“Companies have a responsibility to respect human rights, which means to act with due diligence to avoid infringing on the rights of others”
- UN Global Compact on Corporate Responsibility and Human Rights Report, 2009
Increased media scrutiny and shareholder activism means that companies can no longer turn a blind eye to the human rights risks and impacts that arise from their operations. Following tragedies such as Rana Plaza in Bangladesh, NGOs and Civil Society Organisations (CSOs) have stepped up their efforts to identify and publicise instances of human rights violations. Nor are such efforts confined to the retail and manufacturing sectors; for companies active in the extractives, agriculture, energy and technology sectors, they have also learned that they can no longer confine their efforts in respect of human rights to a few lines in their Annual Report.
Stakeholders, shareholders, NGOs and CSOs seek two things in this new, spot lit-reality: transparency and accountability. Mazars can help your business understand its actual and potential human rights impacts in a way that is beneficial to you as a company, and your stakeholders.
Legislation and Regulation
One of the results of the global shift towards transparency and accountability is that governments and supra-national bodies, such as the EU, have been compelled to act.
- In September 2013, the UK Government published its National Action Plan for implementation of the United Nations Guiding Principles on Business and Human Rights;
- In October 2013 amendments to the Companies Act 2006 created the requirement for all quoted companies to include information in respect of human rights in the Strategic Report;
- In April of 2014 the European Parliament voted to adopt a Directive making non-financial reporting obligatory for all listed companies meeting certain criteria.
There are also sector-specific laws and regulations, such as the Dodd-Frank Act relating to conflict minerals, as well as internationally relevant laws such as the California Transparency in Supply Chains Act of 2010. The world of finance is not immune to this increased level of scrutiny, as the Equator Principles and International Finance Corporation Performance Standards impose strict duties on lending institutions.
However, despite the hard law instruments as outline above, the most authoritative guidance is the United Nations Guiding Principles on Business and Human Rights.
The United Nations Guiding Principles on Business and Human Rights
“In order to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry out human rights due diligence. The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.” Principle 17, UN Guiding Principles on Business and Human Rights
The United Nations Guiding Principles on Business and Human Rights (UNGPs) were unanimously endorsed by the UN in June 2011. Drafted by John Ruggie, then Special Representative to the Secretary General of the UN, they have become the reference point to which all companies should strive to comply. On 24 February 2015, Mazars and Shift launched The UN Guiding Principles Reporting Framework - the first comprehensive guidance for companies to report on how they meet their responsibility to respect human rights in line with the United Nations Guiding Principles on Business and Human Rights.
The reporting framework, including implementation guidance, is available to download under More Information on the right, or from the dedicated website – www.UNGPreporting.org
How confident are you that processes within your business comply with the UNGPs?
The days when lip service could be paid to the issue of human rights are long behind us; it is now incumbent upon every business to ensure that its policies, processes, procedures and controls are aligned with the UNGPs. Furthermore, the obligation to report on certain aspects of alignment will shortly be enshrined in law, following the European Parliament’s adoption of a Directive that will impose Non-Financial Reporting upon all large, listed companies with a workforce of 500 or more employees. Under the terms of this Directive, such companies must provide specific information relating to their risks and impacts in respect of environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. Mazars can add value and help you in your understanding in all of these areas.
Why demonstrate respect for human rights?
The benefits for companies to demonstrate greater respect for human rights are many:
- Attracting investment given the size and importance of ethical funds;
- Improved reputation risk management;
- Greater engagement with workers, communities and suppliers and thereby generating greater trust;
- Reduced costs arising from fewer adverse human rights impacts;
- Attractive to Gen Y recruits
- Greater worker retention
Mazars’ Human rights consulting services
Mazars can help you:
- Undertake human rights due diligence as regards alignment with the UNGPs
- Map out risks and opportunities related to human rights via a risk assessment
- Design and assist in the implementation of appropriate procedures and controls to mitigate against adverse human rights impacts
- Design an appropriate internal monitoring methodology
- Develop a communications strategy which relays a business’s commitment to human rights and how it is addressing the risk of its impacts
- Review, track and report performance; and recommend industry best practices that are applicable to the company
- Preparation of Strategic Report content (UK) and Non-Financial Statement (EU)
Mazars’ Human rights assurance services
At Mazars, we have designed our comprehensive, proprietary human rights methodology that won IAB international award for audit innovation. This methodology has been tailored to align with the objectives of the UNGPs.
This methodology can be applied to both internal audit assignments as well as those for external assurance.
Implementation of a complete human rights programme can be achieved through five key phases:
- Phase 1: Planning
- Phase 2: Defining the strategy
- Phase 3: Scoping the policies
- Phase 4: Engagement with workforce and stakeholders
- Phase 5: Evaluation
Whilst the first three phases should be necessary for all, the remaining two phases can be adopted as and when appropriate.
Our human rights team has in-depth experience advising global companies on the issue of human rights across a wide range of sectors.
If you are interested in learning more about the impact of human rights on your organisation please contact Richard Karmel at Richard.Karmel@mazars.co.uk or on +44 (0) 20 7063 4400 or any of the Mazars Human Rights team contacts.