Although few companies today look at things quite so squarely, it is still operations and finances that are top of mind. Problems with rights and responsibilities further down the production chain are still seen as someone else's responsibility, as long as they themselves live up to standards, laws and framework agreements. CSR is still something you can opt in or out of, to the extent you think is appropriate.
But with the adoption of the UN Guiding Principles on Human Rights in 2011, 'the business of business' has now also become accountability. Not all businesses are aware of their responsibilities.
A new global distribution of power
Historically, it has been the responsibility of the state to ensure that a company complies with human rights. The hierarchy was, and still is, quite clear: The state has the authority to make laws and exercise power, and therefore has the ability to sanction businesses that violate the law.
But with globalization, business operations became global, while the ability to sanction companies for violations remained national. At the same time, production was increasingly moved to third world countries, where the state and national institutions were generally weaker than where the workplaces originated.
The global distribution of power between companies and nation states has also changed, in favor of the companies. It has become much more difficult to hold companies accountable for human rights violations in their production chain, and other monitoring bodies and stakeholders such as NGOs and trade unions have in many cases had insufficient opportunity to provide proper protection for individual workers.
UN Guiding Principles on Business and Human Rights
In 2011, the UN adopted a set of guidelines that addressed this issue. The guidelines called for companies to take greater responsibility for their production. Businesses should ensure that their presence has positive effects in the form of jobs, growth and development, rather than negative consequences in the form of human rights violations, environmental damage or corruption.
The three pillars
The UN Guiding Principles on Business and Human Rights stand on three pillars.
- The first pillar states that states have a duty to enact laws that prevent human rights violations, and to ensure that the laws are implemented and enforced - just as they have always had the responsibility and duty to do.
- The second pillar states that companies' activities must not lead to human rights violations in their supply chain - regardless of where and in what context it takes place. It is no longer sufficient to refer to compliance with local laws, as these may be inadequate (e.g. in authoritarian states). Companies have a duty to take concrete steps to address violations of fundamental human and labor rights in their supply chain. This is an obligation and cannot be compensated by, for example, building schools or digging wells.In addition, companies are obliged to exercise due diligence. This means that businesses have a duty to know their supply chain. They must be aware of risk areas and have action plans if something does not meet the requirements set. It is not sufficient to only react when problems become known in daylight.
- The third pillar deals with the consequences that occur if the first two pillars are not complied with. States undertake to have a judicial body or similar where complaints about human rights violations can be handled and processed. Companies are obliged to respect this body and work actively to improve conditions that can be criticized. This body must function effectively. If the body works too slowly or is corrupt, it is considered incompetent. In Norway, the 'Norwegian OECD Contact Point' can be contacted with complaints about human rights violations.
Factlines is an effective tool for ensuring that your business meets due diligence requirements. With Factlines, you can gain insight, identify risk areas, create an overview and take action when problematic issues are identified.
