New Business and Human Rights Book includes Chapter by Anthony Ewing

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Mandatory Human Rights Reporting

The number of companies worldwide subject to some form of human rights reporting is increasing as states mandate corporate reporting on non-financial issues.

Logos Senior Fellow Anthony Ewing surveys corporate human rights reporting requirements worldwide in a chapter he contributed to Business and Human Rights: From Principles to Practice, an interdisciplinary textbook published this month by Routledge.

9781138833562

Ewing surveys current forms of mandatory reporting – financial, non-financial and human rights – that require companies to address their human rights policies, due diligence and impacts. The chapter highlights reporting requirements in India, Denmark, the United Kingdom (Modern Slavery Act), the European Union (Directive on Non-Financial Reporting), China and the United States (conflict minerals disclosure, California Transparency in Supply Chains Act, responsible investment in Myanmar).

At this point, according to Ewing, the objective of most mandatory reporting is information disclosure: regulations address whether companies should report on their human rights policies, not necessarily how. Current reporting requirements do not prescribe or evaluate what companies are actually doing about human rights impacts connected to their operations. Future disclosure regulations, however, may be more narrowly tailored to prescribe human rights due diligence as well as what companies must do to act on what they learn. He concludes that

“while mandatory human rights reporting has the potential to shape corporate behavior, is raising expectations of greater corporate transparency, and is beginning to produce information about corporate human rights policies and due diligence, . . . legally mandated reporting to date is not yet aimed squarely at preventing the adverse human rights impacts of corporate activities.”

Edited by Dorothée Baumann-Pauly (NYU Stern Center for Business and Human Rights) and Justine Nolan (Faculty of Law, University of New South Wales), Business and Human Rights: From Principles to Practice provides an overview of this rapidly growing area of teaching and research with contributions from more than thirty experts. The textbook outlines the business and human rights movement, explores the legal framework for business and human rights, highlights the practical implementation challenges and standard-setting frameworks in different industries and discusses the future of the business and human rights field.

Anthony’s corporate responsibility practice at Logos helps companies to engage stakeholders, conduct due diligence, and implement policies and programs that effectively manage the risk of adverse human rights impacts. He has taught corporate responsibility at Columbia University since 2001 and is a member of the United Nations Global Compact Human Rights and Labour Working Group.

Anthony Book

For more information about our work in this area, please contact Anthony Ewing at: [email protected].

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Mandatory Human Rights Reporting

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by Anthony Ewing | Bio | Posts
8 Apr 2015

Mandatory human rights reporting is coming soon to a jurisdiction near you. Is your company ready?

Large European companies need to review their human rights policies and the risks of human rights impacts linked to their operations over the next two years. The catalyst is a European Parliament Directive adopted in October that requires companies to report annually on non-financial issues, beginning in 2017. Under the Directive, large, publicly listed European companies must report annually on how they are meeting the corporate responsibility to respect human rights, as well as environmental, social and employee-related, and anti-corruption and bribery matters. The Directive mandates corporate disclosure of human rights due diligence and consideration of human rights risks, consistent with the UN Guiding Principles on Business and Human Rights. Non-financial reports must include a “description of the policies pursued” relating to respect for human rights, including “due diligence processes implemented;” “the outcome of those policies;” principal human rights risks linked to the company’s operations, including its “business relationships, products or services” likely to cause adverse impacts; and relevant non-financial performance indicators. While the regulation is of the “comply or explain” variety – companies must disclose existing policies or explain why they have no policies on these matters – and carries no penalty for noncompliance, the twenty-eight member states of the European Union will implement the Directive through national legislation, in which each country is free to set more stringent disclosure requirements and possible penalties.

The European Non-Financial Reporting Directive is part of a broader trend of mandatory reporting that seeks to promote corporate respect for human rights through greater corporate transparency. Like financial reporting that provides material information for investors, human rights reporting informs consumers, investors and policymakers about the human rights impacts of business operations. Advocacy organizations, like those in the European Coalition of Corporate Justice, and investors, like those in the sustainable and responsible investment network Eurosif, pushed for adoption of the Directive. In the United States, mandatory corporate human rights reporting is emerging around specific issues, such as conflict minerals, forced labor and human trafficking, and specific geographies, such as Central Africa and Burma. No non-financial reporting regulation to date in the United States applies as broadly as the European Directive, however, which is estimated to cover some 6,000 European companies.

The Directive and similar regulations will force many companies to address their human rights impacts for the first time. How should executives prepare? Companies can take a number of steps to meet escalating expectations of greater transparency about corporate human rights impacts:

  • Conduct human rights due diligence.

Companies that understand the human rights impacts of their operations and business relationships are in a better position to prevent or mitigate those risks. Conducting a human rights impact assessment can reveal actual and potential human rights risks and allow a company to prioritize actions to address the most severe risks. Nestlé, for example, based on information from human rights impact assessments (PDF), has taken steps to reduce excessive working hours, improve road safety training for its drivers, add human rights principles to its contracts with security providers, and develop an external grievance mechanism.

  • Integrate human rights considerations into existing policies and procedures.

A growing number of companies have made explicit commitments to respect human rights in corporate codes of conduct, supplier standards and corporate responsibility reports. Adopting a human rights policy is an important step. Companies are also finding ways to integrate human rights considerations into existing management systems, which can be easier than creating stand-alone policies. Even without “human rights” language, corporate policies and procedures can relate to a company’s human rights impacts. Executives should review their employment, security and compliance policies, for example, to identify ways that they can address the human rights impacts of the company’s operations and business relationships.

  • Become familiar with human rights reporting frameworks.

Meaningful human rights reporting accounts for how a company addresses its human rights impacts, especially risks of severe human rights impacts, and serves as a basis to measure future performance. Companies are developing key performance indicators relevant for their businesses and the particular human rights risks they face. Almost all of the world’s 250 largest companies are publishing non-financial reports. More than 7,000 companies have reported non-financial issues consistent with the Global Reporting Initiative Sustainability Reporting Guidelines, which include human rights indicators. The recently launched Reporting and Assurance Frameworks Initiative (RAFI), piloted by the European multinationals Unilever, Ericsson, Nestlé and H&M, can help companies report on their human rights performance in line with the UN Guiding Principles. The European Commission is expected to issue non-binding guidelines for reporting non-financial information under the European Directive.

While European companies now have a regulatory deadline to start reporting, all companies would do well to better understand their non-financial impacts and how to manage them. Whether mandatory or not, non-financial and human rights reporting is an emerging business practice and stakeholder expectation of leading companies with the potential to influence your company’s reputation and bottom line for years to come.

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When People’s Democratic Republics Are None of the Above

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Adam Tiouririne Adam Tiouririne | Bio | Posts
3 Sep 2014 | 10:20AM

This analysis was featured in Foreign Policy’s Democracy Lab Weekly Brief on September 8, 2014. Thanks, FP!

In international affairs, some phrases are so consistently misused that they should immediately arouse suspicion: “The talks were productive.” “Our civilian nuclear energy program.” “We cannot confirm or deny.” And here’s another one: “People’s Democratic Republic.”

People’s Democratic Republics are actually the least likely countries to be popular, democratic, or republican.

Let’s start with a look at how countries name themselves. Founding fathers like George Washington, Mohandas Gandhi, and Ho Chi Minh all have something in common with more conventional parents: Arguing over baby names. For example, Macedonia, grown from a baby to a teenager, is embroiled even still in a bitter naming dispute with Greece — which is formally named the Hellenic Republic.

Most countries’ formal names consist of a geographic word (which we usually use as each country’s common name) with one or more types of modifiers:

Country Names - Icon Popularity - 2014 Sep 3 Popularity: Words asserting that power belongs to the people. (Republic of France; Democratic Republic of the Congo; People’s Republic of China; Socialist Republic of Viet Nam)
Country Names - Icon Popularity - 2014 Sep 3 Royalty: Words referencing a hereditary ruler. (Kingdom of Saudi Arabia; Grand Duchy of Luxembourg; Sultanate of Oman)
Country Names - Icon Popularity - 2014 Sep 3 Unity: Words implying togetherness or the sum of constituent parts. (Russian Federation; United States of America; Commonwealth of Australia)

A few countries combine categories (Federal Democratic Republic of Ethiopia), use other modifiers (Independent State of Samoa), or eschew descriptions altogether (Canada). But for all their revolutionary boldness, most national founders have settled on the safe choice: Simply “Republic.”

Country Names - Post Chart - 2014 Sep 3

Just four countries have dared to bedazzle their names with a Popularity trifecta: The People’s Democratic Republic of Algeria; the Lao(s) People’s Democratic Republic; the Democratic People’s Republic of (North) Korea; and the Democratic Socialist Republic of Sri Lanka. But these utopian names belie bleaker conditions on the ground.

There’s an Orwellian trend in national names.

Each year, the NGO Freedom House publishes an international index of political rights and civil liberties — in other words, of how popular, democratic, and republican countries actually are. These rankings show that the more Popularity words a country’s name includes, the fewer political and social freedoms its people tend to have.

Country Names - Bar Chart - 2014 Sep 3

George Orwell’s Politcs and the English Language decries imprecision and obfuscation in the political language of his time. And that was 1946. Orwell, who died before any of the three-Popularity-word countries was established, would be shocked at how far doublespeak has come.

What explains this combination of lofty language in official documents and base repression in the streets?

Perhaps the founders who peppered their countries’ names with Popularity words really did intend to conceal the authoritarian flavors they planned. Or perhaps their chosen names are evidence of unattainably good intentions that inevitably went awry.

But the most important factor in these countries’ lack of political and social freedom may be their age. Countries with multiple Popularity words in their names tend to be founded more recently than other countries. That means they’ve had less time to develop open political norms and institutions. In naming their countries, these founders may simply have been victims of a long-term uptrend in Orwellian language — a scourge yet absent when the longstanding Kingdoms and Republics of, say, liberal Europe were born.

Whatever the cause, treat the phrase “People’s Democratic Republic” like you’d treat the phrase “We cannot confirm or deny”: When you hear it, take a closer look.

The United Nations list of formal country names is available here (PDF), and the Freedom House 2014 Freedom in the World report is available here. Note that the Freedom House data in this post has been inverted (so that higher numbers mean more political and social freedom, rather than less) and shifted (from a 1-7 scale to a 0-6 scale) for ease of understanding. All of the original rankings and the differentials between them are fully preserved.

Share your thoughts here, like this post on LinkedIn, or tweet @Tiouririne.

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Ten Things Executives Need to Know (and Do) About Human Rights

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An expanded version of this post, “UN Human Rights Framework: What executives need to know and do about human rights, Part I and Part II”  appears on the website of Ethical Corporation (UK).

Human rights have been a concern for some companies since the anti-Apartheid divestment campaigns of the 1980s, but there has been no broad-based uptake of human rights as a business discipline. Relatively few companies have human rights in their corporate vocabulary.

This may be the year human rights go mainstream, thanks, largely, to the work of John Ruggie, serving for the past six years as the UN Secretary General’s Special Representative on Business and Human Rights.

Ruggie has forged a working consensus among companies, governments and advocates that human rights are not just a business concern, but that both governments and companies have human rights responsibilities. The Ruggie, or UN, Framework – “Protect, Respect and Remedy” – asserts that governments must protect against abuses by companies; companies must respect human rights; and victims must have access to remedies.

“Protect, respect and remedy” is a phrase that many executives will hear and be asked to explain over the next twelve months. This Spring, the UN Human Rights Council is expected to endorse Guiding Principles for both governments and companies to meet their responsibilities under the Framework. For the first time, companies have a clear roadmap for making human rights part of their compliance and corporate responsibility efforts. If you are, or advise, one of those executives, there are ten things you need to know (and do) about human rights: Read more

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The Future of Corporate Human Rights Accountability

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Many corporate counsel and human rights advocates will view last month’s $15.5 million settlement of Wiwa v. Shell, correctly, as further evidence that the Alien Tort Statute (ATS) is a viable tool for corporate human rights accountability. The future of corporate human rights accountability, however, is more likely to focus on human rights due diligence and reporting than human rights litigation. Companies and human rights organizations that hope to influence the business and human rights debate should devote resources to improving corporate human rights due diligence and to shaping human rights reporting requirements under national law.

Potential legal liability for corporate complicity in the worst forms of human rights abuse is now a permanent feature of doing business for most transnational companies. Some form of legal jurisdiction over the extra-territorial activities of home companies is increasingly common in OECD countries. For transnational companies doing business in the United States, the ATS provides foreign victims of the worst forms of human rights abuse a tool for holding corporations accountable for their actions abroad. Read more

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Yahoo!’s Human Rights Turnaround

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Just like any other global company, Yahoo! must ensure that its local country sites . . . operate within the laws, regulations and customs of the country in which they are based.

– Yahoo! Spokesperson, September 2005

 

Human rights trump doing business.  . . .  Internet companies must learn when not to hide behind the notion that we are corporations so it is our number one obligation just to do business. It isn’t our number one obligation. Our number one obligation is to be good world citizens.

– Carol Bartz, Yahoo! CEO, Yahoo! Business & Human Rights Summit, May 2009

What a difference media attention, a lawsuit, Congressional hearings, and ousting the CEO makes. Like earlier corporate responsibility poster children under intense pressure from stakeholders (see Nike), Yahoo is transforming itself from a laggard to a leader.

Read more

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Does Your Corporate Responsibility Program Have a Conscience?

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A few years ago, I came across a twenty-five year old article from the Harvard Business Review, “Can a Corporation Have a Conscience?” The 1982 piece, written by HBS Professors Kenneth E. Goodpaster and John B. Mathews, Jr., applies principles of moral philosophy to what was then the relatively new field of corporate responsibility.

I was struck by the relevance of their analysis for business leaders struggling with corporate responsibility today. Since 1982, corporate responsibility programs have proliferated.  Professionals seeking to design, implement and evaluate these efforts spend a good deal of time defining corporate responsibility for their organization. Is it compliance? Is it philanthropy? Or is it something more? I subscribe to the “something more” view and encourage my clients and students to go beyond compliance and philanthropy and define corporate responsibility as meeting the expectations of stakeholders.

Goodpaster and Mathews provide another definition, one that could help today’s executives trying to decide which corporate responsibility initiatives merit investment. Their definition suggests executives could measure a corporate responsibility program against two benchmarks: rationality and respect.

Read more

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Maturing Multi-Stakeholder Programs

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Voluntary “multi-stakeholder” programs have been a prominent feature of the corporate responsibility landscape for more than a decade. Launched by companies, industry groups, NGOs, governments and international organizations, programs like the UN Global Compact, the Voluntary Principles on Security and Human Rights, and the Fair Labor Association, bring together diverse actors to tackle common problems on the corporate responsibility agenda: human rights, labor standards, environmental standards, and transparency. Many of these pioneering efforts established best practices for subsequent multi-stakeholder collaborations.

But as the corporate responsibility field matures, many of these multi-stakeholder programs are struggling to remain relevant. Initial successes have been followed by substantial challenges. Stakeholders are questioning programs over the scope of their mandates, participation levels, and accountability and governance mechanisms. Some multi-stakeholder efforts face credibility and sustainability concerns with the potential to scuttle the programs altogether.

Read more

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The Ruggie Report on Business and Human Rights: Lessons for Leading Companies

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Harvard professor John G. Ruggie has submitted his third and final report to the United Nations Human Rights Council in his role as Special Representative of the UN Secretary-General on the issue of human rights and transnational corporations.

The Ruggie Report is an important benchmark that captures current mainstream thinking on key business and human rights challenges. Ruggie’s recommendations are likely to influence businesses, governments, and non-governmental organizations working to improve corporate human rights performance. Companies seeking to meet stakeholder expectations for corporate responsibility should become familiar with Ruggie’s work.

Read more

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Corporate Responsibility in Global Supply Chains

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Many leading corporate responsibility efforts are the result of stakeholder pressure on companies to improve labor conditions in their global supply chains. Since the 1990s, industries ranging from apparel, sporting goods and toys, to food, manufacturing and technology, have sought to demonstrate responsibility through supply chain compliance programs. Supply chain best practices – codes of conduct, independent monitoring, public reporting, and collaboration with nongovernmental organizations – have shaped stakeholder expectations of corporate responsibility initiatives generally, often setting the bar for other companies and industries.

Supply chain best practices continue to emerge. Key challenges for today’s leading companies include:

• Moving beyond monitoring to focus on supplier training and education;
• Addressing “code and monitoring fatigue” by consolidating brand, industry and multistakeholder compliance efforts; and
• Finding ways to demonstrate (and reward) improved social and environmental performance al all levels of global supply chains.

Current issues in the sourcing world were the focus of Intertek’s Ethical Sourcing Forum North America earlier this month. Intertek provides auditing, testing, quality assurance and certification services for multinational companies, so the conference had a decidedly corporate perspective, emphasizing current corporate compliance efforts and attracting attendees responsible for supply chain management.

The opening panel provided a valuable survey of current trends by three experts on the challenges of responsible sourcing.

Marcela Manubens, Senior Vice President, Global Human Rights & Social Responsibility at Phillips-Van Heusen, noted that: Read more

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