Four Questions to Guide Human Rights Reporting

August 28, 2012

In the past few years—in part due to the launch of the UN Guiding Principles on Business and Human Rights—many companies have begun to demonstrate leadership in addressing human rights across their operations and in using their influence to promote human rights more broadly.

Recognizing that reporting helps companies identify and understand risks, improve management, and build trust with stakeholders, companies have also made great strides in how they cover human rights in their corporate social responsibility reports. This trend complements a concurrent rise in demand for corporate human rights reporting: Reporting on human rights performance is part of the current Global Reporting Initiative (GRI) sustainability reporting guidelines, and reporting on commitments, activities, and outcomes related to human rights is a requirement of the United Nations Global Compact Communication on Progress. Furthermore, investors are increasingly asking companies to disclose human rights risks.

Despite the growing awareness of the need for reporting on human rights issues, there is limited guidance on how to do this well. And since the topic is complex—the Universal Declaration of Human Rights includes 30 articles—companies are struggling with how to incorporate human rights into their current approach to sustainability reporting.

As companies further integrate human rights into their sustainability reports, they should continue to look to standards such as the GRI, but the key source of guidance should be the UN Guiding Principles themselves and their focus on company due diligence.

At BSR, we believe companies can do this by focusing on four key questions:

  1. What is the company's human rights policy and approach to accountability?
  2. How does the company assess actual and potential human rights impacts, both positive and negative?
  3. What has the company found as a result of those assessments?
  4. What is the company doing about those findings?

What follows is a closer look at each of these four questions and some examples of how different companies are responding.

What is the company's human rights policy and approach to accountability?

A clear, easily accessible statement of a company's human rights policy is an essential part of corporate reporting and is also in accordance with the current GRI guidelines. Most companies do not have a standalone human rights policy, but the numbers are increasing. Microsoft, for example, just released its "Global Human Rights Statement" outlining the company's commitment, explaining its approach to human rights issues, and identifying the areas where Microsoft can best meet its responsibility to respect human rights.

More typically, companies have a set of policies that set out their human rights commitments, such as policies for employee health and safety, responsible sourcing, product safety, or privacy.

Ideally, since companies do not change policies often, reporting on policy should be a part of the company's corporate website, but annual sustainability reporting should include clear links to the human rights policy or set of related policies. Reporting should also clarify how the company holds itself accountable for its policy through management responsibility for implementation and oversight of company performance, and the report should offer a narrative about how the company is building internal resources and knowledge to act on its human rights commitment.

Johnson & Johnson's statement of human rights—which is a permanent part of its corporate website and is also incorporated into its annual responsibility report—provides a good example of clear reporting and transparency on human rights commitments. Consistent with best-practice human rights policy, the statement references the key international norms, the Universal Declaration of Human Rights, and the two corresponding covenants, the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social, and Cultural Rights. The statement also clearly communicates how other corporate policies address specific human rights issues such as employee health and safety, labor and employment, responsible manufacturing, business conduct, access to health care, clinical trials, and the human right to water. Furthermore, the company communicates how responsibility for human rights is structured at corporate headquarters and throughout its operations.

In NEC's 2012 CSR report, the company reports on the establishment of an organizationwide Human Rights Awareness Committee, as well as new training programs for employees that were co-led with Amnesty International.

How does the company assess actual and potential human rights impacts?

The Guiding Principles state that companies have a responsibility to respect human rights, and the principles require that they take steps to understand how their existing activities and potential future activities have an impact on the full set of human rights.

To align reporting with these principles, companies should communicate how they assess human rights impact. Reporters should explain the scope of their assessments, how they decide which portions of their operations to focus on, the tools and methodologies they use, how they use stakeholder input or the input of experts and third parties, and how human rights issues are integrated into social and/or environmental impact assessments.

Companies should also explain how they are taking a value chain approach to these assessments in order to identify risks in their supply chain, operations, and logistics, as well as risks associated with their products and services.

What has the company found as a result of those assessments?

While the responses to the previous two questions will necessarily lead to narrative descriptions of management processes and policies, the response to this question will lead companies to provide quantitative metrics and specific details of their human rights risks.

Reporting on this question might stretch many companies out of their comfort zone, but it is critical for companies to be transparent about their risks and about instances of human rights infringement caused by their activities. Doing so will allow companies to better manage those human rights risks, provide stakeholders with necessary information, and also demonstrate the quality of the risk-assessment process.

In responding to this question, companies should explain where they have discovered instances of human rights problems or abuses, provide audit results, and explain how those results are changing over time.

Both Nike and Walmart are increasingly transparent about factory auditing and monitoring results, breaking down the types of incidents that have occurred and where they have taken place. Last year, the apparel company PVH offered a detailed case study on a fire in a contract factory in Bangladesh that killed 29 workers. The case study describes how PVH worked with factory management to help meet the urgent and immediate needs of family members, and also how the company would be collaborating with other companies, local Bangladeshi organizations, and workers to improve safety infrastructure in factories and to bring about industrywide change.

Currently, the companies providing the greatest transparency on their findings are doing so in relation to their supply chains. But this is likely to change as companies expand their human rights assessments to their value chain and consider risks associated with products and services. GE, for example, provides a detailed case study on product misuse in India. Companies using external stakeholders, third-party organizations, or human rights experts to conduct assessments should also consider using those stakeholder voices to report on the findings. Doing so will not only increase credibility, it will broaden the human rights perspective in company reports.

What is the company doing about those findings?

In response to this question, companies should explain how they are managing human rights risks and especially any instances of abuses that were identified as a result of assessments. For example, companies should explain how they have established new processes such as grievance mechanisms to ensure that managers are receiving timely information about potential risks. They should discuss how they are engaging with stakeholders such as community groups or civil society organizations to remedy human rights abuses. They should also describe how they are using their influence—in government and through the broader business community—to support policies and practices that protect human rights.

To this end, PVH reports on its work creating a first-of-its-kind agreement with a coalition of NGOs, Bangladesh labor unions, and other companies regarding fire and building safety in Bangladesh's apparel factories.

Through its annual transparency report, Google has responded to a human rights risk related to privacy and freedom of expression by publicly reporting on requests for data. The report provides the dates of and types of requests, the organizations (both public and private) that made the requests and how Google responded.

In response to incidents of violence against women in its operations in Papua New Guinea, Barrick Gold Corporation reports on the implementation of a grievance mechanism, community-engagement plan, and training programs.

A New Era of Human Rights Reporting

The approval of the UN Guiding Principles represents a change in the way businesses approach their responsibility to respect human rights, and, with it, a new era in communicating their commitment, actions taken, and lessons learned. Through robust and substantive disclosure, companies will be better equipped to provide all stakeholders with information about how they are living up to the Guiding Principles.

While it is important to recognize the recent gains, it is even more important to emphasize the work that still lies ahead. While the companies that have public policy positions on human rights, and those that have disclosed information on performance related to human rights, number in the hundreds and thousands respectively, the vast majority of the world's businesses have done neither. It is incumbent on leadership companies to influence the business community to integrate respect for human rights into management and into reporting and communications.

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