Will corporate human rights reports become the norm?

With the U.N. Guiding Principles on Business Rights, large global companies now have a comprehensive resource available for assessing its human rights issues. Image by: U.N. Office of the High Commissioner for Human Rights

Thirty-one questions.

That is the prescribed strategy for businesses to take stock of their policies and procedures to safeguard human rights across their operations.

The process is of course more detailed, but large multinational companies are now in the early stages of implementing what is considered the most clear-cut and comprehensive methodology to align their operations with the universal principles on business and human rights adopted by the United Nations.

Questions now turn to scale and when the practice of public introspective reports on human rights will become the norm among businesses of all shapes and sizes.

The methodology is the U.N. Guiding Principles Reporting Framework, a questionnaire that asks businesses to probe their most salient human rights issues and the measures they are taking to address them.

The 31-question survey is essentially a toolkit, catered specifically to help companies uphold the standards of business and human rights the United Nations set forth in 2011. The idea is for a thorough response to serve as a snapshot of a company’s implementation of the U.N. Guiding Principles.

“This is our road map toward knowing how to either begin or continue on the road to respecting human rights in practice,” said Julie Schindall of Shift, a civil society initiative that helped design the framework, which launched in February. “Business had been looking for a way to implement the guiding principles. This is the way.”

Global consumer goods giant Unilever last month became the first company to produce a stand-alone account of its human rights issues in lockstep with the reporting framework. While Swedish mobile technology company Ericsson issued a similar report in April, it chose to present its findings as part of a broader annual report on sustainability issues.

Unilever and Ericsson are two of the six “early adopter” companies that have pledged to report on their human rights issues using the framework. The list also includes Dutch bank ABN Amro, Swiss food group Nestlé, Swedish clothing label H&M and American mining firm Newmont.

By no coincidence, the group of early adopters comprises some of the largest and most internationally active companies whose network and expansive global operations tend to draw closer scrutiny on the issue of human rights.

While the reporting framework’s layout is relatively straightforward — asking companies to answer eight overarching and 23 supporting questions — the process to answer them certainly is not.

The reporting framework poses questions such as “what does the company say publicly about its commitment to respect human rights?” or “does the company have any specific policies that address its salient human rights issues?” The means to compile those answers, however, can be quite busy and complex.

“It requires a lot of infrastructure to do one of these reports,” Ed Potter, Coca-Cola’s former director of global workplace rights told Devex. The process for a thorough answer often requires synchrony across the whole matrix of an organization, from procurement teams to legal and environmental ones, for example. The larger and more global a company is, the more complex that upfront burden can be, Potter noted.

Yet it is an increasingly necessary burden that large multinational companies are having to bear. The early adopter companies represent a range of industries whose core products and services put them in direct contact with socially conscious stakeholders. That base has grown exponentially in the roughly 20 years since the modern-day campaign for human rights standards by corporations took shape, manifesting in the 2011 adoption of the UNGP.

Investors now provide a significant impetus for open and transparent human rights reporting. The UNGP Reporting Framework, for example, has the support of a coalition of over 80 institutional investors with roughly $4.25 trillion of assets under management.

“That is a huge pressure factor,” Schindall said. “Thinking has evolved a great deal about the role of the shareholder and what it means to provide shareholder value.”

Yet with all the burden and pressure of exhaustive due diligence comes substantive value, companies say.

By design, the reporting framework forces companies to examine the totality of their business to understand their influence on human rights issues.

“You’re really going into the details of your own operations — all of your operations, not just supply chains — making sure that you can remedy any issue,” a spokesman for Ericsson told Devex. “It’s good to look at your own business through this different type of lens.”

Additionally, once the initial legwork of coordination across a company is achieved, it will be easy to maintain going forward — at least in theory.

In practice, however, it will likely be several more years before the type of comprehensive human rights reporting becomes the norm among big business. Corporate sustainability experts opine that currently only a few dozen companies are committing to the depth of reporting recommended by the UNGP Reporting Framework.

Of them, Unilever is considered the gold standard, having produced the first and only stand-alone report to date using the UNGP framework.

Ericsson, the first information and communications technology company to adopt the framework, added its findings to its broader sustainability reports. That method of reporting by no means diminishes the company’s efforts to examine its human rights issues. Rather, experts suggest that type of integrated reporting is a useful way for companies to honor their commitments while not having to reinvent the wheel.

For now, the group of early adopter companies is indicative of the types of firms that will likely catch on to the UNGP Reporting Framework in the near term: large, resource-rich, multinational companies under acute pressure to have meaningful standards to address human rights.

As a critical mass of those companies develops, the next wave to come on board, presumably, would be their supplier companies that sit one level further from mainstream consumers in global value chains.

As to when UNGP framework reporting becomes the norm among large multinationals themselves, “I would put it at a 5-10 year range,” Potter said.

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About the author

  • Naki B. Mendoza

    Naki is a former reporter, he covered the intersection of business and international development. Prior to Devex he was a Latin America reporter for Energy Intelligence covering corporate investments and political risks in the region’s energy sector. His previous assignments abroad have posted him throughout Europe, South America, and Australia.

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