Introduction

The Equality and Human Rights Commission (the EHRC) recently published new guidance for company boards to help them meet their human rights reporting obligations under UK law and to meet the international best practice benchmarks on human rights found in the UN Guiding Principles on Business and Human Rights.

The Guidance

You can access the guidance in full here.

The guidance suggests five steps that company boards should follow to ensure their businesses are acting in a manner that respects human rights, fulfils their reporting obligations and meets the UN Guiding Principles. Broadly these are:

  1. Embed a responsibility to respect human rights into the business’s culture, institutional knowledge and practices.
  2. Understand and identify relevant risks to human rights in the business’s operations.
  3. Systematically address these risks and when the business’s human rights compliance has fallen short provide a remedy to anyone who was negatively affected.
  4. Engage with stakeholders to understand the human rights context the business operates in.
  5. Ensure that the company meets its regulatory reporting requirements in respect of human rights and consider taking further steps to report on salient human rights issues.

Taken together, the ECHR advises that these steps will help to ensure a robust approach to human rights compliance. Cutting through all of the ECHR’s suggested steps is a challenge to businesses to factor in human rights in all their business decisions and to consider, in particular, how their operations and activities may affect the human rights of others.

Reporting Obligations

Legally, the ECHR’s suggested fifth step towards human rights compliance is the most substantial as it touches on legal reporting obligations of companies under UK law. Companies should be principally aware of two regulatory reporting regimes:

  • Companies Act 2006: Currently UK companies are required to include non-financial information in a strategic report to “the extent necessary for an understanding of the development, performance or position” of the company’s business. This obligation will be revised in the near future, pursuant to an EU Directive, to specifically require the largest companies to report specifically on human rights issues “to the extent necessary for an understanding of the company’s development, performance, position and impact of its activities.”
  • Modern Slavery Act 2015: Organisations with a turnover - or group turnover - of £36 million or more which are either UK incorporated or carry on a business in the UK have to publish an annual slavery and human trafficking statement. Please see our full guide to the Modern Slavery Act here.

Why Bother?

Respecting human rights is clearly the right thing for businesses and individuals to do. However, it also makes good commercial sense.

Businesses who do not properly consider human rights can suffer significant reputational harm, be the focus of customer complaints / campaigns, find themselves involved in litigation at home or abroad and encourage potential business partners and employees to look elsewhere.

Whereas, to quote the ECHR guidance, “when companies operate with a culture of respect for human rights they become brands, partners, investments and employers of choice.”