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Audio | Getting Contractual Provisions on Human Rights, Right

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As the mandatory due diligence debate heats up in Europe and we look ahead to more countries turning the responsibility to respect into a corporate duty, companies will increasingly need to focus on setting clear expectations of their business partners. Putting the right provisions into contracts is going to become even more important.

In this conversation, Shift’s Rachel Davis and John F. Sherman III discuss a recent project of a Working Group of the Business Law Section of the American Bar Association (ABA) that is trying to get ahead of the trend of new legislation and put companies on the right path in how they approach the role of contractual requirements.

You may also read more about the Model Clauses in a viewpoint by John Sherman, here.

This episode’s speakers

RACHEL DAVIS

Rachel Davis is one of Shift’s co-founders and has led work at Shift over the last decade on standard-setting, human rights and sports, financial institutions, conflict and international law.

As Vice President, Rachel shapes our strategy and oversees a range of our collaborations with companies, governments, investors, civil society and other partners. Rachel leads Shift’s work to influence STANDARD-SETTERS of all kinds to integrate the UN Guiding Principles into the rules that govern business, including engaging with governments and the European Union on mandatory human rights due diligence. Learn more

JOHN F SHERMAN III

As Shift’s General Counsel and Senior Advisor, John F. Sherman III focuses on the role of corporate lawyers in the implementation of the Guiding Principles in their role as wise legal counselors.

John is an internationally recognized thought leader on this subject. He chairs the business and human rights working group of the International Bar Association. He writes frequently in professional and academic journals and is a sought-after speaker at legal conferences and workshops, advocating for lawyers’ role in ensuring companies do business with respect for human rights. John is a founder of the IBA CSR Committee and was its co-chair from 2008 to 2010. Learn more

Human Rights & Labor Principles: A Business Imperative

This High-Level dialogue was hosted by the UN Global Compact in the context of the 10th anniversary of the UN Guiding Principles on Business and Human Rights. It was moderated by Shift’s Vice President, Rachel Davis. Panelists include the author of the UN Guiding Principles, John Ruggie; UN High Commissioner for Human Rights Michelle Bachelet; the Secretary-General of IOE, Roberto Suarez Santos; and the Chair of the UN Working Group on Business and Human Rights, Dante Pesce.

Using Leverage to Drive Better Outcomes for People

In March 2021, Shift held the first peer-learning session of its Financial Institutions Practitioners Circle, focusing on the topic of leverage. This resource captures the key takeaways of the session. 

The traditional approach of many banks and Export Credit Agencies (together “FIs”) has been to assess risk from a credit risk perspective and to make a binary decision about whether or not they will enter into commercial relationship with a client. As such, too often those decisions have been made on the basis of risk appetite rather than considering the more complex task of risk management, engagement with the client and the application of firm sustainability expectations. More committed FIs are shifting towards an approach that emphasizes managing risks to affected stakeholders rather than a sole focus on managing potential reputational risks. In addition to setting human rights-related expectations of clients upfront, FIs now need to focus, for higher risk sections of the portfolio, on scrutinizing the appropriateness of the expectations against intended outcomes, reviewing client adherence to them and evaluating their impact.  

When FIs take this approach, we see greater alignment with the UN Guiding Principles’ focus on improving outcomes for people. Moreover it facilitates a move away from so-called “cut and run” approaches whereby the bank makes another binary decision to cut ties with clients amid reputational concerns without first attempting to use leverage. Due Diligence is a wheel after all: it doesn’t start and end at assessment. The bank has a responsibility to get to action: to use its influence (leverage) to seek to improve outcomes for adversely affected people, including, at a minimum, engagement with clients around risks. This also helps the bank to get to the “yes, and” approach to navigating higher-risk transactions, whereby the bank can more confidently take on clients or transactions that pose heightened social risk, if it is prepared to invest the resources necessary for leverage and it has a credible road map for where the client needs to get to in terms of maturity of approach and/or concrete Key Performance Indicators (KPIs). It goes without saying that an element of pragmatism needs to be brought to bear when looking to achieve this at a portfolio level. The prioritization of resources and focus at the assessment phase is particularly important for financial institutions given their challenge of scale. 

The FI’s responsibility to respect human rights includes the need to understand where it has leverage – in the multiple different forms of leverage available – and where it needs to build it; it means using this leverage to seek to prevent and address harm in order to justify continued engagement. Leading FIs are increasingly exploring and institutionalizing this process.

Here are our 6 key takeaways from our discussion about how to consider leverage for financial institutions from the perspective of the UNGPs, with practical steps that might help turn these insights into action. 

The “S” in ESG: Best Practices and Way Forward?

On July 1, 2021, Shift, Frank Bold and the Thomson Reuters Foundation hosted a discussion to explore what’s needed for companies to better measure and report on their social risks and impact. A transcription of Professor Ruggie’s keynote remarks is available here.

THE S IN ESG: BEST PRACTICES AND WAY FORWARD?

The event featured introductory remarks by Professor John Ruggie. Participants also included: Irit Tamir (Oxfam), Lauren Compere (Boston Common Asset Management), Julie Vallat (L’Oréal), Filip Gregor (Frank Bold), Tom Dodd (EU Commission), Giulia Corinaldi (TRF) and Caroline Rees. (Shift).

Using Worker Voice Tools to Assess Relationships Between Workers and their Managers

This note focuses on one dimension of how technology-enabled worker voice tools can be used: to gather qualitative data about the nature of relationships between managers and workers or communities at factories, farms, mines and plantations. This is achieved by asking workers and community members relationship-based questions.

Use this method to:

  • Quantify and make sense of often subtle, sometimes unexplored, worker dynamics that might impede or enable the achievement of positive human rights outcomes.
  • Identify manager or supervisor behaviors that may be undermining responsible workplace programs.
  • Explore relationships between workers’ experiences in the workplace and traditional business performance metrics, such as productivity, absenteeism and turnover.

Sensemaker: Combining Stories, Numbers and Data Analytics to Uncover Hidden Dimensions of Relationships

SenseMaker is a method to collect qualitative information from stakeholders in the form of stories or micro narratives about their experiences and then, after interpretation and quantification, to identify visual patterns across the narratives of large and diverse populations.

This note focuses on the use of SenseMaker to generate data about intangible dynamics –such as trust, agency and power – within relationships between companies and the workers, communities and consumers they impact.

Use this method to:

  • Gain detailed local insights from the set of individual experiences that people share about their contexts.
  • Visualize patterns and identify common themes across the narratives of large and diverse populations.
  • Use insight from the stories and the data they generate to inform efforts that address problems and challenges.