According to the United Nations Guiding Principles Reporting Framework (www.UNGPreporting.org), the first thing that we companies should be asking ourselves is “What are our salient Human Rights issues”. By salient, I mean those Human Rights that are most at risk of causing a severe negative impact. And by severe, I mean the scale – the gravity of the Human Rights that could be potentially violated –, the scope – how many people are actually going to be potentially impacted? – and the remediability – could the lives of the people impacted go back to their previous enjoyment?. Only when a company has identified what ‘Human Rights’ actually means to them can they then start to integrate them into their business model. For example, in the extractive industry, the main Human Rights risks, the salient Human Rights issues, are generally going to revolve around community, environmental impacts, health, safety and security impacts; whereas these risks are likely to be completely different in another sector.
Risks for people and risks for businesses do converge
It’s also important to note that to identify “salient Human Rights issues”, we have to to look at risks as risks to people and not risks to the businesses. If we only looked at business risks, we would be likely to miss some of the salient human rights risks.Paradoxically, though, these risks will converge back to your business. We need to change the lens through which we look at the risks that may potentially affect us.
Once we’ve identified these risks, put the right processes in place and understood the key performance indicators for monitoring the respect of Human Rights, we will begin to see the business return. The latter comes not only in the form of enhanced reputation – as well as minimalizing our reputational risk – but also in the form of increased profitability. For starters, we’re less likely to have lawsuits (and to have to manage them) and the associated legal costs, we may have reduced insurance fees, greater staff retention, less supplier issues…
The roadblocks ahead
So what are the roadblocks in this endeavour? We can identify a few key obstacles.
First of all, businesses must understand what Human Rights means to them and how they relate to them. Generally speaking most surveys show that business executives think that protecting Human Rights is a good thing. A global survey of 853 senior executives and interviews with nine high-profile experts in human rights was published in March 2015 by The Economist Intelligence Unit (EIU); its results show that more than four-fifths (83%) of respondents think that business is an important player in respecting Human Rights. On the other hand, if you ask business executives to elaborate, few can explain how respect for human rights is integrated into their internal management systems and throughout their supply chain.
Secondly, businesses must understand how respect for Human Rights can drive improved performance. The abovementioned survey shows that companies do not see a business case for Human Rights, but rather see respecting Human Rights as helpful in building good relationships with local communities (48%), protecting the company brand and reputation (43%) and serving moral/ethical considerations (41%). Out of these opinions, only one (the second) can be categorised, strictly speaking, as a value issue, which means that greater corporate education is required.
Thirdly, companies must be helped to think beyond short-term profitability goals and to consider the longer term sustainability of their business. Current stock exchange guidance requiring public companies to report quarterly their financial results, drives companies to continually think about short-term profitability. This creates inherent tension in building a company for the longer term. Regulation should be reformed to take account of the unintended consequence of quarterly reporting as this is likely to generate greater value for all stakeholders.