Reana RossouwWritten by

Using effective indicators to measure progress on human rights management

Advisory and consulting| Views: 109

The relevance of measuring, managing and reporting on business and human rights indicators cannot be overstated. Valid and reliable indicators could be useful to: assess the size of the human rights issues that companies face; track corporate progress over time; and compare policies, process and impacts across corporations (thus triggering healthy competition). Good human rights indicators may also operate as early-warning systems and make specific human rights abuses/violations and infringements visible (for instance discrimination is impossible to prove without aggregating information). Lastly, human rights indicators are needed to integrate human rights issues into other operational risk management process and investment decisions.

The United Nations Guiding Principles on Business and Human Rights (UNGPs) support the argument that human rights indicators are fundamental tools for corporations to meet their responsibility to respect human rights. In order to verify whether adverse human rights impacts are being addressed, “business enterprises should track the effectiveness of their responses”, and “tracking should . . . be based on appropriate qualitative and quantitative indicators”. (UNGP 20)

Furthermore, in order to account for how they address their human rights impacts, “business enterprises should be prepared to communicate this externally”. Such external reporting “should cover . . . indicators concerning how enterprises identify and address adverse impacts on human rights.” (UNGP 21)

The UN Working Group on Business and Human Rights has confirmed the significance and importance of indicators on several occasions. In 2012, it argued that: “States and business enterprises should scale up and sustain efforts to implement the Guiding Principles, including . . . by establishing measurable and transparent indicators to assess their effective implementation.” (A/67/285, §79) In 2013, it specified: “The development of performance indicators that can be used by stakeholders to encourage proper functioning of grievance mechanisms is important, and can be used by stakeholders to understand how operational-level grievance mechanisms are working, and to hold business enterprises accountable.” (A/68/279, §41)

Notwithstanding the great potential of human rights indicators, measuring and comparing respect for human rights by corporations is not an easy task.

The project on Measuring Business & Human Rights (MB&HR) identifies two fundamental challenges:
  • Firstly, the challenge of how inadequate business and human rights indicators may contribute to ineffective measures of what is important and therefore poor policy guidance. As an example, a low number of complaints received through a given grievance mechanism can be the result of lack of transparency, and not necessarily evidence of respectful behaviour.
  • Secondly, whilst indicators used by sustainability indices (such as FTSE4Good and Dow Jones Sustainability) or ratings (such as the Access to Medicine Index and the Behind the Brands’ Scorecard) respond well to the UNGPs’ call for companies to “know and show” that they manage their human rights impact, they tend to be granular in nature and developed without sufficient transparency and participation. Such an approach to measurement can disempower those who use and rely on them. [1]

Tracking performance is the process of monitoring outcomes of the due diligence process and making improvements where necessary.  While not designed for that purpose, company-level grievance mechanisms can be an important way of tracking performance because they can be one source of data to evaluate the effectiveness of human rights due diligence. For companies that need to demonstrate that they respect human rights, reporting is another element in order to enable stakeholders to engage with companies and compare practice.

Currently, companies do not usually track and report on human rights performance but are looking at human rights in the context of the “sustainability” footprint of their operations, which combine the social as well as environmental and economic impacts. Human rights become just one of many among the several issue areas of a larger process of measurement and reporting. Within the sustainability framework, the human rights component remains underrepresented and underdeveloped.

Some examples of how companies currently track, report and improve performance on human rights:
  • Gathering data on human rights through data questionnaires, employee surveys, self-assessments, hotline reports.
  • Formulating KPI’s and comparing results over time and with industry peers.
  • Monitoring and auditing of suppliers, reporting on the results, devising improvement plans, and building capacity to improve their performance.
  • Reporting on human rights issues, dilemmas and challenges through corporate responsibility and sustainability reports – which may include case studies, quantitative data and descriptions of processes (i.e. stakeholder engagement).
  • Establishing meaningful engagement with stakeholders who could bring human rights issues to the attention of the company (e.g. grievance mechanisms) and making such engagements a part of the performance evaluation process.
Some examples of commonly used key performance indicators (KPIs):

Process/Inputs

  • Percentage of employees trained in code of conduct (including human rights)
  • Number of safety walks held per business unit
  • Comparison of zero-tolerance vs. limited tolerance issue (supply chain programmes)

Outcome/Impacts

  • Number and breakdown of code violations (e.g. respectful treatment, discrimination, collective bargaining, employee relations, employee privacy, right to organise, working hours)
  • Lost time injury rate
  • Number of contracts due to incompatibility with human rights standards
The challenge of identifying impacts and the subsequent measurement thereof:

A company’s operations may have a range of human rights implications, and identifying these is often more complex than companies anticipate, particularly where operations are global. A comprehensive review, involving a cross-section of the company’s functions and, where appropriate, external stakeholders and expertise, may help reveal actual and potential adverse human rights impacts.

At appropriate junctures (such as the entry into a new business relationship, the launch of a new product, entry into a new market or the renewal of an existing contract/licence), appropriate due diligence or, if necessary, a full human rights impact assessment should be undertaken. These can be vital tools for companies to successfully identify and manage their impacts, as well as to ensure they are able to evidence the processes they have in place to do so.

Consideration for effective human rights management therefore considers:
  • In the workplace:Businesses should be able to guarantee important workplace rights unless local laws prevent this (such as the right of employees to associate freely, to be free from discrimination and to exercise freedom of religion and of expression). Adequate standards of health and safety within the workplace need to be maintained and the right to privacy respected.
  • Along the supply chain:Amongst other things, companies may need to show what steps they take to minimise the risk of child or forced labour in their supply chain or the use of conflict minerals in their products.
  • Sale of products:A business may need to take steps to ensure that products sold for legitimate purposes are not likely to be misused to infringe the human rights of others.
  • The local community/stakeholders:Acquiring land for infrastructure projects or mineral exploration can interfere with rights of the local population and any acquisition or resettlement process needs to take account of stakeholder interests.
  • Local government:Areas of potential difficulty include doing business in countries with significant corruption issues, affected by conflicts and/or with weak governance.

[1] Source:  Business and human rights indicators:  Michael K. Addo, senior lecturer at the Law School of the University of Exeter, member of the United Nations Working Group on Business and Human Rights, March 2014

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