September 19, 2017 — As businesses become increasingly accountable for their wider impact on society, Mazars and Shift today launch comprehensive Assurance Guidance on human rights, for the first time giving businesses a clear direction on how to assess their human rights credentials in line with international standards.
Developed over several years by international accountancy and
advisory firm, Mazars, and leading business and human rights non-profit
Shift, the Assurance Guidance supports the 2015 UN Guiding Principles Reporting Framework,
the world’s only reporting framework for companies that is wholly
aligned with the authoritative UN Guiding Principles on Business and
Human Rights. The guidance will help internal auditors to assure
companies’ human rights performance, and support external assurance
providers as they oversee the assurance of companies’ human rights
reporting.
Corporate governance has become a clear focus of
governments to address unethical behaviours in business. A business
that understands and reports knowledgeably on its human rights
performance is likely to be ahead in its responsibilities around
corporate governance.
In the two years since the launch of the UN Guiding Principles Reporting Framework, it has been embraced by leading companies, governments, investors and civil society organizations
as a critical tool to help companies improve their human rights risk
management, and show greater transparency and accountability. It has
been formally recommended by numerous governments in guidance to
companies. Leading businesses including Unilever, Citi, Ericsson,
H&M and Microsoft have publicly stated that it has guided them in
their internal risk management and reporting.
Professor John
Ruggie, author of the UN Guiding Principles, comments, “Today, any
company that wishes to demonstrate either its own sustainability or its
contribution to sustainable development, must show how it is driving
respect for human rights across its operations and value chains.
Independent assurance has a vital role to play in enhancing the
credibility of what the company’s Board is told – and tells others –
about its risks and performance.”
Richard Karmel, Head of Human
Rights Services at Mazars, said: “The EU now requires company boards of
all EU public companies with over 500 employees to know how their
organizations are identifying and addressing risks to human rights.
Their investors, their customers and their employees have a right to
know about the progress they are making: it is no longer enough to say
‘I wasn’t aware.’
“Such demands make internal audit and external
audit assurance functions more important than ever. Importantly, the
Global and Chartered Institutes of Internal Auditors have given full
backing to this Guidance. As professional advisers, we can no longer
skirt around the issue of human rights, but must instead integrate it
effectively within our professional skill sets: this Guidance will help
make that possible.”
Caroline Rees, President of Shift,
explains: “This Assurance Guidance helps expert practitioners ensure
that their work plays a valuable role in advancing the protection of
workers, communities and other groups affected by business activities –
thereby protecting and creating value for the business in the medium to
long term.”
She adds: “Companies cannot gamble. There are
significant risks to corporate business reputation, continuity and
opportunity if companies ignore their record in human rights – whether
in their own operations or across their entire supply chain. The only
real defense for business is to have appropriate, effective procedures
in place.”
The complete letter is published on the Business & Human Rights Resource Centre website and
is signed by the Business & Human Rights Resource Centre, the
Danish Institute for Human Rights, the Institute for Human Rights and
Business, the International Corporate Accountability Roundtable, Oxfam
International and Shift.
An open letter to United Nations Secretary-General António Guterres and United Nations Private Sector Forum 2017 Participants:
As global business, government and civil society leaders convene for
next week’s United Nations Private Sector Forum to discuss financing the
2030 Agenda, it is difficult to overstate the challenge that has
brought them together. Ensuring the eradication of poverty through
sustainable, climate conscious, and rights-respecting global development
is an ambitious universal agenda. We urge participants to ensure that
respect for human rights is an integral part of all actions towards
achieving the Sustainable Development Goals (SDGs).
The SDGs “seek to realize the human rights of all” and the 2030
Agenda for Sustainable Development is explicitly grounded in the
Universal Declaration of Human Rights and international human rights
treaties, among other instruments. The Agenda emphasizes the critical
role that human rights play in the achievement of sustainable
development in all its three dimensions – economic, social and
environmental.
To put this in context, between 21 and 48 million people are
estimated to work in forms of modern slavery; around 85 million of the
estimated 168 million child laborers are in hazardous forms of work; and
more than 2.3 million people die annually as a result of occupational
accidents or work-related diseases. Poor communities lose livelihoods,
access to healthcare and clean water when land is taken or used without
respect for their rights in the name of agriculture, construction,
mining and other activities. Ending such abuses would enable these
people to live their lives with dignity, with improved access to
education, medical care, food, and many other SDG targets.
Businesses must put these realities at the heart of how they
define their contribution to Agenda 2030. Doing so represents the
private sector’s single biggest opportunity to advance human development
today…
What’s the current problem with the way some organizations are
talking about business contributions to sustainable development – and
what’s a better path forward?
1. The problem: misunderstanding the nature of respect for human rights
The Sustainable Development Goals (SDGs) are setting a new and increasingly accepted basis for companies to stake out a position on how they are responsible and sustainable.
Yet with 17 Sustainable Development Goals and 169 related targets,
there is a risk that companies simply repackage what they already do in
the wrapping of the SDGs, or focus on certain SDGs based on the ease,
rather than the impact, of those choices. This is not to suggest that
businesses should address all goals. Rather, we believe they need a
principled process, that reflects international standards, to identify
the SDGs through which they can maximize their contribution.
Human rights are embedded throughout the SDGs. Yet many organizations
that are telling business how to think about this – and many leaders in
business itself – are failing to understand the place of respect for
human rights in this broader framework.
Respect for human rights tends to be seen as something necessary but
basic, from which leading companies have already moved on to more
innovative, leadership-oriented, collaborative initiatives. (This vastly
overestimates progress on human rights within the business community.)
Moreover, because respect for human rights is an expectation of all
companies, it is often seen as merely a matter of compliance and risk
management, and distinct from initiatives that are characterized as
transformative.
These pervasive assumptions fail to understand:
that implementing respect for human rights is an integral part of doing business, not something you do and then move on from;
that implementing respect for human rights is not just a matter of
compliance to be achieved simply through audit and data tracking, but
instead requires capacity building, innovation, collaboration and leadership;
that respect for human rights is not just a “do no harm” proposition, but drives positive change in people’s lives, with many positive outcomes for sustainable development;
that this positive impact of respecting human rights can drive transformative change at scale,
in particular through collaborative uses of leverage across value
chains that have the power to improve the lives of millions of workers
and community members*;
that respect for human rights must also permeate any and all other initiatives
a company undertakes to contribute to the SDGs, from philanthropy to
shared value initiatives, environmental projects to innovative
financing, and workforce engagement to anti-corruption efforts;
that respect for human rights by business is the essential key to unlock achievement of many SDGs, and without which they cannot be achieved.
2. The answer: a true understanding of the power of respect for human rights
In fact, when companies address negative impacts on human rights they
can achieve resoundingly positive outcomes. Companies and states that
view business respect for human rights in a compliance/risk/do no harm
box will therefore miss its relevance and power as part of an SDG
strategy.
Instead, companies should see it in a similar way to their
environmental contributions to the SDGs, which typically have two parts:
every company can contribute positively to sustainable development
by reducing the negative impacts on the environment associated with its
business – including across its value chain;
some companies will also be able to develop new and innovative
products, services and ways of doing business that can further
contribute to improving the environment and combating climate change,
and should do so wherever they can.
This logic works equally well for the “people part” of the SDGs:
every company can contribute positively to sustainable development
by reducing the negative impacts on people’s human rights associated
with its business – including across its value chain;
some companies will also be able to develop new and innovative
products, services and ways of doing business that can further
contribute to improving people’s lives, including their enjoyment of
human rights, and should do so wherever they can.
Implementation of the UN Guiding Principles on Business and Human Rights – the global standard in this field – is the basis for addressing part (a). It must also inform any initiatives a company undertakes for part (b) – in relation to both planet and people – so they too are carried out with respect for human rights.
3. The way forward: a holistic framework for contributing meaningfully to the SDGs
By
adopting the same two-part approach to how they address the “people
part” of sustainable development as they do to addressing the “planet
part,” companies now have a holistic vision for how they can develop
strategies to support the SDGs, which embeds the right understanding of
the role and the power of respect for human rights. This view is
illustrated in the graphic to the right.
This framework offers a straightforward way for any company to work out how it should and can contribute to the SDGs:
Analysis: The company maps its most severe actual
and potential negative impacts on people and on the planet across its
operations and value chain – that is, its salient issues in each dimension;
Delivery: The company then maps those priorities to
the SDGs and identifies how it can maximize positive outcomes for
people and planet by reducing these impacts, including through
innovation and collaboration;
Analysis: The company maps the ways in which the
nature of its business, skill sets and market position may enable it to
innovate additional positive contributions to the SDGs;
Delivery: The company identifies how it can deliver
on that potential, alone or in partnership with others, through
processes that respect human rights and the environment.
*[1] The International Labour Organization estimates that in just
40 countries representing 85 percent of world gross domestic product
there are 453 million formal sector jobs related to global supply
chains. Realizing the rights of these workers would constitute a
transformative change. This is relevant not only to SDG 8 on decent work
and economic growth; the opportunities unlocked for people when they
have decent jobs with living wages include a route out of poverty (SDG1)
with improved access to food (SDG 2), to health (SDG 3), to education
(SDG 4), and to equality of opportunity (SDGs 5 and 10).
In March 2017 Shift Managing Director and Co-Founder Rachel Davis joined the newly established FIFA Human Rights Advisory Board. We see our participation in this Board as a significant opportunity to push for FIFA’s implementation of the report For the Game. For the World. FIFA and Human Rights, authored by John G. Ruggie with support from Shift. In Shift’s participation on this Board, we retain complete independence and do not accept any financial or other compensation for our time.
We welcomed our first day and a half of substantive discussions with
the FIFA Administration, including the Secretary-General, about FIFA’s
human rights responsibilities. It was an important opportunity to
establish a general understanding of FIFA’s human rights efforts to
date, and it was a forthright and frank discussion.
We reviewed a range of key issues that FIFA is taking action on,
following from the 2016 independent report by John Ruggie on FIFA and
human rights. We discussed the organization’s draft human rights policy
and its ongoing consultations on this document. We also discussed the
most pressing human rights issues in relation to the upcoming FIFA World
Cups in Russia and Qatar, and the important progress being made in
particular through the joint inspections being undertaken with Building
and Woodworkers’ International in both countries. We also had detailed
discussions about the work being done to implement FIFA’s
anti-discrimination commitments, the process to include human rights in
the 2026 bidding documents, the work of the new women’s football
division, FIFA’s initial thinking on how to implement effective
grievance mechanisms, and the work of the Israel-Palestine Monitoring
Committee established by FIFA.
There were a number of examples of positive action that FIFA is
taking, and we are encouraged by much of what we have heard. We
recognize and appreciate the openness of FIFA to having these
discussions with us. This will be essential to address the many critical
issues that need further attention and effort. We will prioritize our
ongoing work based on the most important human rights challenges we
believe FIFA is facing.
We plan to take a very engaged approach in our work with FIFA and to
develop practical advice and recommendations. We will shortly issue a
more detailed set of operating principles about our approach as the
Human Rights Advisory Board.
We will liaise closely with the new FIFA Governance Committee that is
responsible for providing strategic advice on human rights to FIFA’s
Council. We look forward to interaction with all relevant divisions of
FIFA about their own roles in implementing FIFA’s human rights
commitments. We note that the Advisory Board is not a replacement for
broader stakeholder engagement by FIFA, nor a formal channel for
resolution of grievances. We welcome active engagement with all
stakeholders whose views can help inform our work.
We aim to publish our report on our initial meeting within the next six weeks.
On February 15, 2017, Shift Chair and author of the
UN Guiding Principles John Ruggie delivered a keynote address to the G20
Labour and Employment Meeting in Hamburg. He was accompanied by Shift’s
President, Caroline Rees. The complete text of Professor Ruggie’s
address is below.
I am deeply honored to have been asked to join you here this morning.
And I wish you every success on your critical mission to promote
socially sustainable supply chains.
This subject could not be more important – for individual countries
that participate extensively in global supply chains, and for the future
of the open global economy itself. These vast and complex networks
crisscrossing the world are the nexus between investment and trade. They
are vulnerable today, and the global economy along with them. However,
their effective management can turn them into significant leverage
points to make globalization work better for all. Addressing this
challenge requires the kind of collective leadership that only the G20
can provide.
As in a volcano, a potential rupture has been building up steam for
quite some time. As far back as January 1999, then UN Secretary-General
Kofi Annan warned, in a World Economic Forum address, that unless
globalization has strong social pillars it will be fragile: “vulnerable
to backlash from all the ‘isms’ of our post-cold war world:
protectionism; populism; nationalism; ethnic chauvinism; fanaticism; and
terrorism.” He added that if we cannot make globalization work for all,
in the end it will work for none. Today we neither need, nor should we
want, any additional evidence of Annan’s prophetic insight. We see it
all around us.
I propose to do three things this morning. The first is to describe
briefly some key dimensions of global supply chains. Second, while
acknowledging the enormous economic contributions they have made, I also
flag several fundamental problems. Third, I explain how the UN Guiding
Principles for Business and Human Rights contribute to achieving
socially sustainable supply chains.
Here is an example of a global supply chain network. Like some of
you, I have an iPhone 6. It was designed by Apple in the United States,
and assembled by Foxconn, a Taiwan based company at its operations in
China. Along the way, the components were produced by 785 suppliers in
31 countries. Some are multinationals in their own right, with their own
supply chains. It turns out that this is at the smaller and simpler end
of the global supply chains spectrum.
It should be stressed that global supply chains are rapidly ceasing
to fit the traditional profile of suppliers in the Global South and
buyers in the North. One of the most profound global geo-economic shifts
today is the rapid increase of transnational corporations based in
emerging markets and developing countries. In the year 2000 they
numbered just 12 on the Fortune Global 500 list. In 2010 the number had
risen to 85. By 2025 their number is expected to reach 230, or nearly
half of the entire FG 500.
One consequence of the global fragmentation of production processes
is that world trade in intermediate goods is now greater than all other
non-oil traded goods combined. This is due to the multiple times
intermediate goods are imported, a step or two is taken in their
processing, and then they get exported again as intermediate goods to
the next stop, where the cycle is repeated until final assembly. Even
more striking, about 80 percent of global trade (in terms of gross
exports) is now linked to the production networks of multinational
firms. Thus, trade is no longer simply arms length exchange between
countries, governed by international trade law and policy. Much of it
takes place among corporate entities, determined by their optimization
strategies.
On the employment side, according to an ILO report one out of seven
jobs worldwide is related to global supply chains. That number does not
encompass so-called non-standard forms of work, which can range from
casual and temporary employment to forced and bonded labor, nor does it
include informal work at the bottom of supply chains, often done by
women and children in the home. In the 17 G20 countries for which there
is data, the percentage of the labor force in global supply chains is
even higher: more than one job in five.
When we add up these numbers and recognize that those workers may
have families who depend on them, we may well be talking about one
billion people worldwide involved in and directly affected by global
supply chains. So in terms of orders of magnitude, the challenge of
securing socially sustainable supply chains ranks high on the must-do
list.
This model of distributed production and service provision has
transformed the world for the better. In developing countries, it has
helped pull more countries and people of poverty, and faster, than in
any other era of history. It has provided work opportunities for women
that they lacked previously. In the industrialized countries, it has
kept consumer prices low and helped keep inflation in check. And it has
generated extraordinary technological innovations across all spheres of
the human experience.
So why is there such concern today about the sustainability of this
system? What’s the problem? The answer is that an enormous governance
gap has been created: between the scope and impact of economic forces
and actors, and the capacity of societies to manage the adverse
consequences. The gap will be narrowed one way or another: either
through more effective cooperation or through rollback, otherwise known
as protectionism. I vote for cooperation, and I hope you will as well.
One corrosive consequence of this governance gap has been rapidly
escalating income inequality within countries, even as income inequality
among countries has declined.
Another such consequence is what the G20 and the OECD call “base
erosion and profit shifting,” or BEPS. This refers to the highly
sophisticated means whereby many multinationals are able to keep their
effective corporate tax rates as low as the single digits through a
combination of transfer pricing and booking foreign direct investments
in tax havens, where the bulk of the profits then reside.
Former US Treasury Secretary Lawrence Summer, once a vigorous
advocate of unfettered globalization, now writes that this is “a
significant problem for the revenue capacity of states” —and he means
all states. As a result, tax burdens increasingly fall on small
businesses that cannot avail themselves of such strategies, and on
individual households, while governments are strapped for resources to
provide sufficient levels of public goods.
Neither the income inequality nor the base erosion and profit
shifting associated with the current structure of corporate
globalization are socially sustainable.
Other significant risks exist. In some developing countries, the
further down the layers of suppliers one moves the more precarious work
can be. Risks are worsened where governance is weak or poor: health and
safety, inadequate wages, the worst forms of child labor, bonded labor
and in some sectors slave labor. Multinationals are reasonably good at
monitoring top tier suppliers, but in many cases no one really knows
where the bottom is. That is not sustainable either.
At the same time, in some industrialized countries recent
developments demonstrate what happens when the needs of people who have
been left behind by offshoring and rapid technological change are
ignored, on the assumption that somehow the magic of the marketplace
will self correct. Wrong. It is the global marketplace that becomes the
target of their animus. This too poses a serious risk to sustainable
global supply chains, indeed to globalization writ large.
So where do we go from here? What opportunities exist to generate
positive change? One promising scenario is sketched out in the report of
the Business and Sustainable Development Commission, launched at Davos
last month. The Commission includes CEOs of leading companies
headquartered in China, India, Saudi Arabia, South Africa, Turkey, as
well as the US and Europe.
The Commission’s research suggests that achieving the UN Sustainable
Development Goals (SDGs) could add $12 trillion a year to business
savings and revenue in just four economic areas alone: food and
agriculture, energy and materials, health and wellbeing, and sustainable
cities. The Commission estimates that the economic prize from fully
implementing the SDGs could be two to three times bigger, if the
benefits are captured across the whole economy and are accompanied by
higher labor and resource productivity. I’m not a mathematician, but
those seem like big numbers!
The Commission lays out six action paths, one of which is to “Rebuild
the Social Contract.” Where does this rebuilding begin? Here is what
the Commission says:
Treating workers with respect and paying them a decent wage would
go a long way to building a more inclusive society and expanding
consumer markets. Investing in their training, enabling men and women to
fulfill their potential, would deliver further returns through higher
labor productivity. And ensuring that the social contract extends from
the formal to the informal sector, through full implementation of the UN
Guiding Principles on Business and Human Rights, should be
non-negotiable.
This brings me to my final point. What are these Guiding Principles,
and where did they come from? I had the honor to develop them over a six
year mandate as the UN Secretary-General’s Special Representative for
Business and Human Rights. They comprise three sets of mutually
reinforcing principles: the state duty to protect against human rights
abuses by third parties, including business; the corporate
responsibility to respect human rights; and the need for greater access
to effective remedy by those who have been adversely affected by
business conduct.
The UN Human Rights Council unanimously endorsed the Guiding
Principles in June 2011. They constitute the only official guidance the
Council and its predecessor, the Commission on Human Rights, have issued
for states and business enterprises on their respective obligations in
relation to business and human rights. The five core sponsors of the
resolution to endorse the Guiding Principles were Argentina, India,
Nigeria, Norway and the Russian Federation.
UN High Commissioner for Human Rights, Zeid Ra’ad Al Hussein,
describes the Guiding Principles as “the global authoritative standard,
providing a blueprint for the steps all states and businesses should
take to uphold human rights.” They have been widely drawn upon in
standard setting by other international organizations, governments,
businesses, law societies including the International Bar Association,
and even FIFA, the global governing body of football. The China Chamber
of Commerce of Metals, Minerals & Chemical Importers & Exporters
has issued detailed recommendations for the overseas conduct of Chinese
mining companies based on the UN Guiding Principles. The Indian
government’s Voluntary National Guidelines embrace key elements of the
UN Principles, and its top 500 listed companies must report against how
they respect human rights. Among the G20, Germany, Italy, the UK and the
US have issued National Action Plans to implement the Guiding
Principles. Argentina, Brazil, Indonesia, Japan and Mexico have
committed to do so or already have begun the processes.
These examples demonstrate that a growing number of governments,
businesses and other actors recognize how the UN Guiding Principles can
play a central role in achieving socially sustainable business – and by
extension – sustainable development.
First, the Guiding Principles help companies to identify human rights
risks along their entire supply chains, through an approach that
reduces harm and creates social value. They do so by outlining the
components of a human rights due diligence process enabling companies to
manage the adverse impacts on people of their own conduct and their
business relationships. The components include companies assessing
potential and actual impacts, and acting on that information.
Second, the Guiding Principles highlight the many ways in which
governments can incentivize responsible business conduct and protect
people from human rights abuse by business. This requires a smart mix of
policies at the legislative and regulatory levels, as well as
governments taking these factors into account when they support or
otherwise do business with business.
Third, the Guiding Principles identify key means through which both
business and governments need to ensure access to effective grievance
procedures and remedy for the inevitable scenarios where people –
typically the poorest and most vulnerable – suffer the results of
abusive business practices. This involves judicial and non-judicial
state-based processes, as well as operational level grievance mechanisms
companies can establish or participate in.
In short, the Guiding Principles provide a roadmap for helping to
bridge the governance gaps and imbalances that must be addressed for
global supply chains and globalization itself to become socially
sustainable.
Much is at stake for countries and people. But we can make
globalization work for all by putting human dignity at its center. And
you, as member states of the G20, have a unique opportunity to take the
lead by supporting action on the important agenda that is before you at
today’s session, and urging businesses and governments to advance the
further implementation of the Guiding Principles.
Thank you, and once again the very best wishes for success.
Update: In January 2017 the Business
and Sustainable Development Commission, which commissioned this report,
published its position paper on business’s role in sustainable
development, Better Business, Better World.
That position paper draws on this report and strongly supports its
message that respect for human rights must be at the heart of any
company’s efforts to contribute to the Sustainable Development Goals.
Companies’ single greatest opportunity to contribute to human development lies in advancing respect for the human rights of workers and communities touched by their value chains. This position is set out in a new paper published today by the Business and Sustainable Development Commission and authored by Shift.
The paper’s author, Shift President and Co-Founder Caroline Rees, make the case that companies make a mistake when they assume that their best chance to have a positive social impact is through philanthropy, social investment or new business initiatives and models such as “shared value.” While these can bring valuable benefits, they fail to leverage companies’ most immediate and powerful connection to people around the world: their existing operations and value chains. | Also see: Caroline Ree’s Viewpoint on this topic from September 2016
“For too long companies have believed – or been told – that
respecting human rights is ‘just’ a matter of compliance or ‘do no harm’
– that it is not ‘innovative’ or ‘mature.’ Yet the truth is quite the
opposite. Companies working to respect human rights across their
entire corporate social footprint – across their operations and into
their value chains – are doing some of the most exciting innovating of
all, with the potential for transformative impact on the lives of
millions of people,” said author Caroline Rees.
Companies don’t need to look far for inspiration. In the paper, Rees states that the core of this opportunity to contribute to human development lies in implementing the existing global standard about companies’ impacts on people: the UN Guiding Principles on Business and Human Rights. The Guiding Principles are strongly backed by companies, governments, investors, trade unions and civil society. They set out the need for all companies to drive respect for human rights across their business relationships as well as their own activities. The paper argues that by applying resources, leadership and collaborative energies to this task, companies can achieve uniquely far-reaching and sustainable positive impacts.
The UN Guiding Principles were authored by former Special Representative of the UN Secretary-General Professor John Ruggie, who is also the Chair of Shift. Giving a keynote address today at the United Nations, Professor Ruggie gave his address on the topic of business contributions to the Sustainable Development Goals, drawing on the paper’s findings. | See full text of John Ruggie’s speech
“The labor of roughly one in six workers in the world today is part of multinational value chains. And many of the workers in multinational value chains have families and live in communities, which suffer the ill effects or reap the benefits from how those workers are treated. The numbers add up very quickly to reach perhaps two billion people or more out of the total world population of 7.4 billion. If companies make efforts to ensure those people are treated with respect – that is transformative impact at scale,” said Professor Ruggie. | Also see: Professor Ruggie’s letter to the Business and Sustainable Development Commission, February 2016
The paper is one of a series commissioned and published by the Business and Sustainable Development Commission. In January 2017 the Commission will publish a position paper that
draws on the findings of all the commissioned studies, including the
one authored by Shift. According to the Commission, this report, “will
serve as the foundation from which [the Commission] will launch a number
of activities to inspire and mobilize a growing number of business
leaders to align their companies with social and environmental impact.”
The following is the full text of the keynote address
delivered by Shift Chair and author of the Guiding Principles John
Ruggie on November 14, 2016 to the UN Forum on Business and Human Rights
in Geneva, Switzerland.
Also see: Our short framework for action that any company should and can follow to contribute to sustainable development
I suspect that many of you here today were surprised, as I was, by
the results of the US presidential election. I also suspect that many of
you were surprised, as I was, by the results of the Brexit referendum.
Perhaps we should not have been.
As far back as January 1999 former UN Secretary-General Kofi Annan warned, in a World Economic Forum speech,
that unless globalization has strong social pillars it will be fragile
and vulnerable —“vulnerable to backlash from all the ‘isms’ of our
post-cold war world: protectionism; populism; nationalism; ethnic
chauvinism; fanaticism; and terrorism.” He specifically appealed to the
business community to step up and play its role in achieving a socially
sustainable globalization.
Clearly, we must redouble our efforts. Equally important, we have to
maximize the effectiveness of our efforts to make globalization work for
all because, as Annan has also said, if it doesn’t, “in the end it will work for none.”
We neither need, nor do we want, additional evidence of his prophetic insight.
In keeping with the urgency of this challenge, my focus today is on
the relationship between the Sustainable Development Goals and the UN
Guiding Principles on Business and Human Rights. And my message is that
for business to fully realize its contribution to sustainable
development, it must put efforts to advance respect for human rights at
the heart of the people part of sustainable development.
The Guiding Principles set out the global standard of what businesses
must do to embed respect for human rights throughout their operations
and business relationships. The SDGs, in turn, are a vision statement
and action plan for achieving social and environmental sustainability on
our planet. Logically and in practice the two should be inextricably
linked, with the Guiding Principles setting the tone for the social
components of the SDGs to which business is expected to contribute.
Given the sheer ambition of the SDGs and the pressing need for all
sectors of society to contribute to their realization, I urge businesses
everywhere to help meet our common existential challenge.
At the same time, I want to flag an emerging risk I see in some of
the SDG narratives within the business community that may weaken the
link between the Guiding Principles and the SDGs, or possibly sever it
altogether. This can occur when businesses are encouraged to believe
that advancing respect for human rights involves merely doing no harm,
and that to do positive good they need to go beyond respecting rights.
This view misses one of the most important features of respecting human
rights. When companies drive respect for human rights across their own
operations and their global value chains, they generate an unprecedented
large-scale positive impact on the lives of people who may be most in
need of the benefits of sustainable development.
Is there a risk of weakening the link between the Guiding Principles
and SDGs? And if there is, how should it be dealt with? Let me begin by
summarizing some of the emerging narratives that are the source of my
concern.
First, the General Assembly resolution adopting the SDGs in its
operative part makes only a passing reference to relevant standards and
agreements that address corporate accountability for human rights harm,
including the Guiding Principles. This may be misread by some to imply
that these standards matter less than getting business to engage in the
SDGs on any terms. Of course that was not the intent, as the
Resolution’s section on implementation makes abundantly clear. But it is
an impression that we are starting to see gaining ground.
Second, quite a number of business strategies for contributing to the
SDGs draw on the Creating Shared Value paradigm, made famous by my
Harvard colleague Professor Michael Porter. In a Harvard Business Review
article Porter defines creating shared value as “the policies and
operational practices that enhance the competitiveness of a company
while simultaneously advancing the economic and social conditions in the
communities in which it operates.” It stands to reason that any such
win-win situation should be prized and seized upon, and the more of them
that can be created, the better.
However, Porter clearly stipulates that “creating shared value
presumes compliance with the law and ethical standards, as well as
mitigating any harm caused by the business.” But isn’t the business and
human rights challenge precisely about the fact that this presumption
fails to hold in far too many circumstances? Why else would we have
needed the Guiding Principles? Why else is there a move in several
countries, including France and Switzerland, to make human rights due
diligence mandatory? Why else are some governments and many advocacy
groups pushing for the adoption of an international business and human
rights treaty? In short, business strategies drawing on this paradigm
need to take into account that its underlying presumption is problematic
in practice.
My third concern stems from findings in early consultancy reports.
Most companies surveyed indicate that they are not planning to assess
their possible contributions against all 17 SDGs but, in the words of
one report, that they will “cherry-pick.” On what basis will they pick?
The answer is: materiality, or put simply, business risks and
opportunities. But business and human rights in the first instance is
not about what is material to the firm: it is about the salient risks,
or most severe potential harms, that business activities and
relationships pose to people. Salient risks may turn out to be material
to the business if they are left unattended. But a traditional
materiality test will often miss them. Nor can business initiatives to
promote social goods substitute for failing to address salient risks.
This is a fundamental difference between human rights and climate
change: in human rights there is no equivalent to buying carbon offsets.
A fourth and related reason for my concern stems from the way in
which strategies for contributing to the SDGs are being framed by some
who are advising business. The claim is made that these strategies are
so novel that they will generate “transformative” and even “disruptive”
business models. Indeed, one report suggests that the SDGs invite a
shift “from responsibility to opportunity.” It posits what it calls a
“maturity continuum,” with responsibility at one end, and transformative
opportunity at the other. Now, who would not prefer to be considered
“mature” and leave behind the irksome task of being responsible for
one’s own negative externalities in the quest for new business
opportunities? Of course, no such maturity continuum exists. In fact,
getting respect for human rights right is itself radically
transformative and disruptive.
My fifth and perhaps most critical concern is the assumption embedded
in this whole discourse that respecting human rights is merely about
stopping a negative practice, lacking the more inspirational virtue of
making a positive contribution. This rests on a false dichotomy, between
compliance-based views of ‘respect’ on the one hand, and voluntary
efforts to ‘promote’ human rights on the other. Ironically, this is the
same false dichotomy on which the old CSR model was based—a dichotomy
the Guiding Principles left behind long ago.
Consider this example. Companies have learned that non-discrimination
in their personnel practices involves much more than adopting a few
rules to regulate unacceptable behavior. It involves instituting a
positive culture of inclusion and diversity, of empowering people whose
potential previously might have been discounted, of providing equal pay
for equal work and equal opportunity for advancement. It requires
extensive training and other support systems that did not exist before.
These are not negative acts. They are powerfully affirmative,
transformative and even disruptive of traditional practices.
One of the Guiding Principles’ most transformative contributions is
the requirement that companies’ responsibility to respect human rights
is not limited to their own operations, but extends to human rights
impacts connected to their products and services throughout their
network of suppliers and other business relationships. The GPs recognize
that companies do not control every dimension of these relationships,
so they introduce the concept of leverage. Where people’s human rights
are adversely affected by activities in a company’s value chain, the
company’s responsibility is to use its leverage to try to improve those
people’s situation. Where the leverage is insufficient the company is
expected to try and increase it, perhaps in collaboration with other
companies or different stakeholders. I venture to predict that this is
where business can make its single biggest contribution to the people
part of the sustainable development agenda.
Why? Because the labor of roughly one in six workers in the world
today is part of multinational value chains. This doesn’t count those in
“informal” work, which may include in-home subcontractors. It does not
count non-standard work, such as temporary work or forced labor. Also
reflect on the fact that many of the workers in multinational value
chains have families and live in communities, which suffer the ill
effects or reap the benefits from how those workers are treated. The
numbers add up very quickly to reach perhaps two billion people or more —
out of the total world population of 7.4 billion. Now that is scale.
A concerted effort by business to respect the human rights of workers
in their global value chains would have two transformative effects.
First, by helping to ensure that people are paid a living wage, that men
and women workers are treated with equal dignity and provided equal
opportunity, that their rights to organize and bargain collectively are
respected, their health and safety on the job and in their communities
protected, and so on, business would uplift those people’s situation
significantly. It would enable them to lead decent lives and contribute
to their own wellbeing as well as their country’s development — while
also increasing the global consumer base of business.
I hasten to add that this focus involves not only SDG 8 (decent work
and economic growth). It would also have positive effects on SDG 1
(poverty), 2 (hunger), 3 (health), 4 (education), 5 (gender equality), 6
(water and sanitation), 10 (reduced inequalities), 11 (sustainable
communities), and in some respects even SDGs 14 and 15 (life below water
and on land). I strongly suspect that the scope and scale of the
positive impacts this would unleash significantly outstrip many of the
initiatives that currently dominate business attention and resources.
A second benefit of focusing laser-like on respect for human rights
in global value chains would be to help manage the growing threat that
globalization itself faces from populist forces in industrialized
countries. Whether on the political left or right, these populist forces
involve people who have been left behind by the liberalization and
technological innovations that have made it possible to slice and dice
production processes into the most minute of parts, each located where
labor costs are cheapest or the regulatory context is the most
malleable. Surely a more level playing field is a better answer to this
challenge than more Brexits and other such electoral surprises.
So to conclude, of course businesses should look for every
opportunity to create shared value and find other ways to contribute to
the SDGs. So much hangs in the balance. My concern is that the greatest
potential contribution business can make risks getting discounted in the
minds of too many, as they slide along an imaginary continuum from
responsibility to opportunity.
In contrast, my proposition to business — and to you all — is that
far from being at the “immature” end of a transformative trajectory of
business models, respect for human rights, respect for the dignity of
every person, is at the very core of the people part of sustainable
development. And as if that alone were not enough, it is also the key to
ensuring a socially sustainable globalization, from which business
stands to be a major beneficiary.
In an “exceptional agreement”
signed Friday October 28 in The Hague, a multistakeholder group
including individual banks, the Dutch banking association, the
government, unions and civil society have agreed to a commitment and
course of action to ensure Dutch banks respect human rights in line with
the UN Guiding Principles on Business and Human Rights and the OECD
Guidelines for Multinational Enterprises.
This agreement is the second resulting from the Dutch government-led
“covenant process” that brings together companies, government, unions
and civil society to agree on collaborative approaches to manage human
rights, environmental and related risks in specific Dutch industries’
global value chains. Shift is very pleased to be supporting the Dutch
Ministries of Foreign Affairs and Economic Affairs and the Social and
Economic Council of the Netherlands (SER) to help facilitate the
dialogue processes that bring about these agreements.
The complete agreement is available here, and the SER’s press release is available here.
Key elements of the agreement include:
The agreement goes beyond the area of project finance (where most attention has been focused to date) and includes all general corporate loan activities by the adhering (signing) banks. This means, for example, that the banks commit to promote free, prior and informed consent (FPIC) principles that are currently applicable in a project finance context also with corporate loan clients where there is a “fair possibility of land rights violations”;
It goes beyond the fact of having a policy commitment to focus on the need for the adhering banks to strengthen their human rights due diligence processes, specifically in risk assessment and taking action on identified risks, including through improved client engagement on human rights issues;
It commits the signatory parties to develop a publicly available database that can provide reliable information about human rights risks and serve as one of the sources of the banks’ due diligence, and also to undertake a series of public “value chain risk mapping exercises,” drawing on a methodology developed by the SER and Shift, starting with the palm oil, cocoa and gold value chains to better identify where banks can use their leverage to address impacts occurring at different points in those value chains;
The agreement has a particular focus on transparency and reporting, and the adhering banks commit in 2017 to work towards “reporting in line with or equivalent to the UN Guiding Principles Reporting Framework“;
The adhering banks recognize their responsibility to provide remedy, including using their leverage to encourage their clients to meet their own responsibilities in this regard; but the agreement also provides for further work on this topic through a dedicated working group that will develop further recommendations by the end of 2017 and the creation of an independent expert advisory mechanism that can support the banks with the handling of complaints;
The agreement also provides for further work to be undertaken on how banks can build and use leverage (drawing on Shift’s core categories of leverage);
The government, trade union and NGO signatories commit to a range of activities to support the banks in meeting their responsibilities under the agreement, including through sharing information and expert perspectives on challenging issues;
The parties agree that if a parallel covenant on managing risks in asset management (involving pension funds, insurers and institutional investors) is not concluded by the end of 2016, then they will move to address that topic as well (within the realm of banking activities);
Finally, the agreement establishes a multistakeholder steering committee and an independent monitoring committee and sets out in detail how disputes between the parties are to be resolved.
Update: In January 2017 the Business and Sustainable Development Commission published a position paper on business’s role in sustainable development, Better Business, Better World. That position paper draws on a report authored by Shift and strongly supports our message that respect for human rights must be at the heart of any company’s efforts to contribute to the Sustainable Development Goals.
The UN Sustainable Development Goals
(SDGs) are currently a big feature on global agendas — and they
include a call to business to play a role in their implementation. Since
the establishment of the SDGs, however, many companies have asked us
what their connection is to the UN Guiding Principles on Business and
Human Rights. Are the SDGs an alternative to or substitute for the
Guiding Principles? Are they separate ideas with separate implementation
needs?
The simple answer is no: contributing to the SDGs is neither a substitute for, nor unrelated to, implementation of the Guiding Principles. In fact, the two are interwoven in the same fabric. For business to realize its full contribution to sustainable development, it must put efforts to advance respect for human rights at the heart of its strategy.
More clarification on the connection between the SDGs and the Guiding Principles is available in a November 2016 paper published by the Business and Sustainable Development Commission and authored by Shift. Its key points include:
When talking about the “planet” part of sustainable development, companies focus above all on how they can reduce their negative impact on the environment, and the important positive outcomes that will generate. But when it comes to the “people” part, most companies dismiss discussions about reducing negative impacts as mere “compliance” and focus their energies on strategic philanthropy, social investment, shared value and similar efforts.
This misses the point about respect for human rights. When companies drive respect for human rights across their operations and value chains, they can have a sustained and large-scale positive impact on the lives of the people most desperately in need of development. “Diversity and inclusion” programs address problems of discrimination, yet we recognize the positive outcomes they bring for so many groups in the workplace and broader society. It’s no different when it comes to other human rights.
Moreover, under the Guiding Principles all companies have a responsibility to use their influence to drive respect for human rights through their value chains. When we consider the millions of people working in and affected by those global supply chains, for whom abuses of their human rights are a barrier to even basic opportunities, we start to see the true potential for how every company, large and small, can make a major contribution to sustainable development.
In September 2016, I gave a webinar to the World Business Council
for Sustainable Development about the connection between the SDGs and
the Guiding Principles. See my explanation below.
On May 28, 2016, the International Bar Association (IBA) adopted the IBA Practical Guide on Business and Human Rights for Business Lawyers. The Practical Guide is the product of extensive research; its insights are founded on consultations with lawyers across practices and bar associations spanning the globe. As IBA President, it has been my distinct privilege to support John Sherman and his dedicated IBA Working Group in their tireless efforts.
I firmly believe that the Practical Guide marks a watershed in the
disciplines of human rights and corporate law – disciplines we now
recognize as related and interwoven.
In the Practical Guide, we sought to, “enable lawyers around the
world to understand how best they can serve their clients,” at a time
when successful businesses must navigate a multitude of risks grounded
not only in government regulations, statutes and judicial decisions, but
also in ethics, public expectations and international norms. Faced with
this rapidly evolving business environment, it seemed only natural that
the role of lawyers should evolve accordingly.
The Practical Guide considers this evolution in terms that are clear
and reasonable. The widespread endorsement of the UN Guiding Principles
on Business and Human Rights has practical implications for business
lawyers across disciplines. These implications are neither revolutionary
nor vague. Corporate governance may include systems to manage human
rights risks; non-financial reporting may include disclosure on well
such systems work; resolving disputes effectively may turn on
non-judicial grievance mechanisms and a more holistic consideration of
business interests; and, contracts may be drafted to bring precision and
certainty throughout global value chains. The IBA will shortly publish a
Reference Annex, also being prepared by the Working Group headed by
John Sherman, which explores these and other implications of the Guiding
Principles in more detail.
The overarching message for lawyers as business advisors is
straightforward and powerful. We cannot now – if we ever could –
conceive of our role exclusively as technical specialists in
black-letter law. Rather, our clients need us to be wise counselors, who
integrate legal, ethical and business concerns in all our advice.
Embracing that role should not, of course, come at the expense of our
entrenched and unique professional obligations to our clients. But we
serve our clients best by ensuring that we are able to advise them on
what is legal and what is right.
The Practical Guide also sheds light on the responsibilities of law
firms as business enterprises in their own right. The issue is complex.
While the Practical Guide emphasizes the importance of clients’ right to
counsel and the independence of lawyers, it also properly speaks about
law firms’ responsibility to consider the Guiding Principles in their
own operations and value chains. Integrating respect for human rights
across legal advice and law firm operations – all the while balancing
our professional ethical obligations – will take time and effort. The
Practical Guide marks the crucial first step of the journey.
I hope and expect that the Practical Guide will serve as a beacon for
lawyers across disciplines and across the world. I, for one, am
committed to building on its lessons at the IBA and integrating them in
my practice. At Debevoise & Plimpton, we have already begun to
implement the Practical Guide with the launch of a dedicated Business
Integrity Group, which integrates human rights, environmental and
anti-corruption advice across our practice areas. I have been delighted
by our clients’ enthusiastic response to this effort to reduce the legal
and financial risk that arises from the leading integrity standards
like the Guiding Principles, the US Foreign Corrupt Practices Act and
the UK Modern Slavery Act.
As a practitioner and policy maker, I am very optimistic about the
future of business and human rights as a legal discipline. It will not
be long, I suspect, before all lawyers strive to be the wise counselor
to our clients. Our profession will long be indebted to the Practical
Guide as we forge ahead to become more than technical specialists and
endeavor always to be guardians of our clients’ integrity.
David W. Rivkin is President of the International Bar Association and Partner at Debevoise & Plimpton. | Read David’s full bio
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