SHINE webinar - Business and Human Rights

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Business and human rights, particularly in developing countries are under increasing scrutiny. Allegations of sweatshop factories, dangerous working conditions and child labour have been made against a wide-range of companies, particularly those reliant on foreign supply and value chains. The resulting impact to reputation and sales can be hugely detrimental, reflecting an increased ethical awareness amongst customers and investors who are quick to disassociate themselves from tainted brands. This session aims to provide an overview of the issues you should be aware of.

This presentation was conducted on 31 October 2013 by Eversheds' Martin Warren, Partner, and Jane O'Rouke, HR Consultant.

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SHINE webinar - Business and Human Rights

  1. 1. Business and human rights Martin Warren, Practice Group Head, Human Resources & Head of Labour Relations and Jane O’Rourke, Principal Human Resources Consultant, Eversheds LLP 31 October 2013
  2. 2. Business and human rights Today’s speakers Martin Warren Practice Group Head, Human Resources & Head of Labour Relations Jane O’Rourke Principal Human Resources Consultant
  3. 3. Business and human rights Agenda • • • • • • • Identifying the risks and why you need to act An overview of the recognised global human rights standards Who are the key players? Recent developments – the Bangladesh Accord What are the benefits of grasping the nettle? How to respond in practice Useful links to existing guidance and resources
  4. 4. Headlines from last 2 months ‘Beatings and 17-hour days’: the life of Britain’s food slaves The Sunday Times Dhaka victims still wait for help ITV News Yet another labour scandal hits Chinese supplier Foxconn Forbes
  5. 5. Business and human rights An introduction • • • • • Globalisation of – business and supply chains – trade unions and NGOs Global labour practices and conditions, particularly in developing countries, are under increasing scrutiny – some developing countries have weak labour laws or a poor history of enforcement International human rights standards have developed to ‘fill the gaps’ Standards evolving from ILO (aimed at Governments) to Ruggie UNGPs (aimed at businesses) Multi-national employers expected to comply
  6. 6. Business and human rights Identifying the risks • • • • • • • • • Reputation and brand value Cost (lost sales, disruption to supply chains, compensation claims, worker disputes etc) Legal (litigation, procurement terms etc) Accusations of complicity with supply chain abuses Pressure from investors/stakeholders/customers Accusations of failing to live up to CSR codes Trade unions use human rights to pursue a wider agenda Free trade agreements incorporating human rights Western government pressure (e.g. California law)
  7. 7. Business and human rights Other reasons to take action? • • • • • • • Genuine desire to respect labour standards globally A way to address weak laws in some developing states Wanting a level playing field - a legitimate global governance structure Ruggie UNGPs – changing the game A way to regain some control over contractors & suppliers’ working practices Better to take the initiative The Bangladesh tragedy and the resultant Accord has brought many of these issues in to sharp focus
  8. 8. Business and human rights An overview of the global human rights standards
  9. 9. Who is responsible in your organisation? Polling question Who is responsible and accountable for business and human rights in your organisation? A. B. C. D. E. F. G. Human Resources Legal Health and Safety Corporate Social Responsibility Internal audit Labour Relations All of the above
  10. 10. Business and human rights The answer is... • G - All of the above • Human rights issues are relevant to many Corporate support functions • Establishing who should take ownership of this topic is a challenge for many global organisations
  11. 11. Business and human rights What are the global human rights standards? • • • • International Labour Organisation (ILO) Conventions UN Guiding Principles (Ruggie UNGPs) UN Global Compact OECD Guidelines
  12. 12. Global human rights standards International Labour Organisation (ILO) • • • • The ILO mission is “to promote rights at work and enhance social protection” across 185 member states – over 90% of the world’s states = ILO members How? By creating international labour standards, which set minimum levels of social protection, backed by education, supervision, research etc to promote them What are international labour standards? – covering all work matters, with a focus on freedom of association, a right to collective bargaining, the elimination of discrimination and forced/child labour – aimed primarily at governments, not companies Contained in ‘conventions’ - legally binding international treaties that member states must apply in their countries
  13. 13. Global human rights standards International Labour Organisation (ILO) • • • A supervision & complaints procedure (but no hard sanctions) How do the standards apply to global employers? – direct - where national laws apply ILO standards (& are enforced) – indirect - for example… • ILO complaints ‘name and shame’ employers • IFAs incorporate ILO standards • CSR codes incorporate ILO standards • TU’s, NGO’s/others mount corporate campaigns to pressurise employers to adhere to ILO • Commercial contracts impose adherence to ILO • EWC agreements includes ILO adherence What’s the problem if they do bind employers? – legal uncertainty and conflict with national laws
  14. 14. Global human rights standards The UN “Ruggie” Guiding Principles • • • • Background – states play a key role in raising labour standards – but, progress slow and patchy – growing recognition that MNE’s also have global duties and power to affect international labour standards Led to – new UN Guiding Principles on Business & Human Rights developed by J Ruggie How does Ruggie ‘fit’ with the ILO standards? – ILO sets out what standards should be respected & Ruggie sets out how companies should act to fulfil their responsibilities Companies to ‘know and show’ Ruggie compliance
  15. 15. Global human rights standards The UN “Ruggie” guiding principles – an extract • • “Business enterprises should have in place policies and processes… including – a policy commitment to meet their responsibility to respect human rights – a human rights due-diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights – processes to enable the remediation of any adverse human rights impacts they cause or to which they contribute” A human rights due diligence should include “assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed”.
  16. 16. Global human rights standards The UN “Ruggie” Guiding Principles • • • • • The proactive due diligence (know and show) approach marks a major change and is more demanding They are recognised as the authoritative framework against which business behaviour will be judged going forward NB Supply chain responsibility – a company should ‘seek to’ prevent or mitigate adverse human rights impacts ‘directly linked to company through its business relationships’ Sanctions? – there is no legal mechanism which allows complaints against a company to be lodged with the UN Also, same indirect application as for ILO before (‘naming and shaming’, corporate campaigns, IFAs, CSR etc)
  17. 17. Global human rights standards The UN Global Compact • • • • The largest voluntary CSR type of initiative in the world – partnering with the UN Companies sign up to 10 principles in the areas of human rights, environment & anti-corruption Why? Companies benefit from access to practical tools and guidance, UN expertise & sharing best practice to help them embed & apply the principles How do Ruggie and Compact fit together? According to the UN, Ruggie reinforces the Compact, providing an authoritative framework for implementing the Compact
  18. 18. Global human rights standards The OECD guidelines • • • • • The guidelines are recommendations addressed by governments to MNEs operating in their countries They provide a framework for responsible business conduct including business ethics, human rights (based on Ruggie), responsible supply chain management and more Compliance by employers is voluntary, not legally enforceable But, NGOs and TU’s can and do bring complaints against an employer under the guidelines – subject to a non-judicial review procedure – the outcome of which can be published As a result, many companies have settled complaints to avoid reputational damage, sometimes agreeing to enter into an IFA as part of the settlement
  19. 19. Global human rights standards Standard Aimed at: Covers human rights Directly legally enforceable Indirectly legally enforceable ILO Convention Governments of Member States Yes, international /national laws as applicable Various routes UN Global Compact All member corporations No Various routes UN Guiding Principles “Ruggie” All corporations & Member States No Various routes OECD Guidelines NME’s operating in OECD countries No Various routes Establish a framework that covers issues
  20. 20. Business and human rights Other than global institutions like the UN, who are some of the key global players?
  21. 21. The key global players Global union federations • As global organisations with worldwide membership, GUFs are wellplaced to address global human rights – by transnational campaigns and negotiations – exchange of information – cooperation and coordination of positions – building the competence of local unions in developing countries
  22. 22. The key global players Global employer representatives • The International Organisation of Employers (IOE) – recognised as the voice of business by ILO, UN, G20 and more – represents the interests of private sector employers in social and labour matters at international level – with a membership of 150 business and employer federations in 143 countries
  23. 23. The key global players Others • NGOs, charities and other pressure groups, for example – The Ethical Trading Initiative (“we work in partnership to improve the lives of poor and vulnerable workers across the globe”) – The Fair Labour Association (“believes that all goods should be produced fairly and ethically”) – The Worker Rights Consortium (“an independent monitoring organisation that supports workers in defending their workplace rights”) – Worldwide Responsible Accredited Production - WRAP (“a notfor-profit organisation dedicated to promoting ethical, humane and lawful conditions and practices in manufacturing facilities all around the world”) – and many more …
  24. 24. Business and human rights Recent developments – The Bangladesh Accord
  25. 25. The Bangladesh Accord Polling question Have you read the Bangladesh Accord? A. Yes B. No
  26. 26. Recent developments The Bangladesh Accord – legal repercussions • • • • • Industriall and Uni, plus NGOs, pushed global retailers to sign the Accord post Bangladesh factory deaths 80+ signatories to identify key or high risk suppliers in Bangladesh so that they can be subject to safety inspections, remediation and fire safety training Up to $500,000 annual cost per signatory plus unclear who pays for the remediation Legally enforceable binding arbitration clause – high risk - the size of any award for breach is unclear This is a significant development - will GUF’s want similar clauses in IFAs? A way to make Ruggie/ILO commitments legally enforceable by trade unions?
  27. 27. Recent developments International framework agreements (IFA’s) • • Overview of IFA’s – what are they? Typical human rights content? Enforcement? – why do companies enter IFA’s? Risks Cost • • • • Reputational (if IFA breached, not renewed) Legal (soft law challenged, lack of legal certainty) Administration (audits, reports, meetings) Implications for suppliers Confidentiality • Risk of having to disclose sensitive information Labour relations • • • May evolve into union negotiation & collective bargaining If it contains neutrality in organising campaigns, expect membership drive Scope for more credible global strike capacity
  28. 28. Business and human rights The benefits of grasping the nettle?
  29. 29. Business and human rights The benefits of grasping the nettle • Having clarity at a global level on labour standards will help inform and improve local practices, gradually raising standards where they fall below international standards • Employers must be proactive to avoid nasty surprises • Obligations are likely to increase – some governments are seeking to influence labour practices outside their jurisdictions • Global unions are likely to continue to push for legally binding commitments in relation to global labour standards • IFA’s signed under the pressure of a ‘name and shame’ campaign have been described as ‘documents of surrender’ • Employers who are proactive can ‘know and show’ should they become a target of such a campaign
  30. 30. Business and human rights How to respond in practice
  31. 31. Global labour standards How are other global corporations responding? Our judgment is that most companies with global operations/supply chains are here • The ‘Ruggie journey’: – pre-compliance – compliance – beyond compliance • But, progress is being made: – “The number of companies developing human rights policies, due diligence procedures and grievance mechanisms is rising significantly.” John Ruggie, February 2013
  32. 32. Global labour standards How are other global corporations responding? • • • Those companies looking to comply with Ruggie soon realise that the Principles are an authoritative statement but – not a comprehensive code, and – currently lack practical tools and guidance (although the UN Global Compact does) Each company is having to interpret what Ruggie means practically for their operations Typically, supply chains and other key business relationships in developing countries present the biggest challenges
  33. 33. Global labour standards Putting respect for human rights into practice 1. Develop understanding of your human rights risk profile 2. Formulation of strategy/policy commitment 4. Integration and acting on potential impacts 3. Human rights due diligence – assessing impacts ‘Know and show’ Consider local grievance mechanisms 5. Evaluating effectiveness
  34. 34. Business and human rights How to respond – some key points • • • • • • • This is not a one-off - it is an ongoing commitment Identify whose support is needed - bearing in mind that this is crossfunctional (HR, CSR, H&S etc) Allocate resources & identify external/internal expertise Prioritise using your risk profile - trying to do it all at once may prove overwhelming at the outset Beware of making a global commitment you are unable to live up to locally Train management & promote the exchange of information Agree your approach to business partners (using education and encouragement, screening, inspections, commercial leverage, incentives and potentially ending the relationship)
  35. 35. Business and human rights In summary • • • • • Huge reputational and other risks coupled with increasing pressure to comply Beware, some players have wider agendas Although not directly legally enforceable, ILO human rights standards are increasingly being incorporated in to legally binding agreements Many global employers want ‘to do the right thing’ but are overwhelmed by the challenge of how to put respect for human rights into practice given the complexity of their operations and supply or value chain Doing nothing is not an option and help is available
  36. 36. Business and human rights Useful links • UNGPs http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf • OECD guidelines http://www.oecd.org/daf/inv/mne/48004323.pdf • UN Global Compact – general summary brochure http://www.unglobalcompact.org/docs/news_events/8.1/GC_brochure_FINAL.pdf • ILO fundamental rights summary document http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---declaration/documents/publication/wcms_095898.pdf • Business and human rights UN portal http://www.business-humanrights.org/
  37. 37. Business and human rights Any questions
  38. 38. Business and human rights Contact us Martin Warren DD: 0845 497 4745 www.eversheds.com/martinwarren martinwarren@eversheds.com Jane O’Rourke DD: 0845 498 7769 janeorourke@eversheds.com

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