OPINION: Our increasingly globalised and networked world drives unprecedented levels of transparency, which can — and will — affect the ‘social license to operate’ for almost every business.
Fundamental to such license is the care and consideration, or lack thereof, of human rights.
‘Human rights due diligence’ has been described as a “permanent entry in the lexicon of international business” with attendant risks and opportunities.
However, it is not as yet a common-place term in the New Zealand business community, nor are the processes to deliver such diligence widely practiced.
Consequently, company directors, executives, investors and consumers reading this might well ask themselves whether there is a need to adopt these concepts in New Zealand, given our self-appointed status as a “good global citizen” operating at the end of the world, albeit in ways that are totally dependent on international engagement.
The following local headlines in 2016, extracted through a simple Google search suggests that they should:
“Kiwisavers invest in cluster bomb, land mine manufacturers”
“New Zealand’s ethical fashion companies for 2016 revealed: Who passed the test?”
“New Zealand’s first people-trafficking conviction”
“Man performs haka at Dakota Access Pipeline as Kiwis show solidarity with protesters”
“Uncovered: Exploitation of migrant workers rife in NZ”
These headlines infer, arguably demand, socially responsible and human-rights compliant business practices. More troublingly, they suggest a lack of awareness by parts of the New Zealand business community in respect of preventative human rights measures.
The fundamental frameworks relating to business and human rights are now well-accepted globally.
The United Nations Guiding Principles of Business and Human Rights, endorsed by the UN Human Rights Council in July 2011, provides benchmarks for companies.
A core pillar of the Guiding Principles is the corporate responsibility to respect human rights, both internationally and locally. This means that businesses should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.
This principle is an important step away from the traditional understanding that nation states are the sole protectors and respecters of international human rights law. By requiring the effort and compliance of the business sector, it recognises that business enterprises are specialised organs of society performing specialised functions.
These Guiding Principles have been adopted by the OECD, and also by high-profile companies such as Microsoft, the Coca-Cola Company and General Electric. In practice, their implementation translates to such practices as:
– identifying and assessing risks to human rights relevant to the business;
– incorporating the same into a risk register/risk management system;
– designing policies and procedures (including monitoring systems) to avoid and respond to human rights breaches — both within the company, with their suppliers, and even with remote third parties;
– thinking strategically and looking at potential collaborative approaches to enhance human rights compliance.
While the principles are clear, there is no easy solution or toolkit. Furthermore varying contexts and sectoral characteristics will always impact on both the focus and what requires emphasis.
For instance, offshore construction and extractive industries commonly impact upon local communities and involve consultation on land and cultural rights, whereas overseas manufacturing or local horticulture tend to require a closer scrutiny of employee rights and conditions.
Apart from the obvious benefits of implementing the Guiding Principles, such as gaining a strategic advantages with competitors by appealing to the growing market of ethical and conscious consumers, becoming a human rights compliant business makes sense financially and mitigates other potential risks.
This is especially true in respect of the risks that relate to reputation/brand credibility and the large scale legal risks associated with a lack of respect and violation of human rights in business transactions.
This is to say nothing of the litigation or public relations costs that often go hand-in-hand with human rights breaches.
But simply seeing human rights diligence in risk terms is too simplistic. In an age of global transparency, a human rights orientation is a basic requirement for entry into an increasing number of markets, a precondition by many partnerships and collaborations, and essential by consumers spoilt for choice.
Human Rights diligence therefore should not only be seen as a prudent precautionary practice for every commercial entity, but also as a critical facet of competitive and marketing strategies. Recently, Adrian Orr, CEO of NZ Super Fund recognised the importance of a human rights policy when he stated:
“For many global businesses their human rights programme commenced as a measure to protect reputation and was a part of the assurance process. But now we are seeing the rise of leaders that acknowledge the commercial reality. The conversation has moved on, this is about access to new markets, investors, new suppliers and new consumers. Embedding the human rights framework is definitely about reducing risk and adding value whilst accessing those new opportunities.”
The bottom line is that becoming a human rights respecting business is win-win. Now is the time to add another dimension to the ‘triple bottom line’ reporting.
Rebecca McAllum is a human rights consultant and lawyer.