Businesses operate in a complex global environment and face unique challenges when operating in areas affected by social, political and economic instability or when managing larger, more sophisticated supply chains. The convergence of technology, social media and more targeted activism also means consumers, investors and shareholders often find out about human rights impacts before businesses do.
Understanding human rights impacts is an essential component of integrity, risk management and citizenship. In addition to minimizing litigation risks, demonstrating respect for human rights is vital to building a culture of trust and integrity, protecting brand profile and enhancing reputation, managing investor and shareholder relations and making companies attractive business partners.
The increasing convergence of human rights standards, such as the United Nations Guiding Principles on Business and Human Rights, with domestic legislation and international standards also demonstrates a global trend of expected business conduct. Businesses need a proactive approach that balances short-term goals with a long-term vision. An effective strategy that takes into account emerging expectations of business conduct can also enhance business stability, productivity, and long-term profitability.
DLA Piper has a dedicated International Business and Human Rights team led by international business and human rights lawyers with multi-jurisdictional, cross-practice experience to support business in this emerging area.
Sound risk management is about having effective systems and processes for identifying and preventing or responding to adverse human rights, social and community impacts. The journey starts with a strong policy commitment to set the tone from the top on a business's approach to human rights.
Reporting and disclosure
Reporting and disclosure requirements are increasingly focusing on encouraging transparency and requiring businesses to disclosure human rights, social and community risks as well as information on human rights policies and their effectiveness. Examples include the UK Modern Slavery Act 2015, narrative reporting requirements in the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013, the "Dodd-Frank Act", the Californian Transparency in Supply Chain Act 2010 and developments across Europe for transparency-based legislation and the implementation of the non-financial reporting Directive.
When operating in emerging markets businesses often face unforeseen social, political and economic challenges due to poor governance, corruption, political instability and social incohesion. In contrast to risk management, which involves identifying potential impacts and seeking to avoid them, human rights crisis management involves dealing with unforeseen impacts as they occur.
When a business faces criticism or unexpected human rights-related issues, such as adverse impacts on physical or sexual integrity of workers or local community members, or land rights related disruption to operations, DLA Piper can help clients effectively respond with its global investigation and crisis management capability.
Supply chain management
An estimated 80% of global trade passes through supply chains, so it is vital for businesses to manage human rights issues associated with them. This is integral to protecting brand, managing legal, regulatory and reputational risks and for effective expansion into new markets. Sustainable supply chains and ethical procurement procedures make good business sense and create long-term social and economic value for all stakeholders involved in bringing products and services to the market.
Institutional investors and financial institutions increasingly require businesses to identify and manage social and human rights issues related to their activities as a condition of providing funding. Examples of standards that incorporate requirements related to human rights include the IFC Performance Standards, Equator Principles, OECD Common Approaches and OECD Guidelines on Multinational Enterprises and are applicable to most of the world's largest financial institutions.