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November 24, 2009
Corporations Are Advised to Improve Human Rights Reporting
by Robert Kropp
The Global Reporting Initiative and its partners in a human rights initiative find insufficient
attention to negative impacts of human rights issues in corporate reporting, and plans to update
its Sustainability Reporting Framework.
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Corporate reporting on human rights is a core element of the environmental, social, and governance
(ESG) factors that investors identify as critical for effective investment analysis and
decision-making regarding companies in their portfolios. Yet the Global Reporting Initiative (GRI), whose Sustainability
Reporting Framework was used by more than 1,000 companies in 2008, found in a 2008 study that a
majority of reports emphasized positive human rights impacts, while failing to include the negative
impacts that are likely to affect the business operations of companies.
In order to
encourage improvements in the coverage of human rights principles in corporate sustainability
reporting, the GRI, along with the United
Nations Global Compact and Realizing
Rights: The Ethical Globalization Initiative, embarked upon a collaborative project named
"Human rights—A call to action."
The project's Working Group was launched in late 2008.
In September, 2009, the Working Group published a report detailing its recommendations for improved corporate
reporting on human rights.
SocialFunds.com spoke with Bastian Buck, the Technical
Development Coordinator for the Working Group, about the findings of the report.
"There
have been key developments in the human rights field since the GRI's 2006 update," Buck said. "Our
goal was to provide recommendations on how to go forward with human rights reporting by
corporations, and how to continue improvement of the current G3 guidelines."
Buck referred
often to the work of John Ruggie, the UN Secretary General's Special Representative on business &
human rights. "Ruggie found that companies can have an effect on all 30 of the principles for human
rights included in the guidelines," Buck said, "And we focused on the duty of corporations to
respect all human rights."
Ruggie summarized his mandate in a paper entitled Protect,
Respect, and Remedy. While asserting that "the corporate responsibility to respect human rights
is the baseline expectation for all companies in all situations," Ruggie found that "relatively few
companies have systems in place enabling them to support with confidence claims that they respect
human rights."
Ruggie recommended that companies implement a due diligence process, whose
core elements include "having a human rights policy, undertaking human rights impact assessments,
integrating human rights throughout a company, and tracking as well as reporting performance."
"The Working Group focused on the scope of human rights" in its report, Buck told
SocialFunds.com. According to the report, "Reporting organizations need guidance on how to identify
which human rights are relevant for reporting, not just what to consider." It recommended that
companies refer to the full range of human rights enshrined in the International Bill of Rights
to determine relevance for them and their stakeholders.
"Many companies have human rights
policies in place, but how to apply them in practice is a question they struggle with," Buck
observed.
To help enable readers of corporate reports "determine the ability of the
organization to proactively anticipate, prevent, manage and mitigate risks to stakeholders' human
rights and risks posed to the organization by not respecting human rights," the Working Group
recommended that reports answer three key questions.
Effective corporate reporting on
human rights should define which human rights issues are material for the management of risks and
opportunities by companies, and provide specific information on the ability of companies to address
their responsibility to meet Ruggie's requirements to protect, respect, and remedy. Reports should
also address the practical application of corporate due diligence processes, by including
information on human rights violations in addition to positive impacts.
"The Working
Group's recommendation is that companies identify human rights principles relevant to them, and
operationalize their framework for dealing with those principles," Buck said. "Human rights due
diligence is important because it looks at how companies follow through on their commitments."
Last week, the Human Rights joint initiative issued two reports help companies publicly
disclose policies and practice relating to human rights in their reporting. The first, entitled Corporate Human Rights Reporting: An Analysis of Current Trends,
reviewed 57 recent sustainability reports from companies from a range of industry sectors. The
report concluded that "the quality of human rights reporting in 2009, in general, still falls far
short when measured in relation to certain key principles and elements of good human rights
reporting."
"More and more, corporations are looking at the human rights aspects of what
they report," Buck said, "But in the balance between positive and negative aspects there is room
for improvement." In addition to the lack of balance in corporate reports, the analysis also
identified ongoing challenges in the equation of community relations with philanthropy, and a lack
of performance reporting and impact reporting.
The second of the reports issued last week,
A Resource Guide to Corporate Human Rights Reporting, identifies
human rights as "an increasingly important aspect of the developing global CSR movement," and
effectively summarizes the recommendations of the Working Group.
In deciding upon the
scope of human rights reporting, companies should include a broad range of stakeholders, and
prioritize the human rights issues addressed in their reports. Reports should address the issue of
corporate complicity in human rights abuses, and include due diligence, by which companies "become
aware of, prevent, and mitigate adverse human rights impacts."
"A functioning grievance
mechanism suggests that a company has moved beyond just reporting," Buck said, "So we are proposing
to add indicators and performance measurements to the reporting guidelines."
Asked about
the work that remains to be done the working group, Buck said, "The governance committee of the GRI
has accepted our report, and wants us to work further on implementation as part of the regular GRI
due process. By the end of next year we'll be ready to integrate new wording into the updated
guidelines."
In an email sent following our conversation, Buck summarized the goals of the
Working Group and the Human Rights initiative.
"Ultimately, the aim of the project
partners is that through better reporting guidance we will increase business understanding of their
human rights impacts and resulting risks and opportunities," he wrote. "Better reporting enables
all stakeholders, including the growing number of responsible investors, to have access to crucial
information on the human rights impacts of the companies in which they invest, buy products from,
and work for."
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