Human rights, transparency and trade unions: businesses need to take note

The pressure on businesses, particularly global multinationals, to account for their human rights performance, including in their supply chains, is growing. Trade unions are also playing a role in this evolving situation.

The duty to produce an annual slavery and trafficking statement under the UK’s Modern Slavery Act applies to qualifying businesses with year-ends from 31 March 2016 (read our briefing). Larger listed companies will also have new human rights risks reporting responsibilities as a result of the EU Non-Financial Reporting Directive which must be implemented by December 2016. The US and France are currently debating their own draft reporting and due diligence legislation which, if approved, would add further legal transparency duties.

Meanwhile, a number of benchmarking initiatives are directed at spurring organisations to demonstrate human rights leadership or risk being subjected to critical attention by investors, customers and other stakeholders. These include the Corporate Human Rights Benchmark (CHRB) and Know the Chain’s Transparency Benchmark. The CHRB is the first-ever ranking of the world's largest publicly listed companies on their human rights performance; it will rank the top 100 companies in the agricultural products, apparel, and extractive industries with results being available later this year. Know the Chain’s benchmark assessed company transparency and disclosure statements on forced labour in supply chains. Twenty companies were selected across three sectors (apparel & footwear, food & beverage, and information and communication technology).

Reinforcing this trend is the recent launch of the UN Guiding Principles Reporting Database. The database shows what companies say about their implementation of the UN Guiding Principles on Business and Human Rights (UNGPs), based on their public disclosure. Currently, it covers thirty companies, including the ten largest in the extractive, apparel and food and beverage sectors.

Trade unions are also stepping up their supply chain activities. The International Trade Union Confederation (ITUC) has launched a global supply chain hub website “dedicated to promote the work of unions and allies in the fight for decent work in supply chains” which means putting “… the right to organise and bargain collectively, at the centre. It means solidarity in every part of the supply chain with those who are trying to build workers’ power.” IndustriALL has signed an agreement with Inditex, the Spanish fashion retailer, to use trade union experts to monitor and implement workers’ rights in its supply chain. It is also working with a number of fashion brands on its ‘ACT’ (action, collaboration, transformation) initiative which aims to improve wages in the industry by establishing industry collective bargaining in key garment and textile sourcing countries.

While many of these recent human rights initiatives are particularly relevant to high risk industries, it seems unlikely that they will remain confined to them. Businesses, particularly household brands, with global operations and supply chains should expect increasing scrutiny over their human rights practices.

However, Eversheds’ recent business and human rights survey revealed a perceived lack of senior leadership commitment to the human rights agenda, confusion over who has responsibility for human rights and low levels of public human rights reporting.

Human rights – and reporting on human rights progress – is now part of the international legislative framework. It is therefore imperative that it is more visible on the board agenda. To strengthen senior commitment to human rights, businesses should allocate responsibility for human rights to a board member or dedicated board-level committee. Setting the ‘tone from the top’ is key to achieving change and to preparing businesses for human rights challenges.