Change Agents: Standard Setters

Advising the Peruvian Financial Regulator on Improved Corporate Management of Social Conflict

Also see: Overview of our work with financial institutions on implementation of the Guiding Principles | Our report on the cost of corporate-community conflict

From 2012-2015, Shift was pleased to support the Superintendency of Banks, Insurers and Private Pension Funds (SBS) in Peru in the development and implementation of a new regulation to strengthen due diligence in the Peruvian financial sector. The regulation is available in Spanish (official) and English (unofficial) here.

Shift provided advisory support to the SBS regarding the development of a new regulation aimed at mitigating social conflict related to large investment projects in Peru. This initiative responded to the evidence that such conflict can increase credit risk and reduce the creditworthiness of projects and/or their primary suppliers that are directly or indirectly affected by social conflicts. | Jump to our report on the cost of conflict in the extractives sector

In recent years there has been considerable social conflict in Peru around major commercial projects, particularly in the extractive industries and forestry. This has in part resulted from local communities’ concerns about the impacts these projects may have on their livelihoods, welfare and human rights. These conflicts are seen to have implications for the credit risk of individual Peruvian banks, the stability of the Peruvian financial system, and the reputation of Peru as an investment location.

Shift worked with the SBS to look at how the elements of due diligence set out in the Guiding Principles could provide a useful reference point for the planned regulation. This advice focused on the role of effective community dialogue and engagement and grievance handling processes in ensuring that due diligence processes are effective in mitigating risks of social conflict.

The SBS has now issued the new regulation, which requires banks to pursue social and environmental risk management in relation to certain advisory services and loans for particular projects in Peru, including natural resource extraction projects. While the new regulation is framed in terms of social and environmental due diligence in general and emphasizes reduction of systemic risk, its greatest innovation lies in the human rights lens it brings to the requirements of banks, and in turn of their clients, including the assessment of the quality of client companies’ processes for engaging directly with potentially impacted communities and providing channels for them to raise grievances. In this regard, it reflects important features of human rights due diligence emphasized in the Guiding Principles.

During the development of the regulation, Shift was pleased to provide additional support to the SBS including delivering collaborative capacity building workshops for key SBS staff, joint with the Association of Banking Supervisors of the Americas (ASBA), as well as training for representatives from Peruvian banks that are subject to the new regulation.

Advising the International Council of Toy Industries on Alignment with the Guiding Principles

The International Council of Toy Industries (ICTI) CARE Process is a program to promote ethical manufacturing in the toy industry supply chain. Its mission is to enable the worldwide toy industry to ensure that its products are manufactured in safe and humane workplace conditions for factory workers, by providing education and training to key actors in the supply chain, and enforcing a thorough and consistent assurance and factory monitoring. Its initial focus is in China, where 80 percent of the world’s toy volume is manufactured. Its intent is to provide a single, fair, thorough and consistent program to monitor toy factories’ compliance with ICTI’s Code of Business Practices

In 2012, the ICTI Care Process (ICP) asked Shift to help it assess the implications of the Guiding Principles for its work. Through a combination of desk-based research and interviews with representatives of key stakeholder groups, including in China, Shift conducted a high-level gap analysis designed to review and assess the general strengths and weaknesses of the ICP’s processes against the Guiding Principles. Through this review and assessment, Shift developed concrete conclusions and recommendations for consideration by the management and Board of the ICP, with particular attention to education and capacity-building needs required to meet the ICP’s objectives.

Guidance for Companies on Respecting Children’s Right to Be Free From Child Labor

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“Participation in this project is very important to Vale, because it contributed directly to our process of continuous improvement in the management of human rights.”

Adolfo Gonçalves, Labour Relations Manager, Vale

The International Labour Organization’s (ILO) International Programme on the Elimination of Child Labour (IPEC) was created in 1992 with the overall goal of the progressive elimination of child labor, which was to be achieved through strengthening the capacity of countries to deal with the problem and promoting a worldwide movement to combat child labor. ILO-IPEC is the largest program of its kind globally and the biggest single operational program of the ILO.

Since its creation in 1920, the International Organisation of Employers (IOE) has been recognized as the only organization at the international level that represents the interests of business in the labor and social policy fields. Today, it consists of national employer organizations from over 140 countries from all over the world.

This joint project of ILO-IPEC and the IOE sought to develop a “Child Labor Guidance Tool” (2012 concept note) that would provide guidance on how companies can avoid child labor and contribute to child labor remediation, whether in their own operations or in their supply chains, through appropriate policies, due diligence and remediation processes that are aligned with ILO Conventions on child labor and the Guiding Principles.

“The ILO-IOE project on business and child labour has provided valuable, cross-functional learning for The Coca-Cola Company on this critical issue. We have benefited from the expert assessment process, which has led to improvements in our policies and due diligence systems.  TCCC would highly recommend this project to companies interested in developing effective systems to identify, prevent, mitigate, and, if necessary, remediate child labour, all while contributing to the creation of an authoritative global guidance tool.”

Ed Potter, [former] Director, Global Workplace Rights, The Coca-Cola Company

In the first stage, Shift developed a protocol and conducted assessments of an initial group of companies from diverse industry sectors, including AngloGold Ashanti, The Coca-Cola Company, Sterling Industries and Vale. The assessments explored alignment with the key elements of the corporate responsibility to respect in relation to the prohibition of child labor, generating important lessons for the project. In 2014, the project team consulted with other companies and expert stakeholders. In December 2015, guidance was published by the ILO and IOE, with support from Shift, to help companies do business with respect for children’s rights.

European Commission Human Rights Sector Guides

“Respect for human rights is part of the recipe for modern business excellence. This guidance meets global standards agreed in the UN while leaving enterprises the necessary flexibility to adapt their approach to their own particular circumstances.”

Antonio Tajani, Vice-President of the European Commission, Enterprise and Industry

Human Rights Guides for Three Sectors

In June 2013, the European Commission issued three guides on implementing the Guiding Principles, tailored for specific industry sectors.

There are three guidance documents, one for each sector:

  • employment and recruitment agencies;
  • information and communication technologies (ICT) companies;
  • oil and gas companies

The guides are written by Shift and the Institute for Human Rights and Business.

> Jump to the guides

What the Guides Do

Each Guide offers practical advice on how to implement the corporate responsibility to respect human rights in day-to-day business operations in each industry through step-by-step guidance. At each step, they summarize what the Guiding Principles expect, offer a range of approaches and examples for how to put them into practice, and link users to additional resources that can support their work. They are intended to help companies “translate” respect for human rights into their own systems and cultures.

How the Guides Were Developed

The Guides were developed over 18 months by Shift and the Institute for Human Rights and Business through extensive research and multistakeholder consultation with representatives from the three industries as well as governments, trade unions, civil society, academia and other experts.

“Business is an increasingly important player in the world of human rights. This guidance aims to help enterprises in Europe and elsewhere to meet the corporate responsibility to respect human rights, as defined by the UN and strongly endorsed by the EU.”

Stavros Lambrinidis, EU Special Representative for Human Rights

Support for the Guides

Jim Baker, Council of Global Unions: “The UN Guiding Principles on Business and Human Rights were derived, on the one hand, from universal human rights standards and, on the other, from real world experience. Human rights, like life itself, cannot be reduced to a checklist or to simple slogans. It is only through understanding and reflection that the Guiding Principles can become ‘simple’ and applicable. These guidance publications are designed to further that process.”

Brent Wilton, International Organisation of Employers: “The three sector guides are comprehensive compendiums which contribute to helping companies in those sectors and beyond gain understanding of the scope of the UN Guiding Principles on Business and Human Rights.”

Alexandra Guáqueta, UN Working Group on business and human rights: “Dozens of sectoral guides and tools on how to implement the UN Guiding Principles are being produced. This is a solid indicator of the relevance and high demand for the Guiding Principles. Now users want to know whether the practical guides are actually aligned with the Guiding Principles. A best practice example of such alignment are the new EC Sectoral Guidelines. They capture the essence of the Guiding Principles faithfully, they refer to the interdependence of the state, corporate and remedy pillars, and were formulated after technical research, expert consultations and multi-stakeholder dialogue processes with state, business and civil society actors from across the globe. They will no doubt be a valuable source for practitioners and affected persons alike.”

Advising the Global Network Initiative on a Public Engagement Mechanism

The Global Network Initiative (GNI) is a multistakeholder group of companies, civil society organizations, investors and academics who have created a collaborative approach to protect and advance freedom of expression and privacy in the information and communication technologies (ICT) sector. GNI provides resources for ICT companies to help them address difficult issues related to freedom of expression and privacy, including a framework of principles and implementation guidance. | Also see guidance on implementing the Guiding Principles for ICT companies

As part of the GNI’s Governance Charter, the network has made a commitment to engage the public, in order to provide a platform to share information about GNI, receive feedback, and raise questions or concerns, with a view to strengthening the implementation of GNI’s mission. Shift supported the GNI in the development of this public engagement mechanism through a consultative process involving the different GNI constituent groups and select external experts. In light of these consultations, as well as its own research and expertise, Shift has provided GNI with a confidential report proposing design options for the public engagement mechanism, to inform its internal discussions and decision making.

Advising the Fair Labor Association on Alignment With the Guiding Principles

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July 2012 | Publications

Implications of the Guiding Principles for the Fair Labor Association

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The Fair Labor Association is a nonprofit organization whose goal is to protect workers’ rights and improve working conditions worldwide. It is a multi-stakeholder initiative of universities, civil society organizations and socially responsible corporations that work to increase accountability and transparency from brands, manufacturers, factories and others involved in global supply chains, and to create lasting solutions to exploitative labor practices. Since its inception as the Apparel Industry Partnership and the development of its Workplaces Code of Conduct and Compliance Benchmarks, the FLA has developed a range of procedures and programs aimed at driving through positive change in supply chains. It has also expanded its membership base beyond the apparel and footwear industry to include companies in other sectors, such as agribusiness and electronics. 

In 2012, Shift helped the FLA assess the implications of the Guiding Principles for its work. The report prepared by Shift analyzed how the FLA’s standards, processes and programs align with the Guiding Principles, and suggested areas for future focus. Since this report was written, the FLA has made a number of changes to its standards and processes.

Shift also provided ad hoc advice to the internal FLA Working Group tasked with reviewing the organization’s Third Party Complaint mechanism.