Reana RossouwWritten by

The importance of human rights management for business

Advisory and consulting| Views: 340

A strategy for risk management and proactive stakeholder engagement

Business has previously regarded the protection of human rights as a moral imperative. Today, human rights management and due diligence policies are required for good governance and an obligation for operating in the global market.

The concept of the protection of human rights emerged as the obligation of government to protect citizens. However, now all companies have the obligation to guarantee the rights of all humans and not to do anything that may harm, violate or infringe on these rights.

Human rights management practices have immense value for companies

The concept of human rights management has become common practice for companies across the world. Human rights are independent of race, sex, religion, political opinion, social status or any other characteristic.

Globalisation brings the world closer together and a general benchmark was created for the protection and guarantee of human rights in sustainability practices. Currently, promoting, protecting, guaranteeing and safeguarding human rights is required by multinational enterprises and managed across their value chains from sourcing to production, distribution to marketing, and sales to consumption. Human rights management is an opportunity to promote and sustain healthy stakeholder relationships while respecting the rights of all stakeholders, including staff, business partners, suppliers, producers, etc.

A human rights management strategy assists in managing risks at all levels

Various risk factors impact the business performance of any company. These are social, environmental, economic, geographical, country and industry-specific, while political issues also influence operations. In the context of human rights, management-specific consideration is given to impacts and risks across the value chain that affects all stakeholders. The level of risk is directly related to the influence and control of a company over such a risk aspect.

The difficulty for a company arises in questions around how said company ensures and controls, monitors, assesses and guarantees that human rights are protected while working with its stakeholders across the globe.

The link between human rights and stakeholder management

The solution for effective human rights management practices lies in how a company communicates and engages with its stakeholders. Since the global adoption of the Universal Declaration of Human Rights, multiple documents and guidelines have been drafted and implemented as guiding principles and frameworks for human rights management.

To mention a few:

  • The UN Guiding Principles on Business and Human Rights
  • The OECD guidelines for multinational companies operating in emerging markets
  • The 17 Sustainable Development Goals
  • The Global Reporting Initiative
  • The voluntary principles on safety and security

These principles establish remedial frameworks and responsibilities for companies and are by far the guidelines that are referred to most. It is important to note that these guidelines are designed for companies in developed as well as developing countries, including fragile and failed states and across different languages, cultures and religions.

Good human rights practices have a meaningful impact (to minimise costs and risks) in scenarios where companies expand and enter new markets. In countries where issues around for instance gender, diversity and inclusivity are concerns or where the right to strike, freedom of expression and association, the right to belong to a trade union, the right of political freedom and political participation cannot be guaranteed, human rights standards provide clear guidelines for universal operating procedures.

Harmful practices such as corruption, marginalisation of groups and weak legal systems are all aspects that can be positively influenced by a company’s human rights management strategy. Cultural relativism can certainly become a challenge for companies exploring new markets.

From a risk management perspective, human rights and supporting due diligence policies have great value for companies, as they:

  • Prevent human rights infringements and violations in supply chains
  • Avoid unethical or harmful business practices
  • Guarantee labour rights, indigenous people’s rights and other social and political rights protected by international law
  • Mitigate negative stakeholder perceptions and avoid negative media publicity caused by unethical, unfair or corrupt business practices
  • Support and enhance a company’s sustainability commitments
  • Promote dynamic business relationships and set the tone for proactive stakeholder engagement
  • Mitigate governance, compliance and reporting risks, and promote transparency and accountability

A human rights management strategy can be useful for companies that operate globally, but also for smaller, mid-size companies, as these companies often form part of large corporations’ supply chain. Other advantages of having proactive human rights management strategies, policies and due diligence processes and systems include:

  • Access to better financial investment and procurement opportunities
  • Greater competitive advantage and differentiation
  • Legislative protection and guidance in fragile and failed states, or in areas of lacking government practices
A human rights-based approach to community development

Social responsibility is an obligation for companies, irrespective of the context they operate in. The right of communities to good air quality, enough drinking water, the right to information, education, housing and health should be guaranteed. Violations and infringements on the rights of communities include poisonous leaks from a factory contaminating the air, soil, drinking water, and land affecting both humans and animals.

People have the right to access to opportunities, sustainable livelihoods and quality of life, and companies ongoingly make development efforts towards eradicating poverty. Companies’ social responsibilities and obligations extend to ensuring that these rights are upheld.

It takes time and effort to incorporate a human rights management approach, but the rewards are significant and endless.

Next Generation has assisted numerous companies with developing human rights strategies, policies, processes and systems. In this regard, our services include:

  • Country and industry/sector risk assessments and benchmarking human rights practices
  • Identifying rightsholders and stakeholder engagement to test perceptions of human rights practices, impacts and risks
  • Review and due diligence of existing processes, policies, frameworks, compliance and standards across value chains
  • Determining human rights risks and impacts of a company’s products, services and relationships
  • Developing human rights strategies, plans, policies, tools, frameworks and guidelines
  • Capacity-building in human rights management

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