Increasingly, investors are becoming interested in understanding to what extent companies are respecting human rights, and whether their efforts are likely to improve the lives of affected people. A good place to start is by reading a company’s human rights disclosure. But company reports are often hard to analyze. On the surface, many companies will seem to be doing the right thing. But, how can investors tell whether what they are reading is meaningful and in line with what the UN Guiding Principles expect? This collection of resources was designed by Shift to help investors apply a people-centered approach to gain deeper insights from company disclosure.
This resource examines five excerpts from companies on their reporting of identification and prioritization of human rights risks. In particular, it looks at:
Whether the company only reports on issues it deems material to the business;
If the only indicated external input for the human rights issues the company prioritizes is a generic survey;
If a company’s list of material issues includes both individual human rights and a category of ‘human rights’;
Whether human rights issues are listed in company disclosure without further explanation of how these relate to the business’s own operations and value chain.
The European debate on mandatory human rights due diligence (HRDD) has gained significant momentum in the last year. A number of national initiatives are coming to a head in late 2020, and the European Commission is launching a formal consultation on a potential EU-wide regime on mandatory human rights and environmental due diligence. We have seen growing business support for mandatory HRDD, from both individual companies and business associations, as well as an increase in joint calls by business and civil society for such measures.
Also Read
October 2020 |
Opening Remarks by John Ruggie at the Conference “Human Rights and Decent Work in Global Supply Chains”
As we approach this critical moment, we have been working hard at Shift to support constructive discussions among government, business and civil society allies about the role and content of new regulation. In particular, we have been engaging with businesses that are supportive of new measures, but have concerns about what shape it might take and what the consequences might be.
In this briefing note, we explore what well-designed mandatory HRDD measures could look like, with a focus on the role of accountability – or consequences – for meeting a new legal standard of conduct. We set out three key considerations that we believe businesses that are committed to meeting their responsibility to respect human rights should keep in mind:
The legitimate role of liability in implementing the UN Guiding Principles
Incentivizing robust HRDD through accountability measures that go beyond liability
Assessing the quality of a company’s due diligence
“Effective regulation should take account of the legitimate concerns of various stakeholder groups. For mandatory HRDD, that means forging legislation that speaks to businesses’ concerns that liability on its own won’t incentivize the right kinds of practices and behaviors by companies throughout their value chains. But it also has to address the understandable views of civil society that a failure to meet an agreed standard of conduct should result in robust consequences, including a basis for those harmed to seek remedy.”
Advisor Daniel Berezowsky discusses how to use the lenses of LGBTQI vulnerability to identify risks connected to the business
In September 2020, Shift hosted a webinar on LGBTQI rights and the corporate responsibility to respect human rights, under the UN Guiding Principles. In the webinar, advisor Daniel Berezowsky discussed structural vulnerability due to discrimination on the basis of sexual orientation, gender expression, gender identity and/or sex variations. Business Learning Participants can access the full recording in the Business Learning Portal.
Everyone working to ensure that business acts with respect for people is in the business of behavior change. We want companies, and individuals within them, to act in ways that enable respect for human rights. That being so, it’s intriguing that we have not drawn on the vast range of existing psychological insights about how to influence behavior. In our first-of-its-kind experiment in the business and human rights field, we drew on the field of behavioral science to test how consumer choices might help to reduce pressure on couriers delivering online purchases. We found how best to nudge consumer behavior, which provided some surprising discoveries, data and evidence about what works.
We simulated an online shopping experience and asked 2,500 people to select their delivery options. Consumers’ delivery choices can place pressure on couriers handling the items. Using the latest psychological research, we designed six behaviorally-informed nudges to test what was most effective in nudging consumers towards choosing longer delivery times. This experiment and its revelations demonstrate the need for evidence and experiments… Continue to the full Viewpoint.
Katryn Wright is a Shift Associate. As a researcher, Katryn focuses on leveraging behavioral science to address common business and human rights and behavior change initiatives.
Edward Gardiner works as the Behavioural Design Lead at Warwick Business School.
Dr. Umar Taj is a Research Fellow in Behavioural Science at Warwick Business School.
Online shopping is booming. In the UK in 2019, average weekly online retail sales rose from £1.45billion in 2019 to £2.2billion in May 2020. Retailers have struggled to keep up with demand during the COVID-19 pandemic, comparing it to the Black Friday and Christmas rush periods. A critical part of the online shopping value chain are logistics companies who fulfill retailers’ delivery to consumers. The industry is fast-changing but many logistics companies rely on couriers who are often self-employed, not provided holiday or sick pay and face fines or don’t get paid at all if an item is not delivered.
Longer delivery windows enable better planning and forecasting, provided that retailers pass on the additional time to their logistics providers, who use it to support couriers. While some logistics providers pay couriers a premium to deliver high-value items, the delivery of these items can also place additional pressures on them. Self-employed couriers tend to only be paid if the item is delivered, which can delay or dilute payment if the courier must make multiple trips.
Shift – through it’s Valuing Respect Project – partnered with the Behavioral Science Group at Warwick Business School to see if behavioral science could suggest some ways to nudge consumers towards longer delivery windows that could reduce pressures on couriers.
Over the last few years, Shift has engaged with UK retailers, logistics providers and other stakeholders on the full spectrum of human rights challenges in final mile delivery in the UK. One driver of these challenges is customer choice when buying online and this experiment focuses specifically on the ways that consumers can be nudged to make more responsible decisions in relation to online delivery. A future Shift publication will address the wider human rights issues in final mile delivery and the ways that retailers, logistics providers, trade unions and Government can play a role in building a rights-respecting logistics sector in the UK in the aftermath of the COVID-19 pandemic.
Online shopping is booming. In the UK in 2019, average weekly online retail sales rose from £1.45billion in 2019 to £2.2billion in May 2020. Retailers have struggled to keep up with demand during the COVID-19 pandemic, comparing it to the Black Friday and Christmas rush periods. A critical part of the online shopping value chain are logistics companies who fulfill retailers’ delivery to consumers. The industry is fast-changing but many logistics companies rely on couriers who are often self-employed, not provided holiday or sick pay and face fines or don’t get paid at all if an item is not delivered.
Reasons why couriers are particularly vulnerable to harm
Longer delivery windows enable better planning and forecasting, provided that retailers pass on the additional time to their logistics providers, who use it to support couriers. While some logistics providers pay couriers a premium to deliver high-value items, the delivery of these items can also place additional pressures on them. Self-employed couriers tend to only be paid if the item is delivered, which can delay or dilute payment if the courier must make multiple trips.
Shift – through it’s Valuing Respect Project – partnered with the Behavioral Science Group at Warwick Business School to see if behavioral science could suggest some ways to nudge consumers towards longer delivery windows that could reduce pressures on couriers.
Testing Ways to Nudge Consumer Behavior
With that in mind, we ran an online shopping simulation experiment with 2,500 regular online shoppers in the UK. Participants were asked to imagine they were buying a low-value (book), medium-value (coat) and high-value (laptop) product. They were then asked to select their delivery preference for each. Participants were randomized into different groups and shown a range of delivery options, including:
Same-Day Delivery
Nex-Day Delivery
2-3 Days
3-5 Days
£6.49
£4.99
£1.99
Free
The control group received no nudge and acted as a point of reference to compare the effectiveness of the groups receiving the nudges. Participants in this group saw a list of delivery options from fast to slow, with the fastest option as the default. This mirrored how many popular online retailers present delivery options. Each of the other groups saw the same list of delivery options as the control group combined with a different “nudge,” as we tested how best to encourage consumers to choose “3-5 day” delivery instead of “same day” delivery. The nudges
( A nudge is a change in choice architecture to influence behavior and decisions in ways that are easy and cost-free and that retain freedom of choice. )
were:
Decoy
Decoy
Consumers were given an additional 12-14 day option, in order to make 3-5 days appear more reasonable.
Default
Default
The slowest delivery option (3-5 days) was pre-selected.
Empathy
Empathy
The consumer was shown a picture of a courier with a message about how their choice would affect them.
Ordering
Ordering
The delivery options were reversed, from longest to soonest, keeping the “same day” option pre-selected.
Recommended
Recommended
A message was added saying “Standard 3-5 day delivery is recommended by the Good Courier Network, an alliance of delivery providers who commit to responsible working practices for their drivers”.
Social
Social
A message was added saying, “Over 80% of people who purchase this item choose the Standard ‘3-5 day’ delivery option”.
WATCH | A WEBINAR WITH THE BEHAVIORAL SCIENTISTS BEHIND OUR ONLINE SHOPPING EXPERIMENT
Key Findings
Our starting point was the control group, where 18% of consumers chose the free, “3-5 day” delivery option. Our experiment then tested how we could bring this number down by nudging consumers. The graph below shows how nudges were effective in lowering the 18% by up to 4 points:
How Nudges Decrease the Number of Consumers Who Opt for Faster Delivery Options
0.05.010.015.020.0
18.0
Control
17.0
Decoy
17.0
Default
15.0
Social
14.0
Ordering
14.0
Empathy
14.0
Recommend
1. Consumers Want More Expensive Items to Arrive Sooner
As the item value increases, fewer consumers choose the free delivery option and more of them go for same-day delivery, even if they have to pay an additional £ 6.49.
Percentage of Consumers Who Chose the Free, “3-5 Day” Delivery Option
Percentage of consumers willing to pay £6.49 to receive their product the day they ordered it
2. The effectiveness of the nudges appears to be dependent on the value of the purchased product
Different nudges were more or less effective depending on what consumers were buying. For instance, when consumers were buying a laptop, they were more susceptible to change their behavior with the ’empathy’ nudge; however, when they were buying a coat, they were more responsive to ordering and recommendation. Interestingly, no nudge had a statistically significant effect on consumers buying the low-ticketed item, which was a book. This is not surprising as data confirmed that people are unwilling to pay for smaller value items to be delivered.
How nudges affected consumer behavior depending on the product they were buying
Increase in Percentage of Consumers Who Chose the Free, “3-5 Day” Option
Laptop
+6%
MOST EFFECTIVE NUDGE:
EMPATHY
+6%
Coat
+6%
MOST EFFECTIVE NUDGES:
Ordering and Recommendation
+6%
Book
+0%
MOST EFFECTIVE NUDGES:
No nudge made a statistically significant difference
+0%
It may be that buying an expensive, long-term investment item such as a laptop triggers more analytical thinking and makes the consumer more receptive to the reasoning in the message from the courier.
3. Several nudges that are effective in other contexts, didn’t seem to alter consumer behavior.
Some nudges did not have a significant effect on any of the three products. For instance, changing the delivery option that appeared by default did not significantly alter consumer choice. This was particularly surprising. Defaults are well-established, powerful nudges in behavioral science and in real-world settings. However, in this case, consumers chose to actively move away from the default to select other options.
4. Consumers who identify as women and are 35 or older were more likely to choose the free, “3-5 day” delivery option.
Across the items, consumers who identified as women were 64% more likely to actively select “standard delivery” when purchasing the book than those who identified as men. Age also played a role in consumer behavior. For instance, compared to consumers aged 18-34, those aged 35 and over were 57-80% more likely to choose “3-5 day” delivery.
5. Shoppers may claim to be ethical consumers. That doesn’t necessarily reflect in their behavior.
Almost half of the consumers (48.2%) said they agreed or strongly agreed with the statement: “I consider myself an ethical consumer.” This was particularly relevant in the case of consumers with higher income and younger consumers. However, their behavior showed no difference in actuality from consumers with lower income or older consumers.
So, what does this mean for a business?
Also Read
September 2020 |
Does our human rights work… work? The case for experimentation and testing
By simply changing the order of how delivery options are presented, retailers can significantly impact the decisions that consumers make.
Changing the order of delivery options led to a decrease in “same day” delivery and a significant increase in “3-5 day” delivery. For the coat, “same day” delivery dropped from 3% in the control group to 0.8%. And “3-5 day” delivery jumped from 85% in the control group to 91% in the order group.
Changing the order is an inexpensive, easy to implement solution that businesses should consider.
When the price tag is high, empathy is key.
High-ticket items — such as a laptop, are critical to nudge given their potential impact on couriers (a book may be posted through letterboxes, while a laptop will need a signature). Simply showing a humanizing picture of a courier with a message that encourages consumers to consider how their choice could place a burden on them appeared to trigger a more reflective, analytical thought process that leads consumers to choose a longer delivery window.
Men and young consumers are less likely to choose delivery options that are better for couriers. We need more research to know how to change that.
More research could help us better understand how certain nudges could be tailored to different demographic groups, in order to increase the number of consumers who choose the “3-5 day” delivery option.
Measuring behavior, and not just stated preferences or attitudes, is critical.
In this experiment, participants were fairly likely to describe themselves as ethical consumers, however, this did not correlate to their actual behavior in all cases. We need to look at what people actually do, not just what they say they will do. Focusing on real-world behavior and decisions is the only way of understanding whether our interventions work.
Over the last few years, Shift has engaged with UK retailers, logistics providers and other stakeholders on the full spectrum of human rights challenges in final mile delivery in the UK. One driver of these challenges is customer choice when buying online and this experiment focuses specifically on the ways that consumers can be nudged to make more responsible decisions in relation to online delivery. A future Shift publication will address the wider human rights issues in final mile delivery and the ways that retailers, logistics providers, trade unions and Government can play a role in building a rights-respecting logistics sector in the UK in the aftermath of the COVID-19 pandemic.
This note sets out Shift’s key take-aways from a series of single-stakeholder consultations we organized between July and August 2020, as part of the Valuing Respect Project. The consultations focused on opportunities and challenges for boards, company practitioners, business associations, banks, investors, governments and Civil Society Organizations to use the Valuing Respect Leadership and Governance Indicators of Rights-Respecting Culture and supporting resources in their work.
This note sets out Shift’s key take-aways from a series of single-stakeholder consultations we organized between July and and August 2020, as part of the Valuing Respect Project. The consultations focused on opportunities and challenges for boards, company practitioners, business associations, banks, investors, governments and Civil Society Organizations to use the Valuing Respect Business Model Red Flags Indicators and supporting resources in their work.
All businesses have a responsibility under the UN Guiding Principles on Business and Human Rights to take action to respect human rights in connection with their own operations and their extended value chain. This responsibility is a globally acknowledged and expected standard of conduct that is increasingly reflected in national laws, the expectations of investors, NGO and trade union advocacy, the standards set by influential industry bodies and the commitments of companies themselves. In the US, the Department of State actively promotes the UN Guiding Principles to US companies.
We see three main ways in which companies need to grapple with these human rights harms – both the immediate risks to protestors as well as the underlying inequalities that the BLM movement is raising.
These are:
Connections to short-term risks to protestors’ safety and freedom of speech
Connections between a company’s own operations and racial discrimination over the long-term
Company involvement in broader advocacy on BLM policy goals
The experience of people on the frontlines of seafood production across geographies (focus on the Global South) with regard to human rights, health and safety, and equity before and during COVID-19
Current efforts and interventions to address these issues and where new approaches are needed, and if the impacts of COVID-19 requires new/different interventions, and
The role NGOs and seafood companies can play to support efforts and address the needs of workers and communities.
Panelists included Neill Wilkins, Head of Migrant Workers Programme (IHRB); Ines Lopez, Catalyst of Change (COBI); and Francis West, Shift’s Business Engagement Director.
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