Mazars’ Richard Karmel, who helped develop the UNGP Reporting Framework, reflects on how the framework has helped leading companies such as Unilever and Coca-Cola have a fundamental shift in practice towards safeguarding workers
Ten years ago, if someone had predicted that I would give up my role as a statutory audit partner to concentrate on helping businesses understand and deal with their impacts on people, I would have been shocked.
Part of the reason would have been the prevailing business environment. At that time, few businesses, especially in the financial and professional services sectors, gave significant thought to the impact of their operations on human rights. If they did, they would have regarded it as the responsibility of government rather than the private sector. However, times change. The world has moved on and now I spend my time consulting with businesses about issues such as modern slavery and wider human rights.
As Human Rights Day approaches on 10 December, it is a timely opportunity for me to reflect on relevant changes during that time:
In 2011, the United Nations Guiding Principles on Business and Human Rights (UNGP) were unanimously endorsed by the UN Human Rights Council. These have since become the authoritative guidance for businesses to understand their responsibilities to respect human rights;
Legislation has appeared across Europe requiring certain companies to not only report on human rights issues and modern slavery in their own organisations but also within their supply chains;
Several multinational companies are being attacked for undertaking their tax affairs legally but, supposedly, immorally;
The rise of social media has resulted in many more human rights abuses by companies, or from within their supply chains, being exposed, with the result that the most well-known brands in the chains are having their reputations tarnished. This trend will continue to increase.
At the end of the 20th century, Nike has been probably the best-known example of previous bad practice in this arena. In 1995 it initially reacted to human rights abuses taking place in its supply chain by denying it should take responsibility. This response backfired. Later on, realising that customers didn’t want to buy products made by children, Nike began its process of improvement.
Apple also became entangled in a similar scandal a few years ago, when 13 workers at the factory of its principal manufacturing supplier of iPads, Foxconn, committed suicide over a six-month period. Workers had jumped from their premises so in response, the company simply put up nets around the roof. Foxconn and Apple were roundly criticised for this tone-deaf and remarkably uncaring approach. The fear of consumer backlash eventually drove the companies to address the root causes of these tragedies.
Governments have room for improvement, too. The EU and the French and German governments have now started to take their responsibilities more seriously by mandating that certain groups of companies (usually large and/or listed) publicly report on the steps they are taking to address human rights issues.
The greater emphasis on human rights in business has informed my own personal journey over these years. Identifying a need to assist businesses in this area, Mazars and Shift; a non-profit formed of the authors of the UN Guiding Principles on Human Rights, began collaborating in 2012. Together we produced the UNGP Reporting Framework to help companies in their quest for improved human rights performance. The premise is simple: don’t publicly report on everything; tell stakeholders about what you believe are the greatest risks to people arising from your activities and how you are managing those risks, the most salient risks.
The questions posed by the UNGP Reporting Framework are straightforward to understand, for example, “What is the company’s approach to engagement with stakeholders in relation to each salient human rights issue?” There is nothing complicated to understand about the question. However, the inference is that companies should be talking to stakeholders about these risk areas. So if companies aren’t doing this, they can’t report meaningfully and are therefore not properly addressing their key risk areas.
The collaboration I have nurtured with Shift continues today. The most recently released guidance issued by Mazars and Shift is the UNGP Assurance Guidance (www.UNGPreporting.org/Assurance). Launched in September 2017, the guidance aims to help internal auditors within companies and external assurance providers better understand what is required in the audit process for reviewing human rights performance and reporting.
Since my work with Shift began, many of the world’s largest companies have adopted the UNGP Reporting Framework, with the likes of Microsoft, Unilever, Coca-Cola and ABN Amro reporting more meaningfully on human rights. The fact that the process of producing simple questions resulted in companies addressing complex operational areas and taking action to ensure fewer people were harmed is personally gratifying.
Without leading global companies showing willingness to take a lead in this area, it would have been difficult for other companies to understand what best practice looks like. As a result of the UNGP Reporting framework and its related assurance guidance we know that all companies have the opportunity to not only minimise their risks to people but create value through better performance.Given that the answers on how to respect human rights are now publicly available, lack of understanding is no longer an excuse for inaction.
Richard Karmel is partner and head of human rights in business at Mazars.
Main image credit: Flickr/iPhone digital
coca-cola Shift Unilever supply chains Human rights UNGP Reporting Framework