HR professionals’ cross-departmental relationships, and expertise in employment rights, mean they should be leading the way in human rights due diligence, write lawyers at Norton Rose Fulbright
The impact of businesses on the human rights of all individuals affected by their operations – their own employees, as well as employees in their supply chains and local communities – is a critical issue for all employers.
A recent study by the British Institute of International and Comparative Law and global law firm Norton Rose Fulbright, surveying more than 150 companies around the world, discovered that HR departments in some companies are playing a vital role in the identification of human rights impacts, the implementation of relevant systems and processes to eliminate such impacts, and monitoring progress.
The study also found, however, that human rights impacts are still being overlooked by many businesses – mainly because they are still not effectively implementing international standards for human rights due diligence so as to consider the whole spectrum of internationally recognised human rights. This is something that needs to change fast as it exposes organisations to a wide range of reputational, financial and legal risks.
While many companies already conduct various traditional forms of due diligence in their business processes, this is not enough to detect human rights impacts. Our research shows that only 19 per cent of companies that considered human rights indirectly as part of non-human rights processes (eg employment, health and safety, and non-discrimination) identified human rights impacts. Only 29 per cent identified adverse impacts linked to third-party relationships. In contrast, 77 per cent of companies that carried out specific human rights due diligence identified actual or potential human rights impacts, and more than 74 per cent identified impacts linked to third-party relationships.
It is vital to appreciate that human rights due diligence is not the same as traditional forms of general due diligence. General business due diligence considers the risk to the company of actions such as acquisitions and investments, and is often voluntary or subject to limited regulation. Human rights due diligence, on the other hand, examines the risk to individual rights-holders of the activities of a company. They include a wide set of stakeholders – not only employees but also local communities, indigenous peoples, workers in supply chains and others. Many of these groups are simply not being considered.
The current understanding of human rights due diligence and what makes it effective presents an opportunity for HR professionals to become one of the drivers for change in this area. Their knowledge of employment-related issues and internal governance structures that are being used to tackle such issues puts HR professionals in a very strong position to participate in the design and implementation of wider holistic human rights due diligence programmes that would cover the whole spectrum of human rights relevant to any specific company.
This is because research has shown that the only effective way of dealing with human rights impacts in a holistic way is to adopt a cross-departmental approach where HR, corporate social responsibility, compliance and legal departments work together to identify and mitigate potential human rights risks. It’s important to recognise human rights issues at the operational level, where interaction with the rights-holders actually takes place. All stakeholders and operations need to be included in due diligence, supported by a multi-departmental group including lawyers and board-level decision-makers. Training, consultations with all stakeholders (not just employees) and regular human rights impact assessments are needed.
Taking this cross-departmental approach puts businesses in a better position to consider the whole spectrum of human rights, starting with an impact assessment across the whole company’s operations and its supply chains. It is important to move away from due diligence processes that only look at employees and internal stakeholders. Training and consultations with internal and external stakeholders are potent tools.
Legal claims against companies for human rights abuses in their supply chains are on the rise across the globe. Ignorance is no defence. Organisations will be liable not only for those human rights impacts that they knew about, but also for what they ‘ought to have known’, had they been diligent, or indeed for making misleading statements. HR teams have a central role to play in making sure that companies rise to the challenge.
Robin Brooks and Milana Chamberlain are partners, and Stuart Neely and Gal Levin associates, at Norton Rose Fulbright