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Demonstrating Corporate Responsibility During a Pandemic

Crises reveal what organizations value. Whether a business demonstrates corporate responsibility during the COVID-19 pandemic, or fails to do so, can determine if the company and its leaders emerge from this crisis with the trust and confidence of their stakeholders intact.

Source: google.com/covid19/

Definitions of corporate responsibility have evolved from an exclusive focus on shareholder returns, to the acknowledgment by businesses of a much broader group of corporate stakeholders and range of responsibilities. Acting responsibly today means more than legal compliance and goes beyond corporate philanthropy.

At its core, corporate responsibility means meeting stakeholder expectations for responsible conduct. Meeting both the financial and non-financial expectations of its investors, customers, employees, business partners, suppliers, regulators, and the communities where it operates, helps a company to manage risk, protect its reputation, attract and retain employees, grow its markets, and sustain its financial performance.

Demonstrating corporate responsibility is a key challenge for business leaders in the best of times. As my colleague Helio Fred Garcia observes, the COVID-19 crisis comprises simultaneous crises (public health, business, economic, information, governance, social, mental health) of unprecedented scope that require a multi-dimensional leadership response. [1]

Unprecedented in its scope, the COVID-19 pandemic is an opportunity for companies and their leaders to live their values by acting responsibly.

When navigating next steps during the pandemic, business leaders should keep in mind key principles for demonstrating corporate responsibility.

 

Understand the potential impacts of your crisis response.

Responsible organizations understand the potential impacts of their actions and take steps to “do no harm.” Business leaders determining how to respond to the pandemic need to assess the potential impacts on all company stakeholders.

Well-managed organizations plan for foreseeable crises. Companies that engage in meaningful crisis planning likely had a standby pandemic crisis plan they could draw upon as they began to address COVID-19. Effective crisis management plans identify potentially affected stakeholders and catalogue relevant corporate policies for high priority scenarios. A global manufacturer’s pandemic planning, for example, would have considered the business impact of supply chain interruptions, triggers to suspend executive travel, and criteria for allowing employees to work remotely.

When evaluating next steps, companies should seek to “do no harm” by preventing or mitigating harmful impacts.

Companies without a pandemic crisis plan in place can still identify potential impacts to guide their response. Enterprise-wide impact mapping and assessment can help an organization prioritize next steps. By applying a human rights impact lens to its operations and stakeholders, [2] a hospital system, for example, might prioritize securing adequate personal protective equipment to ensure the health and safety of its healthcare workers; expanding diagnostic testing among vulnerable communities to ensure nondiscrimination in patient access to healthcare, and communicating information about the virus and medical capacity to ensure public access to reliable and timely information.

When evaluating next steps, companies should seek to “do no harm” by preventing or mitigating harmful impacts. Apparel companies that have cancelled supplier contracts for goods during the pandemic face criticism for triggering layoffs of the factory workers worldwide that make their products, often among the groups most vulnerable to COVID-19. A quick stakeholder impact assessment would have flagged the risk of harming supply chain workers. Responsible international brands have sought to protect workers by honoring their supplier contracts during the pandemic.

Similarly, companies that provide paid sick leave are protecting the health of employees, customers and the general public alike. When the California-based retailer Patagonia voluntarily closed its stores nationwide while continuing to pay its employees, its CEO and President, Rose Marcario stated, “It’s everyone’s responsibility to help stop the spread of this virus.”

“It’s everyone’s responsibility to help stop the spread of this virus.” 

− Rose Marcario, CEO and President, Patagonia Inc.

 

Anticipate changing stakeholder expectations.

Meeting stakeholder expectations demonstrates corporate responsibility and earns the trust of those who matter most to your business. All stakeholders expect a responsible organization to care about the multiple dimensions of the COVID-19 crisis and to take appropriate action.

What stakeholders expect a responsible company to do will change. The current pandemic is a dynamic situation that calls for decision-makers to adapt policies to new information. Responsible companies meet stakeholders where they are and adjust accordingly.

Customers, for example, expect essential businesses that remain open (or that reopen) to follow public health guidelines, to protect their employees, and to protect vulnerable community members. Obeying the law is the just the starting point.

On my first trip to the grocery store after a statewide “stay-at-home” order had been issued, the store had placed limits on the number of scarce items that customers could buy, like cleaning products and milk. Employees were working hard to keep shelves stocked. Two weeks later, consistent with evolving public health guidance, the store was limiting the number of customers allowed inside at once, plexiglass shields had been placed between checkout workers and customer payment stations, and all store employees wore gloves and masks. The grocery chain had also adopted an industry-wide practice reserving its opening hour for elderly customers. On my most recent shopping trip, the store had instituted “one-way” aisles to ensure physical distancing and all customers were required to wear face coverings.

Some of these measures were mandated; some were voluntary. All track what the store’s customers, employees, and community would expect a responsible grocery store to do under the circumstances based on available information.

Conversely, companies that act contrary to stakeholder expectations for responsible conduct, even if the actions are legal and contribute to the bottom line, risk losing the trust of customers, investors, and regulators. Large public corporations that secured millions of dollars of loans under the Paycheck Protection Program intended for small businesses, for example, have endured substantial public criticism prompting some companies to return the funds. The angry reaction should not have been a surprise for corporate leaders paying attention to stakeholder expectations. 

 

Philanthropy is not a substitute for responsibility.

Stakeholders expect responsible companies with the resources to do so, to give money and to tap their expertise during a crisis. Many businesses, large and small, have responded to the pandemic by providing financial or in-kind support to healthcare workers, to small businesses, and to international and community organizations addressing the impacts of COVID-19 on vulnerable populations.

Source: covid19responsefund.org/

Google has pledged more than $800 million to support small businesses, health organizations and governments, and health workers on the frontline of the global pandemic. The company’s contribution includes $250 million in advertising credits to help the World Health Organization and more than 100 government agencies disseminate information on how to prevent the spread of COVID-19. Citigroup is donating a total of $15 million to the United Nations Foundation and World Health Organization’s COVID-19 Solidarity Response Fund, to No Kid Hungry to support emergency food-distribution programs in the United States, and to international efforts in countries that are severely affected by the pandemic. The British and Dutch consumer goods multinational Unilever is contributing €100 million through donations of soap, sanitizer, bleach and food, including adapting its manufacturing lines to produce sanitizer for use in hospitals.

All of these efforts are welcome.

Philanthropy, however, does not excuse a company from acting responsibly elsewhere in its operations.

Source: www.ethicalconsumer.org

Amazon faces intense criticism for failing to adequately protect its employees from the outset of the pandemic; resisting paid sick time, hazard pay, and health benefits for part-time employees; and retaliating against a warehouse worker who protested working conditions. Since then, Amazon has enhanced its health and safety practices, hired 175,000 additional employees, and donated thousands of laptops to Seattle public school students, among other efforts. CEO and Founder Jeff Bezos announced a $100 million gift to Feeding America. The company’s philanthropic responses alone, however, are proving insufficient to meet stakeholder expectations for responsible conduct. Employees continue to protest Amazon’s working conditions and policies, and regulators have launched investigations into the company’s labor practices.

McDonald’s Corporation has donated over $3 million in food to support local communities during the COVID-19 pandemic; yet, more than half a million McDonald’s workers without access to paid sick leave are serving food nationwide.

Leading companies act and give responsibly.

 

Business leaders are called to act when government fails to do so.

The COVID-19 pandemic has triggered a crisis of government capacity and leadership. Corporate responsibility today means filling these governance gaps.

Business leaders should be prepared to address the governmental pandemic response by speaking out against harmful policies and advocating for responsible solutions.

Source: coronavirus.jhu.edu/map.html, visited 5/8/2020

Responsible companies in the United States are meeting public needs that the federal government has failed to address. Companies in many different sectors are stepping in to manufacture, purchase, and distribute personal protective equipment; to accelerate production of diagnostic tests and medical equipment like ventilators; and to disseminate accurate data on the virus and its spread. Microsoft voluntarily told its employees to work from home in support of local health authorities’ efforts to communicate the urgency of the looming pandemic in Seattle. Apple and Google are partnering to develop contact tracing technology to help governments and health agencies reduce the spread of the virus.

Stakeholders increasingly expect corporate leaders to speak out on public policy issues, [3] such as gun violence and immigration policy, [4] when government fails to act or causes harm. COVID-19 is accelerating this trend. In his annual letter to CEOs, Larry Fink, the chairman and CEO of BlackRock, the world’s largest asset manager, noted last year that “stakeholders are pushing companies to wade into sensitive social and political issues — especially as they see governments failing to do so effectively.” Fink called on CEOs to demonstrate leadership and corporate commitment to “to the countries, regions, and communities where they operate, particularly on issues central to the world’s future prosperity.” No issue meets these criteria right now more than the multi-dimensional COVID-19 crisis.

CEOs that understand and anticipate the potential impacts on of all of their company’s stakeholders are not rushing to reopen.

Business leaders should be prepared to address the governmental pandemic response by speaking out against harmful policies and advocating for responsible solutions. Consumer product brands have had to correct inaccurate information about disinfectants. Many businesses in the United States must now decide whether to reopen against data-driven public health guidance. CEOs that understand and anticipate the potential impacts on of all of their company’s stakeholders are not rushing to reopen.

Unprecedented in its scope, the COVID-19 pandemic presents a unique opportunity for companies and their leaders to live their values by acting responsibly.

 

Logos Senior Advisor Anthony Ewing counsels executives on corporate responsibility and works with clients to establish and strengthen crisis management programs. He teaches a graduate seminar on corporate responsibility at Columbia Law School.

 

Notes

[1] Helio Fred Garcia, “Leadership, Communication, and COVID-19,” (Mar. 25, 2020) https://logosconsulting.net/leadership-communication-and-covid-19/.

[2] Anthony Ewing, “Integrating Human Rights into Crisis Planning,” A Good Practice Note endorsed by the United Nations Global Compact Human Rights and Labour Working Group (6 October 2015), https://www.unglobalcompact.org/docs/issues_doc/human_rights/Human_Rights_Working_Group/crisis-planning-GPN.pdf.

[3] Aaron K. Chatterji and Michael W. Toffel, “The New CEO Activists,” Harvard Business Review (January–February 2018), https://hbr.org/2018/01/the-new-ceo-activists.

[4] Anthony Ewing, “Business and Human Rights: Lessons for Managing the Trump Presidency,” blog post, February 13, 2017, https://logosconsulting.net/business-and-human-rights-lessons-for-managing-the-trump-presidency/.

Anthony Ewing Leads Teaching Workshop in the UK

Logos Senior Fellow Anthony Ewing convened the eighth Teaching Business and Human Rights Workshop earlier this month at the University of Essex in Colchester, England. The seventy Workshop participants included individuals teaching “business and human rights” at universities in Canada, Hong Kong, Italy, Japan, Mexico, Pakistan, Poland, the Netherlands, South Africa, Switzerland, the United Kingdom, and the USA. The Workshop was co-hosted by the Global Business and Human Rights Scholars Association.

In 2011, Ewing co-founded the Teaching Business and Human Rights Forum, a unique platform for collaboration among individuals teaching business and human rights worldwide. The Forum has grown to include more than 300 members teaching business and human rights at some 150 institutions in 40 countries.

The Forum’s in-person Teaching Workshops provide an opportunity for teachers to learn from one another and share their experiences in the classroom. This year’s Workshop featured thematic sessions on “Teaching BHR and Environmental Rights,” “Emerging BHR Topics,” and “Current Developments in Tools for Accountability,” and discussions on “Launching a BHR Curriculum” and “Classroom Strategies for Teaching BHR.”

Ewing has taught the course Transnational Business and Human Rights at Columbia University since 2001. In 2019, he launched an advanced seminar – Managing Human Rights –  at Columbia Law School. In the Classroom Strategies session, led by Ewing, he noted that

“We are at the point in the evolution of the discipline in which a comprehensive BHR curriculum would include an introductory course covering core topics, more advanced electives on specific topics, as well as clinical offerings that emphasize experiential learning.”

The Teaching Forum has proven to be a valuable resource promoting BHR education worldwide. More than 140 universities have added BHR courses or content to their curricula in the past decade. The multi-disciplinary subject is now being taught at schools of business, law and policy worldwide. Teaching Forum resources have been especially helpful for professors trying to make the case to their universities for creating new BHR courses, as well as for individuals already teaching the subject seeking to add new topics or teaching materials to their courses.

Ewing also edits the Teaching BHR Handbook (BHRHandbook.org), an online resource for teachers. For more information about the Teaching BHR Forum, visit TeachBHR.org.

Business and Human Rights: Lessons for Managing the Trump Presidency

The Trump administration’s January 27th executive order banning refugees and certain legal immigrants from entering the United States galvanized businesses into action. Companies immediately affected by the ban, like airlines, scrambled to manage the impact on their customers. U.S.-based companies with global operations and diverse workforces, like Coca-Cola, Ford, Goldman Sachs, Google and Nike made forceful public statements opposing the ban. Technology and media companies expressed concern for their employees and operations. Starbucks announced plans to hire 10,000 refugees. Companies like Amazon and Microsoft joined the State of Washington’s successful lawsuit challenging the legality of the immigration ban. Apple and more than 125 other companies signed a brief defending the nationwide restraining order. Even companies that have not addressed the impact of the ban publicly are managing its fallout. From assisting affected employees to fielding inquiries from concerned employees and others, few large enterprises could avoid addressing the federal government’s sudden attempt to close U.S. borders to certain groups of people, targeting refugees and Muslims.

The immigration ban is the first of many ethical dilemmas companies will confront under this administration.

Trump signing order January 27The Trump administration brings unprecedented levels of uncertainty for businesses. The immigration ban is the first of many ethical dilemmas companies will confront under this administration. Trump’s controversial proposals include detaining and deporting all undocumented residents of the United States, including children; and creating a Muslim registry. Corporate boards, CEOs and their advisors are asking themselves how the most extreme Trump proposals would affect their company’s people, customers and communities, and how their company should respond. Companies prefer not to address these questions on the fly.

Well-managed companies anticipate risks to their business and plan accordingly. It is no surpsrise that some of the global brands moving quickly to defend the rights of their employees, customers and communities against harmful executive action on immigration in the United States have been working for years to integrate human rights considerations into their global operations. Nike, Starbucks, Coca-Cola, Google, Ford and Microsoft have all faced human rights challenges in the past – from child labor to complicity with abusive security forces to government censorship – and have drawn management lessons from their mistakes. Companies reacting to the immigration ban are pursuing many strategies used by companies seeking to meet their human rights responsibilities, but without articulating any conceptual framework for their actions.

The business and human rights movement provides a roadmap for managing business risks under Trump. Executives and managers looking for a conceptual framework to organize their responses to Trump’s policies, and road-tested tools to manage them, can apply the corporate responsibility to respect human rights to their United States operations.

The Corporate Responsibility to Respect Human Rights

The business and human rights movement provides a roadmap for managing business risks under Trump. 

UNGPs CoverBusiness and human rights” is a management discipline that has emerged over the past three decades. An international benchmark, the United Nations Guiding Principles on Business and Human Rights (2011) (PDF), reflects the working consensus among business, governments and civil society on what companies can do to meet their corporate responsibility to respect human rights. Specifically, companies must:

  • Avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur; and
  • Seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.

To meet this standard, companies have adopted human rights policies, are conducting due diligence to understand the human rights impacts of their operations and business relationships, and finding ways to prevent, mitigate and remedy adverse human rights impacts.

CablammetchMost attention has focused on the human rights impacts of multinationals outside their home countries, typically in places where corporate activity is connected to human rights violations – like child labor, human trafficking and torture – and where legal accountability for perpetrators and remedies for victims are lacking. The most familiar examples are sweatshops in global apparel supply chains and complicity with abusive security forces by oil and mining companies, but advocates have shined a spotlight on the human rights impacts of companies in sectors ranging from agriculture and consumer products to healthcare and technology.

Business and Human Rights under Trump

The business and human rights landscape in the United States shifted dramatically with the election of Donald Trump.

Dodd FrankThe business and human rights landscape in the United States shifted dramatically with the election of Donald Trump.

The prospect of stronger U.S. government action to protect individuals from corporate misconduct has vanished. One of the final initiatives of the Obama administration in December 2016 was the release of a U.S. National Action Plan on Responsible Business Conduct describing the federal policies and governmental expectations for the conduct of U.S corporations operating abroad, including their responsibility to respect human rights consistent with the UN Guiding Principles. Corporate accountability advocates are rightly concerned that the Trump administration will fail to consistently implement the laws and policies contained in the National Action Plan. The ideology and policy prescriptions of Trump’s advisors and cabinet, abetted by Republicans in Congress, means the likely weakening of protections for consumers, workers, and communities against corporate abuses under federal U.S. law, especially concerning the activities of U.S. companies abroad. Regulations of corporate conduct are more likely to be stripped than strengthened. (One exception may be the issue of tax avoidance, for which companies could face greater scrutiny if Trump’s rhetoric becomes policy.) The modest federal human rights reporting requirements enacted during the past decade, like the conflict mineral provisions of the Dodd-Frank Act, are already targeted for elimination. The Trump regime may even stop prosecuting companies for bribing foreign officials under the Foreign Corrupt Practice Act. Advocates will have to rely on other tools to promote corporate responsibility for human rights impacts.

TIMOTHY A. CLARY/AFP/Getty ImagesAbsent government enforcement, voluntary corporate action has become the backstop for meeting the corporate responsibility to respect human rights in the United States. The policy shift in Washington may be good news for business executives who subscribe to a “profits at all costs” business model. It is deeply troubling, however, for the business leaders, managers and employees who know that business success in the long run (beyond the next earnings cycle) is inextricably tied to meeting the expectations of customers, investors and employees that companies demonstrate corporate responsibility, their so-called “license to operate.” Leading companies, especially those companies that have integrated compliance and human rights standards into the way they do business, are unlikely to make bribery or human rights violations part of their business plans. Unethical executives will be less likely to get caught, but responsible companies will continue to comply with the spirit of the UN Guiding Principles. U.S. federal regulators may be instructed to look the other way when companies do harm, but the corporate responsibility spotlight now shines brighter than ever on business operations in the United States.

In a complete role reversal, business leaders may need to mobilize to hold the U.S. government accountable for protecting human rights and obeying the Constitution. U.S. companies face the real prospect of human rights violations connected to their operations much closer to home. Multinationals operating in the United States will be asked to demonstrate that they are respecting human rights whenever U.S. government policies fall short of international standards, and significantly, if government actions violate the United States Constitution. Businesses will also face pressure, as they are right now regarding the immigration ban, to deploy corporate resources as a check on the U.S. government.

Rights under Threat

The corporate responsibility spotlight now shines brighter than ever on business operations in the United States.

Internationally recognized human rights threatened by proposed actions of the Trump administration include the rights to non-discrimination; to recognition and equality before the law; to protection from arbitrary arrest and from interference with privacy; to personal security; to freedom of opinion and expression; to freedom of thought, conscience and religion; to political participation; and to freedom of association. These rights, defined under international law in the Universal Declaration of Human Rights and international human rights and labor treaties, are the focus of corporate efforts to manage their human rights impacts outside the United States. Other rights that have received less attention by most companies may now come into play, such as prohibitions of “propaganda for war” and “advocacy of national, racial or religious hatred that constitutes incitement to discrimination, hostility or violence” (ICCPR, Article 20), and the right of “ethnic, religious or linguistic minorities” to “enjoy their own culture, to profess and practice their own religions, or to use their own language.” (ICCPR, Article 27). The Trump campaign and administration have demonstrated a willingness to engage in such tactics in the United States, and to target minorities.

The Corporate Responsibility to Respect the U.S. Constitution

U.S. ConstitutionCompanies operating in the United States should consider the U.S. Constitution together with the international human rights instruments to define their potential human rights impacts. Most internationally recognized human rights are protected in some form under United States law at the federal, state and/or local level. The United States Constitution’s Bill of Rights, for example, enumerates rights including the free exercise of religion (First Amendment): the freedoms of speech, of the press, and of assembly (First Amendment); freedom from unreasonable searches and seizures (Fourth Amendment); the right to vote (Fifteenth, Nineteenth, Twenty-Fourth, Twenty-Sixth Amendments); and the rights to citizenship, due process and equal protection of the law (Fourteenth Amendment).

Companies can add “US Constitutional rights” to human rights principles as another lens through which they manage the impacts of their operations in the United States.

Companies can add “US Constitutional rights” to human rights principles as another lens through which they manage the impacts of their operations in the United States. If federal, state or local authorities in the United States engage in systematic discrimination; target individuals or groups for harassment based on national origin or religion; curtail press freedoms; seek to arrest undocumented individuals; separate children from their families; or arbitrarily restrict the right to vote; their actions or omissions are likely to be both unconstitutional and violate international human rights.

Human Rights Impact Management

In the Trump era, companies must exercise due diligence to identify, prevent and mitigate the domestic human rights impacts of their operations and business relationships in the United States.

Due DiligenceCompanies can manage the risks of contributing or being connected to government actions that violate human and Constitutional rights using the same concepts and tools that apply a human rights lens to their non-U.S. operations. In the Trump era, companies must exercise due diligence to identify, prevent and mitigate the domestic human rights impacts of their operations and business relationships in the United States.

If U.S. government action violates rights, companies must take steps not to cause or contribute to any of the human rights impacts, and must be prepared to respond appropriately when any of these scenarios touch their people, products, or partners.

Companies should be prepared to do five things to manage their human rights impacts and meet their responsibilities to respect rights under Trump:

1.  Protect employees.

EmployeesWhen government actions threaten or harm employees, companies must act to support and protect them. The priority for companies in the wake of the immigration ban has been to identify affected employees, ensure their safety, and provide assistance, such as travel, legal and financial support. Providing employees with clear, accurate information about the immigration ban and its impact, so that individuals can take action to protect themselves and their families, is a first step companies can take to meet their responsibility to employees. Employees are the stakeholder group companies can help most directly, but businesses must also consider how to support and protect others connected to their particular business, such as customers, business partners and the communities where they operate.

2.  Avoid complicity.

Rally Against the Immigration Ban (32487627352)Companies must ensure that they are not contributing to rights violations in any way. A practical first step for businesses is to apply international standards for effective human rights due diligence, such as human rights impact assessments, to their corporate operations and business relationships in the United States. Airlines that refuse to allow passage to refugees in the wake of the immigration ban, for example, are at risk of complicity with violations of the right to seek asylum under international law. Particularly important will be corporate relationships with the U.S. government, its agencies and the Trump administration. CEOs serving as advisors to the Trump administration are already attracting extra scrutiny from customers and rights advocates. If the Trump administration were to attempt to detain all undocumented residents of the United Sates or to create a national registry based on religious belief, companies should not provide information nor supply products or services that would foreseeably contribute to rights violations.

Once a company understands how its operations, products or relationships are connected to potential or actual rights violations in the United States, the business must act to cease or prevent its own violation or contribution, and use its leverage to prevent and mitigate violations by others. Exercising leverage may take the form of challenging rights violations or opposing harmful policies. Companies connected to human rights violations committed by government security forces outside the United States have intervened with government authorities seeking to prevent the violations, promoted standard-setting and training initiatives to prevent future violations, and have ended business relationships to ensure they are not connected to violations. U.S. companies are beginning to use their leverage, individually and collectively, to prevent and mitigate the impact of the immigration ban. One can imagine scenarios in which companies refuse to provide goods or services to U.S. government agencies violating rights, or in the case of non-U.S. companies, pull out of the U.S. market altogether if the violations are sufficiently severe.

3.  Mitigate harmful impacts.

NondiscriminationWhen companies are unable to stop harmful policies and actions by others, they can seek to mitigate the negative impact on their employees, customers, business partners and communities. Companies have sought to comply with the spirit of international human rights standards outside the United States by protecting rights “within the factory walls.” Brands sourcing from factories in China, for example, where independent trade unions are banned, have promoted the creation of factory worker councils to bring concerns over working conditions to management. Businesses must consider ways to ensure that their U.S. workplaces provide safe spaces where individual rights are protected. Adopting workplace policies reinforcing a commitment to non-discrimination and prohibiting the harassment of any individual based on national origin or immigration status is one concrete way to meet the corporate responsibility to respect rights.

4.  Challenge rights violations.

Companies must obey the laws wherever they operate, yet the corporate responsibility to respect human rights goes beyond legal compliance. What is lawful may still violate an individual’s rights. Challenges arise for companies when local law or its enforcement conflicts with international standards. Companies must be prepared to challenge government actions that are unconstitutional or violate human rights.

Tech CompaniesIn countries where laws explicitly contradict international human rights standards, companies have found ways to minimize their connection to human rights violations by others. In China, Brazil and elsewhere, for example, foreign technology firms have insisted upon valid judicial orders before acquiescing to demands from government officials to turn over personally identifiable user information for questionable purposes. Companies may face similar situations in the United States if asked by law enforcement authorities to turn over personal information related to their employees’ or customers’ national origin, immigration status or religious beliefs. Businesses can exhaust all available legal processes, as Apple successfully refused to collaborate with the FBI to unlock encrypted iPhones, and challenge the legality of government actions in court, as some companies are now doing in opposition to the immigration ban. Companies can also communicate publicly about government actions that violate rights, using transparency to highlight actual and potential rights violations. Since 2009, for example, Google has published a “Transparency Report” with data on government requests to hand over user data, and how the company responds. Companies will need to be more transparent about what the U.S. government under Trump asks them to do, and the likely consequences of compliance.

5.  Oppose harmful policies.

Google CEOCompanies in diverse sectors are speaking out against the immigration ban. In response to government actions targeting Muslims, immigrants and refugees, companies are directing corporate resources toward organizations defending these groups and their rights. Multinational companies have learned that the corporate responsibility to respect human rights often requires advocating for governments to fulfill their own human rights obligations. Companies have criticized rights violations by governments around the world and opposed harmful government policies privately, publicly and in partnership with others through business associations, coalitions and advocacy networks. More businesses will need to become public rights advocates in the United States. 

Starbucks-refugee-cupCorporate advocacy is most effective when it reinforces company values. U.S. companies in recent years have publicly opposed state laws in the United States that would permit discrimination based on sexual preference. Since the election, U.S. companies have spoken out to let their stakeholders know where they stand on the most extreme Trump proposals.

When engaging in public advocacy on rights issues in the United States, companies will need to overcome any cultural reluctance to speak out publicly. This will seem even riskier because Trump has embraced the “naming and shaming” of individual companies to advance his political agenda. Companies at the center of the business and human rights movement, however, understand that customers, employees and investors often view corporate silence in the face of rights violations as tacit complicity.

Human rights impact management accounts for all of these strategies.

The discipline that accounts for all of these strategies is human rights impact management, an approach that more and more business leaders may now embrace to effectively manage the Trump administration. What is your company doing to meet its corporate responsibility to respect rights in the United States?

Anthony P. Ewing (aewing@logosconsulting.net) is a Senior Advisor at Logos Consulting Group and a Lecturer at Columbia Law School, where he teaches business and human rights.

PRESS RELEASE: New Business and Human Rights Book includes Chapter by Anthony Ewing

New York, NY (April 18, 2016) – Logos Senior Fellow Anthony Ewing surveys corporate human rights reporting requirements worldwide in a chapter he contributed to Business and Human Rights: From Principles to Practice, an interdisciplinary textbook published this month by Routledge.

The number of companies worldwide subject to some form of human rights reporting is increasing as states mandate corporate reporting on non-financial issues. Ewing surveys current forms of mandatory reporting – financial, non-financial and human rights – that require companies to address their human rights policies, due diligence and impacts.

At this point, according to Ewing, the objective of most mandatory reporting is information disclosure: regulations address whether companies should report on their human rights policies, not necessarily how. Current reporting requirements do not prescribe or evaluate what companies are actually doing about human rights impacts connected to their operations. Future disclosure regulations, however, may be more narrowly tailored to prescribe human rights due diligence as well as what companies must do to act on what they learn.

Ewing concluded, “While mandatory human rights reporting has the potential to shape corporate behavior, is raising expectations of greater corporate transparency, and is beginning to produce information about corporate human rights policies and due diligence . . . legally mandated reporting to date is not yet aimed squarely at preventing the adverse human rights impacts of corporate activities.”

Ewing’s corporate responsibility practice at Logos helps companies to engage stakeholders, conduct due diligence, and implement policies and programs that effectively manage the risk of adverse human rights impacts. He has taught corporate responsibility at Columbia University since 2001 and is a member of the United Nations Global Compact Human Rights and Labour Working Group.

Anthony Ewing Leads Teaching Workshop

Logos Senior Advisor Anthony Ewing recently co-led the Fifth Annual Teaching Business and Human Rights Workshop at Columbia University.

Anthony is a co-founder, with Joanne Bauer of Columbia University’s Institute for the Study of Human Rights, of the Teaching Business and Human Rights Forum, a unique platform for collaboration among individuals teaching business and human rights worldwide. As demand for university and professional business and human rights education grows worldwide, individuals teaching the subject face common challenges and opportunities. The Forum seeks to promote and strengthen business and human rights education by connecting individuals teaching the subject in different faculties and geographies. Since 2001, Anthony has taught the seminar “Transnational Business and Human Rights” at Columbia University, where he is a Lecturer in Law.

The Forum grew out of an inaugural workshop in May 2011 at Columbia University that convened twenty professors from the United States and the United Kingdom to share teaching strategies and resources. The Forum has since grown to include more than 200 members teaching business and human rights at more than 115 institutions in 26 countries on five continents.

This year’s Workshop, on May 18-19th, brought together 35 individuals teaching business and human rights at schools of law, business and international affairs worldwide, including professors from Canada, China, Denmark, Turkey, the United Kingdom and the United States. Topics of discussion included teaching non-judicial grievance mechanisms, recent national policy and legislative developments, and key issues in emerging economies like China.

Mandatory Human Rights Reporting

by Anthony Ewing | Bio | Posts
8 Apr 2015

Mandatory human rights reporting is coming soon to a jurisdiction near you. Is your company ready?

Large European companies need to review their human rights policies and the risks of human rights impacts linked to their operations over the next two years. The catalyst is a European Parliament Directive adopted in October that requires companies to report annually on non-financial issues, beginning in 2017. Under the Directive, large, publicly listed European companies must report annually on how they are meeting the corporate responsibility to respect human rights, as well as environmental, social and employee-related, and anti-corruption and bribery matters. The Directive mandates corporate disclosure of human rights due diligence and consideration of human rights risks, consistent with the UN Guiding Principles on Business and Human Rights. Non-financial reports must include a “description of the policies pursued” relating to respect for human rights, including “due diligence processes implemented;” “the outcome of those policies;” principal human rights risks linked to the company’s operations, including its “business relationships, products or services” likely to cause adverse impacts; and relevant non-financial performance indicators. While the regulation is of the “comply or explain” variety – companies must disclose existing policies or explain why they have no policies on these matters – and carries no penalty for noncompliance, the twenty-eight member states of the European Union will implement the Directive through national legislation, in which each country is free to set more stringent disclosure requirements and possible penalties.

The European Non-Financial Reporting Directive is part of a broader trend of mandatory reporting that seeks to promote corporate respect for human rights through greater corporate transparency. Like financial reporting that provides material information for investors, human rights reporting informs consumers, investors and policymakers about the human rights impacts of business operations. Advocacy organizations, like those in the European Coalition of Corporate Justice, and investors, like those in the sustainable and responsible investment network Eurosif, pushed for adoption of the Directive. In the United States, mandatory corporate human rights reporting is emerging around specific issues, such as conflict minerals, forced labor and human trafficking, and specific geographies, such as Central Africa and Burma. No non-financial reporting regulation to date in the United States applies as broadly as the European Directive, however, which is estimated to cover some 6,000 European companies.

The Directive and similar regulations will force many companies to address their human rights impacts for the first time. How should executives prepare? Companies can take a number of steps to meet escalating expectations of greater transparency about corporate human rights impacts:

  • Conduct human rights due diligence.

Companies that understand the human rights impacts of their operations and business relationships are in a better position to prevent or mitigate those risks. Conducting a human rights impact assessment can reveal actual and potential human rights risks and allow a company to prioritize actions to address the most severe risks. Nestlé, for example, based on information from human rights impact assessments (PDF), has taken steps to reduce excessive working hours, improve road safety training for its drivers, add human rights principles to its contracts with security providers, and develop an external grievance mechanism.

  • Integrate human rights considerations into existing policies and procedures.

A growing number of companies have made explicit commitments to respect human rights in corporate codes of conduct, supplier standards and corporate responsibility reports. Adopting a human rights policy is an important step. Companies are also finding ways to integrate human rights considerations into existing management systems, which can be easier than creating stand-alone policies. Even without “human rights” language, corporate policies and procedures can relate to a company’s human rights impacts. Executives should review their employment, security and compliance policies, for example, to identify ways that they can address the human rights impacts of the company’s operations and business relationships.

  • Become familiar with human rights reporting frameworks.

Meaningful human rights reporting accounts for how a company addresses its human rights impacts, especially risks of severe human rights impacts, and serves as a basis to measure future performance. Companies are developing key performance indicators relevant for their businesses and the particular human rights risks they face. Almost all of the world’s 250 largest companies are publishing non-financial reports. More than 7,000 companies have reported non-financial issues consistent with the Global Reporting Initiative Sustainability Reporting Guidelines, which include human rights indicators. The recently launched Reporting and Assurance Frameworks Initiative (RAFI), piloted by the European multinationals Unilever, Ericsson, Nestlé and H&M, can help companies report on their human rights performance in line with the UN Guiding Principles. The European Commission is expected to issue non-binding guidelines for reporting non-financial information under the European Directive.

While European companies now have a regulatory deadline to start reporting, all companies would do well to better understand their non-financial impacts and how to manage them. Whether mandatory or not, non-financial and human rights reporting is an emerging business practice and stakeholder expectation of leading companies with the potential to influence your company’s reputation and bottom line for years to come.

Putting Business and Human Rights in Context

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Anthony Ewing reviews Corporate Responsibility for Human Rights Impacts: New Expectations and Paradigms (American Bar Association, 2014) for Lawyers for Better Business, an online publication and network in the United Kingdom.

Three years on from the unanimous endorsement by the UN Human Rights Council of the Guiding Principles on Business and Human Rights, as stakeholders struggle to understand what the “corporate responsibility to respect human rights” means in practice and what states can do to protect against human rights abuse caused by companies, key questions framing the business and human rights discussion include:

  • How international law applies to state regulation of corporate conduct and to corporate responsibilities for human rights impacts.
  • Whether mandatory or voluntary measures are most likely to prevent and address adverse human rights impacts caused by, or connected to, business operations.
  • Which litigation and regulation strategies offer the best prospect of justice for victims of human rights abuse.

Corporate Responsibility for Human Rights Impacts is a timely contribution from the American Bar Association that illuminates these issues, surveys the current legal landscape surrounding business and human rights, and offers indications of where the field may be headed.

(Download PDF)

Ten Things Executives Need to Know (and Do) About Human Rights

An expanded version of this post, “UN Human Rights Framework: What executives need to know and do about human rights, Part I and Part II”  appears on the website of Ethical Corporation (UK).

Human rights have been a concern for some companies since the anti-Apartheid divestment campaigns of the 1980s, but there has been no broad-based uptake of human rights as a business discipline. Relatively few companies have human rights in their corporate vocabulary.

This may be the year human rights go mainstream, thanks, largely, to the work of John Ruggie, serving for the past six years as the UN Secretary General’s Special Representative on Business and Human Rights.

Ruggie has forged a working consensus among companies, governments and advocates that human rights are not just a business concern, but that both governments and companies have human rights responsibilities. The Ruggie, or UN, Framework – “Protect, Respect and Remedy” – asserts that governments must protect against abuses by companies; companies must respect human rights; and victims must have access to remedies.

“Protect, respect and remedy” is a phrase that many executives will hear and be asked to explain over the next twelve months. This Spring, the UN Human Rights Council is expected to endorse Guiding Principles for both governments and companies to meet their responsibilities under the Framework. For the first time, companies have a clear roadmap for making human rights part of their compliance and corporate responsibility efforts. If you are, or advise, one of those executives, there are ten things you need to know (and do) about human rights: Read more