WME Environment Business Magazine – 22 August 2012
There’s a new global standard on human rights, supported by the federal government, which is relevant to anyone doing business here or abroad, writes Catherine Sutherland.
The unanimous endorsement of the Guiding Principles on Business and Human Rights framework by the United Nations in June, supported by the federal government, was a game changer.
The principles provide an internationally agreed framework and practical guidance on what actions businesses can take to fulfill their responsibility to respect human rights. It is also a benchmark for stakeholders – employees, customers, investors, shareholders, non-governmental organisations and local communities – to assess a company’s human rights performance and that of its business partners and suppliers.
Over the past year, the principles have seen rapid uptake by individual businesses, voluntary and sector-specific initiatives, industry bodies and sustainability reporting frameworks, including the OECD Guide-lines for Multinational Enterprises, the UN Global Compact, the International Council on Mining and Metals, and the Global Reporting Initiative.
The trend is expected to continue with the principles anticipated to form the basis of future government regulation, investor decision-making and business policies and management responses in Australia and internationally.
The business case
The business case for action on human rights relates to gaining and maintaining your social and legal licence to operate, avoiding reputational damage and financial or operational costs.
It also relates to business opportunities including access to capital and new markets, building sustainable relationships with business partners and local communities and improving employee attraction and retention. As Australian Human Rights Commissioner Catherine Branson QC said: “Australian companies are increasingly … realising that doing the ‘right’ thing is good for business.”
Companies are facing increasing scrutiny of their human rights performance and that of their business partners and suppliers by diverse stakeholders including the media, employees, investors, NGOs, local communities, customers and clients. With the growing transparency of business operations and rapid dissemination of stakeholder concerns and reactions through social media, poor performance on human rights can rapidly result in significant damage to corporate reputation, investor confidence and market share.
“Today, human rights is a key performance indicator for corporations all over the world,” former UN human rights high commissioner Mary Robinson said.
There have already been initiatives undertaken to improve corporate human rights performance by a wide range of organisations. These include voluntary codes of conduct, monitoring and reporting procedures and socially responsible reporting indexes such as the Equator Principles; Voluntary Principles on Security and Human Rights; Dow Jones Sustainability Indexes; and the Good Business Register.
“Respect for human rights has become a widely accepted business principle, a core part of business risk management, a critical component of their social licence to operate, and the source of business opportunity and innovation,” the Global Business Initiative on Human Rights said.
How Australia rates
The UN Guiding Principles provide a framework and guidance for businesses to understand, manage and report on their human rights performance.
Integrating human rights considerations into existing processes, including those relating to communities and social performance; health, safety and environment; security; human resources; procurement; product responsibility; and compliance and risk management, is part of this process.
While businesses must respect all internationally recognised human rights, certain human rights are likely to be more relevant for some sectors or operating contexts. The Australian Human Rights Commission identifies common business-related human rights impacts as those relating to: fair working conditions; equality, non-discrimination and dignity; people’s health, life and security; housing and standards of living; Indigenous peoples, land and culture; and human rights impacts in the supply chain.
Many companies already have processes in place to address some of these issues, for example through policies on occupational health and safety, environment, anti-corruption, privacy, collective bargaining, and non-discrimination. However, few businesses have developed an overarching human rights management framework that would allow them to ensure they are not exposed to human rights risks left unidentified, unmeasured or unmanaged.
Australian businesses are increasingly operating in new and challenging environments that pose a greater risk of involvement in human rights-related abuse, through their own activities and business relationships. Complying with local laws is not always enough, particularly when operating in conflict areas or weak governance zones.
Despite significant progress by some Australian companies in recent years, there remains much room for improvement. A recent report by the Association of Chartered Certified Accountants, Net Balance and Corporate Analysis Enhanced Responsibility found of the 47 Australian Securities Exchange 100 companies exposed to human rights through their operations in countries with serious human rights concerns, 90% appeared to have insufficient management systems in place to mitigate their exposure to risks.
The remaining 53 companies also failed to demonstrate adequate policies or disclosures on human rights. It puts Australian companies behind the standards of their UK and European counterparts and only slightly better off than their North American peers.
Investors, governments, NGOs and industry associations are calling on businesses to demonstrate they have effective policies and processes in place to respect human rights and address adverse impacts if and when things go wrong.
Businesses are expected to know and show their human rights performance and how they have addressed human rights related complaints, disputes and grievances when actual or perceived harm occurs.
“Australian businesses need to know and show that they are respecting human rights wherever they operate,” Australia-based business and human rights expert and former UN business and human rights legal advisor Vanessa Zimmerman said.
“The UN Guiding Principles on Business and Human Rights, now accepted as a global standard for government, business and others in managing business-related human rights impacts, provide a roadmap on how to go about doing so.”
The UN Association of Australia (Victoria) business and human rights workshops provide training for business, government and NGO professionals who want to know more about how human rights relate to business and how to develop human rights policies and processes to identify and manage human rights risks and track and communicate their organisation’s human rights performance.
The workshops provide practical guidance and tools on the implementation of the UN Guiding Principles on Business and Human Rights in practice.
Catherine Sutherland is manager of sustainability education at the United Nations Association of Australia
(Victorian division). For more information visit:http://www.unaavictoria.org.au