,
On 18 October 2023, GBI CEO Ron Popper gave a keynote address to the Swiss Business and Human Rights Forum. The full speech is available below.
I have worked as a business and human rights practitioner inside…and with…some of the world’s largest companies, including Swiss companies for some 20 years, supporting and charting the issues and progress over that time.
I have been asked to speak about performance gaps that I still see. One of those gaps is in the approach within companies in their responses to the growing wave of hard law, such as the German, French and Swiss laws…and the proposed EU Corporate Sustainability Due Diligence Directive and other reporting requirements.
This will be looked at in much greater detail in the next panel discussion. But I think we are in a very delicate phase where one approach to human rights performance is based mainly on legal compliance versus a broader approach outlined in the United Nations Guiding Principles and the responsible business conduct approach of the OECD Guidelines.
As a practitioner, I was always in favour of a greater proportion of the hard law component in the “smart mix” outlined by Professor John Ruggie, believing it would force the pace and strengthen performance and reporting. Now I am starting to see companies preparing to respond only to the requirements of hard law, with a much narrower set of obligations.
As a former colleague of mine reminded me a couple of weeks ago: “Be careful of what you wish for.”
We will come back to this issue in the next panel. But the bottom line is that companies – in any case - should be doing the right things…should focus on respecting the dignity and rights of people without having to be encouraged or forced to do so.
While it is clear that considerable progress has been made by many companies, there are still performance and governance gaps which I would like to focus on.
The first major gap I see is at board level. A dozen years into the UNGPs…I don’t believe that boards, with some honourable exceptions, sufficiently understand the human rights footprint and risks of their companies.
Irrespective of where we end up in the current debate in the EU about directors’ duties, there is an urgent need for members or relevant board committees to be trained on human rights. I am talking essentially about the S in ESG – and the close inter-connected relationship between the S and the E…and the S and the G.
Without adequate information, how can those Board members exercise appropriate oversight and good governance? Board members need to make the link between ESG and performance, and see ESG as an investment rather than a cost.
A second major gap that I see is at senior management level. Again with some exceptions – particularly in consumer-facing industries - I am still seeing a woeful lack of investment which actually means a lack of buy-in to the agenda to respect human rights; Yes – I appreciate management budgets are tight – but it’s usually an issue of prioritisation.
Failure by managements to address these and more gaps represent risks to rights holders and risks to the business.
At this stage, on a more positive note, I would like to acknowledge the incredible work of the practitioners in this room. Still tiny teams in a huge subject area. Practitioners are incredibly creative, hard-working, and tough-skinned, and every step forward is a validation of intense effort.
There are some leaders here today who are effecting genuine and incremental progress
- in the way in which their companies think about and approach human rights,
- in due diligence work in the entire value chain, not just the supply chain
- in the training and awareness of management and in the field,
- and in the implementation of policies and processes needed to drive progress.
Progress indeed. And it’s been very encouraging to see some Swiss companies take leadership positions – particularly in the debate about mandatory due diligence in the EU.
But I would like to highlight some gaps that I still see in due diligence carried out by companies – and I’m aware again that what I say may be applicable to some but not all.
There are five areas where I often come across operational and governance due diligence gaps:
- Gap one: In transport and logistics: The human rights issues associated with how our products and services are delivered are all around us. The often-dire working conditions of transport and shipping workers, and warehouse staff, are tantamount in many cases to modern slavery.
- Another gap which requires urgent attention relates to land. Land rights as well as the use, pollution or non-replenishment of resources in emerging economies, impacts vulnerable people and indigenous communities - not just in agriculture but also in relation to infrastructure work… projects to foster a greener economy…and so forth. I am also still dubious about some of the claims I read about stakeholder engagement…or the lessons learned.
- Gap three: Our real estate functions need to be trained on human rights. What are the implications and impacts of the purchase or renting of land for factories, offices, and showrooms? No doubt, legal due diligence is done; but do we really know about the impacts on rights or who the beneficial owners are?
- And four: security, I know in some quarters there is already work done on including human rights training when hiring private security, but is it adequate or tokenistic? And are human rights clauses underpinning expected behaviours contained in contracts?
- And finally – among the most important issues – how far have we really come on pillar 3, on access to remedy? I think some progress is being made…but are our grievance mechanisms really fit for purpose? Can workers and contractors report a grievance without fear of retaliation? And is remediation appropriate and in line with the UNGPs? I appreciate this is a difficult area for practitioners – and there are often internal obstacles – but the two other pillars mean little without access to remedy.
In other words, was our last gap analysis still fit for purpose?
So here we are: 12 years into the United Nations Guiding Principles…a fresh, updated edition of the OECD Guidelines just off the presses…and a whole host of new legislative and reporting demands in Switzerland, the EU and around the world landing on practitioners’ tables.
The tone from the top is vitally important in companies - without it, human rights due diligence will not be embedded in the appropriate policies and processes, and will not get beyond middle management. Senior managements also need to review their policies on incentivisation to ensure, for example, that front-end salespeople feel empowered to walk away from a potential deal that does not feel right…without fear of their end-of-year bonuses.
Managements need – as a matter of urgency - to invest more in their human rights teams not only so they can carry out consistently solid due diligence…but also to ensure that they have the capacity to meet the growing wave of legal and double materiality reporting requirements.
The pressure on small teams assembling and checking data…and turning it into a narrative that meets a wide range of internal and external stakeholder interests…is very tough. And it will only get more so.
One anecdote – I know of a French multinational which uses 80 capacities – 80 – not full time of course – to be able to report to the annual due diligence law.
Another unsubtle nudge to managements represented in the room. Are human rights – after all these years – factored in…both early and sufficiently…into country or project risk assessments, or enterprise risk management systems? Every time there is a major international event, such as the Russian invasion of Ukraine, the civil conflict in Ethiopia, the military coup in Myanmar, I speak to Human Rights practitioners at a large number of multinationals, including Swiss companies.
In the case of Russia/Ukraine…I asked them what kind of human rights due diligence they had done since the Russian invasion and annexation of Crimea in 2014, which should have been a wake-up call for risk managers. Answer, with one half-hearted exception: None.
And do managements genuinely listen to internal HR specialists – particularly in a time of crisis? The answer I receive from practitioners is invariably “no”: we are not at the table; and the views of the cross-functional committees we have set up on human rights – and I fully believe in the value of such committees – unfortunately those views are very rarely listened to either.
Human rights specialists can offer:
- greater understanding of international standards,
- they can provide insights on identifying affected stakeholders and their expectations,
- and they can add a more nuanced approach to communications…so my message to managements would be: listen to your subject matter experts… not just when a crisis strikes… preferably beforehand as befits responsible risk management.
In a way I am also making a plea for a less siloed approach to working. It’s clear that there are cross-over points which need to be acknowledged more.
For instance, human rights specialists need to be working more closely with business units and procurement…with legal…with government affairs…and with environmental specialists on company approaches to climate mitigation among other issues.
A few words for the Swiss government:
As a humble outsider, there is clearly a lot of good work ongoing under the NAP and other programmes and initiatives, at home and abroad.
I would also encourage the government to use its convening power more to deliver key human rights messages to senior managements in whatever context is appropriate. I
am sure a certain amount of dialogue between government departments and companies already goes on, some of it in private.
You are certainly one of the stakeholders that CEOs or board members will sit up and listen to, and are well placed to deliver key messages on good practice, due diligence and the UNGPs.
From personal experience, such as in Yangon in 2014, I also know the value of embassy briefings. It’s really helpful when embassy staff deliver briefings to corporate visitors – and it’s important that human rights insights are part of those briefings.
A final thought – and one with the upcoming panel in mind - I have already mentioned what I see – perhaps simplistically - as a struggle between those who see human rights performance in terms of legal compliance and those who see performance in the broader terms of international standards and wider stakeholder expectations.
I don’t wish to prejudge the upcoming panel but my message would be: don’t under- estimate – or make sure you listen to - those growing stakeholder expectations – business partners, affected communities, civil society, trade unions and employees.
It would be a great shame if companies – having come this far over the past 12 years – fail to take the next steps and baulk at further progress. In the final analysis it’s the right way to go to respect the dignity and rights of human beings – and it’s good for business.