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ABOUT
It is perhaps a cliché to say that the COVID-19 pandemic has surfaced the urgent need to reimagine the relationship between business and people. Over the past few months, we’ve seen how the workers that companies depend on the most – essential workers – are also very often the ones that are most vulnerable to harm. We know things need to change. But, what conversation should we have to move things forward?
Is it a political conversation about how structural inequality leads to lack of opportunity in our societies? Is it a discussion about how companies should report not only to shareholders, but to stakeholders affected by the business? Should we first talk about the interconnection between people and planet in building a sustainable future? Or is it about the incentives that investors create in how they measure business performance?
The answer, perhaps, is all of the above.
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October 2020 |
Transforming How Business Impacts People: Unlocking the Collective Power of Five Distinct Narratives
The truth is, for some time now, we’ve had multiple conversations happening at the same time about how we can transform the way business impacts people. And, while they are all very much needed, the truth is that these “narratives” that we use to try to persuade decision-makers, end up competing for limited attention. The risk, of course, is that they end up diluting each other.
How can we make sure that we make the essential points that each narrative has to offer, while offering a cohesive story that bridges them together?
In this short conversation, Caroline Rees (Shift) and Phil Bloomer (BHRRC) discuss how Business and Human Rights may offer a unique way to navigate this broad array of civil, political, economic, social and cultural impacts on people, both through their focus on those impacts that reach the point where they undermine people’s dignity and equality, and through their underpinning in the UN Guiding Principles on Business and Human Rights, which provides a standard for what we can and should expect of business as well as governments.
As we approach the 10th anniversary of the UN Guiding Principles, these two leaders in the business and human rights space talk about how we can and must seize this unique moment to define a shared vision that brings the power of these narratives in ways that can bring about the change we need.
Human rights are about valuing and ensuring individual dignity. And respect for peoples’ dignity is fundamental to the values enshrined in the Olympic Charter. As we assessed what the IOC had in place, we found many examples of how the organization has carried out important work on human rights, even if it has not always been described as such. But this work has typically happened in silos, independently of an overarching or coordinated approach on human rights. Recently, this has begun to change as the IOC has become more explicit about the centrality of human rights in its own operations, its role as custodian of the Olympic Games, and its leadership of the Olympic Movement. However, more remains to be done.
Our assessment included consultation with a broad range of IOC staff as well as with expert stakeholders – from human rights NGOs to trade union representatives – whose perspectives informed our understanding of the human rights challenges and opportunities across the Olympic Movement.
Our final report – delivered to the IOC in March 2020 – sets out our recommendations on how the IOC can meet its human rights responsibilities and demonstrate leadership on human rights for the Olympic Movement as a whole through a comprehensive strategy that builds on Agenda 2020 and is aligned with UN human rights standards. Today, we welcome the IOC’s decision to publish our report in full– we believe that this demonstrates the organization’s commitment to engaging with its human rights responsibilities and shows needed leadership on human rights for the Movement.
We are also encouraged that the IOC has announced that from January 2021, it will move forward on building its internal capacity on human rights and start developing an overarching strategy, in line with our recommendations. We also commend the IOC’s commitment to explore an amendment to the Olympic Charter.
While we know that some of our recommendations remain challenging for the IOC to implement, we appreciate that the organization is making them public and inviting dialogue on them. We look forward to continuing to engage with the IOC as it moves forward.
For media inquiries regarding this statement, please contact communications [at] shiftproject [dot] org.
This article originally appeared in this compendium by the Business and Human Rights Resource Centre
As the debate on mandatory human rights due diligence (mHRDD) at the EU-level starts to move from the if to the what and the how, a key concern that policymakers must grapple with is the size of businesses covered by any incoming legislation.
While our work with some forward-thinking small and medium-sized businesses suggests that they boast some significant advantages over their larger counterparts when it comes to realizing their responsibility to respect human rights, legislators will need to act with care not to disadvantage them. The first step would be to anchor mHRDD in the UN Guiding Principles’ understanding that while the responsibility to respect human rights applies to all businesses, the means through which a company meets that standard will vary according to its size.
Here are five key considerations to support such an approach being reflected in new legislative developments:
Half of the world’s population works for a small or medium business
First, let’s look at the numbers: SMEs account for about 90% of all businesses and contribute up to 50% of total employment in the world. That is why, if legislation aims to drive positive outcomes for people in the context of business activity, it must reach the businesses people work for and interact with. What’s more, we see that the support amongst larger businesses for mHRDD increasingly hinges on the inclusion of SMEs in any such regimes, given the interest of multi-nationals in the level-playing field and the increased leverage with resistant suppliers that mHRDD promises.
Prioritization of salient issues
Most stakeholders recognize that companies – regardless of size – need to prioritize their salient human rights issues. For small businesses with limited resources, prioritizing action on the most severe risks to people is even more crucial to get traction. For instance, we’ve spoken to businesses in the apparel, food, retail and cleaning sectors that have made progress by focusing on addressing the problem of low wages, believing this will have knock-on effects on a host of other rights. The expectations hardwired into legislation ought to reflect the need to enable businesses to prioritize action on human rights impacts based on their severity and that the complexity of company processes for identifying and taking action on impacts will be affected by the size of the company in question.
A focus on the quality of relationships with business partners
In comparison to larger businesses, SMEs tend to have fewer suppliers and customers, which can enable deeper and better-quality relationships. In work that we’ve done with forward thinking SMEs, we’ve seen how they often spend a lot more time selecting business partners that are the right fit and putting more up-front investment into finding those who share their values and tend to perform well on human rights. For small businesses that aim to respect people, partnership with suppliers is a necessity not a choice.
However, there is a risk that legislation on mHRDD incentivizes an approach where a buyer ‘polices’ its supply chain through a process of monitoring and social audits. This approach would fail to encourage the right behaviors for any business, but would particularly impact SMEs. As policymakers consider how best to articulate the standard of human rights due diligence, they should encourage practices that focus on relationship-building, not policing, to work towards better outcomes for people.
Expectations on action need to move beyond commercial and legal leverage
SMEs often lack the cold, hard commercial leverage of larger multi-nationals, and must think more creatively. For instance, we’ve seen how one medium-sized business 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. This business achieved buy-in through explaining the benefits of the program, and drawing on the trusted relationship it had developed, rather than requiring suppliers to participate.
Under any form of mHRDD, the nature of a company’s involvement with a human rights impact, and the strength of the action it has taken to prevent it from occurring, is likely to determine the assessment of the consequences the company faces. Such assessments must consider the wide spectrum of avenues to effectively influence business partners, rather than honing in narrowly on the extent to which a company has deployed legal or commercial leverage, which SMEs are unlikely to possess.
Respect for human rights is more than a mechanical due diligence process
One of the advantages that committed SMEs have over their larger counterparts when it comes to human rights is a greater facility to nurture a culture that supports people and their ability to speak up for themselves. For SMEs, people truly are their most important asset. The very lack of resources and stretch that skeptics cite as reasons why SMEs may find it difficult to respect human rights means that smaller businesses have to respect, trust, motivate and empower their employees to succeed. From talking to executives in SMEs, it is clear to us that 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.
Experience shows that even the most sophisticated human rights risk management processes will bear little fruit if they are not fully embedded in company culture, lived by the business’ leaders, and supported by effective governance structures. Here, values-driven SMEs have an advantage and legislation should support that relative strength, setting the expectation not just for a mechanical due diligence process, but one that lives and breathes, informing company behavior and decision-making.
Structuring legislation to encourage and compel companies to adopt and scale rights-respecting business practices and behaviors is no small task. But the legislation will have limited impact for the people that need it the most if it does not consider how best to incorporate SMEs within its scope. Doing so means ensuring an adaptable framework that sets a clear standard of conduct, but allows businesses of all sizes to reach that standard drawing on their unique strengths and expertise.
We are proud to share that Shift’s Senior Advisor, David Vermijs, is among the 40 selected members of the multi-stakeholder task force appointed by the European Reporting lab to produce recommendations on the potential development of EU non-financial reporting standards. This forms part of the preparatory work for a revised version of the EU Non-Financial Reporting Directive, due in 2021.
During the first phase of the project, David is co-leading a workstream that will analyze and assess the conceptual framework for potential reporting standards, including approaches to materiality, linkages to the SDGs, and the structure and types of relevant information.
Good reporting standards have a critical role to play in both reflecting and shaping responsible business conduct.
A revised Non-Financial Reporting Directive and robust reporting standards can create coherence for companies between what they are expected to do and to report when it comes to managing their impacts on both people and the planet. Effective reporting is in particular critical for markets to be able to recognize and reward those companies that are consistently progressing in their efforts to identify and address the most critical risks to people in their operations and value chains.
The EU initiative is therefore both critical and timely. It should also support a move towards more coherent and consistent standards at the global level.
The Working Group’s project is forward-looking. So are the UNGPs. They embody two core strategic concepts that are as relevant today as they were in 2011 when the Human Rights Council endorsed them unanimously.
The first is leveraging opportunities to drive human rights considerations into everyday decisions by businesses and governments.
The second is the need for a smart mix of measures, national and international, voluntary and mandatory, in order to achieve that aim.
In big picture terms, what guidance do they provide as we look ahead? Let’s look first at leveraging human rights into the mainstream.
Today, there is near-universal consensus on the need to build back better from the worst pandemic in a century, and for many countries possibly the worst recession since the Great Depression. Building back better must not become a slogan for some technical fix. It should serve as a call for a fundamental rethink of how things are done, one which puts people at the center rather than treating them as a factor of production.
Building back better must not become a slogan for some technical fix. It should serve as a call for a fundamental rethink of how things are done, one which puts people at the center rather than treating them as a factor of production.
In addition, for the first time in a half-century, a serious debate is taking place within the business community itself regarding the social purpose of the corporation. Is it merely an instrument to serve the interests of securities holders? Or is it a social entity that should also serve a broader range of stakeholders, including workers and communities – whether they are next door, at the other end of global value chains, or virtual?
Or take yet a third opportunity, the remarkable rise in ESG investing – incorporating environmental, social, and corporate governance criteria into investment decisions. ESG investing, modest in scale until the 2008 financial sector meltdown, now accounts for close to one-third of all assets under management globally. Virtually every theme under the S in ESG addresses human rights: workplace standards, diversity and inclusion, community relations, and so on. But ESG analysts, data providers and asset managers don’t yet seem to be aware of this. As a result, the widely different metrics they use to measure the S factors make it hard to compare performance across firms and sectors.
In short, we are surrounded by opportunities to drive human rights considerations into every-day decisions by business and governments: building back better, the corporate purpose debate, and ESG investing. Let’s seize them.
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December 2019 | Video
Keynote Address by John Ruggie at the Conference ‘Business & Human Rights: Towards a Common Agenda for Action’
A smart mix of measures is required to support these transformative opportunities. What would that look like in the context I have sketched out? To make it concrete, let me focus on the EU as an illustration.
A smart mix of measures would begin with consideration of the kind of mandatory human rights due diligence Commissioner Reynders has just described.
It would link the due diligence provisions to the revision of the non-financial disclosure requirements the EU is also undertaking – it makes good sense for the two to reinforce one another. In turn, this means that the materiality construct in the reporting requirement recognizes potentially high impact risks that are emergent but not yet imminent, which is the case for climate change and certain human rights harms.
Furthermore, a smart mix would include drawing on these initiatives to promote greater consistency among ESG standards, for which everyone is clamoring but no authoritative entity is providing.
Finally, this level of policy coherence would provide the EU External Action Service with a robust position for engaging in the ongoing business and human rights debate in Geneva.
Our fragile world is in desperate need of systemic change. Unconnected fragments here and there will not achieve the outcomes we need. Thank you again, and bon voyage to the Working Group as it heads towards a decade of global implementation.
This document contains reflections offered by Shift to the World Economic Forum on its white paper ’Towards Common Metrics and Consistent Reporting on Sustainable Value Creation’. The document is based on Shift’s expertise and experience working directly with companies, standard setters and financial institutions. It focuses on indicators and metrics most relevant to the assessment of impacts on people, and draws on Shift’s work leading the improvement of human rights reporting by companies and Valuing Respect, our current initiative to advance better ways to evaluate business respect for human rights.
Shift, IHRB, The Business & Human Rights Resource Centre and the European Coalition for Corporate Justice have written to Sergio Mujica, Secretary General of the International Organization for Standardization (ISO). In the letter, we make the case for why ISO should not proceed with proposals to revise the ISO 26000 social responsibility standard, nor to establish a technical committee charged with introducing further private standards on responsible business conduct.
The ISO 26000 standard was adopted in 2010 in careful alignment with key international standards on business and human rights, and we are concerned that its reopening will become a major distraction from the development of international and national laws in relation to environmental and human rights due diligence.
Please read the full letter below and share it with your networks.
This article is available in PDF format. To download it click here.
The human toll of COVID-19 is growing daily, with over 3 million confirmed cases globally and 26 million unemployment claims in the US alone – well before April is out. The burden is falling disproportionately on the people least able to bear it: those in low-paying jobs, exposed to health risks on the frontline of the pandemic response; losing those jobs altogether in western workplaces and overseas supply chains; or cooped up in worker dormitories far from home and without protection. Against this backdrop, the reactions of business to the pandemic are under as much scrutiny as those of governments. Even mainstream business media are keeping a log of the ‘sinners and saints.’
One clear rule of thumb is emerging as to who is getting their response to the COVID-19 crisis (at least mostly) right: those companies that focus first on the most vulnerable.
As the accounting continues, one clear rule of thumb is emerging as to who is getting their response to the crisis (at least mostly) right: those companies that focus first on the most vulnerable. The language of ‘vulnerability’ peppers the news and commentary as never before. Yet it is far more than just a label for the people who stand to lose the most as this crisis unfolds. It is the essential lens we must apply if a new stakeholder capitalism is to succeed: the difference between how our economies have worked in the past and how we need them to work going forward.
Before the pandemic hit, there was already a growing movement away from Milton Friedman’s idea that business should focus on maximizing shareholder returns. The gross and growing inequalities in our societies are the now inescapable result of externalizing risks and costs of business onto vulnerable ecosystems, workers and communities.
Yet this new narrative of ‘stakeholder capitalism’ always risked being far less radical than it appeared – potentially even the ‘virtuous side hustle’ some have feared from the get-go. Why? At least in part because the categories of stakeholder beneficiaries – employees, suppliers, customers and communities – were defined so generically that they necessitated little real change from the status quo.
The new narrative of ‘stakeholder capitalism’ always risked being far less radical than it appeared – potentially even the ‘virtuous side hustle’ some have feared from the get-go.
Take ‘employees.’ The term includes those generously compensated in safe jobs as well as those whose pay, security and benefits are vulnerable to cost-cutting initiatives. It also excludes altogether people whose roles are externalized by evolving business models and strategies into categories of ‘contractor’ or the nominally ‘self-employed.’ The category of ‘suppliers’ blurs the line between large, strategic partners and small or more remote businesses whose cash flow is fragile and whose workers’ wages are the first to give under pressure.
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May 2020 | Publications
Making Rights-Respecting Business Decisions in a COVID-19 World
Similarly, ‘customers’ are by definition those who can afford to access a company’s products or services; yet the term does not call out those who are stretched to do so, and excludes, of course, those who simply can’t. Meanwhile, ‘communities’ can continue to be viewed as the beneficiaries of corporate philanthropy rather than groups whose health, livelihoods and opportunities may be directly affected by company actions and decisions.
With all this flexibility in interpretation, the new ‘stakeholder capitalism’ built a broad church. It certainly embraces companies committed to understanding how business practices may harm people across their value chain, and to reducing those impacts. However, it also readily accommodates companies hoping for little more than marginal adjustments to usual practice, or continuing to bank on business models that embed risks to people at their core. Little surprise, then, that some CEOs seemed taken aback to find that their new commitments raised expectations of real and substantive changes to address the inequalities of today.
Yet this pandemic, with all its awful consequences, is fast removing the ambiguity about what matters. At least in the Global North, it is showing the lens of vulnerability to be essential for businesses to determine how they should act, and a guide for how popular opinion will react. This focus on vulnerable people, once seen by many as idealistic, is becoming a primary expectation from investors, public figures, civil society and business commentators alike.
A focus on vulnerable people, once seen by many as idealistic, is becoming a primary expectation from investors, public figures, civil society and business commentators alike.
Meanwhile, companies are identifying and prioritizing those customers who are most exposed to harm, with grocery stores offering earlier hours to the elderly, and some key service providers prioritizing the vulnerable over those who can better cope. And we see businesses thinking afresh about impacts on communities. Some that can afford to make new hires are drawing from local, hard-hit populations; others are collaborating with governments to address systemic risks to those most in need.
The same Milton Friedman who spawned the ‘shareholder primacy’ theory that stakeholder capitalism now proposes to replace, ironically also wrote, “Only a crisis, actual or perceived, produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe is our basic function: to develop alternatives to existing policies, to keep them alive and politically available until the politically impossible becomes politically inevitable.”
It can no longer be viewed as impossible to make it the ‘new normal’ once we emerge from the pandemic. We just need to make it inevitable.
The idea that businesses must look beyond generic categories of ‘stakeholder’ to hone in on those individuals in workplaces, supply chains, transportation networks and communities who are most vulnerable is alive and available. It is embodied in the UN Guiding Principles on Business and Human Rights: a ready blueprint for governments and businesses to reorient capitalism to protect and respect those most at risk: a true ‘stakeholder capitalism.’
Companies that have led the way in putting the UN Guiding Principles into practice have shown a more natural reflex to focus on the most vulnerable in their response to the crisis, getting it right while others have fumbled. Yet it is the crisis itself that is now taking the lens of vulnerability to scale. It can no longer be viewed as impossible to make it the ‘new normal’ once we emerge from the pandemic. We just need to make it inevitable.
In February, the European Commission began seeking stakeholder feedback to inform the revision of the EU Non-financial reporting directive (NFRD) as part of its strategy to strengthen the foundations for sustainable investment.
Shift made this submission as part of the consultation, drawing on our work over several years to strengthen human rights reporting standards in line with the UN Guiding Principles on Business and Human Rights.
Lausanne, Switzerland. The International Olympic Committee (IOC) announced a series of initial steps on human rights today, following recommendations made by Shift’s Vice President, Rachel Davis in collaboration with HRH Prince Zeid Ra’ad Al Hussein, former UN High Commissioner for Human Rights. The measures were made public after the IOC’s most recent Executive Board meeting, in Lausanne.
Also Read
March 2019 | Engagements
Shift and Former UN Human Rights Chief to Advise the International Olympic Committee on Developing a Human Rights Strategic Framework
Adopting a comprehensive human rights strategy encompassing the IOC’s responsibilities in its own operations (including the activities of the IOC administration and its role as organizer of the Olympic Games) and setting out its role to advance respect for human rights as the leader of the Olympic Movement;
Establishing a Human Rights Unit with expert leadership, and continuing to strengthen human rights due diligence, the use of leverage and engagement with affected stakeholders in existing areas of work, including engagement with Olympic Games hosts;
The IOC will also establish a previously announced Human Rights Committee once the strategy is elaborated and the internal resources are in place to make it operational.
Rachel Davis and Prince Zeid submitted the recommendations in February as part of their joint report ‘Recommendations for an IOC Human Rights Strategy’, commissioned by the IOC in March 2019. During the past twelve months, Rachel Davis and Prince Zeid evaluated the IOC’s current approach, including through consultation with key internal staff and expert civil society stakeholders. Shift has been providing advisory support to the IOC since May 2018 and will continue to do so during the transition to the IOC’s new internal human rights capacities. We are committed to playing an objective, critical and transformative role in embedding respect for human rights in global sports governance, working side-by-side with others to drive meaningful change in the sports sector as a whole.
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