Both shareholders and other stakeholders want to know if companies are doing business with respect for human rights. Formative legislation such as the UK's Modern Slavery Act (2015), the French 'Devoir de Vigilance' (2017), the California Transparency in Supply Chains Act (2010) and the EU non-financial reporting Directive (2014) requires companies to disclose information related to their human rights policies, risk management processes and outcomes. Moreover, we have seen a proliferation of company performance benchmarks, indices and ratings, such as Behind the Brands, the Corporate Human Rights Benchmark, Ranking Digital Rights, and the Workforce Disclosure Initiative.
The UN Guiding Principles on Business and Human Rights emerged out of decades of argument between governments, business and civil society over how (and even whether) to hold companies accountable for harms to people's fundamental rights. That the Guiding Principles were unanimously endorsed by the UN Human Rights Council in 2011 was testament to the new consensus they represented. They clarified that the responsibility to respect human rights requires companies to place the focus on risks to people connected with their business, not just risk to the business itself. They also make clear that approaches of 'do no harm' are insufficient, instead requiring a proactive approach to tackling human rights challenges; that harm to people's human rights cannot be offset by philanthropic or CSR initiatives; and that businesses must respect human rights throughout their own operations and importantly across their value chains as well. The Guiding Principles empowered companies to move away from just reacting when 'named and shamed' and instead to start 'knowing and showing' - knowing what their human rights risks are and how effectively they are being managed, and showing the progress they are making - including through public disclosure.
Over the past several decades, reporting by companies on 'sustainability' or 'CSR' has increased. Yet the emphasis has often been on philanthropic activities or community volunteering, alongside environmental issues. Too many companies still demonstrate a lack of understanding about what is meant by 'human rights', and about what the Guiding Principles ask companies to do. Recent research we conducted on 74 FT500 companies highlighted some worrying realities: