The World Benchmarking Alliance’s fifth Corporate Human Rights Benchmark reveals that over a third of all companies scored zero on human rights due diligence – the critical process that allows them to translate their commitment to respecting human rights into practice.
To ensure that all companies do the right thing, we must have legislations where voluntary measures have failed to create an impact.
Mandatory measures are necessary to plug the gaps, especially when it comes to human rights due diligence.
By Namit Agarwal, Social Transformation Lead, World Benchmarking Alliance
Human rights are embedded within the SDGs. Over 90% of the SDGs’ goals and targets correspond to improved human rights, from eradicated poverty and hunger to decent work and reduced inequalities. Human rights have been in the spotlight over the past few months, from the FIFA World Cup in Qatar, mired in controversy around the host nation’s discrimination against the LGBT community and alleged abuse of immigrant workers, to protests against Foxconn’s treatment of workers. Making progress towards improving human rights simultaneously advances progress on the SDGs, in these examples and across the world.
The public expects those with power to respect everyone’s rights and freedoms – based on dignity, fairness, and equality – and business plays a key role in the state of human rights. To reach the SDGs by 2030, now is the time for businesses to increase their focus on this vital issue. Our latest research shows that they still have much work to do.
The World Benchmarking Alliance’s fifth Corporate Human Rights Benchmark reveals that business progress to date has been inconsistent. An assessment of 127 companies – including Unilever, Coca-Cola, Ford, BMW, Amazon, and Microsoft, it measures how they are doing against the UN’s Guiding Principles on Business and Human Rights (UNGPs) – the standard for business behavior relating to people’s rights.
While the latest iteration of our benchmark reveals there has been significant improvement since the first one in 2017, big gaps remain. Crucially, over a third of all companies scored zero on human rights due diligence – the critical process that allows them to translate their commitment to respecting human rights into practice.
The reality is that one in three of the world’s most powerful companies are not identifying and assessing human rights risks across their operations and value chain. As a result, they are overlooking the risks they are running in terms of serious worker issues – like unsafe conditions, discrimination, child labor, and slavery. They also do not fully know the potential for human rights issues relating to the international communities in which they operate, such as the right for Indigenous People to live on their traditional lands.
We know that those companies who score poorly often do perform poorly on human rights – we have only to look at last month’s protests around Foxconn (who scored 7.6 out of 100) in China to see the real impact on workers of poor management of human rights by corporations.
The fundamental problem is that the SDGs and the UN Guiding Principles on Business and Human Rights are not legally binding. Despite the emergence of some pertinent domestic laws around the world, business action on human rights remains largely voluntary. In an age in which our rights are viewed as a societal norm, this is no longer defensible. To ensure that all companies do the right thing, we must have legislations where voluntary measures have failed to create an impact.
Mandatory measures are necessary to plug the gaps, especially when it comes to human rights due diligence. It is an important mechanism to ensure that major companies are not profiting from workplaces where children are forced to work, staff struggle in dangerous conditions, unscrupulous bosses withhold wages, or workers are systemically discriminated on the basis of gender, race, or religion.
Some countries and regions, notably the EU, have started drafting legislation, in line with the UN’s Guiding Principles on Business and Human Rights, in turn, supporting progress towards the SDGs. More is expected in other regions in the coming years. But the very nature of multinational businesses – with supply chains crisscrossing the globe – means we need these new laws to be harmonized across all territories. Otherwise, an ongoing lack of consistency will stymie further progress.
In particular, European governments and businesses must work with their Asian counterparts to standardize new human rights due diligence legal frameworks. Considering the significant supply chain linkages between European and Asian businesses, the EU’s success in eradicating human rights abuses depends on the two continents aligning their policies and laws.
One of the key issues for Asia will be the dominance of its informal sector – such as self-employed traders, street vendors, and anyone without formal employment arrangements. When it comes to human rights, the UNGPs’ policy mechanisms are designed for the formal sector. It will be necessary to design bespoke regulations for Asia’s informal economy, without lowering the bar on expectations for national, regional, or international companies. To draft the right legislation, governments and lawmakers will have to engage directly with communities on the ground.
Big business bears a great responsibility when it comes to human rights. While it is laudable that so many companies have recently upped their game, it cannot be acceptable that others choose not to protect people from abuse.
After all, some multi-national companies have more influence than entire countries. Their activities affect hundreds of thousands, if not millions, of people every day – including employees, customers, suppliers, shareholders, and the communities in which they operate.
The time has come for all business practices to reflect societal expectations.