In recent years, companies have made significant progress to understand, come to terms with and implement human rights practices. In general, this statement applies mostly to high-profile industries such as mining, oil and gas. Similarly, manufacturers as suppliers to large retail chains have also come under scrutiny in countries such as China, Indonesia and India.

Initiatives such as the United Nations Global Compact have assisted to raise the profile of the management of human rights practices and provide the link between business strategy and directors’ fiduciary duty, as well as managing legal and operational risk and reputation, meeting shareholder and stakeholder expectations, and maintaining and motivating staff performance, amongst others.

Yet, although a general understanding of human rights responsibilities of businesses has emerged, many company leaders still struggle with defining how to embrace human rights responsibilities and how to embed these into their business practices.

Stakeholder engagement is foundational to effective implementation of the United Nations Guiding Principles on Business and Human Rights. Meaningful stakeholder engagement is particularly essential in a business’ efforts to meet its corporate responsibility to respect human rights. An increasing number of companies have sophisticated systems and processes for conducting a wide range of stakeholder engagement activities, and there is a substantial body of guidance around effective stakeholder engagement.

However, in practice many human rights impacts can also be linked back to challenges related to stakeholder engagement. It appears that more effective stakeholder engagement often could have prevented or mitigated them. According to one expert in human rights and stakeholder engagement, “Effective stakeholder engagement is one of the most powerful and under-utilized tools we have in addressing human rights risks.”

The UN Guiding Principles on Business and Human Rights provides critical insights into the link between human rights and stakeholder engagement. Stakeholder engagement is understood to be “an ongoing process of interaction and dialogue between a company and its potentially affected stakeholders that enables the company to hear, understand and respond to their interests and concerns, including through collaborative approaches.” [1] The Guiding Principles reference the importance of consulting with affected stakeholders at several key moments: in identifying and assessing actual and potential human rights impacts; in tracking and reporting on company efforts to prevent and manage those impacts; and in designing effective grievance mechanisms and remediation processes.

Affected stakeholders may include not only staff (employees and contract workers) and communities directly affected by a company’s operations, but also more physically remote stakeholders affected through business operations in a company’s supply chain, or customers or end-users of a particular product or service who may be even more dispersed, such as in the ICT or financial services sectors.

Increasingly, companies also engage at the broader policy level with expert stakeholders: individuals whose human rights are not themselves affected by a company’s activities, but who can provide insights into identifying and addressing human rights challenges, and with whom it may be important for companies to communicate about their overall performance on human rights issues.

Meaningful engagement with affected stakeholders is essential to the effective implementation of the Guiding Principles and corporate respect for human rights. Whether companies have extensive and sophisticated systems for managing engagement with external stakeholders or limited processes and platforms for doing so, there is a need to assess whether the purposes, methods and results of those stakeholder engagement processes are aligned with the Guiding Principles.

Below is an initial set of diagnostic questions that human rights leaders within companies can ask about their company’s stakeholder engagement approaches to begin to review those strategies with a human rights lens.[2]

• What are the underlying assumptions on which our approach to stakeholder engagement is based? Could those assumptions be challenged?
• Is our engagement ongoing? What is the long-term engagement plan?
• Has our company understood “the business case for both human rights and effective stakeholder engagement”?
• How do we use our engagement with stakeholders to inform our understanding of our impacts?
• Is our engagement a strategic objective that informs our operations, or a “box to be ticked”?
• Through what forums and with what kinds of approaches do we conduct engagement with stakeholders? In what ways do these reflect stakeholder preferences?
• Have we reached all relevant potentially affected vulnerable groups through our engagement processes? How do we know?
• How do we know that we have the “right” information and an accurate reflection of stakeholder perspectives?
• Have the results of our external engagement been integrated into our business decisions? How, and in what ways?
• How do we assess whether our stakeholder engagement has been effective?

[1] Source:  Corporate Responsibility to Respect Human Rights: An Interpretive Guide

[2] Source:  “Bringing a Human Rights Lens to Stakeholder Engagement.” New York, 2013