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Human RigHts Putting the Social into Sustainability

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In this Q&A article, Luke Wilde, CEO of business consultancy TwentyFifty, and Gareth Llewellyn, Executive Director of Safety and Sustainable Development at Network Rail, explain why there is now international consensus that business should respect human rights and what businesses can do to identify and manage their social impacts.

How does the topic of human rights concern itself with business?

Luke Wilde: For many people, when you mention the topic of human rights they think of personnel and employment rights, sweat shops in Asia or, perhaps, the allegations that were made against Shell regarding their operations in Ogoniland in Nigeria. But just take a cursory look at some of the recent stories on the website of the Business and Human Rights Resource Centre [business-humanrights.org] and you’ll see discussions about companies that are selling mobile, text and email surveillance technology to the regimes of countries such as Iran and Syria. You’ll find continuing concerns about trafficking and forced employment of children on cocoa farms, particularly in Cote d’Ivoire. And you’ll find coverage of Global Witness, the NGO deciding to leave the Kimberley Process [which checks the origin of diamonds to ensure they’re ‘conflict free’].

In the UK, if you take a look at the Gangmasters Licensing Authority, you’ll see that it’s referred 38 cases of the abuse of workers, usually migrant workers, to the Serious and Organised Crime Squad in the last year.

Given this burgeoning scope of understanding of the human rights impacts of businesses and the increasing challenge of civil society, the former UN Secretary General, Kofi Annan, decided to appoint a UN Special Representative for Business and Human Rights, John Ruggie, in 2005.

How has John Ruggie helped to shape the ‘human rights and business’ debate?

LW: John’s work over the last six years has been characterised by extensive international consultation with businesses and governments and NGOs. In June 2011 he produced the UN Guiding Principles on Business and Human Rights. This is the template by which businesses and governments can start to look at how they need to address business and human rights. One of the things that Ruggie has very helpfully done is to clearly separate the roles of government and business; the state has a duty to protect human rights while business has a responsibility to respect

human rights. Leaving aside the legal debate about the applicability of international standards to businesses, he has said simply that the baseline expectation of society is that businesses respect human rights.

gareth Llewellyn: There are three points of attack on human rights. One is to protect human rights, one is to respect them and one is to further them. It’s actually the job of government, the state, to protect human rights. The job of business is to respect human rights in the way in which it operates, but, actually, you can, if you are really clever as a business, move into the next space, which is to promote or further where there’s consequential business benefit in doing so. For most businesses, concern arises from the sense that we’re being asked to move into protector space, and that’s not for us. Once people overcome that and realise that actually that’s not where business best fits, then it is a lot easier to open up a debate internally.

Do you have any examples of companies realising ‘consequential business benefits’?

gL: When Statoil went into Venezuela, one of the things they did early on was to train the judiciary in international human rights legislation. It not only increased the capacity of the country to tackle human rights issues, but it also meant that, if ever there was a challenge as to why Statoil was operating in Venezuela, they knew that they would get a fair hearing in the courts. It was a business benefit, but it was also an opportunity to extend the capacity of the judiciary to understand human rights in the broader sense.

LW: That is an interesting example whereby a company has taken proactive steps beyond its own impacts as a business in order to improve the operating environment, which benefits both it and society. We work a lot in the agricultural sector and in developing countries labour shortages are arising as a result of industrialisation and urbanisation. Poor labour practices in agriculture do not help, and supporting programmes to ensure human rights are respected and promoted in rural communities can help to retain workers and encourage new groups into the workforce,

The job of the state is to protect human rights. The job of business is to respect them

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such as women. In an industrial sector, we found a direct relationship between a dramatic fall off in quality of a safety critical component and labour unrest in a suppliers’ factory.

Ruggie’s work has led to guidelines that help companies monitor, control and audit their human rights activities. How are these ‘guiding principles’ actually helping organisations?

LW: Ruggie suggests that what companies lack at the moment is a comprehensive process of due diligence for understanding their human rights impacts and the ability to manage those impacts.

Many mining companies have been talking about human rights for years. In the past these companies often had policies and guidance for their staff in place, but now they’re really beginning to knuckle down and look much harder at where they are doing business. These are the countries where the human rights risk and conditions on the ground are the worst, so that they can prioritise their attention there and consider conducting a human rights impact assessment in such countries.

Businesses are used to having a due diligence process in place. And, in many respects, what he’s asking for in these principles is quite similar to the sorts of processes that companies might be thinking about putting into place to ensure their international operations meet some of the requirements of the UK Bribery Act, pertaining to ‘adequate procedures’. When we talk about human rights impacts, we’re often saying these impacts are beyond simply the core operations of the company; they may be through the relationships that companies have with suppliers, joint venture partners and with governments.

So, mining companies, for example, would want to question who provides the security for their installations and whether and how they ensure that those security providers are trained in order to respect human rights, or what are they doing to ensure that their JV partner company meets and respects human rights commitments.

gL: For me, one of the biggest changes for the companies I’ve worked for comes when you strip away the term ‘human rights’ and you look at what’s underneath it. Some companies would classify this as sustainability, some as corporate responsibility and some as just general operating practices around things like health, safety, freedom of association, collective bargaining, security; all those components are sitting under the human

rights banner. Many companies will be doing a big proportion of this, although not all of it, without ever tacking it as ‘human rights’.

For most businesses, core operations will be relatively well under control; it’ll be more in the supply chain that they’ll be looking to see whether there are impacts. The other bit that I’ve seen, more in the gold industry than anywhere else, is that once your product goes on to the next stage, quite often it can then be contaminated with other products which do have a conflict-related background. When we were sending gold to refineries, for example, some of them would be taking gold from the Congo which they knew at that time had been used to fund conflict. And, so, the bar that comes out, which is generally stamped with the miner’s name, was not pure at all. These issues become very complicated, particularly when you’re in the base metal industry or in industries with very long supply chains.

How do ‘human rights impact assessments’ differ from an environmental or social impact assessment?

LW: One difference is that you have got an objective social framework in the international human rights standards which you’re looking at a business activity in relation to and, indeed, the activities of governments.

The second point is that, when you do a human rights impact assessment, you’re not only looking at the business activities, but you’re looking at the context in which the business operates and the human rights issues and the protections or lack of protections that are present in that context. You’re also not only looking at the impact of the business, you’re also looking down the supply chain and thinking about its relationships to joint venture partners and governments.

Finally, Ruggie emphasises the importance of what he terms ‘meaningful engagement’ with potentially affected groups. So, in this respect, he’s thinking about local

Human rights impacts… may be through the relationships that companies have with suppliers, joint venture partners and with governments

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communities or indigenous groups operating or living in the area where perhaps a mine will impact. Or even perhaps employees within your own workforce or contractor’s employees and engaging with them in, in his terms, a meaningful way - which I think is beyond some of the consultation processes we are familiar with.

What’s the risk of human rights being cast aside as an unwelcome diversion, as has sometimes happened with environmental issues in constrained economic times, rather than something that actually helps the business?

LW: Many businesses know the economic challenges are vast, but it’s not hard to see that social expectations are changing and moving apace. I would point to the Occupy protestors and widely held disquiet about the operations of the City as evidence of that. It gives legitimacy to politicians to make changes. Looking at India, for example, there’s been a long running antipathy to multinational companies, but what’s been going on very recently in terms of preventing multi-national supermarkets from opening there, takes it to another level. We are seeing social expectations shift and I think we can anticipate further policy from governments in this area.

For businesses, the cost of remediation or catching up to regulations is often greater than the cost of being ahead. If you want to be a leading company, then now is the time to be exploring what the future of business looks like. And, in human rights, you have a set of social expectations and objective frameworks on which you can have that dialogue with your stakeholders. Without them there’s very little guidance for how you might resolve issues or find a middle ground. Human rights frameworks can help to make clear the difference between the role of the state and the role of business.

You are both referring to mining companies here. What about other sectors? What about service industries like executive search?

gL: When I was at the World Gold Council we did a lot of work with Intel. And you wouldn’t naturally look at Intel as being an organisation that would have particular concerns in this area. But one of the things they are most worried about is where the raw materials come from for their products. And they look right down their supply chain to understand the consequences of operating in some very difficult parts of the world. Companies like Gap and HP know

that their greatest exposure is some distance down the supply chain, where the NGOs are quite adept at finding those problems before the business finds them themselves.

In terms of a headhunting firm, when they’re faced with the potential to work for a company which, in the eyes of the public or others, has a fairly poor human rights record, they’ve got two choices. They can walk away and say, no, we’re not going to do it, and allow another head hunter who probably hasn’t thought through the human rights issues to take up that mandate. Or they could look at it as a fantastic opportunity to change the culture of that organisation by putting in a person who’s got human rights vision… By bringing the right people into the right place with the right skills, they can make a massive change.

What sanctions are likely to be put in place for those private companies that might take human rights less seriously?

LW: We are seeing companies increasingly brought to courts in Europe and the US. An example would be Trafigura, the privately-held trading company which was responsible for the discharge of chemicals in Cote d’Ivoire a few years ago. A Dutch court recently upheld a case against it for illegal export of toxic waste. However, before you get to the legal sanctions, I think privately wealthy individuals and families who own non-listed companies are very conscious of their place in society and don’t really want to be associated at a personal level with injuries and the like. I’d also argue there’s a recruitment issue, at least in the West, where corporate reputation is certainly a big factor in people’s decisions about who they work for these days.

With stakeholders ever more socially networked and demanding of their organisations, is being a ‘non-involved bystander’ in an environment where human rights abuses are committed no longer acceptable?

LW: One of the big shifts that Ruggie is really saying is that we’ve got to move into a world

Companies [should] know what their human rights impacts are and show how they’re addressing them

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The most obvious and most memorable disaster in that respect was Morecambe Bay, where nearly 40 Chinese working as cockle pickers drowned.

In the last 18 months, the Equality and Human Rights Commission has undertaken a very comprehensive enquiry into the meat packing sector, which found extensive abuses of not just migrant workers, but also, for example, pregnant women working in meat packing factories who were not allowed toiletry breaks.

So, UK companies should never believe that their UK activities are free from human rights abuses and should look as diligently at them as they would look at their international operations.

gL: You have to look at people down the supply chain – and the dilemma here is the extent to which the top level company is an easy target for things that are happening probably four or five steps down the supply chain, even though those suppliers are still UK-based.

Actually, It’s a bit of a circular argument which gets worse the more regulation gets involved. And I think we need to find a way, particularly in the UK, of making sure that the big companies feel obligated to be more paternalistic down the supply chain and do more work, but knowing that, if they do find issues, they’re not going to get penalised right away.

What really troubles me is the extent to which some companies in this country outsource their risk protection to labelling schemes, like Fair Trade and Rainforest Alliance. Now, the reason I mention it is that I took my children on holiday to Malawi a few years ago and we stayed for a couple of days on a tea estate near Mount Mulanje. We saw children under 16 working in the tea estates, there. These workers claimed they were only being paid a dollar a day and, because the tea estate owned their houses, if they complained they lost their job AND their house. Yet, that was Rainforest Certified and it was providing tea to Tetley, which is part of Unilever.

Now, I subsequently had a chat about this with somebody at Unilever and it became pretty clear to me that they looked at something like the Rainforest Alliance as their sole protection against human rights risk. I think companies are pretty vulnerable if they do that.

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where companies know and show; know what their human rights impacts are and show how they’re addressing them. For example, I was with an executive who leads a business in Egypt and he was explaining exactly what they’ve been doing for the last 18 months. He knows what their human rights impacts are and he’s been able to show to anyone who asks what they’re doing to make sure that they have a neutral, if not a positive, impact on the human rights situation in that country. I think the best country managers in the best businesses often have very positive impacts on particular situations, but we just haven’t necessarily been able to articulate that as businesses in the past. And I think that’s what we really should be thinking about at the moment.

gL: I’m taken back to the time when CalPERS, the huge California pension fund manager, started selling shares in ABB because ABB was building a power line in the Darfur region of Sudan. And the easiest thing for ABB would have been to walk away, but actually it took the view that, even though it was being accused of being complicit in human rights abuses simply by being there, the long-term benefit of having power in that country was much greater. And the chairman wrote to all the staff in ABB saying the company was prepared to take a hit from CalPERS and actually, just to carry on with the work. And I think that understanding of the longer-term benefits of things and the boundary between direct human rights abuses and, in that particular case, what was perceived as being complicit, I think is hugely important.

For those companies whose main operations are in the uK, with its strong protections of human rights in law, what issues around this subject should they be concerned with?

LW: Probably the most significant thing I encourage companies with large UK footprints to worry about is the treatment of migrant workers. We have certainly found examples where migrant workers have been abused; where they haven’t been paid minimum wage, where they’ve been threatened with violence by employers or where there’s simply been an absence of attention paid to their well-being.

We know that, certainly within the agricultural sector in the UK, there’s extensive use of migrant workers from the Eastern European countries but also, on occasion, Chinese workers.

Luke has played a lead role in the international dialogue on business and human rights for over a decade. He has provided training and mentoring on this topic to over fifty leading companies in the UK, Germany and beyond. In the UK, TwentyFifty are working with the Ministry of Justice, the Equality and Human Rights Commission, the CBI, Business in the Community and other interested parties to establish a multi-stakeholder dialogue in the UK on business and human rights.

In 2005, Gareth became the first person from industry to be invited to address the United Nations General Assembly on the role of business in upholding human rights. He was also a founder member of the Business Leaders Initiative on Human Rights. Gareth joined Network Rail having previously worked in an interim role with the World Gold Council and, before this, having led Anglo American’s strategy on matters of sustainable development, including human rights.

Contact the authors through www.criticaleye.net

Luke WildeCEOTwentyFifty Ltd

gareth LlewellynExecutive Director of Safety and Sustainable DevelopmentNetwork Rail