Shift to Support the Finnish Presidency of the Council of the European Union with its Flagship Conference on Business and Human Rights

New York, NY. – Shift is proud to be supporting the Finnish Presidency of the Council of the European Union in convening its flagship conference ‘Business and Human Rights: Towards a Common Agenda for Action’, to take place in Brussels on December 2, 2019. This is part of Shift’s broader support to the Ministry for Foreign Affairs on advancing business and human rights as part of the Finnish Presidency.

The Conference will bring together high-level EU Member State representatives, members of key EU institutions, senior representatives from business and civil society to discuss the present and future roles of different stakeholders in accelerating the implementation of the UN Guiding Principles at Member State and EU level.

Key topics will include state financing for doing business abroad, the role of regulatory measures as part of a mix of state measures, and the use of collective leverage and cooperation to enhance human rights outcomes for those most vulnerable to harm, especially human rights defenders.

The keynote speaker will be Professor John Ruggie, Chair of Shift and author of the UN Guiding Principles on Business and Human Rights. The event will culminate in the release of a conference outcome document, an Agenda for Action, with the objective to strengthen the EU’s actions on business and human rights.

The full draft program may be found here and will be updated as speakers are confirmed.

Shift looks forward to working with all the key stakeholders involved, in line with our commitment to advocate for the meaningful implementation of the UN Guiding Principles, in order to build a world where business gets done with respect for people’s dignity.


About Shift


Shift is the leading center of expertise on the UN Guiding Principles on Business and Human Rights. Shift’s global team of experts works across all continents and sectors to challenge assumptions, push boundaries, and redefine corporate practice, in order to build a world where business gets done with respect for people’s dignity. Shift is a non-profit, mission-driven organization, headquartered in New York City. Visit shiftproject.org and follow us at @shiftproject.


About the Finnish Presidency of the Council of the European Union


Together with the European Parliament, the Council is the main decision-making body of the EU. Its presidency rotates among the EU member states every 6 months. Finland holds the Presidency of the Council from July 1 to December 31, 2019, with the motto ‘Sustainable Europe – Sustainable Future’. The Finnish Presidency will be the first to integrate the new priorities of the Strategic Agenda 2019 – 2024 into the Council’s work. Learn more at eu2019.fi

Are You Making a Difference? Listening to Affected Stakeholders to Improve Business Human Rights Performance

Tracking whether company efforts to prevent and mitigate risks to people from business activities are effective is an integral part of the Corporate Responsibility to Respect Human Rights. Many companies undertake a range of monitoring activities to this end, including assessment of human rights risks, impact assessments, audits and reviews of grievances. While these periodically-used instruments are sometimes successful in identifying abuses and violations, they do not help companies know which of their activities make a difference in the lives of communities, workers and consumers.

Evaluation practices, on the other hand, give companies evidence of why desired outcomes have not been achieved and how to achieve them.

 Evaluation moves away from just collecting data to examining practices in order to learn and improve. As affected stakeholders are at the center of companies’ responsibility to respect, incorporating the voices of people affected by companies’ actions is vital.

Incorporating the voices of affected stakeholders in this evaluative process has several benefits. First, using insights from stakeholders affected by companies’ efforts has proven to lead to more reliable, trusted and meaningful data. It can reveal which aspects of an intervention have desired impacts on stakeholders, which are the most valued and which need further improvement. Second, paying attention to stakeholder experiences can also contribute to improving a company’s relationship with its stakeholders, and facilitate building trust and respect. Additionally, assessing the value of an intervention from the affected stakeholders’ perspective can help companies make informed choices when designing and implementing programs in the future, preserving valuable company time and resources.

The Valuing Respect Project has mapped three standout examples of companies using affected stakeholder insights to improve their practices, all with positive results.  

Active listening. Phillip Morris International, in cooperation with Verite, conducted interviews with smallholder farmers in Malawi to learn about what aspects of its extensive Agricultural Labour Practices program had made greatest impacts on their lives. Using an applied method called Most Significant Change, they collected farmers’ stories. The stories, told and interpreted by farmers themselves complemented an extensive field monitoring system, which relies on field technicians regularly visiting tobacco-growing farms to assess management practices, environmental conditions and labour issues. The combination of periodic assessments with a deep level inquiry into farmers’ experiences brought to life impacts of the program in the voice of real people, and revealed effects of the program on complex issues like child labor.

Taking actions to improve stakeholder relationsA challenging relationship with local communities adjacent to its mining operations has led global mining company Gold Fields to use findings from regular assessments of stakeholder relationships to improve its community engagement strategy. By tracking changes in the communites’ perceptions over time, Gold Fields is able to measure which aspects of its community-company relationships have improved, and which need additional attention. The company has also used the data to redesign its community programs, and to focus energy and resources on what matters to their communities.

Ensuring that affected stakeholders stay informed about how their insights shape companies’ decision making can help companies continuously improve their programs and data. 

Communicating the improvement. Ensuring that affected stakeholders stay informed about how their insights shape companies’ decision making can help companies continuously improve their programs and data. Constituent Voice, a methodology developed by Keystone Accountability builds a continuous feedback loop between a company and its stakeholders as a way to create quality company-stakeholder relationships. On the one hand, the “loop” (a cyclical process of data collection, analysis and reporting and finding solutions) increases stakeholder motivation to participate in the company’s evaluation process. On the other hand, the cyclical nature of the evaluation means that data is collected and analyzed in real time, allowing a company to predict if desired outcomes are likely to be achieved, or a course correction should be considered.

As you can see, well-designed evaluations generate knowledge around what works and what does not, which can then serve as a strong foundation for scaling up successful interventions.

To help expand available research around this concept, the Valuing Respect project team will be publishing a collection of case studies offering a spectrum of methods and lessons early next year. Furthermore, the Project is seeking to test new ways of using stakeholder voice with pioneering companies across different geographies and sectors. Identification, design and implementation of the pilots is currently under way. If you would like to become a part of this group of leading companies, please email me

SMEs and the Corporate Responsibility to Respect Human Rights

“SMEs lack the resources and expertise to manage human rights issues.”

“They’re too focused on small margins to invest in respecting people.”

“SMEs don’t have any leverage.”

“Without regulatory and reputational concerns, there’s no business case for small companies to care about human rights.”

“How can large multinational companies possibly respect human rights when faced with so many disinterested SMEs in their value chain?”


These refrains will be familiar to anyone with a passing interest in business and human rights. But our recent work with leading small and medium enterprises (SMEs) suggests they are wide of the mark. In fact, small and medium sized businesses can boast some significant advantages over their larger counterparts when it comes to realizing their responsibility to respect human rights. These include:


A focus on quality of relationships with business partners

SMEs tend to have fewer suppliers and customers, which enables deeper and better-quality relationships. Not only is it more feasible for SMEs to map the businesses in their supply chains, it is easier and more desirable to get to know them. From our discussions with SMEs interested in respecting human rights, we learned they tend to spend a lot more time selecting business partners that are the right fit, putting more up-front investment into finding those who share their values, and will rise with them to the standards they aspire to.

The preference for longer-term relationships tends to make them less transactional, and allows greater scope to integrate human rights issues. Because of their diversity, and often detailed knowledge of local contexts, SMEs may be better able to understand the idiosyncrasies of smaller business partners. Their smaller scale and inclination towards bespoke relationships can lead small businesses to engage directly with suppliers and their workers, in addition to their social audit and certification practices.

These stronger, more nuanced relationships can reap human rights rewards. Some of the small businesses we talk to report that suppliers proactively bring up (and seek to work together to address) issues like child labor, rather than claiming full compliance with buyers’ standards and hiding the problem.

Shift Advisor Anna Triponel presenting a workshop to SMEs, in collaboration with the International Organisation of Employers. Photo courtesy of IOE


A need to think creatively about leverage

 SMEs often lack the cold, hard commercial leverage of larger multi-nationals, and must think more creatively. The business and human rights community talks frequently about moving from a policeman to partnership approach in supply chains. But for smaller retail businesses, partnership with suppliers is a necessity, not a choice, if business is to be done with respect for people.

One medium-sized business we know has rolled out programs on freedom of association and worker voice in the most challenging contexts, despite having less than 5% of the product buy from suppliers. They achieved buy-in through explaining the benefits of the program, and drawing on the trusted relationship they’d developed, rather than requiring suppliers to participate.

For small businesses to get traction, prioritizing issues to address is crucial.

For small businesses to get traction, prioritizing issues to address is crucial. We have spoken to businesses in apparel, food, retail and cleaning sectors that have made progress by focusing on low wages, believing this will have knock-on effects on a host of other rights.

Sometimes, such commitment implies a willingness to take business risks. One small commercial cleaning company successfully re-negotiated client contracts at a higher cost after the owner met personally with customers to explain that this was the only way to raise wages. Another CEO of a medium-sized business explained to shareholders that, while sourcing their key agricultural commodity with higher social standards would result in a hit to short-term profits, it was still the right thing to do. This is another clear lesson from SMEs: when top leadership is committed to respecting human rights, there are fewer obstacles to navigate.


A culture focused on people and their empowerment

The old adage that people are a business’s most important asset is even more pronounced for SMEs. The very lack of resources and stretch that skeptics cite as reasons they may find it difficult to respect human rights means that smaller businesses have to respect, trust, motivate and empower their employees to succeed. Committed leaders are able to instill values of empathy and empowerment through face-to-face interaction with employees, listening to them and modelling desirable behaviors. One small business CEO we spoke to claimed doing so boosted creativity and productivity, and gave people confidence to make decisions themselves – not only in their operational roles, but also when it came to human rights. 

Committed leaders are able to instill values of empathy and empowerment through face-to-face interaction with employees

Another small business owner told us that when workers feel respected, and identify with managers and others, they will raise issues and concerns with them. But creating this culture depends on workers’ awareness of their rights. This business owner introduced WhatsApp groups to disseminate information on worker rights, as well as fortnightly employee dialogue meetings without management to encourage peer-to-peer learning and to provide a forum for discussion. 

As people are so important to small businesses’ efforts to respect human rights, there is little margin for error in hiring. A number of medium-sized businesses told us they took the unusual step of hiring vocal critics of their companies. These critics, often younger and greener in business, but with experience in human rights, became passionate drivers of the agenda inside the company, and provided a counterweight to their more business-savvy colleagues. 


Authenticity

Committed SMEs like these are able to approach human rights with the same authenticity they bring to doing business. This can be an asset when encouraging employees to treat each other with respect, or when communicating their values to business partners. But it does raise a challenge if larger clients expect SMEs to implement the UN Guiding Principles formulaically, with a rote policy statement referencing the appropriate international conventions, and a grievance mechanism that checks certain boxes. One SME we spoke to said that producing a policy statement on human rights felt stale and corporate, and was received with suspicion by employees and trusted suppliers. Likewise, interrogating the mother and daughter owners of a micro-business about whether their complaints procedure meets an expected template is hardly productive. Larger customers of SMEs need to enable their smaller business partners to build on their strengths in their own distinctive ways, whether it’s encouraging respect amongst workers, giving employees a voice, or building partnerships with suppliers. In short, we need them to reflect the spirit of the UNGPs.

It’s about changing the way business gets done, and the way people interact in the workplace and beyond. 

This isn’t to suggest it’s always easy for SMEs to get it right. Lack of resources can prove a problem; informality is an enduring conundrum. Smaller businesses can easily fly under the radar of reputational risk, and those outside of global supply chains have fewer incentives to act. At scale, workers in small businesses face more challenging working conditions and lower wages. 

But respect for human rights is tough for all companies. It’s about changing the way business gets done, and the way people interact in the workplace and beyond. This isn’t straightforward for businesses of any size, and those that claim it is are likely only scratching the surface of what their responsibility implies. Respect for human rights is not more or less difficult for SMEs than for larger businesses; it is just difficult in different ways. It’s also easier in certain ways. SMEs should take advantage of that in their bid to respect human rights. 

This viewpoint was informed by conversations with SMEs and other stakeholders, including at a workshop organized in collaboration with the IOE.

On LGBT Rights, True Corporate Allyship Means Using a Stethoscope, Not a Bullhorn

June 28 marks the 50th anniversary of the Stonewall uprising, the event that sparked the modern lesbian, gay, bisexual, transgender and queer (LGBTQ) movement. Ever since, queer communities have taken their fight for justice to the streets all over the world in their yearly Pride march. In a few (mostly Western) cities, Pride has become a celebration of diversity and inclusion. In some, it continues to be an outcry against hate and violence. And in many, where state persecution against gender and sexual minorities prevails, it is still a valiant, life-risking venture undertaken by a handful of activists in the name of visibility and justice.

More and more, Pride is also becoming an annual reminder to companies both big and small to consider their role and responsibility with regards to LGBTQ rights. Too many companies opt for cautious pragmatism, centering their analysis around the opportunities and risks to their business. In markets where LGBTQ rights continue to be a contentious topic, companies usually shy away from demonstrating strong support, fearing that doing so could taint their brands, unleash political repercussions or even endanger their presence in a specific market. Conversely, companies can rush to be bold, loud and opportunistic where they see prospects of upping sales for a quarter by commodifying diversity, with targeted messages of supposed allyship and products washed with a rainbow veneer. This approach -also known as pinkwashing– naturally leads to unfortunate inconsistencies, with multinational businesses using one hand to wave rainbow flags in New York, London or Cape Town, and the other to censor or dismiss queer narratives in Jakarta, Nairobi or Sao Paolo. 

Pride is also becoming an annual reminder to companies both big and small to consider their role and responsibility with regards to LGBTQ rights.

To prevent this dissonance, companies should take a principled approach to respecting and helping advance LGBTQ rights. The UN Guiding Principles on Business and Human Rights (UNGPs) offers a lens that can help companies think about sexual orientation, gender identity and gender expression (SOGIE) in a way that puts people -and not only share value- at the center of their thinking and their decisions.


Start with a stethoscope, not a bullhorn. 


Most companies that decide to support LGBTQ rights take the ‘bullhorn’ approach. They target markets where they can be ‘loud and proud’, and look for ways to boost their queer allyship, through rainbow products, donations or ‘inclusive’ advertising. Not many companies, however, start their search from within. Using a ‘stethoscope’ approach means that, before a company considers making a public statement on LGBTQ rights, it should assess how its products, services, operations and practices are impacting (or could impact) LGBTQ people negatively.

Companies can take a stethoscope approach by asking at least these three questions:

  1. How are we treating our own people?

    Start by looking at your own policies, environment, and culture through a lens of inclusion and nondiscrimination. Does your company offer a safe, judgment-free environment for people to express and live their own identities? Does your business have recruitment, retention, promotion, representation and overall human resource policies that specifically prevent and address discrimination and harassment based on SOGIE? Does your health insurance provider offer support to transgender employees, same-sex couples, and other populations with particular health needs? Are there support and counseling mechanisms in place to address mental health needs? Is there a safe and effective channel to report grievances that LGBTQ staff feel comfortable using?
  2. How do we conduct our business?

    This question asks you to take a look at the nature of your business, and ensure there is no SOGIE discrimination in how you design, produce, offer, advertise, and sell your products and/or services. It also means performing proper due diligence to seek to ensure that there is no discrimination and/or violence against LGBTQ people along your value chain, or in how your products and services are made, delivered or used.
  3. Where and how do we choose to invest?

    Most of the world continues to be highly hostile to LGBTQ people. Currently, a third of all UN Member States criminalize same-sex consensual activity (including 11 where the death penalty is still on the books, one of them by stoning). Many others have legal barriers preventing LGBTQ people from exercising their rights, fail to recognize their families, or at the very least, lack comprehensive protections against violence and discrimination based on SOGIE. In this context, where and how a company decides to invest matters. This does not mean that companies should necessarily steer clear from adverse markets. However, they should make decisions with due attention to the severe human rights risks that exist in each market, and the way in which their investments could empower those who are persecuting LGBTQ people. In fact, some companies are realizing that, as investors, they have important leverage they can use creatively to reduce risk and advance LGBTQ rights.

Taking the ‘stethoscope’ approach does not mean that companies should not take a public stand in favor of equality. 

These three questions can help companies start conversations to identify risks, put in place mitigation measures to address them, and design a principled process for decision-making. They offer a framework that should be informed by effective and ongoing stakeholder engagement. This requires an approach that understands both the similarities and vast differences that exist in the diverse sexual and gender identities encompassed by the LGBTQ acronym. Too many businesses fail to prevent risk to people (or even end up making things worse) because they had good intentions but misinformed solutions.


But, wait! Does this mean we should stop doing pride marketing campaigns?


Taking the ‘stethoscope’ approach does not mean that companies should not take a public stand in favor of equality. When used thoughtfully, a company’s voice can be transformational. However, when done haphazardly, it can be inadequate, detrimental and even put people’s lives at risk. Making the right call means understanding the context when assessing whether a company’s voice should be loud and public, subtle and targeted, collaborative and part of a coalition, or silent, ceding the space for others to have their voices heard instead.

Above all, companies should learn when and how to use their voice to spotlight LGBTQ rights, rather than using LGBTQ rights to cast a spotlight on themselves. Because as much as the support of a company can help move things forward, true allies know that respecting the history of a rights movement also means knowing when to lead from behind.

Rethinking Remedy and Responsibility in the Financial Sector

The Remedy Gap


There is much debate about the roles and responsibilities of financial institutions when it comes to respecting human rights. But there is one point on which we can all agree:  in too many cases, remedy is not available for people who are harmed by business activities, which are often connected in some way to the products and services of global financial institutions. 

While there are many reasons for this remedy gap, two seem to emerge time and again:

  • First, impacts are often remote. Sometimes they occur in the global operations of clients or portfolio companies directly, but often they are even deeper within these businesses’ value chains. It can be challenging for a financial institution or any business that is far away and poorly-equipped to investigate allegations of impacts to establish facts on the ground, particularly when those facts might be disputed.
  • Second, the primary responsibility for providing remedy will often rest with other parties who caused or contributed to the harm, rather than the financial institution itself. Yet these parties are often less aware of their responsibilities, less committed to meeting them, and less equipped to do so. Meanwhile, businesses further up the value chain often default into thinking that remedy is less relevant for them because they did not cause the harm.

The Current Conversation on Financial Institutions and Remedy

In too many cases, remedy is not available for people who are harmed by business activities, which are often connected in some way to the products and services of global financial institutions. 

At Shift, we have worked for several years with a wide range of financial institutions and their stakeholders, including commercial banks, export credit agencies, national development finance institutions and institutional investors. Throughout our engagements, we’ve seen how those making efforts to address the remedy gap often approach it through a well-intentioned yet limited lens. 

Much of the focus has been on ensuring that financial institutions establish their own grievance mechanisms to address impacts they are connected to through clients and portfolio companies. Although such mechanisms have an important role to play, they alone are unlikely to close the remedy gap in a meaningful way. Most will face significant challenges in accessibility, even before facing the related challenges around remoteness. For example, stakeholders may not know which financial institutions are connected to a business causing an impact when seeking to resolve complaints. Institutions will also only be able to deliver remedy if the parties causing the harm – clients, their supply chain partners, and other entities they may be connected to – participate constructively in the mechanism.

We’ve also focused on the question of financial institutions’ responsibility, seeking to clarify the circumstances under which contribution to a harm can be established (creating a clear responsibility for contributing to remedy). This, too, is an important conversation. However, these debates are often contentious, and even if we establish criteria, will continue over how these apply to each particular circumstance. And regardless, there will still be a substantial number of impacts financial institutions remain linked to where they will not have a responsibility to contribute directly to remedy, but where they will be expected to use leverage to seek to address the impacts going forward.

Senior Advisor David Kovick presents a briefing paper on modern slavery in the financial sector to members of the Liechtenstein Initiative. (Courtesy of the Liechtenstein Initiative)

Expanding the Conversation:  An Ecosystem Approach to Remedy


At Shift, we have been thinking about how to unlock current conversations on responsibility, remedy and financial institutions. And we have found it quite helpful to expand the focus of current conversations to ask an additional set of questions.  

Rather than focusing solely on who is responsible for providing remedy, we are asking who can play what roles in enabling remedy.

Rather than concentrating solely on whether a global business or financial institution should build a grievance mechanism, we have been asking what roles a financial institution can play to strengthen the broader grievance architecture

And, rather than focusing solely on who is responsible for providing remedy, we are asking who can play what roles in enabling remedy.

We call this a remedy ecosystem approach. It’s not about shifting responsibility. Rather, it’s an integral part of meeting responsibility by thinking about how financial institutions can use their leverage differently to enable remedy in practice.

  • The ecosystem framing brings a focus to preparedness for remedy, by asking how financial institutions can use their leverage to strengthen the grievance mechanism architecture, and how they can build their leverage with clients at an early stage, before impacts occur. For example: What criteria could help financial institutions better prioritize those client relationships where effective grievance mechanisms are more critical? What set of questions could help financial institutions better assess the effectiveness of the pathways that exist to raise concerns about impacts? What type of support could financial institutions proactively provide to strengthen those mechanisms? What types of up-front commitments, contract clauses, and conversations with clients could help build more leverage for remedy if impacts should occur down the road? 
  • It also transforms how we think about enabling remedy in specific cases, by exploring a range of ways financial institutions can use their leverage once impacts have occurred. For example: What roles could financial institutions play in bringing a greater focus to conversation about remedy when severe impacts occur? What steps could financial institutions take to support joint-fact finding between affected stakeholders and businesses when impacts are alleged to have occurred, but the facts are disputed? How could financial institutions best use their leverage to ensure quality of process when grievances are raised through various channels. 

Putting the Ecosystem into Practice 


We have been exploring the elements of this ecosystem approach over the past several years with a number of our partners, including individual financial institutions, industry associations, civil society organizations, and multi-stakeholder platforms. The way it shifts conversations from a purely adversarial and defensive posture into a constructive dialogue about getting to more meaningful outcomes for people has been eye-opening.

The ecosystem framing brings a focus to preparedness for remedy

We first started exploring this ecosystem approach in our 2014 report on remedy and grievance mechanisms. We have since introduced this approach in a briefing note for the Financial Sector Commission on Modern Slavery and Human Trafficking, and in some depth in the expert advice we provided to the Equator Principles Association to inform the Equator Principles update process in 2018. We have also been helping shape conversations in the Dutch Banking Sector Agreement, which will soon publish a paper starting to explore this ecosystem approach in asset-based financing and corporate lending.

We are excited to see how the remedy ecosystem approach can help break through some impasses that have often prevented the financial sector from meaningfully addressing remedy. We look forward to continuing the dialogue with financial institutions and stakeholders, and seeing how these concepts are applied in practice.

Learn more about our Financial Institutions work here.

Valuing Respect: Going from Research that Makes the Case to Tools that Make the Difference

In 2018, our work on the Valuing Respect project made one thing clear: better evaluation of business respect for human rights starts with reconnecting to what we are trying to achieve in the world.

That is, to remember that corporate policies, systems and programs have always been the means, not the ends, of the responsible business agenda.  As we continue our research in 2019, we are field testing a new approach by asking investors, civil society and businesses to step out of their comfort zones and question their assumptions using the beta version of our first Valuing Respect tool.

Valuing Respect Project Lead Mark Hodge facilitating a consult in Singapore
Image courtesy ASEAN CSR Network

Looking Back

2018 was a fascinating year. We engaged with hundreds of people from business, civil society, government and the investment community, and held consultations in Europe, South-East Asia, Sub-Saharan Africa and North America.  In parallel, we conducted empirical research to understand why the way we measure corporate human rights performance isn’t working. For example, we came to realize that 70% of the 400+ “S” indicators used across the major ESG tools, focus on policy commitments, inputs, and activities, not on actual results.

In sum, we confirmed our main hypothesis: when testing the effectiveness of a company’s process or program, most people jump straight to measurement. They develop indicators, agree on metrics and start collecting data. This certainly offers more information about what is happening. For example, data can tell us which companies are making policy commitments, the general scale and location of forced or child labor in a supply chain, the number and nature of local community grievances at a mining location, or even the views of workers on their workplace realities.

But measurement and monitoring alone do not help us to understand why and how things are happening, nor whether the things we measure are a sign that we are achieving desired outcomes. We end up flooded with information, but with no rigorous way of making sense of it. As one participant in our New York consultation noted, we end up “counting without context”. We have more knowledge, but not always more wisdom.

A New Logic

2018 helped us see the problem, but it also got us thinking about what a better approach looks like. After much thought–and hundreds of hours of consultation– we came up with an interesting proposition: what if we looked at measurement using a theory of change (TOC) model?

TOC forces a focus on outcomes for the specific people affected by business activities. It also offers an additional component: building the connection between risk to people and risk to business.

We realized that a TOC model offers an interesting new perspective. It moves away from ‘measuring for the sake of measuring’, and demands that we think systematically and robustly about the necessary requirements and conditions to achieve a desired outcome. It also provides a way for companies and their stakeholders to develop indicators with reference to the outcomes they want to attain, the means by which they are trying to achieve them, and the assumptions their approach depends upon.

Theory of change models are often developed in the fields of international development and public policy, where they tend to include the same core elements: inputs, activities, outputs, outcomes and impacts, based on a cause and effect sequence. In the Valuing Respect project, we have adapted the model to fit the particularities of evaluating business respect for human rights.

Shift President Caroline Rees and Project Lead Mark Hodge beta testing the Theory of Change Tool with Pepsi

Whereas other models focus on a broader and more remote societal impact, which may hide negative impacts on the most vulnerable groups through appeal to overall social benefit, TOC forces a focus on outcomes for the specific people affected by business activities. It also offers an additional component: building the connection between risk to people and risk to business.

Perhaps the most important adaptation we made to the model is adding a deliberate focus on ‘practices and behaviors’ between ‘outputs’ and ‘outcomes’. That is, to look beyond activities and their immediate outputs, and to focus on the desired changes in human behavior (and thus, in outcomes for people.

We need to go from ‘it makes sense’ to, ‘it makes a difference’. 

This changes the measurement paradigm. Rather than ticking boxes and counting actions, the TOC model tells us whether our approach to solving issues is resulting in positive outcomes. Whether, for example,  audits, trainings, or policies are leading to better working conditions. Once a clear and replicable connection between certain practices/behaviors and outcomes is established, the former can become valuable indicators of the latter, as they can be more easily measured over time and at scale. 

Field Testing

We know this makes sense in theory, but now we need to see it in action. We need to go from ‘it makes sense’ to ‘it makes a difference’. That is why, in 2019, we are working with companies and their stakeholders to field-test the beta version of our Theory of Change tool.

The tool aims to provide a simple step-by-step method for companies and their stakeholders to develop and work with indicators in ways that support learning about what is working and why, in relation to their specific objectives for advancing business respect for human rights. We will be testing it with practitioners both in the design phase of new interventions, and to evaluate and improve existing interventions. We will consider how to apply it to action taken by companies individually, as well as with industry peers or via multi-stakeholder initiatives.

We’ll be sharing insights from practitioners on lessons learned, and how they affect decision making and resource allocation in favor of measures that deliver tangible outcomes for workers, consumers, and communities.  

In early 2020, we will publish these insights along with the tested and refined methodology and supporting resources.


But wait! Don’t corporate policies, governance arrangements and business processes matter?

Yes, but with a twist. We’ll address this in the Valuing Respect project and our work on business-model red flags, leadership and governance indicators, and quality of business processes.

How Value Chain Mapping is Helping Companies Respect Human Rights

Value chain mapping and traceability are common buzzwords in sustainability circles. But few companies are looking beyond a limited number of commodities or deliberately applying an explicit human rights lens to these processes. From my experience at Shift, working with dozens of companies, human rights value chain mapping is one of the most effective ways to fully understand the expectations of the UN Guiding Principles on Business and Human Rights, and to drive action on the most severe human rights challenges a company faces. 

Why should a company map its value chain?

Companies are expected to meet their responsibility to respect human rights. Value chain mapping helps companies realize that expectation, by building an understanding of the full scope of impacts, prioritizing the most severe human rights issues, and identifying other actors that have a role to play in exercising leverage to address these issues.

Value chain mapping can help explain a fundamental shift that the UNGPs reflect: the expectation that a company proactively identifies and addresses potential human rights impacts across its entire value chain, rather than just in its own operations and immediate contractual relationships. HEINEKEN, one of the companies we work with, calls this approach to identifying impacts “from barley to bar.” In the work we do with them at the country level, the first step is to draw a full map of the risks to people across the local operating company’s operations and value chain. This includes the human rights risks to smallholder farmers (often several steps removed from HEINEKEN’s operations), as well as those relating to the brand promoters in outlets serving its beers.  

Example of a commodity value chain mapping for sugarcane, courtesy of ILO-IOE

But what is human rights value chain mapping?

The objective of value chain mapping is very practical — to take action on the most severe human risks a company is involved with. 

Value chain mapping is the process to create a visual representation of the different entities in the value chain to which the company is connected through its products and services. The process maps each step in the chain (including the type and number of entities in a particular step, and often their geography), and identifies where people’s human rights can be impacted. This helps visualize how the company can be involved with particular human rights risks.

Value chain mapping should also identify existing internal processes and external mechanisms to address human rights risks. These mappings help uncover blind spots in both areas of human rights risks and management systems to address them and identify areas where further information gathering is needed, making it a valuable risk management tool.

How can companies use value chain mapping?

It’s all about action! The objective of value chain mapping is very practical — to take action on the most severe human risks a company is involved with. While the UNGPs expand the scope of where companies should look for human rights risks, value chain mapping makes it easier to focus on the most severe issues, even if they are farther away and less well-understood than the more immediate issues the company may already know about. The mapping also shows how the company is connected to an impact, and who needs to be involved in addressing it—whether that is a particular supplier or contractor, or a specific company function or business unit.

A sample mapping illustrating a “pinch point” in the chain, courtesy the ILO-IOE

Once the map is sufficiently detailed, it enables brainstorming and informed discussion about where leverage exists or can be built, and how it can be most effectively applied to address impacts (e.g., the pinch point in the graph above).

As part of the Dutch Banking Sector Agreement, we helped map palm and cocoa at the sector level with a multistakeholder group of participants. The value chain mapping — detailing how Dutch banks are connected to various parties within these value chains — aimed to form the basis for developing further individual and joint actions by banks, in collaboration with stakeholders. For cocoa, these actions include: “strengthening due diligence by banks that finance the cocoa sector…improving access to finance for cocoa reinvestment by smallholders,” and “advancing a multi-stakeholder approach towards sustainable cocoa.

Key Elements of Effective Value Chain Mapping:

  • Use it as a tool to get to (or accelerate) action: value chain mapping is not just helpful in driving technical analysis; it also creates an understanding of the company’s responsibility under the UNGPs, facilitates brainstorming on action areas and builds consensus around priorities.
  • Apply it iteratively: it is most effective to build step by step, without trying to perfect it. Regular updates should be made as more information is added.
  • Avoid paralysis by analysis: it is easy to get bogged down in the details. At every step, ask yourself the question: how does this piece of information lead us to more understanding, consensus, and action?
  • Consider how it informs your current due diligence: often, value chain mapping demonstrates how the company’s current approach differs from what the UNGPs expect. Insights from the mapping exercise provide valuable lessons for how to update the company’s overall approach to social sustainability to incorporate respect for human rights (see the experience of ABN AMRO below).

ABN AMRO: An Example of Effective Mapping

One of the first companies we worked on value chain mapping with was ABN AMRO, with an initial focus on the diamond value chain. We followed six steps in the mapping:

  1. Identified the different steps of the diamond value chain and main countries of activity.
  2. Identified the entities, their nature and size.
  3. Mapped how ABN AMRO serviced clients in different parts of the value chain.
  4. Investigated in which parts of the value chain the most severe impacts could be found.
  5. Overlaid the map with existing due diligence efforts by the bank as well as relevant external mechanisms (e.g., Kimberley Process).
  6. Identified the residual risks, and where ABN AMRO could best apply leverage to address them.

The analysis formed the basis for engagement with account managers, desk heads, sustainability experts, the bank’s leaders, clients, other companies and external stakeholders. This led to the following actions by ABN AMRO:

  • ABN AMRO issued a Sustainable Diamond Jewelry Guide to educate and engage its trading clients;
  • They issued a client briefing on responsible jewelry, offering additional value for clients by providing information and analysis.
  • They commissioned and published a study on the “true price” of diamonds.
  • They enhanced due diligence to add a focus on client subcontractors, which was identified as an additional area of risk.
  • They started to explore the wider application of leverage in the sector beyond their immediate clients by engaging other parties with leverage (e.g., major mining companies) and sector initiatives, such as the Responsible Jewelry Council.
  • It spurred the commitment of banks, the Dutch government, unions, and NGOs to jointly conduct sector-level value chain mappings under the umbrella of the Dutch Banking Sector Agreement on Human Rights.

In addition to these specific actions, the diamond mapping (as well as subsequent mappings of other commodities) have contributed to a more fundamental reflection on ABN AMRO’s approach to human rights due diligence, and an explicit recognition that addressing human rights issues must focus on continuous improvement and the creative use of leverage, not a tick-box, compliance approach.

Caroline Rees’ Remarks at the 2019 Expert Conference on Sustainable Supply Chains

These remarks were originally delivered by Shift’s President Caroline Rees at the Expert Conference on Sustainable Supply Chains on February 21st, 2019 in Berlin.

I’m grateful for the invitation to join you today for a conversation that is both important and timely, looking at the distinct roles and responsibilities of business and governments when it comes to sustainable supply chains, and the rights-respecting business practices on which they depend.

In sharing with you a few reflections this morning, I’d like to start by taking us back briefly to the reason why it was, and is, so important to understand the distinct roles of business and government; and to remind us why this conversation has never been more central to the challenges of our time.

And then I’ll share with you a few reflections about what the UN Guiding Principles on Business and Human Rights mean when they call for a ‘smart mix’ of government measures, and what that might imply for your own deliberations here in Germany.


First, let me take us back a few years.


Before John Ruggie’s mandate was created, I was representing the UK Government at the then UN Commission on Human Rights – just before it became today’s Human Rights Council.

That was 2004, and the idea that companies have a responsibility with regard to people’s human rights was hotly disputed.

  • Many in the business arena felt that claims of such a responsibility were merely an excuse to push onto business the obligations of states.
  • And many in civil society saw a conveyer belt of severe business impacts on people that were treated as if business had no responsibility at all.

Little surprise that discussions were heated!

And little surprise that as we negotiated the mandate for a new role of Special Representative of the UN Secretary-General on Business and Human Rights – which Kofi Annan then invited John Ruggie to take on – the task of identifying the distinct roles and responsibilities of governments and business was front and center.

Fast forward to 2011, and of course the UN Human Rights Council endorsed the UN Guiding Principles on Business and Human Rights that John had developed over six years of research and consultation, and which were built on three distinct pillars:

  • The duty of states to protect human rights against abuse by third parties, including business;

  • The responsibility of business to respect human rights – meaning to avoid infringing on people’s human rights through their operations and value chains, and address any impacts that do;

  • And the need for anyone whose human rights are harmed by business to have access to remedy through effective judicial and non-judicial mechanisms – which reflects responsibilities of both states and business.

Let me highlight two critical points from the UN Guiding Principles:

  • First, the corporate responsibility to respect human rights is not an optional extra, or a sign-up proposition – it is a baseline expectation for all companies, everywhere. This is no longer about voluntarism.

  • Second, the responsibility of business does not increase or decrease depending on what governments do. It remains the same. But it is considerably harder to implement the responsibility to respect human rights where governments fail to meet their own duties.

That brings us to the heart of our discussion today: what can and should governments do? What constitutes what the Guiding Principles call a ‘smart mix’ of measures on the part of governments in meeting their own duty to protect?

Before I say more about the idea of a ‘smart mix’, it’s important to understand this conversation about business and human rights in context.

Because of the way the discussion on business and human rights emerged onto the international stage, it can sometimes appear to be a bit of a niche topic, a side-show, or perhaps a small sub-set of what the investment arena refers to as ‘ESG’ – environmental, social and governance factors. 

 The question of business respect for human rights lies at the heart of one of the most pressing challenges of our time: gross inequality. 

It is none of the above. Quite the opposite: the question of business respect for human rights lies at the heart of one of the most pressing challenges of our time: gross inequality. As such, it needs to be approached with the same seriousness, attention and resources as is the role of business impacts on the environment in the context of our other most pressing challenge: climate change.

Let me pause on that for a moment.

A critical turning point in the discussion of climate change and the role of business came when climate change was understood as a tragedy of the commons.

What does that mean?

  • It means that we realized our planet and the environment it provides us with is a precious shared resource system on which we all depend;

  • and if companies and others draw down on this resource individually for their own narrow self-interest, collectively they erode the very resource on which we all – business included – depend.

There is an analogous kind of tragedy of the commons in the gross inequalities that now characterize societies in so many countries – including developed and emerging market economies – and the backlash against globalization that this has engendered.

Why is this a tragedy of the commons?

Well, we have another shared resource system on which we all depend to survive and thrive – namely, social cohesion and stability.

This relies 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 business practices have too often drawn down on human welfare for narrow, profit-focused self-interest, squeezing out dignity and opportunity for so many in a process of globalization that has failed to protect the most vulnerable in our societies. 

We have seen this in moves to seek out ever lower-paid workers around the world, in land acquisitions and permits that have dispossessed rural communities without consultation or due compensation, in the over-excited embrace of a gig economy that commoditizes people’s labor and the exploitation of people’s data that commoditizes their very identities.

And so social cohesion and stability – this shared resource system – 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.

This is the story of business and human rights.

And this is why it is no side show, but must be center stage in any search for solutions to the challenges of our time. 

As with climate change, it reinforces why we need urgent action by both business and government – separately and collaboratively with each other and with civil society – to address gross inequalities and the human rights impacts that cause and result from them.

A smart mix.

As we look, then, at the role of governments, this is where a ‘smart mix’ of interventions comes in. 

When the Guiding Principles speak about the need for governments to adopt a ‘smart mix’ of measures, the word ‘mix’ should be understood to be as important as the word ‘smart’.

The commentary to UN Guiding Principle 3 states that, “States should not assume that businesses invariably prefer, or benefit from, State inaction, and they should consider a smart mix of measures – national and international, mandatory and voluntary – to foster business respect for human rights. 

As we explore today what we might, from all our different perspectives, consider more or less ‘smart’ measures, let’s not forget that this is equally about a ‘mix’:  comprising measures across all those categories of ‘national and international’ and ‘mandatory and voluntary’.

Let’s consider five distinct kinds of role that governments can take as part of a smart mix, all of which are covered in the UNGPs. They include:

  • policies and exhortation,
  • guidance and support,
  • integration in government’s own transactions with business,
  • legislation or regulation, and
  • ensuring access to remedy.

As we look at each of these measures, we see why a smart mix is essential, as no one of them can be effective without some or all of the others. 

First, there is the role of policies and exhortation. UN Guiding Principle 2 makes clear that ‘States should set out clearly the expectation that all business enterprises domiciled in their territory and/or jurisdiction respect human rights throughout their operations.’

  • This requires a clear and unambiguous assertion of what the government expects of business – right across their value chain. It should provide predictability and be coherent across all parts of the government. 
  • But a statement of expectation is quickly undermined if it is unsupported by other interventions.
     
    • For example, if the government does not scrutinize whether the companies it procures from, or to which it gives trade support, have identified and addressed human rights risks, it will be quickly assumed by businesses that they are not truly expected to do the same themselves.

  • In sum, government policy that is undermined by government practices quickly becomes a non-policy.

Second, is the role of government in providing support and guidance to companies. We must be honest and clear-eyed in recognizing that implementation of respect for human rights is not straightforward. It take considerable time, commitment and effort. And the job is never done. 

  • So government has a critical role to play in assisting companies in making progress – including through advice at home and through overseas missions, and through guidance, resources and other forms of support.

  • For example:
    • The UK Equality and Human Rights Commission issued guidance to company boards on respect for human rights.

    • A number of governments have played a critical role in initiating and chairing the Voluntary Principles on Security and Human Rights – a key international initiative including both business and civil society members.

    • The Dutch government commissioned an independent evaluation of human rights risks in the global supply chains of 13 sectors and has supported the development of binding agreements among stakeholders in those sectors.
  • Yet guidance is just that – a resource one may choose to use. Those companies that do not see a need to make progress can and will ignore it.
    • Progress will be limited if no evidence is required that indeed progress is being made.

    • So again, we must think of other measures as well.

Raising expectations and demands alone is inadequate to help business on the journey of implementation.

Third is the role of government when it does business with business. The UNGPs call this the ‘state-business nexus’ and refer explicitly to activities such as procurement and the provision of export credit guarantees, investment insurance, development aid and development finance, as well as government actions in ownership or control of state-owned enterprises.

  • The Norwegian export credit agency has long shown leadership in its own human rights due diligence on clients and in action that has leveraged positive change, and the agencies of Denmark, Sweden, the Netherlands and Canada are also stepping up to their role in this regard.

  • The Finnish Government has perhaps shown unique coherence in bringing together all five of its public finance instruments to evolve their own implementation of human rights due diligence collectively and in coordination.

  • The US Federal Acquisition Regulation, which governs public procurement in the US, prohibits child labor, forced labor and human trafficking, and various Executive Orders have further expanded specific human rights protections in the procurement context.

  • Yet this kind of action by governments when they do business with business also requires support from other measures. Raising expectations and demands alone is inadequate to help business on the journey of implementation.

    • The UK’s Development Finance Institution has developed due diligence guidance and practical training for fund managers in the private equity firms it invests in in high-risk markets.

    • And the US General Services Administration also makes guidance to procurement officers in government public to assist them and their suppliers in meeting expectations.

Fourth comes the role of legislation and regulation. Of course, legislation has always been a feature of business and human rights, even when not labeled as such. Typical examples include laws on health and safety, consumer protection, non-discrimination in the work place, freedom of association and data privacy.

We have seen a range of legislative initiatives in recent years, including on child labor and modern slavery in supply chains, on conflict minerals in supply chains, and on human rights reporting in the context of wider non-financial reporting

Recently, of course, we have seen a groundswell of support in various European states for mandatory human rights due diligence legislation.

  • The French Duty of Vigilance law was a first example and will be discussed further today.

  • The popular initiative that is under discussion in the Swiss legislature warrants close attention as showing some very thoughtful balances in requiring that companies demonstrate the adequacy of their due diligence when complaints are raised, but also allowing that where companies do so, this can also be a defense against liability.

  • The 2016 revisions to the US Tariff Act of 1930 takes a similar approach to requiring the demonstration of adequate due diligence, in the specific case of forced labor.

    • Anyone who has reason to believe that products produced by forced labor are being or likely to be imported to the US may report this to Customs and Border Protection for investigation.

    • Products can then be withheld until documentation of due diligence for forced labor is provided by the company. A list of products being withheld or released is made public.

Let me highlight three of the benefits we see that can flow from robust and workable human rights due diligence legislation:

  • It can elevate the examination of human rights risk to senior levels of the company and the board, as well as mainstreaming it into business functions that otherwise too often see it as a diversion and distraction;

  • It can level the playing field for companies. This helps ensure that it is not only those companies with brand names or other forms of public exposure that are pressured to improve. It also avoids the current danger that companies that are de facto leaders are more critiqued than those who may have done little or nothing but manage to fly below the radar of attention.

  • It can provide a means for people who have been harmed by business activities to find an avenue for remedy, where it includes civil liability for companies. Since these are often the most vulnerable people in societies around the world, the importance of these all-too-rare means for them to access remedy cannot be overstated.

Of course, legislation can also be poorly crafted. That leads not just to inefficiencies and frustration, but can also have perverse consequences – including for human rights. Let me highlight three particular risks.

Respect for human rights is not simply a compliance proposition. It fails if and when it is treated as such.

  • First, the desire for clarity can quickly lead to a tick-box, compliance-led approach to the drafting of legislation.

    • But respect for human rights is not simply a compliance proposition. It fails if and when it is treated as such.

    • Rather, it is a way of thinking about business decisions and action, a way of considering the implications of what the company does for people inside and outside the company.

    • Respect for human rights is fundamentally about culture and behavior. And for that, tick-box lists and mechanical approaches are insufficient.

    • But we can look to various other fields, from health and safety to consumer protection to find lessons in how to avoid this pitfall.
  • That raises a second point, which is that it is important to strike a careful balance in how precisely laws prescribe what is asked of companies.

    • Laws that are too prescriptive risk being inappropriate to the actual operating realities of many companies, and can distort practices in unhelpful ways.

    • On the other hand, laws that are too general can end up being interpreted in ways that easily disregard their actual intent.

    • This again reminds us of the importance of other measures to complement legal provisions, which will always be constrained to a certain level of generality. Their intent can be reinforced, for example, through implementing regulations, government guidance, or complaints mechanisms and access to remedy. 
  • That brings me to my third point. That is, that great care must be taken to understand and preserve the distinctions between the actual scope of companies’ responsibility to respect human rights and the reasonable scope of any civil liability provisions that legislation may introduce.

    • The UNGPs make clear that companies have a responsibility not only where they cause or contribute to a human rights harm, but also where abuses are linked directly to their products and services – including at remote tiers of their value chain – without any contribution on their part.

    • Legislative proposals that aim to include civil liability provisions need a narrower scope. It would be unreasonable to attach liability to scenarios where the company has not contributed to a harm.

    • Yet laws should not imply that an absence of civil liability means an absence of responsibility.

    • One way to address this distinction could be to require reporting by companies on the full scope of their responsibility, while constraining any civil liability provisions to situations where the company’s own actions or decisions have played a role.

Enabling remedy is one of the most compelling arguments for considering civil liability in the context of legislation on human rights due diligence.

The fifth and final role of governments in this ‘smart mix’ is of course in providing access to remedy. This would warrant a separate discussion all of its own given the central importance for human rights of ensuring that people whose human rights are harmed can seek and secure remedy for those harms.

  • Enabling remedy is one of the most compelling arguments for considering civil liability in the context of legislation on human rights due diligence.

  • National development finance institutions or export credit agencies may also offer some form of recourse to raise concerns about decisions that have been made to support certain businesses or investments. The independent complaints mechanism for the German, Dutch and French DFIs has initiated a mediation process in response to a complaint from communities in the DRC about a land conflict with a local subsidiary of a Canadian company.

  • Of course, the OECD National Contact Points may offer another mechanism for remedy at the international level, with governments intended to use their own leverage to bring companies and stakeholders to the table to resolve complaints. Unfortunately, most NCPs have failed to deliver on their promise so far. And they have almost never gone so far as to provide remedy to those harmed, with the refreshing and admirable exception in the case of Heineken working with the Dutch NCP and civil society last year.

So let me leave you with these key reflections by way of summary.

Efforts to embed respect for human rights into how business gets done are indispensable if we are to tackle the gross inequalities that plague societies today, and the threats to social cohesion and stability that are their ever more frequent result.

While the corporate responsibility to respect human rights is not voluntary or optional; it is far harder to implement where governments do not meet their own duties to protect human rights.

A critical role of government – which can thread among and between these five categories – is collaboration.

When the Guiding Principles speak about the need for governments to adopt a ‘smart mix’ of measures, the word ‘mix’ should be understood to be as important as the word ‘smart’.

There are five key types of measure that can make up such a mix: policy measures, guidance and support, integration in governments’ own transactions with business, legislation and regulation, and ensuring access to remedy. Yet each of these types of measure is inadequate on its own, and each is much stronger where most or all of the others are present.

Finally, I would be remiss not to note that a critical role of government – which can thread among and between these five categories – is collaboration.

Here in Germany there is a strong history of collaborative decision-making and consensus-building. This is seen also with regard to business and human rights – whether through your long history of social dialogue or through recent initiatives such as the Textile Industry Roundtable.

I look forward to joining you in some really collaborative thinking through the rest of the day as you explore the options to bring your different roles and responsibilities together, and start to define a smart mix of measures on the part of government, with the common purpose of building sustainable global supply chains based on rights-respecting business practices.

Fulfilling the State Duty to Protect: A Statement on the Role of Mandatory Measures in a “Smart Mix”


There is a growing number of national and international debates around mandatory measures to ensure business respect for human rights, and specifically a) a binding international instrument on business and human rights and b) national legislation on mandatory human rights due diligence. In these debates, the UN Guiding Principles’ expectation of a “smart mix” of implementation measures is often cited. As a contribution to these discussions, Shift has developed the following statement on the role of mandatory measures in a “smart mix”.

I

The State Duty to Protect is not a passive duty, but a proactive one.

Under UN Guiding Principle 1, all states “must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises”.

This “requires taking appropriate steps to prevent, investigate, punish and redress human rights abuse through effective policies, legislation, regulations and adjudication”.

This should be understood as a proactive duty. States should actively assess the effectiveness of what is currently in place, understand what gaps there are, and identify ways to address them. Yet most “National Action Plans” on the UNGPs to date reflect a more passive approach; they are a catalogue of existing measures rather than robust assessments of what more is needed.

II

The State Duty to Protect is fulfilled through a smart mix of measures.

To fulfill their duty to protect, states will need to use a range of approaches. The commentary to UN Guiding Principle 3 elaborates on this when it says that states “should consider a smart mix of measures – national and international, mandatory and voluntary – to foster business respect for human rights.”

States should go beyond enforcing existing laws to “periodically assess the adequacy of such laws and address any gaps” in light of evolving circumstances.

III

A smart mix of measures necessarily involves legislative and regulatory measures.

A truly “smart mix” means looking at all four aspects (national, international, mandatory and voluntary), not just the one or two that are most convenient or already in place. It follows, therefore, that the state duty to protect necessarily involves legislative and regulatory measures at the national level, and the supportive infrastructure (such as enforcement, incentives and guidance) needed to make them meaningful in practice. Without these, the UNGPs will never fulfill their true potential.

The UNGPs also clearly contemplate mandatory international measures as a natural part of this “smart mix”. Shift follows with interest the current discussion of a new treaty in this area.

IV

Measures that involve Mandatory Human Rights Due Diligence are in line with the UNGPs, and there are strong reasons for states to consider them.

While the UNGPs do not demand that states adopt legislation requiring companies to carry out mandatory human rights due diligence (HRDD), clearly such legislation is entirely in line with the UNGPs.

Some elements of HRDD are already embedded in national laws, such as in health and safety regulations, environmental legislation, privacy laws or in some corporate reporting regimes. However, there are often strong reasons for states to also consider more comprehensive mandatory HRDD legislation.

Practical reasons to consider mandatory human rights due diligence can include:

• The powerful effect it can have in driving top-level attention to human rights in companies, as well as engaging functions across the business;

Leveling the playing field across companies and sectors, including through engagement with business partners in a company’s value chain;

• Obliging companies to consider the interests of stakeholders other than shareholders;

• Incentivizing collaborative approaches to address systemic human rights risks; and

Enabling (where civil liability is included) a clear cause of action for individuals who are harmed to pursue remedy.

To be effective, such legislation should take account of critical aspects of the responsibility to respect. These include that: • It should not undermine the scope of the responsibility to respect, which extends throughout the value chain, even if liability is attached to a narrower set of relationships;

• HRDD is a standard of conduct not result, meaning that mandatory measures should allow consideration of the quality of a company’s efforts to respect human rights; and

• Meeting the responsibility to respect in practice will always involve going beyond compliance alone as good practice continues to evolve.  

Beyond Voluntary: What it Means for States to Play an Active Role in Fostering Business Respect for Human Rights

As a senior legal advisor to former UN Special Representative John Ruggie during his mandate, Shift’s Rachel Davis played a key role in the drafting process of the UN Guiding Principles on Business and Human Rights. Seven years into the implementation of the UNGPs, she reflects on the relevance of mandatory measures in the State Duty to Protect and the growing debate around comprehensive mandatory human rights due diligence legislation.

For more, see Shift’s full statement: Fulfilling the State Duty to Protect: A Statement on the Role of Mandatory Measures in a “Smart Mix”


  1. Pillar I of the UNGPs focuses on the role that states should play in fostering business respect for human rights. What is the role of mandatory measures in meeting that responsibility?

    The UNGPs always envisaged that mandatory measures by states – at both the national and international levels – would be part of their implementation. It’s right up front in Guiding Principle 1, which says that states must have effective legislation and regulation, as well as policies and other measures, to protect against human rights harms by businesses. It’s also in the definition of the “smart mix” of measures that is needed under Guiding Principle 3 to meet the state duty in practice. Yet we often hear the term “smart mix” being used to really just mean voluntary measures. That’s a misreading of what the UNGPs say.

    When we were developing the UNGPs, there were already relevant laws on the books in many states that made aspects of the corporate responsibility to respect human rights mandatory,  like workplace health and safety legislation, environmental legislation, privacy protections and so forth. In the last few years, we’ve seen a growing number of legislative initiatives, including those aimed at introducing comprehensive human rights due diligence as a requirement for companies, helping to drive more effective implementation of the UNGPs.
  2. So, does that mean that all states should implement comprehensive mandatory human rights due diligence legislation as part of a “smart mix” of measures?

    A smart mix is exactly that – the right combination of mandatory, voluntary, national and international measures that is needed to effectively foster business respect for human rights in a particular context.

    At the national level, that is going to look different in different countries, depending on what currently exists, how effective it is in practice, and what can be done to address the gaps. The UNGPs don’t require states to implement comprehensive mandatory human rights due diligence regimes, but as we explain in our statement on this topic, they are clearly in line with the UNGPs and there are positive reasons for states to consider them.

    I think many stakeholders hoped that National Action Plans (NAPs) on the UNGPs would be a vehicle for states to proactively explore tailored mandatory measures. And it’s true that some NAP processes have provided important moments for governments to engage business and civil society stakeholders, bringing everyone around the table. But in terms of new measures, particularly mandatory measures, most NAPs have ended up just cataloguing what currently exists in a specific context, rather than identifying what more might be needed.
  3. What about binding international measures? Do the UNGPs expect states to use those too?

    Mandatory international measures are part of what the UNGPs mean by a smart mix. In my view, it’s only natural, and entirely predictable that the appropriate role of binding international measures should be actively considered as part of effective implementation of the UNGPs. Indeed, when John Ruggie presented the UNGPs to the Human Rights Council in 2011, one of his five follow-up recommendations specifically called for the development of a new international instrument. It was the only one that wasn’t taken up.

    At Shift, we’re paying close attention to the discussion of the “Zero Draft” treaty. We are very interested in exploring how a binding instrument could drive the most meaningful change in state practice in this area.
  4. Some laws have been criticized for incentivizing a tick-box approach by business to human rights risks. Don’t mandatory measures just lead to more compliance-based thinking that goes against how the UNGPs are trying to change company mindsets?

    States have had to tackle this challenge in other areas of law that aim at changing company behavior like anti-corruption or health and safety, and there are plenty of lessons to learn from what has and hasn’t worked in those areas. It certainly requires up-front thought about who within the state is going to have the capacity and expertise to oversee the legislation, and assess whether its expectations are being met. Authoritatively calling out what meaningful compliance looks like, and what is merely superficial, is an important element in making such legislation effective in practice. And for it to be authoritative, the state needs to be playing a role in making these assessments.
  5. Some have suggested that stringent laws can have perverse consequences, leading companies to avoid high-risk contexts, or to disengage rather than seek to influence high-risk suppliers, as a way to avoid liability. What is Shift’s perspective on this?

    The UNGPs are trying to shift companies’ response to high-risk contexts or suppliers from one that seeks to manage risk to the business alone – by not investing in challenging contexts, or by immediately terminating relationships when human rights harms are found – to a more thoughtful approach that is driven by consideration of risk to people. This is why the quality of a company’s human rights due diligence matters. Legislative and regulatory regimes need to allow companies the space to show that they genuinely tried to use leverage creatively and consistently to address a situation. Legislation should also be designed to incentivize companies to put in place more robust internal processes for deciding to divest or withdraw from a relationship – processes that consider the severity of the impacts involved, and whether there could be additional harm to people from a decision to disengage.
  6. Another specific risk that’s been raised is whether legislation could lead to companies reducing the scope of their human rights due diligence to the scope of their liability for impacts. Is this risk real?

    The scope of due diligence expected under the UNGPs is likely to always be broader than the scope of legal liability for impacts a business is connected to. It’s true that the leading model of comprehensive mandatory human rights due diligence that has been enacted to date – the French Duty of Vigilance law – takes a narrower approach to the scope of due diligence, focusing it on those business relationships that could also give rise to liability. It will be very interesting to see whether companies limit their vigilance plans and their due diligence solely to the relationships covered under the Act, or whether they maintain a broader scope. We will be assessing how this plays out in practice against the baseline evaluation of French companies’ human rights reporting that we published last year.

    The mandatory human rights due diligence proposal (or ‘popular initiative’) in Switzerland takes a different approach. It proposes that the scope of due diligence should be broad (throughout the value chain, as in the UNGPs) but that liability should only attach to harm caused by certain controlled entities like subsidiaries. We’ve been actively supporting the debate on the proposal in Switzerland for over 18 months now, through our engagement with both business and civil society partners and allies, and will continue to do so.
  7. Are there specific elements that all states should consider when drafting legislation that includes aspects of mandatory human rights due diligence? Are there good practices – or issues to watch out for – that states could learn from?

    Absolutely. We’ve already seen how important it is to provide clarity on key terms to ensure that they correspond to what businesses -and their stakeholders- are expected to do under the UNGPs. For example, don’t just use the term “supply chain”, which many companies may give a narrow meaning to, but clearly define it to include the full value chain connected to a company’s operations, products or services. We already see a difference in how the Australian Modern Slavery Act (MSA) handled this point, compared to the UK Act’s approach. In Australia, we had the benefit of learning from what hadn’t worked with the original MSA.

    States will also want to consider how to avoid drafting legislation that facilitates action only at corporate headquarters and not at the operational or country level, or that creates perverse incentives for companies to avoid engaging publicly about human rights risks due to fears of liability. That’s not helpful for anybody.

    This whole area concerning legislation as a part of a smart mix is one we’re going to be doing a lot more thinking about at Shift as the examples of mandatory human rights due diligence proliferate – and we look forward to sharing our thinking widely over the coming year.

Read our full statement: Fulfilling the State Duty to Protect: A statement on the role of mandatory measures in a “smart mix” when implementing the UNGPs