What is the business view on human rights?

The Economist Intelligence Unit (EIU) recently published a report exploring the views of businesses worldwide on their responsibility to respect human rights. Its findings are mainly based on a global online survey of 853 senior corporate executives carried out in November and December 2014.

The EIU report is a fundamental piece of research in the business and human rights field, in particular given the importance of tracking progress in the implementation of emerging global standards, such as the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises.

This article offers a brief summary of the most interesting findings of the EIU report, based on my experience as co-director of the Measuring Business & Human Rights project.

Reasons for optimism

One of the most encouraging findings of the EIU report is that a very large number of business executives acknowledge that companies should respect human rights, wherever they operate. Eighty-four percent of the respondents disagreed with the statement that “respecting human rights is a matter for governments, not for business”, while 71% of them disagreed with the statement that “the corporate responsibility to respect for human rights means only complying with relevant local laws”.

This finding holds true even when business executives are confronted with real-case scenarios where adverse human rights impacts are not directly caused by their companies but indirectly linked to them through business relationships. For example, 85% of the respondents think that “sponsors of major global sporting events should use their influence to ensure the rights of workers and local communities involved with the preparation are respected by all”. Meanwhile, 62% of them think that “avoiding repeats of the Rana Plaza factory disaster in Bangladesh is primarily the responsibility of multi-nationals that purchase products from these factories not the Bangladesh government” (emphasis added).

Human rights issues are also increasingly mainstreamed within companies. Eighty-five percent of respondents reported that the CEO of their company is involved in meeting their company’s responsibility to respect human rights. Almost half of the respondents further specified that the CEO is actually taking the lead in this process.

Furthermore, the survey challenged the assumption that companies generally oppose regulation. According to 57% of the respondents, a new legally-binding international treaty on business and human rights would be useful in helping their business respect human rights. Thirty percent of the respondents highlighted that mandatory human rights due diligence would enable companies to better fulfil their corporate responsibility to respect human rights.

Reasons for concern

According to the UNGPs and the OECD guidelines, the first (and arguably easiest) step of human rights due diligence is the adoption of a public statement on human rights. Disappointingly, only 22% of the companies surveyed by the EIU have already adopted a policy statement that explicitly references “human rights”. Even worse, short-term improvement seems unlikely. Only 6% of the companies plan to issue a public statement of policy outlining our commitment to respect human rights in the next 12 months.

The low levels of adoption of human rights policies are linked to a serious problem of misperception. The EIU report performed a separate analysis of the quarter of respondents who strongly agreed with the statement that their company outperforms competitors on human rights policy. The companies in this self-benchmarked group of 210 firms were defined by the EIU as “leaders”.

Unsurprisingly, “leaders” are more likely than others to have a public statement of policy. Yet, the percentage is still very low: 30% (compared with 19% among non-leaders). This means that 130 self-benchmarked human rights “leaders” think that they outperform their competitors on human rights even though they still lack a publicly available policy statement on human rights.

Misperception is accompanied by lack of vision. The survey asked the human rights priorities for the respondents’ companies over the next 12 months. The EIU facilitated the task, and suggested several options, such as “strengthen company’s ability to monitor and assess the impact on human rights related to its business relationships (eg, business partners, suppliers, etc.)” and “strengthen relationship with national governments on human rights issues”. One fifth of the respondents answered: “None of the above”. An additional 12% replied that they do not know.

Lastly, the EIU report confirmed that short-termism from investors and shareholders still represents a crucially missing link between wider societal concerns and corporate actions. Only 11% of the respondents considered pressure/encouragement from shareholders (including state owners) to be one of the biggest drivers for their company’s commitment to respect human rights. When asked about the level of involvement of different functions in meeting the company’s responsibility to respect human rights, “investor relations” ranked very low.

The importance of tracking progress             

As the business community seems to agree that companies have human rights responsibilities, tracking the evolution of corporate thinking vis-à-vis emerging global standards becomes a crucial exercise. Without a clear understanding of the corporate perception regarding business and human rights issues, it is impossible to know which topics need more attention, and which initiatives are likely to be more effective.

Author: Damiano de Felice, Strategic Adviser to the CEO of the Access to Medicine Index and co-director of Measuring Business & Human Rights. Member of the Global Agenda Council on Human Rights and a Global Shaper.

Image: People ride escalators inside a building at a business district in Tokyo June 30, 2014. REUTERS/Yuya Shino