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.
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.
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
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.
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.
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:
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. )
Consumers were given an additional 12-14 day option, in order to make 3-5 days appear more reasonable.
The slowest delivery option (3-5 days) was pre-selected.
The consumer was shown a picture of a courier with a message about how their choice would affect them.
The delivery options were reversed, from longest to soonest, keeping the “same day” option pre-selected.
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”.
A message was added saying, “Over 80% of people who purchase this item choose the Standard ‘3-5 day’ delivery option”.
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
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
MOST EFFECTIVE NUDGE:
MOST EFFECTIVE NUDGES:
Ordering and Recommendation
MOST EFFECTIVE NUDGES:
No nudge made a statistically significant difference
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?
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.
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.
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
Everywhere, human rights are at risk from the impacts of COVID-19. People around the world fear for their life and health, livelihoods, civil liberties and privacy, to name just a few issues. At the same time, many businesses are facing existential threats, as they seek to survive or adapt to a new and unprecedented reality. As they make painful decisions, companies need to bring precision thinking to how their choices will impact the lives of people that work for, depend on, or are otherwise connected to their business.
This resource offers focuses on five approaches that companies can put in practice to ensure that they are making rights-respecting decisions:
Apply the lens of vulnerability to prioritize action
Involve relevant stakeholders in critical decision-making processes
Use leverage with governments on policy responses
Communicate your actions clearly
Have honest decisions about risks that are baked into the business model
The last page on this resource is an annex that can help companies get started on identifying the increased or new human rights risks that arise as a consequence of the pandemic.
Seguido, las empresas tienen dificultades para identificar e implementar acciones significativas que atiendan los riesgos a los derechos sindicales en sus cadenas globales de valor. Ello por distintos factores:
Externos, como los que surgen del contexto en el que operan y en el que se extienden sus cadenas de valor. Ello incluye las leyes y regulaciones, el estado de derecho, las prácticas sociales que enmarcan las percepciones culturales sobre los sindicatos y la capacidad local de sindicatos y empresas socias para llevar a cabo acciones en la práctica.
Modelos de negocio, que pueden resultar en riesgos exacerbados a los derechos sindicales si no son propiamente administrados. Ello incluye el tener insumos de mercados de alto riesgo (o bajo costo), el uso intensivo de trabajadores contratistas o temporales, y las propias práctiacas de adquisición de las empresas.
La cultura corporativa y las prácticas empresariales, lo que puede incluir suposiciones y actitudes hacia los sindicatos por parte de las oficinas centrales, así como debilidades en el proceso de debida diligencia.
En la parte 2.2 de esta publicación se incluye también una herramienta de diagnóstico, que puede servir para que las empresas entiendan cómo y dónde pueden existir los riesgos para los derechos sindicales.
Asimismo, se delinean algunos ejemplos de pasos que pueden tomar las empresas dependiendo de los riesgos que existen, y ocho casos práticos de casos reales en los que otras empresas han logrado sobrepasar estos retos.
Between 2010-2014, the Peruvian fruit growing company Composol was in ceaseless conflict with its workers and their union representatives. It had strong turnover of staff, low motivation among those remaining, and, according to its own accounts, very high litigation cost due to constant cases before the labor courts. The company’s labor troubles were even featured as a prominent case example in complaints filed by Peruvian and international unions with the US Department of Labor and the European Commission related to beneficial trade agreements.
It was not until 2014 that the company started to realize how much of an impact this was having on its business, and decided more meaningful action was necessary. Together with local and internationally focused unions and business associations, the company embarked on a path towards fully embracing social dialogue and trade union rights. Through a process of trust-building, negation training and capacity building on labor rights -among others- the company and unions were able to fundamentally transform their relationship. In addition to more satisfied workers and meeting company commitments, results also included lowered costs in recruitment, transportation and legal fees, among many others.In the words of Javier Morales, Camposol’s Managing Director of the Fruit and Vegetable Division: “We have been able to be profitable while focusing on people. (…) Now workers come to Camposol because they choose to, not because they have to as in the past. Competitors are raising the salaries to attract workers more but it is not the only thing that workers seek. What they seek is also a healthy emotional relationship with their employer. We demonstrate that we can align the interests of workers and shareholders.” Perhaps most central to turning things around was the realization that in order to ensure respect for trade union rights companies need to take proactive steps to realize them in practice. This, in a nutshell, is the key message of our newest publication ‘Respecting Trade Union Rights in Global Value Chains’, developed with Mondiaal FNV, to help companies approach trade union rights proactively.
What are trade union rights?
What are trade union rights?
Freedom of association and the rights to collective bargaining (collectively referred to in the publication as “trade union rights”) are recognized by the International Labour Organisation (ILO) as one of a set of four core labor standards that all governments and companies should adhere to. While they are fundamental rights in and of themselves, trade union rights are also recognized as “enabling rights,” meaning that respecting these rights can often lead to the fulfillment of a number of other labor rights, including adequate wages, reasonable working hours, workplace safety, and a work environment free from discrimination and harassment.
Action on trade union rights is hard…
Those who have worked on trade union rights know that this is all easier said than done.
While many companies list respect for trade union rights in their policy commitments, pledge to adhere to industry standards, and participate in multi-stakeholder initiatives, many still struggle to identify and implement meaningful action to address the risks to trade union rights in their global value chains.
In our work with Mondiaal FNV we recognized three categories of barriers that often create challenges for global companies to ensure respect for trade union rights in their global operations and value chains:
External factors: Respecting trade union rights in many contexts can be extremely challenging: local laws may prohibit them, union-relations may be seen to be political, and local business partners may not see the value in changing what already works.
Business models and practices: some companies have risks embedded in how they are structured or in how they operate. For instance, extensive reliance on contract labor, or sourcing strategies that rely upon production in markets with lower labor costs and often weaker labor protections.
Internal company governance and due diligence pitfalls: a number of challenges arise from weaknesses in corporate governance and due diligence. For example, a lack of understanding of trade union rights, limited visibility into conditions in the supply chain, or strong commitments on paper not being translated into action on the ground.
Our publication provides a detailed diagnostic tool with simple questions to help companies identify the specific barriers they might face in a particular context or relationship.
… but there are ideas and experiences to inspire action
We have seen that those companies who identify their salient human rights issues (one of the practical steps the publication suggests) now often include freedom of association and right to collective bargaining among them. I believe it reflects a broader understanding of how interconnected human rights impacts are and that one of the most sustainable ways to improve human rights for workers—in a way that also brings benefits to business—is to give workers a voice and take proactive steps to reduce barriers and reinforce constructive relationships that enable them to organize, make their voice heard and take a stake in the long-term interest of the company.
October 2019 |
Respecting Trade Union Rights in Global Value Chains: Practical Approaches for Business
But identifying trade union rights as important is only the first step. We need to move to action. Our work with companies on these issues has surfaced a range of practical approaches companies are taking to address these barriers in new and meaningful ways. Whether it is the Freedom of Association protocol that was developed by apparel and footwear companies with local suppliers and stakeholders in Indonesia to address the locally challenging context for trade union rights or the way that companies have collaborated in Mexico to jointly apply leverage to improve union relations.
Different types of approaches are almost certainly going to be necessary to address the range of situations a company might face and the different types of barriers that may be present. The resource offers a continuum of different types of leverage that can be applied internally and externally, with practical case examples to illustrate these approaches in practice: for example, working jointly with peer companies and international and local trade unions to advance collective bargaining to improve living wages in the garment sector, or exerting collective leverage with peers vis-à-vis a government to improve laws and regulations that protect trade union rights (both of which have concrete case examples in the publication).
Our aim is to inspire companies with ideas for concrete action, to move from recognizing risks to trade union rights to taking meaningful action to address those risks, by drawing from a menu of potential options for action. We hope it can provide companies with a roadmap for developing thoughtful, meaningful and targeted actions necessary to tackle these issues more effectively in practice.