This discussion draft is intended for the consideration of the European Commission and other stakeholders as the Commission develops proposals on mandatory human rights and environmental due diligence (mHREDD) and considers how national regulators would implement any such legislation. Shift is submitting this draft together with our formal response to DG JUST’s consultation on a potential new corporate duty to carry out HREDD.
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May 2023 |
Human Rights Due Diligence: The State of Play in Europe
In this discussion draft, we propose some key signals that national regulators could use in assessing the seriousness or quality of a company’s HRDD, grouped into six broad areas of company practice:
Governance of human rights;
Meaningful engagement with affected stakeholders;
Identifying and prioritizing risks;
Taking action on identified risks;
Monitoring and evaluating progress in addressing risks;
Providing and enabling remedy
Not all these features need to be present to judge HRDD to be meaningful or serious, yet where few of them are present, it is unlikely that HRDD will achieve its purpose in practice.
This draft is intended to inform a discussion about assessment by national regulators of company compliance with potential new mandatory human rights and environmental due diligence (mHREDD) legislation by:
Highlighting critical features of HRDD that are often overlooked or done poorly in practiceby companies (such as meaningful stakeholder engagement);
Identifying key practices and behaviors needed for meaningful implementation of HRDD that can help in distinguishing better from poorer quality HRDD by going beyond the ‘observable basics’ of company practice;
Being relevant to companies of all sizes and sectors by highlighting features of HRDD that could be demonstrated by any company in a variety of ways.
It is not intended to:
Replace or dilute existing guidance on the process elements of HRDD;
Exclude consideration of authoritative sector-specific guidance by regulators where that is relevant to a company being assessed;
Define leading practice in carrying out HRDD.
We welcome feedback on this discussion draft and will be consulting further on it during Q1 2021. Please direct your feedback and inquiries to: info [at] shiftproject [dot] org
This is a case study of how Best Buy assessed the effectiveness of a factory training program designed to address certain behaviors of supervisors that were impeding good quality relationships with workers. Specifically, the program sought to improve how supervisors, among other things, managed conflict with workers, listened to workers, and dealt with workplace stress. Companies often use knowledge tests to assess training activities. However, measuring how the newly-acquired knowledge affects the everyday practices and behaviors of participants requires more innovative and deliberate techniques. In this case, the company:
used a randomized controlled trial (RCT) to evidence whether any improvements in supervisor awareness and behavior could be attributed to the training program; and
built-in worker voice – in the form of worker surveys and interviews – to measure the change in how supervisors interacted with workers.
Having robust evidence about the success and challenges of the training program has allowed Best Buy to communicate the outcomes of its efforts to its stakeholders in a balanced way, and to identify improvements that can be put in place before scaling the program in other locations.
I strongly encourage companies to do what they can to isolate their interventions so as to better assess the impact they are having on labor practices and working conditions. We created target and control groups, which is ideal, but not the only option in seeking to evaluate more accurately.
hamlin metzger, senior director of human rights – best buy
In March 2020, Shift’s Rachel Davis and the former UN Human Rights Chief, Prince Zeid Ra’ad Al Hussein, delivered the report ‘Recommendations for an IOC Human Rights Strategy’ to IOC President Thomas Bach. The report in full has been made publicly available by the IOC on the organization’s website. Below is a summary of the recommendations that were included in the report, grouped into five pillars.
The authors recommend:
1. Articulating the IOC’s human rights responsibilities, including by adopting appropriate amendments to the Olympic Charter and other core documents, developing a detailed human rights policy commitment reflecting the expectations of the UN Guiding Principles on Business and Human Rights, and setting similar expectations for the Olympic Movement as a whole through the “Basic Universal Principles of Good Governance of the Olympic and Sports Movement”.
2. Embedding respect for human rights across the organization to ensure that the IOC’s commitment is driven into its values and culture, including by: hiring a Head of Human Rights to lead implementation of a new human rights strategy, supported by a Human Rights Unit; establishing a cross-functional steering group on human rights at Director-level; ensuring the IOC’s governing bodies take full account of human rights in their decision-making (including through the role of the proposed Human Rights Advisory Committee); and ensuring that there is human rights expertise in the IOC’s consultative Commissions.
3. Identifying and addressing human rights risks by strengthening human rights due diligence across the IOC’s operations, including by: routinely integrating the perspectives of affected stakeholders (such as athletes, journalists, volunteers, fans, workers and local communities) into the process of identifying and taking action on human rights risks; significantly strengthening the way in which athlete voice and representation informs decision-making within the IOC and the Movement more broadly; taking a more robust approach to using the IOC’s leverage with National Olympic Committees and International Federations on human rights issues; and integrating a focus on salient human rights issues (such as child protection and respect for athletes’ human rights) into existing areas of the IOC’s work.
4. Tracking and communicating on the IOC’s progress, including by: evaluating the human rights performance of the IOC’s partners, especially that of OCOGs for upcoming editions of the Olympic Games; deepening the IOC’s engagement with affected stakeholders and their legitimate representatives (including trade union representatives where athletes are unionized), or with credible proxies for affected stakeholders’ views where direct engagement is not possible; and enhancing transparency about the IOC’s human rights efforts.
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December 2020 |
Statement on the Publication of the Report ‘Recommendations for an IOC Human Rights Strategy’
5. Strengthening the wider remedy ecosystem in sport by contributing to a significant improvement in the quality of grievance mechanisms at all levels of sport, including strengthening sports bodies’ own mechanisms, supporting social dialogue processes in sport, and enabling access to state-based forms of remedy for severe human rights harms. We recommended that this should begin with an initial focus on: improving access to remedy in cases of harassment and abuse; improving Games-time grievance mechanisms (run by the IOC as well as by OCOGs); and reviewing the preparedness of the IOC’s own systems to handle human rights complaints.
Zeid Ra’ad Al Hussein was the UN human rights chief from 2014-2018; and is a highly-regarded defender and promoter of universal human rights -awarded the Stockholm prize in 2015 as well the Tulip prize in 2018 for his human rights work. For much of his career, he was a senior diplomat, serving twice as Jordan’s ambassador to the United Nations (in New York) and once as Jordan’s ambassador to the United States (2007-2010). He also represented Jordan twice before the International Court of Justice (ICJ). In January 2014, he served as president of the UN Security Council. Earlier, in 2002 he was elected the first president of the governing body of the International Criminal Court (ICC) — guiding the court’s growth in its first three years (9/2002-9/2005). He chaired some of the most complex legal negotiations associated with the court’s statute. He contributed to the international community’s efforts at countering the threat of nuclear materials being trafficked by terrorists (2010-2014). And he led the UN’s efforts at eliminating sexual exploitation and abuse in UN peacekeeping (2004-2007). From 1994-1996, he was a UN civilian peacekeeper with UNPROFOR. He has degrees from Johns Hopkins and Cambridge universities. In 2019, he was appointed a member of The Elders, an independent group of global leaders working for peace, justice and human rights, founded by Nelson Mandela. He is currently the Perry World House Professor of the Practice of Law and Human Rights at the University of Pennsylvania. In 2019, he was inducted into the American Academy of Arts and Sciences and awarded an honorary knighthood (KCMG) from Queen Elizabeth II.
Rachel Davis is Co-founder and Vice President of Shift, the leading center of expertise on the UN Guiding Principles on Human Rights, where she has led work for the last decade on standard-setting, human rights and sports, financial institutions, conflict and international law. Rachel has been the Chair of FIFA’s independent Human Rights Advisory Board since it was established in 2017 and has advised the International Olympic Committee on human rights since 2018. She was a senior legal advisor to the Special Representative of the UN Secretary-General on business and human rights, Harvard Professor John Ruggie (2006-2011), and is a Senior Program Fellow with the Corporate Responsibility Initiative at Harvard Kennedy School. An author of the leading study on the costs of company-community conflict in the extractive sector, Rachel has worked at the High Court of Australia and the UN International Criminal Tribunal for the former Yugoslavia. She is a graduate of Harvard University and the University of New South Wales.
For the first time in four decades, leading business associations, corporations, and the corporate law and governance community are seriously debating the social purpose of the corporation. The idea of stakeholder governance – moving beyond shareholder primacy toward some form of ‘stakeholder capitalism’ – is in play. But the how question unveils significant differences of opinion as well as difficulties. Some advocates place their bet on enlightened voluntary cooperation between corporations, large institutional investors, and other stakeholders. Yet considering the financial incentives, the current system affords corporate directors and executives, especially in the Anglo-American system, driven by equity-based compensation, voluntarism by itself is unlikely to move the needle far enough. Others provide long and detailed lists of a dozen or more bodies of law and regulations that should be reformed to ensure that accountability to wider stakeholders is established. But that inevitably poses multiple political impediments and therefore takes time. For their part, critics of ‘stakeholderism’ posit what amounts to an impossibility theorem, contending that corporate leaders simply are unable to identify ex ante who the relevant stakeholders are, or to devise a formula regarding how to weigh and balance their conflicting interests – let alone how their concerns would be represented at board levels.
In contrast, we focus on a pathway that reflects the ambition of stakeholder capitalism, but which current reform proposals have largely overlooked. We draw on practical experience in the field of business and human rights, where leading companies are increasingly embedding human rights due diligence processes into their strategic decision-making. As human rights due diligence is made mandatory for companies, which it is in a growing number of jurisdictions – with debate centered in but not limited to Europe – risks to stakeholders become a significant corporate governance issue. It makes it necessary that their concerns are addressed and requires demonstration that indeed they are. Such changes by themselves may not constitute a full-blown system of multi-fiduciary obligations, but they mark substantial strides on the path toward it, and they are doing it in the relatively near-term.
While respect for human rights and corporate activism are often seen as distinct, in this short video, Business Engagement Director Francis West and Advisor Daniel Berezowsky make the case for companies to use their voice and influence as a key part of their responsibility to respect human rights.
Narratives drive conversations. They serve a framing purpose and offer a lens through which we enter a discussion, make sense of an issue and find meaning in our world. Ultimately, they shape decisions. When it comes to conversations about how people are affected by business conduct and the global economy, a number of distinct narratives are influencing decision-makers today: the development narrative of sustainability; the political narrative of inequality; the economic narrative of stakeholder capitalism; the investment narrative of ESG performance; and the accounting narrative of human and social capital. All of these narratives co-exist, yet they also compete for attention.
Also Read
December 2020 |
Audio | Can the UN Guiding Principles Unlock the Power of other Narratives to Transform how Business Impacts People?
In this working paper, Caroline Rees explains why continuing down this siloed approach could result in each of these narratives becoming unnecessarily diluted and falling short of its aims. By contrast, she proposes that the narrative of business of human rights – grounded in global normative standards and a focus on those people most at risk of harm from business practices – can be of central relevance in bringing these other five narratives together, and helping them achieve a goal they all share: a world in which business gets done with respect for the basic dignity and equality of everyone.
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.
In particular, this resource uses excerpts from companies’ reporting on setting targets and tracking performance. It examines:
Whether the company’s targets set and track in reporting are limited to activities or outputs;
Whether the company follows up on the extent to which all of targets set in one reporting period were met in the next;
Whether data on human rights performance is aggregated such that meaningful insights cannot be drawn from the disclosure.
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.
In particular, this resource uses examples from companies’ reporting their targeted action. It examines:
Whether the company only reports generally on its process for identifying and addressing human rights impacts;
Whether the company reports on how the perspectives of affected stakeholders informed its understanding of the impact and its decisions on what action to take;
Whether the company talks about engagement with suppliers or other business partners on human rights-related issues in terms of compliance.
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.
In particular, this resource uses excerpts from companies’ reporting on systemic human rights challenges. It looks at:
Whether the company positions itself solely as part of the solution to the human rights challenge concerned;
Whether the company only reports its membership in groups or collective initiatives that tackle certain systemic human rights risks without describing its engagement with these initiatives and how this contributes to change;
Whether the company reports on any actions it has taken unilaterally to address its own potential involvement with that issue.
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