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Developing a strategy for managing human rights
by Richard Welford
17 May 2017

The attention now being given to human rights issues by the stakeholders of large corporations has certainly grown over the last decade. Yet the attention being given to the issue by companies themselves is hugely variable.

A new report from Shift entitled Human rights reporting: Are companies telling investors what they need to know, has assessed 74 of the world’s largest companies from seven sectors. While the report is primarily targeted at investors, its findings will be of interest to a range of stakeholders interested in human rights issues and how companies are tackling them.

Key findings from the research undertaken point to some key areas of concern:

  • Lack of focus: Over half of companies provide no clarification about which human rights are most relevant to their operations and value chains. Instead, these companies just refer to certain human rights related issues without any apparent rationale.
  • Lack of oversight: 45% of the companies reviewed do not clearly identify who is responsible and accountable for managing human rights risks.
  • Lack of clarity about internal controls: 90% of the companies do not have a coherent narrative about how risk or impact assessments inform mitigation actions taken, how decisions are made or if senior management is ever involved.
  • Silence on governance: 16% of the companies provide no information at all about governance of human rights, nor even about governance of broader issues such as sustainability or corporate social responsibility.
  • Lack of measurement: 45% of companies provide no information whatsoever about how they track their performance on human rights – leaving readers unclear about whether any of their efforts translate into positive outcomes for people.

Our own research on human rights has consistently identified either an unwillingness or an inability to engage with human rights issues and this poses huge reputational and legal risks to business. With more governments introducing human rights related regulation covering the operations and value chains of businesses, there is clearly a need to put in place much more robust policies and procedures and ensure meaningful reporting on both risks and mitigation.

For companies it is important to begin a process that can ensure that human rights risks are managed and be part of an emerging global agenda to tackle scourges such as modern slavery. Developing a comprehensive approach to tacking human rights issues will require companies to:

  1. Develop awareness within the organization about human rights challenges, accepting that there is no easy solution to dealing with human rights violations. Recognize that ignoring human rights risks is not an option because they can cause damage to brand, reputation and trust and cause severe disruptions to value chain security and efficiency with implications for competitiveness.
  2. Use human rights risk assessments to evaluate the issues along the whole value chain and how they can impact on sourcing, products, brands, reputation and legislative requirements. As part of this, engage with a range of stakeholders to better understand the dynamics of the value chain and the reality of operations on the ground. Ensure that any potential high risk areas are monitored and engage with vulnerable and marginalized communities to tackle risks associated with exploitation.
  3. Make value chains as transparent as possible, highlighting the sources of raw materials and production methods. Make it clear that the company has a policy and commitment to eliminate all forms of modern day slavery. Provide accessible, reliable and independent whistle-blowing procedures so that human rights abuses can be reported. Establish grievance mechanisms for those who believe the company is not abiding by its commitments.
  4. Focus on developing responsible products and traceability initiatives so that consumers and other stakeholders can have a good degree of assurance that the products that they buy are free from human rights abuses. Encourage consumers to be part of the fight against modern day slavery through education initiatives, influencing their purchasing decisions.
  5. Work alongside communities to address human rights. Recognize that certain groups of people will be more vulnerable to human rights abuses and work towards recognizing the root causes of such potential abuses. Vulnerable groups will include the poor, women, indigenous peoples, children, migrant workers, refugees, the disabled, ethnic minorities and the displaced.
  6. Engage with industry-wide initiatives that can begin to examine the root causes of human rights abuses and begin to work on common standards and initiatives to mitigate the risks associated with modern day slavery. Work alongside other businesses to address real and potential value chain risks associated with human rights abuses, recognizing that a safe and responsible relationship with suppliers is in the long term interest of value chain security and competitiveness.
  7. Partner with the NGO community where significant expertise on human rights issues exists and begin working on solutions to dealing with the underlying causes of modern day slavery (including poverty, discrimination, land rights, refugees and vulnerable groups). Engage with experts who understand different issues in different geographical locations and respect local cultures and traditions, whilst seeking to reduce human rights risks.
  8. Develop multi-stakeholder initiatives at industry level to work towards the solutions to human rights abuses along the value chain whilst at the same time increasing benefits to the poor and protecting the environment. Develop joint initiatives for responsible and inclusive value chains and consider links to industry standards, certification schemes and labels where appropriate.
  9. Develop effective reporting on human rights based on meaningful performance indicators, emphasizing the areas where the greatest risks emerge and the mitigation measures undertaken to protect the company from litigation, conflicts and reputational damage. Explain how human rights fit into the company’s sustainability strategy as well as the broader business model.
  10. Join in a broader global movement to protect the human rights of vulnerable people and advocate for more effective responses from governments and other regulatory agencies. Demonstrate to other parts of the private sector that there is a business case associated with engaging with human rights relating to risk reduction and potential competitive gains associated with value chain security.

There will be a number of workshop sessions on human rights and supply chains at this year’s CSR Asia Summit in Bangkok. These will highlight best practices and some of the emerging tools that are being used to identify challenges, predict dangers and reduce risks. Come and join the conversation.

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