Human Rights Risks in Developed Economies: A New Frontier for Business Action
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Human Rights Risks in Developed Economies: A New Frontier for Business Action

Businesses are increasingly under scrutiny for their human rights impacts across operations and supply chains. The prevalence of human rights challenges including modern slavery, forced labour, child labour, hazardous working conditions and others, not only poses a reputational risk for companies but also exposes them to regulatory pressures that are becoming more significant in light of recent legislations that are calling for greater disclosure from business on human rights and slavery. The Modern Slavery Act in the UK, the corporate duty of vigilance law in France, and similar legislations in the Netherlands and Australia are raising the bar for corporate action and disclosure not just in parent countries but also in sourcing and operating markets globally.

However, despite progress over the years, corporate action on human rights is still falling short of addressing the scale and complexity of the challenge. The result of the first Corporate Human Rights Benchmark, an investor led multi-stakeholder initiative, where the average score for 98 companies across the apparel, agricultural, and extractive sectors is only 28.7%, confirms that a lot more work lies ahead in implementing the UN Guiding Principles and other international human rights and industry standards. The Sustainable Development Goals (SDGs), that are in effect the new political framework for business, also underscore the importance of addressing labour and human rights issues. SDG 8 ‘Decent Work and Economic Growth’ is a call to action for decent work for all women and men, measures to eradicate forced and child labour, and steps to protect labour rights.

More recently, precarious work conditions in geographies typically not high on the risk radar of companies are coming to the fore. Modern slavery risks in EU supply chains are rising as the region has experienced the largest increase in slavery conditions in 2017 compared to any other region, largely driven by the migrant crisis. Similarly, ethical standards in many of Britain’s apparel factories are found to be worse than in Asia with low wages and poor health and safety standards becoming a common feature. Corporate risk frameworks typically focus attention on hotspots in key sourcing and manufacturing hubs in emerging and developing economies. While these will remain important, an expansion of business focus is required in response to changing societal priorities. The rising incidence of exploitation of migrant labour and other human rights challenges in Europe and other mature markets needs to be integrated into the corporate risk radar to avoid any blind spots and to improve due diligence. Companies can then build on the risk identification and screening process and develop an informed and robust response including developing new partnership models and forms of stakeholder engagement that improve their oversight of supply chains closer to home and ensure responsible business conduct.

(Photo Credit: Secuestro / Diaro el Mundo / Flickr)