Human rights management as part of a business strategy
"Formulating a specific corporate strategy on human rights and embedding this strategy in corporate policies is key to the successful integration of human rights management processes in a company. Such a strategy should provide the vision, map the means to integrate human rights and embody the business commitment to human rights. Taking a strategic position on human rights management can establish a leadership position for the company.” [1]
Companies are increasingly required to provide a transparent and fair valuation to all interested parties of their substance and performance in social, economic and environmental spheres. They are also expected to illustrate and validate their contributions to the overall sustainable local and global economies as investors, consumers and other stakeholders are becoming better informed and more critical of how economic value is created. Economic value is no longer only measured on fiscal inputs and outputs, but needs to incorporate social, socio-economic and environmental factors as well.
To this end, how a company manages the human rights of all its stakeholders has become part of fair, transparent, responsible and ethical business. Giving due consideration to human rights has become a critical aspect of business strategy and is considered essential for businesses to retain their “business license to operate”. Reporting on human rights strategies, policies and activities helps companies illustrate their commitment to global standards — such as the UN Declaration on Human Rights, The Voluntary Principles for Security and Human Rights, the Global Compact, the Global Reporting Initiative (GRI), Corporate Sustainability Reporting Coalition (CSRC) and the Integrated Reporting Framework — thus providing more credibility to its stakeholders and investors.
This article explores some of the key aspects of human rights that need to be incorporated into business strategy to the benefit of all company stakeholders.
What are human rights in the context of business strategy?
Human rights are a set of moral principles that guide the behaviour of all individuals, states and corporations to ensure that all people in all circumstances are treated with respect, dignity and fairness. Human rights are universal and not country-specific. However, every country is obligated by international law to write into its own laws and policies the governance and protection of all humans’ basic rights. South Africa has adopted into its Constitution the protection of human rights of all South African citizens. Companies operating in South Africa therefore have an obligation to incorporate human rights into their daily operations and implement relevant policies and procedures to ensure that fundamental human rights are upheld.
It must be noted that the implementation of human rights goes beyond observing the rights of workers – such as the right to fair treatment, equitable labour practices and the right to collective bargaining (which is the minimum that many companies report on). Human rights in the context of business strategy include the rights of all rightsholders/stakeholders impacted by a company’s operations, including community members, shareholders, suppliers and customers. A company’s human rights management policies and activities should refer to all internal and external rightsholders’ human rights. It could for example include the right to: human dignity; a healthy environment; access to proper housing; access to food, water, healthcare and social security; freedom of association on aspects of culture, religion, politics and language; and freedom and safety.
Employee rights
In their World of Work Report of 2014 the United Nations International Labour Organisation (ILO) highlights that while there have been some positive trends in emerging economies over the past decade, many social and employment issues still persist, with significant levels of “vulnerable employment” remaining on the African continent.
South Africa is still one of the lowest ranked Emerging Economies for both GDP per capita growth and productivity improvements for the period 1980 and 2011.[2] The ILO highlights a number of persistent key issues within the South African employment landscape, including (but not limited to) excessive working hours of large portions of the labour market, lack of trade union representation in companies, and continued high rates of informal employment. These findings show that there are still large gaps in the commitment of South African companies to honour and respect basic human rights.
Further, the ILO found that significant numbers of smaller businesses opt to remain small so as to avoid reaching the thresholds which require enterprises to formally register their workforce and come under the scrutiny of labour and union inspectors. These businesses perpetuate the use of unregistered workers and limit their own economic growth, while potentially also engaging in other undesirable business practices, such as paying less than living wages. This poses a potential threat to the human rights of workers, as unfair labour practices persist.
Other examples of human rights violations against workers include:
- The use of child labour
- Discrimination against specific gender, racial or religious groups
- Sexual harassment and abuse
- Insufficient safety in the workplace
The illustration of adherence to human rights in the workplace is an important factor to consider for companies up and down their supply chains. Companies need to consider the business risks presented as a result of human rights violations committed by their suppliers and clients. In order to achieve this, businesses are required to not only look internally at the basic human rights of their employees, but also rights of other rightsholders within their operating environment. Companies need to develop a framework for integration and implementation into their strategic and operational plans that indicate such a company’s respect for the human rights of all its stakeholders.
Other stakeholder human rights
The human rights of stakeholders impacted by a company’s operations are becoming a key aspect for companies – not only from a reporting perspective, but also from a strategic planning and human rights risk management perspective.
According to the Guiding Principles on Business and Human Rights, published by the United Nations:
“The responsibility to respect human rights is a global standard of expected conduct for all business enterprises wherever they operate. It exists independently of the States’ abilities and/or willingness to fulfil their own human rights obligations, and does not diminish those obligations. And it exists over and above compliance with national laws and regulations protecting human rights.”[3]
However, many companies have not yet come to grips with the scope of human rights risks that they potentially face and are not incorporating these into policies and business frameworks. Social, economic, cultural, environmental and community rights are some of the rights of stakeholders that companies are expected to address and report on as part of their business operations.
Some examples of human rights that companies face in South Africa include:
- Protection of privacy of customers and other stakeholders [4] as outlined by the Protection Of Private Information Act (POPI).
- Investment of international companies in emerging economies in e.g. mining and agriculture may threaten indigenous peoples’ rights to land ownership and displace local communities.
- Destruction of natural resources, e.g. pollution of waterways, air pollution and environmental degradation due to waste dumping.
Human rights management and business strategy
According to Baab and Jungk [5], companies need to make concerted efforts and require well-developed approaches to effectively address human rights challenges within their strategies and operations. These should include:
- Understand human rights in the context of the industries, supply chains and communities within which they operate.
- Follow due diligence processes and engage all relevant stakeholders to identify, quantify and prioritise human rights risks, issues and opportunities.
- Build a business case for inclusion of human rights into business strategies, policies and practices, taking into consideration legal, reputational, operational, environmental and financial risks. [6]
- Ensure that human rights issues are mandated, overseen and prioritised by senior and executive management.
- Ensure that all staff are educated and trained in human rights aspects and how these translate into the ethos of the business.
- Develop relevant human rights indicators, implement data collection, undertake monitoring and evaluation activities pertaining to human rights, and conduct regular human rights impact assessments.
- Prevent, mitigate and, where appropriate, remediate human rights issues and grievances through the implementation and communication of appropriate human rights policies, processes and procedure within the organisation.
- Ensure that human rights issues, risks and actions are communicated appropriately and transparently to all stakeholders through communication and reporting practices, e.g. integrated and sustainability reports.
While country-specific laws govern the violation of human rights, companies need to consider additional standards and practices in instances where specific human rights issues prevail in the countries where they operate. These may include the rights of: indigenous peoples; women; national or ethnic religious and linguistic minorities; children; persons with disabilities; and migrant workers and their families.
There are a number of guidelines and voluntary standards to which companies can subscribe and participate in, depending on the nature and size of their business. These include:
- The Organisation for Economic Co-operation and Development’s (OECD) Guidelines for Multinational Enterprises
- The United Nations Global Compact
- The International Labour Organisation (ILO) Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy
- The Protect, Respect and Remedy Framework to address corporate accountability
The Guiding Principles on Business and Human Rights: Implementing the United Nations Protect,
Respect and Remedy Framework was released in 2011. The framework is built on three pillars [7]:
- Pillar one refers to the obligation of governments to craft policies and regulation to protect individuals against human rights violations and provide legal structures to identify and remedy human rights violations.
- Pillar two refers to the obligation of companies to put into place policies and frameworks to prevent human rights violations.
- Pillar three refers the creation of greater awareness of human rights violations and to provide victims access to legal mechanisms that effectively redress such violations.
This framework provides a good guideline in the treatment of the various stakeholders that are impacted by or impact human rights issues, and is therefore a good point of departure for companies that have not done so yet to start developing their own human rights strategies, policies and mechanisms.
Conclusion
Businesses have an obligation to observe and respect human rights, not only those of their employees, but also those of larger stakeholder groups. Companies can mitigate the risks presented by human rights violations by adopting policies, subscribing voluntary initiatives, incorporating human rights principles in their business strategies and ensuring that human rights due diligence is done up and down their supply chains. Companies need to report transparently on human rights and potential human rights violations and risks. In addition, putting in place mechanisms to effectively address human rights violations will lend further credibility to companies in the context of their treatment of stakeholders.
Next Generation has developed a deep understanding of human rights business practices that allows us to provide an extensive range of services to help companies in these complex scenarios.
Our human rights management services include:
- Identifying rights holders, country risks and impacts, operational risks and impacts within operating contexts.
- Identifying, mapping and analysing the company’s relationships across its business and along its value chain.
- Analysing and auditing the company’s products, services and relationships.
- Analysing and auditing the company’s practices and impacts.
- Developing human rights strategies, policies, frameworks and guidelines from implementation to due diligence, and reporting on human rights practices.
