to expect in 2019” piece. But what do those articles achieve? Year after year, they all come down to the fact that while some issues linger, and some new ones emerge, the fundamental problems for society remain.

So perhaps the end of the year should steer us in a different direction. One that aims not to list out all the individual crises of respect for human rights – past or anticipated – nor the commendable responses from a growing number of companies, but instead to address social inequality as a whole.

I imagine that 15 years ago companies viewed these issues much as they typically view business and human rights today. One day you were called out for the use of refrigerants, the next for pollutants from your transportation fleet; the next, deforestation in connection with your packaging; or the use of concrete, chemicals or water in your supply chain. And no doubt each “new” issue raised questions about the business case – the costs and benefits – of changing practices to avoid the harm highlighted.

That is, until the realisation spread that all these issues are either causes of, or compound the effects of, a single “tragedy of the commons”: namely, climate change. In other words, if individual companies each continue to exploit the shared resource system of our environment for their own narrow self-interest, taken together the results will be catastrophic for our planet and humanity.

With that realisation, action moved from some mid-level managers trying to do the right thing to the C-suite and board room showing leadership for change. Yes, there are still laggards and nay-sayers, and for sure progress is too slow. The current political climate in many countries does not help much, either. Yet the fact remains that many thousands of company leaders today have moved beyond quibbling about the rationale for addressing their environmental footprint, and are embracing the urgent, large-scale and collective action – together with government and civil society – that is needed.

In 2019, we need a similar epiphany with regard to companies’ social performance. For there is an analogous tragedy of the commons around us: gross human inequality. At the forefront sits income inequality within societies, but this is underpinned by all the other inequalities of race and ethnicity, disability, gender identity, sexual orientation and so forth, that both exacerbate and are compounded by income inequalities. The World Inequality Lab finds that “the top 0.1% has captured as much growth as the bottom half of the world adult population since 1980” and that, “[i]ncome growth has been sluggish or even nil for individuals between the global bottom 50% and top 1%.” 

How is this a tragedy of the commons? Well, social cohesion and stability are in many ways a “shared resource system”, on which we all depend to thrive as humans in society. They rely in good part on advancing human dignity, equality, hope and opportunity: the sense that people of all backgrounds can better their lot and build a brighter future for their children.

Yet for decades, companies have acted in ways that squeeze out dignity and opportunity for the most vulnerable workers and communities. New businesses in the gig economy are now celebrated for disrupting entire industries, with too little attention to how they can disrupt human rights.

Meanwhile, corporate commitments or philanthropic pledges by business leaders have frequently masked a resistance to the structural changes needed to tackle the root causes of inequality. And so social cohesion has been gradually depleted, to the point where the resulting tensions and anger – exploited by some for political ends – tear our societies apart and make obvious what we should have known all along: that ultimately, we all lose.

Of course, business is far from the sole culprit. Governments and our intergovernmental system have had a critical role to play. Others have recorded eloquently the continual loosening of domestic regulations on corporate conduct and the strengthening of international trade and investment regimes without equal regard to protecting those people most vulnerable to the downsides of globalisation.

But “business” writ large has been a promoter and beneficiary of these trends for decades. Its interests have often spoken – literally – against the real and deep changes that are needed to how business gets done.

And so, today, business must turn its leadership toward addressing the crisis of gross inequalities in our societies no less than it is doing with regard to climate change; including where that requires changes to the business models and strategies at the heart of the problem.

The outlook is worrying but not bleak. We are not working from a blank slate. At Shift, we follow with interest the ways in which some business leaders are recognising the urgency of wholesale change. Some are speaking out about the need to replace financial calculations as the deciding factor in whether to treat people decently, with leadership that recognises that the very fabric of our societies depends on doing so.

CEOs from the apparel sector have been pressing forward their work with unions to make living wages a reality for workers across their supply chains. Performance expectations adopted by the CEOs of mining companies include accountable commitments to implement respect for human rights. Leaders at Hewlett Packard Enterprise and NXP Semiconductors are tackling the root causes of forced labour in their supply chains, and Mars Inc’s CEO Grant Reid has set out to improve the lives of a million people in its supply chain. Yet we are far from critical mass.

So, instead of using this column to run through a suite of seemingly unrelated human impacts of business that we should look out for in 2019, I think we need to stand back and see that these fragmented images are part of one single and troubling picture: the tragedy of the commons that is gross human inequality.

And then we can stop arguing piecemeal about the business case for treating people with respect, and start taking bold, visionary, collective action – delivered through boardrooms and C-suites working hand-in-hand with government and civil society to put respect for people at the heart of how business gets done.

That’s the ‘tipping point’ story we should look for in 2019. We just need enough business leaders to want to write it.