SHINE webinar - Business and Human Rights

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


Today’s speakers

Martin Warren Practice Group Head, Human Resources & Head of Labour Relations

Jane O’Rourke Principal Human Resources Consultant


• 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

Agenda

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


• 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

An introduction

• 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)


Identifying the risks


• 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

Other reasons to take action?


An overview of the global human rights

standards

Who is responsible in your organisation?

Who is responsible and accountable for business and human rights in your organisation?

A. Human Resources

B. Legal

C. Health and Safety

D. Corporate Social Responsibility

E. Internal audit

F. Labour Relations

G. All of the above

Polling question


• 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

The answer is...


• International Labour Organisation (ILO) Conventions

• UN Guiding Principles (Ruggie UNGPs)

• UN Global Compact

• OECD Guidelines

What are the global human rights standards?

Global human rights standards

• 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

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


International Labour Organisation (ILO)

• 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

The UN “Ruggie” Guiding Principles


• “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”.

The UN “Ruggie” guiding principles – an

extract


• 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)

The UN “Ruggie” Guiding Principles


• 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

The UN Global Compact


• 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

The OECD guidelines



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

Establish a framework that covers

issues

No Various routes

OECD Guidelines

NME’s operating in OECD countries

No Various routes


Other than global institutions like the UN,

who are some of the key global players?

• As global organisations with worldwide membership, GUFs are well-placed 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

Global union federations

The key global players

http://en.wikipedia.org/wiki/File:UNI_global_union_new_logo.jpg

http://en.wikipedia.org/wiki/File:ITF_logo.png

http://www.bwint.org/

• 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

Global employer representatives


• 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 not-for-profit organisation dedicated to promoting ethical, humane and lawful conditions and practices in manufacturing facilities all around the world”)

– and many more …

Others



Recent developments – The Bangladesh

Accord

The Bangladesh Accord

Have you read the Bangladesh Accord?

A. Yes

B. No

Polling question

• 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?

Recent developments

The Bangladesh Accord – legal repercussions

• Overview of IFA’s

– what are they? Typical human rights content? Enforcement?

– why do companies enter IFA’s?

• Risks

Recent developments

International framework agreements (IFA’s)

Confidentiality

• Reputational (if IFA breached, not renewed)

• Legal (soft law challenged, lack of legal certainty)

• Administration (audits, reports, meetings)

• Implications for suppliers

• Risk of having to disclose sensitive information

• May evolve into union negotiation & collective bargaining

• If it contains neutrality in organising campaigns, expect membership drive

• Scope for more credible global strike capacity

Cost Labour relations


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

The benefits of grasping the nettle


How to respond in practice

• 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

Global labour standards

How are other global corporations

responding?

Our judgment is that most companies with global operations/supply chains are here


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

1. Develop understanding of your human

rights risk profile

2. Formulation of

strategy/policy commitment

3. Human rights due diligence –

assessing impacts

‘Know and show’

4. Integration and acting on

potential impacts

Consider local

grievance mechanisms

5. Evaluating effectiveness


Putting respect for human rights into practice

• This is not a one-off - it is an ongoing commitment

• Identify whose support is needed - bearing in mind that this is cross-functional (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)


How to respond – some key points


• 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

In summary


• 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/

Useful links

http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf

http://www.oecd.org/daf/inv/mne/48004323.pdf

http://www.unglobalcompact.org/docs/news_events/8.1/GC_brochure_FINAL.pdf

http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---declaration/documents/publication/wcms_095898.pdf





http://www.business-humanrights.org/




Any questions


Martin Warren

DD: 0845 497 4745

www.eversheds.com/martinwarren

[email protected]

Jane O’Rourke

DD: 0845 498 7769

[email protected]

Contact us

http://www.eversheds.com/martinwarren

mailto:[email protected]

mailto:[email protected]