Memorandum submitted by Vigeo
The Joint Committee on Human Rights has decided
to inquire into Business and Human rights and the way in which
businesses can affect human rights both positively and negatively.
Vigeo, a Corporate Social Responsibility Rating Agency, would
like to contribute to this inquiry by sharing some of its findings
on the human rights performances of UK companies. This paper focuses
on the question: How should UK businesses take into account
the human rights impact of their activities? How can a culture
of respect for human rights be encouraged?
VIGEO'S
RESEARCH RESULTS
ON UK COMPANIES
AND HUMAN
RIGHTS
Vigeo's reference model is based on criteria
drawing together international objectives for social responsibility.
These criteria are divided into six fields: Human Rights, Human
Resources, Environment, Business Behaviour, Corporate Governance
and Community Involvement. In this paper we only consider findings
analysed under the Human Rights Domain, focusing in particular
on two criteria: Fundamental Human Rights, and Freedom
of Association and the Right to Collective Bargaining (Labour
Rights).
1. Respect for Human Rights Standards and
the Prevention of Violations (fundamental human rights in society)
Over the past three years, Vigeo has analysed
414 European companies on the issue of fundamental human
rights. 104 of these are British. Compared to the average
performance of its European peers, more British companies have
established formalised policies on Human Rights and 50% of them
have implemented concrete measures to ensure the respect of these
rights (such as risks assessments, training and awareness raising,
etc…). However, 25% of the UK companies do not address
human rights issues at all. Moreover, between January 2007 and
April 2009 Vigeo has identified human rights allegations
involving 18 British companies—which is a rather high
number compared to companies from other European countries.
The British companies included in Vigeo's panel
that were involved in violations of fundamental human rights,
were: Group 4 Securicor, Serco GRP, GlaxoSmithKline, BHP
Billiton, Unilever, Vedanta Resources, Mondi, BAE Systems, AstraZeneca,
Anglo American, Royal Bank of Scotland, HSBC Holdings, BP, Royal
Dutch Shell, Xstrata, Rio Tinto, Barclays and Standard Chartered.
In general, these companies belong to "sensitive"
sectors in terms of human rights, which means that, due to the
specific activity or the region in which these companies operate,
there is an increased risk of exposure to human rights violations.
The sectors that were most exposed to fundamental
human rights risks and involved in controversies were Mining &
Metals, Business Support Services (security), Forest Products
and Paper, Energy (oil & gas), Banks (related to investment
projects) and Pharmaceuticals.
EMPIRICAL EXAMPLES
OF UK COMPANIES
INVOLVED IN
FUNDAMENTAL HUMAN
RIGHTS CONTROVERSIES:
In September 2006, Amnesty International reported
that a leader of the Association of Miners of the Bolívar
Department (linked to the Agro-mining Federation of the south
of Bolívar Department in Colombia) had been killed. According
to Amnesty, he was "reportedly killed by members of the Colombian
army's Nueva Granada Anti-Aircraft Battalion". The reports
states that "Soldiers have also reportedly told local residents
that their operations aim to guarantee the presence of international
corporate mining interests in the area". This is an area
in which the gold-mining company AngloGold Ashanti has interests
(Kedahda S.A. in which Anglo American has 17.5 holding).
Local miners had opposed the arrival of this company in the area.
In April 2007, the U.S. Ninth Circuit Court of
Appeals upheld the right of Bougainville Island residents in Papua
New Guinea to pursue class-action litigation against Rio Tinto.
The plaintiffs claim that they or their families were victims
of numerous violations of international law as a result of Rio
Tinto's Bougainville copper mining operations, and the decade-long
uprising generated by the controversy over the mine. Rio Tinto
has argued that the plaintiffs need to exhaust all PNG court remedies
prior to seeking U.S. court intervention. In November 2007, War
on Want released a report, "Fanning the Flames: The role
of British mining companies in conflict and the violation of human
rights". Rio Tinto responded to the report by explaining
its policies and management systems in safeguarding human rights,
and proposed a meeting with War on Want, which has been accepted.
According to the Independent, in 2006, BP paid
multi-million dollar compensation to Colombian farmers, who accused
the company of benefiting from a harassment and intimidation from
Colombian paramilitaries hired by the government to protect BP's
pipeline. However, BP's direct involvement with the paramilitaries
was not established.
However, there are also examples of good practices
among British corporations. Quite many companies adhere to the
Global Compacti and/or to the UK Voluntary Principles on Security
and Human Rights.ii Although it remains rare, some companies also
cooperate with independent stakeholders.
Companies should not only issue commitments
to Human Rights. It also lies within their responsibility to ensure
the respect of these rights within their operations. Some of the
British companies in Vigeo's panel have implemented relevant measures
such as risk assessments, consultations with local populations,
grievance procedures (such as confidential hotlines), human rights
training and awareness raising for relevant employees and contractors.
Best in class companies also conduct external human rights audits.
EMPIRICAL EXAMPLES
OF GOOD
PRACTICES AMONG
UK COMPANIES:
Old Mutual is a signatory of the Global Compact.
Nedbank, the major unit of the company's banking activities, is
also a signatory of the Equator Principles. Nedbank has a structured
approach to prevent human rights violations in project finance.
Procedures are in place to ensure that appropriate social assessment
studies are carried out by the borrowers. The bank verifies that
the borrowers implement and monitor environmental and social risk
management programmes and borrowers must submit periodic reports.
Nedbank discloses the number of project finance transactions subjected
to environmental/social assessment. In 2007, the company completed
a second two-day training session for its key support staff. Credit
Committee awareness sessions were also included.
As a defence company, Meggitt's business activities
in it selves are highly controversial from a Human Rights point
of view. Indeed, the defence industry's responsibilities in this
area are important. As other companies in the sector, Meggitt
is subject to statutory export controls.
While Meggitt's Corporate Responsibility Policy
only vaguely refers to human rights, the company states that it
seeks to become an "industry champion" on export compliance,
and hence non-proliferation, based on the recommendations of the
Nunn-Wolfowitz Taskforce Report on best practice in export compliance.
Meggitt's commitment to arms export compliance is sponsored by
senior management and compliance officers at all business units.
The company's export compliance programme includes awareness-raising
and training programmes for employees, internal audits and screening
of potential counterparties against government lists of restricted
parties. In addition, the programme is externally audited by trade
consultancy JPMorgan Chase Vastera. The company has set up such
systems throughout the group, including subsidiaries and sites
located in countries where regulations on arms exports are not
stringent.
A review of stakeholder sources did not reveal
any allegations against the company on this issue.
2. Respect for freedom of association and
the right to collective bargaining
A majority of the European companies in Vigeo's
panel commit to respect basic labour rights. Some companies go
further in their commitment and sign an International Framework
Agreement (IFA) with global trade unions. In the end of 2008,
78 IFA's had been signed world wide. As regards to UK companies,
only five have concluded an IFA (Ability, Barclays Africa, Brunel,
G4S, NAG) which is a rather low number compared to countries like
Germany, Sweden or France.
Although many European companies commit to respect
basic labour rights, very few (UK companies included) have implemented
measures for ensuring the respect of basic labour rights within
their operations. Hence, this is an area of improvement for international
corporations. Even basic measures, such as providing and spreading
information on freedom of association to employees (eg access
to the Code of Conduct in all relevant languages), are rarely
in place. There are several means available for companies that
wish to ensure the respect of labour rights within their operations.
Best in class companies have for example conducted risk assessments,
internal and external audits, and collaborate actively with international
and local trade unions.
EMPIRICAL EXAMPLES
OF GOOD
PRACTICES AMONG
UK COMPANIES:
Reckitt set up internal standards that including
a part relating to the right of employees to freedom of association
and collective bargaining. All Reckitt's entities are audited
on their compliance to these standards.
BAE Systems has developed a set of guidelines,
through consultations with trade unions, on the recruitment of
new union members. In order to make an informed choice, trade
unions are said to be provided with an opportunity to talk to
new employees during their induction, and "check-off facilities"
for union dues are provided at a number of sites. Paid time off
is usually granted for shop stewards to be trained in membership
recruitment activities. BAE Systems does not operate a collective
bargaining policy in Saudi Arabia, where the situation is naturally
more complex. There, employees are said to be encouraged to represent
their views through formal consultative forums, opinion surveys,
local briefing and discussion forums.
In a recent studyiii on European companies and
their respect of basic labour rights, Vigeo demonstrates that
British companies are more often involved in labour rights controversies
than companies from other European countries.iv Most of these
allegations occurred outside Europe, in so called "sensitive"
countries. The controversies relate to cases of union busting,
non recognition of trade unions, the refusal of collective bargaining,
the denial of the right to strike, and discrimination of trade
union members or representatives. The sectors most involved in
allegations were the Mining & Metals, Technology Hardware,
Building Materials and Automobiles sectors.
EMPIRICAL EXAMPLES
OF UK COMPANIES
INVOLVED IN
LABOUR RIGHTS
CONTROVERSIES:
In October 2007 workers and trade union
members brought demands to their employer, Group 4 Securicor
Marocco (Business Support Services), on the payment for overtime
work and proper health and safety protection. According to UNI,
following this demand G4S dismissed 20 trade union members.
In protest, 500 union members took 24-hour strike action
on 11 October 2007. The following day, almost 200 of
the strikers, including the union leaders, were dismissed from
their employment. During the three months that followed, G4S offered
severance packages to the dismissed workers but refused to re-employ
any of them. In January 2008, the last of the remaining strikers
accepted severance pay. G4S Morocco reported on 23 January
2008 that it had recognised another union.
Tesco faces major and recurrent allegations of
labour rights abuses. According to UNI, the British retail giant
did not accept a newly created trade union at its subsidiary Tesco
Lotus in Thailand and resorted to repression instead of dialogue.
In Turkey, the company refused to accept a government decision
that recognised UNI Commerce affiliate Tez-Koop-IS as a negotiating
partner. In South Korea, Tesco Homeplus is considered as an anti-union
employer. And in the United States, Tesco has consistently refused
to meet with the large UNI Commerce affiliate UFCW (USA), prior
to its recent entry to the United States market. Instead, UNI
believes that the retail giant is tempted to build up a non-union
convenience store chain, thus avoiding entering into a collective
agreement relationship.
How should UK businesses take into account the
human rights impact of their activities? How can a culture of
respect for human rights be encouraged?
International law firmly establishes that States
have a duty to protect against non-State human rights abuses within
their jurisdiction, and that this duty extends to protection against
abuses by business entities.v Of concern are the HRT violations
reported by Amnesty International in 2008 and 2007. These
allegations are particularly severe considering the pioneering
role the UK could fulfil in the promotion of human rights.vi
Companies have clear legal responsibilities
to respect human rights standards according to both international
and UK law.vii There is also an overwhelming consensus that corporations
have a clear moral obligation to respect Human Rights.
This paper provides several examples on how
businesses can, and should, take into account the human rights
impacts of their activities. A first step for companies is to
issue formal commitments towards the respect and the promotion
of human rights. However, such commitments must be followed by
measures that monitor and ensure that the company's policies are
respected.
In Vigeo's opinion, active and transparent support
of human rights can induce a motivating working environment as
well as company cohesion. Indeed, addressing human rights issues
may enhance a company's effectiveness in managing its human capital
risks. The competition for high qualified employees is a challenge
in today's business world. Responsible business practices, including
transparency and appropriate policies on human rights, are persuasive
means for encouraging employees and potential employees to choose
a company over its rivals. Indeed, graduates take into account
social responsibility issues when choosing which jobs to apply
for—even when the employment market is depressed. Adopting
and implementing explicit human rights policies therefore reinforces
a company's value proposition and sends a strong and tangible
signal internally and externally about what the company stands
for. Moreover, violations of human rights can have severe consequences
for the company's reputation as well as its market acceptability.
Vigeo's examples demonstrate that companies that do not comprehensively
address human rights issues also run important legal risks (litigations,
trials, legal proceedings, fines etc).
When looking at the results of Vigeo's analysis
of the 104 British companies in the panel, it is striking
that barely 50% of the UK companies have monitoring/audit systems
in place to ensure the implementation of their declared policies
and commitments. The lack of such measures increases the risk
that fundamental human rights and labour rights will not be effectively
monitored, and in case of conflicts, corrective measures might
not be taken. Additionally, a company's policy may be considered
by external stakeholders as a mere marketing instrument or pure
"window-dressing" if not concretely supported by strong
implementation mechanisms.
Finally, it has become more and more common
for companies to externalise and delocalise their core businesses
from their home and host country of operations, to suppliers or
subcontractors in more "sensitive" countries or regions.
Under the pressure of stakeholders (in particular international
trade union movements and human rights NGOs) companies increasingly
need to prove that they handle human rights risks in an effective
and responsible way throughout their entire supply chain. Indeed,
in Vigeo's opinion, a responsible management of the supply chain
by international companies will be the next "front line"
for promoting human rights and for fighting against the violations
of these rights. This is why companies should, starting from today,
address human rights issues within their own operations as well
as within their supply chain.
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