Any of our business? Human Rights and the UK private sector - Human Rights Joint Committee Contents


5  RESPECT: THE RESPONSIBILITY OF BUSINESS

What does the responsibility to respect human rights mean?

107. In his 2009 Report, the Special Representative explained that the corporate responsibility to respect human rights has a number of facets:

  • The first is straightforward and involves the legal obligation on businesses to obey the laws of its home and host states;
  • The second element of the responsibility to respect human rights is the social or moral responsibility on businesses to "do no harm" to the rights of others guaranteed by international human rights law. He explains that this is accepted "near-universally" by all businesses, states and civil society; applies regardless of the laws or international obligations of the host state; and that there may be circumstances in which the need to respect human rights imposes additional responsibilities on firms.[150]
  • While some businesses implement corporate social responsibility policies over and above the responsibility to respect human rights, these activities are not a substitute for meeting the responsibility to "do no harm". Philanthropy, while desirable, is not a requirement of the responsibility to respect human rights.[151]

108. In order to discharge the responsibility to respect human rights, businesses must take positive steps to recognise and mitigate the effects of their business activities on human rights. Companies are required to undertake human rights due diligence of their activities to assess their human rights impacts; and they must take steps to prevent or address those impacts through business planning or other positive measures.[152]

109. Witnesses expressed a range of views over the requirements of the responsibility to 'respect' human rights. It was widely recognised that the principal responsibility for securing adequate protection for human rights remains with states.[153] Some witnesses argued that more recognition was needed of the role which some businesses play relating to the rights of individuals, for example in areas of conflict.[154] Different perspectives were expressed on whether legal or regulatory action was necessary to enforce this social responsibility and whether those standards should be agreed internationally or set unilaterally by individual host or home states.

110. We welcome the recognition by Professor Ruggie that the responsibility on businesses to respect human rights is not merely voluntary. However, we share the concerns of the UN Special Representative and others that while this responsibility is clear in theory, its practical implications are uncertain.

WHAT DOES "RESPECT" MEAN FOR UK BUSINESS?

111. In recent years many companies have become increasingly aware of the need to enhance their corporate responsibility and deal with the human rights impacts of their business.[155] This is apparent from the growing number of companies who make human rights part of their corporate strategy, including through the adoption of codes of conduct or subscription to international codes or principles that call for observance of human rights standards by companies.[156] A number of these initiatives have been business-led, suggesting that some businesses see value in acknowledging that their operations have an impact on human rights. A number of witnesses - from both business and civil society - outlined the business case for respect for human rights, both at home and abroad. These include protecting the reputation of the business and its brand; increasing public confidence; actively managing financial and other risks that may arise as a consequence of allegations that the company has been involved in human rights abuse; enhancing employee satisfaction; and improving recruitment and retention.[157]

112. The Minister for Regulation, Ian Lucas MP added:

    One of the best ways that you can improve your reputation is to show yourself as a company that has consciousness of the environment in which you operate; that does things beyond its normal commercial remit to assist the local community and to be seen to be behaving in that way. I think that brings a commercial benefit as well as doing the right thing, and that is a perfect solution as far as I am concerned.[158]

Due diligence and human rights impacts

113. In his 2009 Report, Professor Ruggie criticised the number of companies that introduce human rights policies which have no real impact on their business. In oral evidence he said:

    Companies universally will say that they respect human rights. I have never come across a company website that said, "We do not respect human rights". The question that we ask them is "Okay, that is great. We are delighted that you respect human rights, but how do you know that you do? What steps do you go through to demonstrate to yourself that you do, and are those steps adequate? Most of the time there are no systems in place.[159]

114. Vigeo, a Corporate Social Responsibility Rating Agency provided us with some broad findings from their research on 414 European companies, including 104 UK companies, including a number of FTSE 100 companies:[160]

  • Between January 2008 and April 2009, Vigeo identified human rights allegations involving 18 British companies. This was a "rather high number" when compared with other European companies studied.[161]
  • Compared to the average performance of European peers, more British companies have established formalised policies on human rights;
  • of those firms which have human rights policies have implemented measures to ensure respect for these rights (such as risk assessments, training and awareness raising);
  • of the UK companies studied do not have policies which address human rights issues at all.[162]

115. In its written submission, BP outlined a number of processes which it has introduced as part of its corporate governance and risk management programme. It explained that these processes were developed after the firm was criticised in the mid-1990s for alleged wrongdoing relating to security issues in Colombia:

    Spurred by this experience we took a number of steps to develop internal 'process' with the intention of ensuring that considerations of human rights are embedded in our business practice. […] The main elements of this broad framework include the need for clear policy positions which are articulated and backed-up by supporting developed processes; for ensuring that human rights requirements are enshrined In third party procurement and contracts, particularly in high risk areas; and for the provision of independent monitoring, assurance and reporting techniques.[163]

116. New Look told us that it was committed to membership of the Ethical Trading Initiative. It argued that it had achieved improved working conditions in its supply chain by introducing training on productivity, combining concern for the rights of its workers with business efficiency.[164]

117. Tesco also described a number of steps which it was taking to demonstrate its commitment to its "core values" and the Ethical Trading Initiative Base Code. It mentioned, for example, its annual audit of high-risk sites in their supply chain and recent steps taken to improve the audit programme. Tesco also informed us about its decision to stop using Uzbek cotton as action to remove child labour from its supply chain.[165]

118. Witnesses made few suggestions about the steps which companies can take to improve their due diligence processes. The UFCW (a US trade union) called for the UK Government to promote the inclusion of independent members on company corporate responsibility committees. The union noted that six out of ten of the FTSE's largest UK firms have corporate responsibility committees which are comprised largely or entirely of independent non-executive directors. Shell were cited as an example of good practice (having three independent non-executive board members on their corporate responsibility committee) and Tesco as bad practice (having a committee comprised entirely of employees and chaired by the director of corporate and legal affairs).[166]

119. Many of the steps taken by businesses and their organisations have helped to move the debate on business and human rights forward. Changes in business practice on the ground can have a positive impact on the lives of communities and individuals. We welcome the commitment shown by many companies to respect human rights, wherever their businesses operate. Dealing with the negative impacts of businesses on human rights requires a culture change in the way that businesses think about their responsibilities. We see merit in the argument that business-led initiatives may achieve a credible and lasting change, but this is hampered by the perception that some businesses regard addressing human rights as little more than an exercise in "good PR". Although compliance with the due diligence requirements outlined by the Special Representative - including the need to take action to address identified risks to individual rights - has the potential to benefit more than a business's public image, Professor Ruggie himself recognises that few businesses meet the standards he considers are necessary. We consider this and other limits to the responsibility to respect, below.

Limits of the responsibility to respect?

120. Some witnesses have expressed concerns about the scope and implications of the responsibility to respect human rights. These included:

  • Whether the responsibility to respect human rights means more than taking measures of corporate social responsibility?
  • Whether voluntary arrangements and business-led initiatives work without state reinforcement?

RESPECT FOR HUMAN RIGHTS AND CORPORATE SOCIAL RESPONSIBILITY

121. Several witnesses argued that it was important to remove the issue of human rights from the wider corporate social responsibility agenda.[167] For example, the Government told us:

    Companies are taking proactive steps to produce their own human rights policies, statements of values, codes of conduct and pledges. However, policies tend to be aspirational and overarching, with a blurring of corporate social responsibility and human rights.[168]

122. War on Want argued:

    A CSR framework is determined by commitments that companies agree to enter into voluntarily but human rights need to be underpinned by legally binding framework.[169]

123. Given the absence of a straightforward legal framework for business responsibilities regarding human rights, it is understandable that these issues are generally dealt with by businesses alongside environmental issues under the 'corporate responsibility' label.

124. How businesses describe their activities should not matter, provided that businesses take their responsibility to respect human rights seriously. Greater clarity on the distinction between actions required by the social or moral 'responsibility to respect' (i.e. do no harm) and acts of general philanthropy would go some way to reinforce the baseline responsibility identified by Professor Ruggie. The UK Government could encourage such a distinction by adopting the 'protect, respect and remedy' framework and clearly explaining the responsibility to respect human rights and the associated need for due diligence in their work on corporate responsibility.

VOLUNTARY ARRANGEMENTS AND MULTILATERAL INTERNATIONAL INITIATIVES

125. Witnesses expressed a range of views about the value of businesses' participation in voluntary schemes and codes of practice. For example Business for Social Responsibility told us that the development of voluntary schemes and multi-stakeholder initiatives had captured the promise of "dialogue, debate and collective action". It went to on explain that these arrangements provided institutional support for those businesses advancing support for human rights and provided accessible information on business and human rights issues.[170] Good Corporation argued that voluntary schemes could lead to "lowest common denominator results".[171] CORE told us that the effectiveness of the range of voluntary initiatives were difficult to monitor.[172] Themes in the evidence included:

  • Characterisation of participation in these schemes as voluntary underestimates the risks that a company may face to its reputation and its market share by withdrawing from a scheme.[173]
  • Current schemes do not provide sufficient information to allow the public to influence consumer behaviour and thereby change corporate behaviour.[174]
  • No process exists to scrutinise the effectiveness of any of the existing range of voluntary schemes. This reduces their value to business and consumers and ultimately reduces their ability to enhance human rights protection.[175]
  • Businesses may benefit from the good publicity associated with a positive statement on human rights, without adequate scrutiny of how consistently their policy has been applied. This may mean that they apply their policy in one country (for example, their home state) but not in others.[176]

126. Several witnesses argued that a voluntary approach, on its own, could provide very little protection for human rights. War on Want argued that voluntary initiatives were inherently flawed:

    Time and time again these voluntary initiatives fail to deliver significant and long lasting relief to the victims of human rights abuses. We believe that partly this is because these initiatives are used to protect the reputation of the corporations rather than as an effective tool for promoting socially responsible behaviour.[177]

127. CORE said:

    There is no business case which exists for all companies to be more ethical, only a business case for strong consumer brands selling to socially conscious consumers.[178]

128. On the other hand New Look wrote:

    The motivation behind brands taking responsibility for the impact of the industry on the rights of people along their supply chain varies widely: from truly caring about the issues to compliance reasons, to tick boxes and gain recognition, what matters is that action is taken and results are achieved.[179]

129. The array of multi-stakeholder initiatives and sector-specific arrangements that have been agreed in the past decade show that businesses recognise they must take some action to meet the criticism levelled at a number of multinational businesses. Many of the doubts expressed about their effectiveness have merit. While there is no consistent global agreement on the standards to meet, it is difficult to assess the effectiveness of each scheme or for the outsider to accept that business can self-regulate without adequate scrutiny from active consumers, NGOs and others. We have not classified the arguments we heard as pro-'voluntary' or pro-'regulatory', but there is a clear distinction between those who favour business-led initiatives and those who see a far clearer role for home states. We support the view of Professor Ruggie, that a range of responses is necessary. No single solution will be able to address the complex issues which arise in cross-border commercial operations which impact on human rights. This collaborative approach should not involve a race towards the lowest common denominator, as some witnesses fear. We consider the Government can play a role in supporting and reinforcing the social and moral responsibility of business to respect human rights, through due diligence. We consider the Government's broader strategy on business and human rights in Chapter 7, below.


150   Ruggie Report 2009, paras 46 - 48.See also para 54. Back

151   Ibid, paras 61 - 65. Back

152   Ibid, paras 45 - 65.See also para 85. Back

153   Ev 104, Q190 Back

154   See for example, Ev 219 Back

155   Ev 107, page 1 Back

156   Ev 107, page 1 Back

157   Ev 124 Back

158   Q376 (Minister for Regulation, Ian Lucas MP) Back

159   Q2 Back

160   Ev 124. As we noted above in paragraph 48, we drew the attention of those companies referenced in the evidence to our inquiry and invited them to submit their own evidence. Back

161   Ev 124 Back

162   Ev 124 Back

163   Ev 152. See also the experiences of Imperial Tobacco, Ev 128 Back

164   Ev 347 Back

165   Ev 352 Back

166   Ev 114 Back

167   See for example, Ev 138, Ev 147- 148, Ev 164 Back

168   Ev 85 Back

169   Ev 209 Back

170   Ev 290 Back

171   Ev 345 Back

172   Ev 170. See also Ev 164 Back

173   See for example, Q1, Q126, During our visit to the US, a number of the groups and individuals we spoke to, notably the UN Global Compact emphasised that participation in some schemes although voluntary in nature was not without consequences for business, including the impact on a company reputation of withdrawing or being expelled from a scheme. Back

174   Ev 107 Back

175   Ev 161, para 10; Ev 170; Ev 345 Back

176   Ev 114; Ev 193. Back

177   Ev 164 Back

178   Ev 170 Back

179   Ev 347 Back


 
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Prepared 16 December 2009