- Businesses believe their senior leadership lacks commitment to the human rights agenda - 43% gave them a rating of 5/10 or less
- Confusion over who has responsibility for human rights is prevalent – just 8% of board directors said responsibility came from the top
- Lack of reporting on human rights responsibilities is widespread - just one third (33%) of businesses publically report progress despite implementation of UN Guiding Principles five years ago and new legislation demanding increased transparency
Five years on from when the Guiding Principles on Business and Human Rights were endorsed by the UN (The UNGPs), and with new legislation placing increased human rights transparency and reporting obligations on business, a new report from Eversheds finds the issue of human rights is still not high enough on the boardroom agenda.
Despite high-profile human rights challenges faced by businesses, often in their supply chains, the report – On The Right Path – assessed the awareness of the UNGPs amongst 200 international businesses and found less than two in five board directors were familiar with them.
And, while a third of businesses (31%) have begun implementing the UNGPs, the apparent slow progress could be down to lack of leadership and clear ownership of human rights – 42% of those familiar with the UNGPs said responsibility for human rights sat with more than one corporate function.
Those businesses dragging their feet in this area risk being named and shamed by human rights campaigners and losing business, as procurement processes increasingly require companies to confirm compliance with slavery, trafficking and other human rights standards.
Yet, nearly half of those participants familiar with the UNGPs (43%) rated the commitment of their senior leadership to the human rights agenda as five or under out of 10, highlighting a need for board-level buy-in to ensure compliance.
However, only 8% of board directors surveyed said it was the board’s responsibility to manage human rights risk in their organisation.
New human rights legislation includes the EU Non-financial Disclosure Directive, UK Modern Slavery Act, US Dodd-Frank Act and the California Transparency in Supply Chains Act. Failure to comply could lead to businesses facing significant reputational damage and a consumer, employee and investor backlash.
Thomas Player, partner at Eversheds, comments:
“It has been five years since the UNGPs were unanimously endorsed, which shifted the onus from organisations simply reacting to human rights problems, to proactively ‘knowing and showing’ i.e. identifying and disclosing their human rights risks. Arguably, businesses should already have made more progress on implementing the UNGPs in their organisation.
“A key factor in the slow progress could be the apparent lack of board-level leadership in this area.
“Human rights – and reporting on human rights progress – is now part of the international legislative framework, so it is 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 the creation and enforcement of human rights policies.”
Although there was a lack of awareness of the UNGPs, nearly half (47%) of those who were aware of them had used their purchasing power to exert leverage over companies in their supply chain to respect human rights. One in five (19%) would also attempt to influence a client and apply leverage if there were a human rights conflict.
Thomas Player concludes:
“The UNGPs state that where a business is directly linked to a human rights harm through a business relationship, it should exercise any leverage it has to prevent or mitigate the effect. “The supply chain often represents a major challenge to businesses, particularly if it involves international suppliers. Many businesses have long and complex supply chains involving countries with lower or poorly-enforced human rights standards, which explains why the use of leverage is attracting more attention. Lack of direct control over suppliers and the sheer numbers involved pose difficulties and complex issues can arise where abuses exist deep in the supply chain.
“That said, proportionality and reasonableness should be taken into account, including the severity of the harm to people, the size of the business, its resources and the countries involved. Simply terminating a supplier could actually precipitate more harm to workers in the long run.”