DLA Piper co-sponsored a report launched by the Economist Intelligence Unit (EIU) "The Road From Principles to Practice - Today's Challenges for Business in Respecting Human Rights" which reviewed the preparedness of businesses in respect of human rights. The report suggested that human rights issues are still low-down the board agenda as they are not seen as issues that pose a real and present risk to the future of a company's bottom-line. Despite this, the report identified an appreciation amongst the senior corporate executives surveyed that these issues need to have a greater influence on how business is conducted.
Some companies have not yet tackled the issue
Whilst 83% of the respondents to the EIU survey agreed that human rights are a matter for business as well as governments, only 44% stated that human rights are an issue on which the CEO takes the lead, and only 22% of these companies had a publicly available human rights policy.
Part of the reason for this disconnect may be the lack of understanding as to what respecting human rights looks like in practice. The EIU report revealed that companies are still getting to grips with what their responsibilities mean and how they can be put into practice. As one respondent described it, businesses are “often uncertain of where to start” when it comes to human rights.
32% of respondents to the survey were not aware of their company's obligations and identified this as a training need. 26% considered that there was a lack of training or education for employees available in this area.
Other companies face additional challenges
Companies who have overcome these initial problems and already begun to tackle the potential for human rights impacts in their supply chain face different challenges.
These companies typically have human rights policies and procedures in place which usually include supplier Codes of Conduct. They may also undertake social audits to ensure compliance. However, on their own, these initiatives have limited effect.
Such Codes and policies often require suppliers to revisit their own procurement or purchasing practices. Given complex, dynamic, and geographically diverse global supply chains, it is a challenge for companies to conduct effective due diligence.
If due diligence does identify an adverse human rights impact, this can prove a difficult matter for the company to manage. The company will need to consider what it can do to remedy the particular impact or avoid it occurring. This is likely to bring with it difficult ethical and legal questions, including:
- How does it influence a supply chain?
- What contractual leverage does it have?
- What are the legal and practical consequences of disengagement?
Understand more about the findings of the EIU report: The Road From Principles to Practice