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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