The UN Guiding Principles on Business and Human Rights require companies to embed their commitment to fulfill their responsibilities to respect human rights in the operational policies and procedures that apply throughout the business enterprise. Embedding has been described as creating the right “macro-level” environment for the company’s human rights policies to be effective in practice through training, performance, and accountability structures, the tone at the top from the board and senior management, and a sense of shared responsibility for meeting the company’s human rights commitments. There is no universal standard for embedding human rights in a company’s operations and organizational culture. However, there does appear to be a consensus that companies should begin the process with the full-scale assessment of human rights impacts, relying on both internal resources and external assistance, and then use the information collected during the assessment process to develop a human rights strategy with commitments and performance targets. Subsequent steps would typically include developing processes and procedures to integrate human rights throughout the organization, including extensive training, and monitoring and measuring progress toward the performance targets; setting up a framework for reporting on human rights activities and performance and other communications to stakeholders relating to human rights; and ensuring that the initiatives relating to human rights are regularly reviewed and that appropriate changes are made to continuously improve performance.
Governance and Management
Research has found that corporate social responsibility (“CSR”) initiatives are most effective when CSR principles have been integrated into the company’s governance and management processes and its organizational culture. CSR governance begins at the top of the organization with the board of directors, which has been charged by emerging corporate governance guidelines and stakeholder expectations with responsibility for oversight of the environmental and social impacts of the company’s operations. The directors and members of the senior executive team must proactively respond to the serious challenges confronting business, and society in general, resulting from neglect of important environmental and social issues. The UN Guiding Principles explicitly call on businesses to demonstrate the commitment of senior management to the due diligence process from the very beginning. One of the first steps that should be taken is to design and implement appropriate high-level governance arrangements that have been publicly endorsed by the board of directors and senior management.
CSR and human rights are like any other important management initiatives and require proactive leadership from the top of the organization. It is clear that the “tone at the top” is an important factor in the success or failure of any effort to embed and integrate human rights into a company’s operations and business relationships. The directors and senior managers of the company are uniquely positioned to act as internal champions of this process, and they should proactively communicate with everyone in the organization on a daily basis about the steps they believe are necessary to effectively manage the company’s human rights impacts. The directors and senior managers must also commit to investing the time and effort necessary to explain the company’s human rights initiatives to customers and other stakeholders and must develop and implement metrics for tracking and reporting progress. While social responsibility certainly extends “beyond the law,” directors and officers must be mindful of their fiduciary duties and understand how laws, regulations, and standard contract provisions are rapidly evolving to incorporate standards for respecting human rights.
Even in large organizations, concern for human rights due diligence may begin with just one person or a small group of persons with a passion for the subject. However, like any other important project, due diligence requires project management skills, structures and widespread participation and support. Companies should form a human rights steering or working group, either as a totally new entity or perhaps by extending the charter of an existing group working on related issues such as ethics. The working group should include senior managers from all relevant areas of the organization including social , legal, environmental and/or sustainability, human resources, worker/trade union representatives, operations/production, compliance and ethics, procurement (including supply chain and business relationships), sales and marketing, community development, external affairs/reporting, risk management, mergers and acquisitions, and audit. It is important for the working group to be cross-functional in order to avoid a “siloed” approach and ensure that input is solicited and obtained from stakeholders across all of the levels and functions within the organization. The specific composition of the working group will depend on the activities and size of the company and the specific risks it faces.
One important issue to consider when attempting to organize and manage a cross-functional initiative is ensuring that each of the functions and departments involved in the process understands why the company is undertaking human rights due diligence, their specific role in the process, how due diligence will impact their day-to-day activities, and how their performance will be assessed by senior management and others throughout the organization. Each function or department will have its own set of salient human rights issues based on its specific activities (e.g., human resources will be concerned with industrial relations and working conditions while the information technology group will be focused on privacy). Leaders of a function or department may be concerned about the effect that human rights due diligence will have on their limited resources and the changes that might have to be made in historical practices in order to accommodate the requirements of due diligence. While critics of corporate efforts to act responsibly complain when it appears that a decision to “do the right thing” turns on an attractive business case, the reality is that many managers will be more motivated when they are shown how addressing human rights risks will improve their traditional financial-based bottom line. However, the responsibility to carry out human rights due diligence applies regardless of any business case argument.
Once the assessment of the company’s human rights impacts has been completed and the company has identified and prioritized its own unique set of salient human rights issues and actions, attention needs to turn to:
- developing a human rights strategy, a process which includes building support among the directors, senior management and employees;
- researching what others are doing, and assessing the value of recognized voluntary human rights initiatives and instruments;
- preparing a matrix of proposed actions; developing ideas for proceeding and the business case for them; and
- deciding on direction, approach, boundaries, and focus areas.
As with any other strategic initiative, human rights activities must be institutionalized in the organization in order to be sustainable and thus it is essential that respect for human rights be seen to be inherent in the organizational culture and adopted as part of the company’s long term strategy and decision-making rather than being seen as an “add on” that can be discarded when circumstances change (e.g., when an economic downturn creates pressures to divert resources away from sustainability initiatives). Like any other strategy, a human rights strategy reflects decisions among multiple potential projects and provides a path for implementation, assigns roles and responsibilities throughout the organization, establishes timetables for completion of various tasks, and incorporates metrics to measure progress and performance. The strategy should also be aligned with the company’s core values and standards.
The strategy itself should include a mission statement, goals and commitments, policies and procedures, key performance indicators, a clear allocation of responsibilities for the implementation of the strategy, procedures for reporting on progress, and regular evaluation of the strategy. As the strategy moves toward finalization, it should circulated to key stakeholders for their input, a step that not only improves the strategy but creates a sense of participation among stakeholders that will help to ultimately garner their support. Once the company is actively engaged in implementing the strategy, it is essential to measure and assure performance, engage stakeholders, and report on performance, both internally and externally. The human rights working group described elsewhere in this article must evaluate performance, identify opportunities for improvement, and engage with stakeholders on implementing changes.
Once the human rights strategy has been completed, it is time to move forward with developing and implementing human rights commitments. Developing those commitments involves doing a scan of existing commitments relating to human rights issues; holding discussions with major stakeholders; creating a working group to develop the commitments; preparing a preliminary draft of the commitments; and consulting with the affected stakeholders. In order to implement the commitments, steps must be taken to develop an integrated decision-making structure; prepare and implement a strategic plan; set measurable targets and identify performance measures; engage employees and others to whom the commitments apply; design and conduct training; establish mechanisms for addressing problematic behavior; create internal and external communications plans; and make commitments public.
Commitments should address human rights-related targets for each of the company’s key stakeholders and institutionalize associated processes such as stakeholder engagement, collaborations with value chain partners, and sustainability reporting and communications. The commitments should be closely aligned to the list of salient human rights issues created earlier in the assessment and implementation process. Alignment makes it easier for the company to focus its attention on a relatively short list of commitments that are easily to describe, such as the following:
- Employee health and safety: Ensuring that employees work in a safe environment which meets or exceeds relevant regulatory expectations, addresses health and safety concerns as they arise, and mitigates opportunities for reoccurrence of incidents.
- Product quality and safety to customers: Choosing materials from quality sources, complying with current “good manufacturing practice,” and delivering fit-for-purpose, safe products to customers that adhere to or exceed strict regulatory standards in all jurisdictions served by the company.
- Corruption and bribery: Business must be conducted with transparency and free from unethical persuasion in every aspect of the company’s business from identifying product sources, through development of new products, transactions with regulatory bodies, and sale to customers.
- Ethical purchasing and human rights in the supply chain: Responsibility to partners to ensure our product line is free from human rights concerns such as forced labor and trafficking, unsafe labor standards, and unfair treatment.
- Compliance: Responsibility to drive compliance with legal and regulatory requirements applicable to our global business including training programs, continuous improvement, and striving for best practices.
- Resource use and waste management: Reducing the environmental impact of the company’s operational activities by managing energy usage during manufacture and logistics, water usage, and waste as a by-product of manufacture.
- Employee development: Offering employees the opportunity to develop their professional skills mentoring, technical training, and continuing education programs.
- Making maximum use of new technology: Developing and acquiring new technologies to improve productivity and operational efficiency in an environmentally and socially responsible manner.
Human rights commitments are generally formalized in a separate commitment statement that is made available to all stakeholders for viewing on the company’s website along with other documents and instruments pertaining to the company’s governance and operational guidelines. Statements regarding human rights commitments are accompanied by principles and policies, including a code of corporate conduct that covers legal compliance, financial responsibility, fair competition, prohibitions on bribery and corruption, conflicts of interest, customer relationships, supply chain relationships, workplace conditions and employee wellbeing, environmental responsibility, and community relations; environmental policies; human resources policies; and principles of responsible purchasing.
Once the human rights commitments have been selected, the company needs to define the target level for its performance with respect to each of the commitments. When setting the targets, consideration should be given to both effectively managing material risks to the business and rights holders and meeting expectations of key stakeholders. The initial target level depends on the current status of the company’s activities, and companies should expect to periodically review and, as appropriate, reset the targets. At a minimum, companies need to comply with all laws and regulations applicable to their business operations. However, a serious effort goes beyond minimum compliance to include both surpassing the requirements of laws and regulations and making and keeping voluntary commitments selected by the company that are related to the company’s key human rights impacts. The next level is meeting the expectations of markets and stakeholders, which inevitably exceeds legal and regulatory compliance and can be understood only through a process of extensive engagement with investors and other key stakeholders. Finally, some companies may progress to the point where they become recognized as being among the leaders of best practices with respect to human rights due diligence.
Processes and Procedures
Companies need to establish processes and procedures to support the implementation of their human rights strategies that span the full scope of their business activities and functions. Among other things, the company needs to implement processes for identifying its human rights-related risks and opportunities, such as the matrix approach described above, and understanding business, cultural, economic, and political conditions in each of the geographic locations in which it is currently operating or intends to operate in the future. It is particularly important for companies to establish control systems for managing the human rights-related aspects of their business. Common approaches include incorporating social and environmental criteria into every assessment of a new project; a supplier qualification process that considers compliance criteria along with other factors such as cost, speed, quality, and innovation; mandatory reviews of prospective customers’ human rights record and processes; codes of conduct; checklists and instructions for business operations in sensitive areas including scheduled and unscheduled inspections; supplier guidelines, including requirements for independent audits and certification in accordance with internationally-recognized standards and sector-specific initiatives; and mandatory requirements relating to human rights due diligence in standard contracts for common business relationships.
Communications and Reporting
Companies should be prepared to communicate with stakeholders regarding their human rights strategies, policies, procedures, and performance using a variety of internal and external communications and reporting tools, including codes of conduct, the company’s website, company publications, annual reports, and notice boards. Information should be presented in local languages and stakeholders, particularly employees, should be able to understand the performance indicators that the company is using to track its human rights initiatives in order to influence behaviors and guide decision-making during day-to-day operational activities. Information should be readily accessible and should be presented in a format that can be readily understood by all affected stakeholders. Planning for communications should also include developing and publicizing tools for stakeholders to safely pose questions and raise concerns regarding the company’s human rights performance. Companies should engage regularly with key stakeholders to discuss issues relating to the relationship between them including dissemination of information and the effectiveness of consultation processes. Formal reporting, either in a free-standing document or as part of the company’s annual report, should not only conform to applicable legal requirements but also use an effective reporting format that addresses the company’s key stakeholders and provides them with a full and transparent picture of the impact of the company’s operations on human rights and the steps that the company is taking to prevent adverse impacts.
Reviewing and Improving
Effective performance relating to social responsibility and respect for human rights depends on commitment, careful oversight, evaluation, and review of the activities undertaken, progress made, achievement of identified objectives, resources used, and other aspects of the company’s efforts. Regular monitoring and review of human rights performance ensures that the company understands whether its strategies and programs are proceeding as intended and allows the company to identify problems and issues and to take remedial actions including changes in programs and shifts in the human rights issues that are given the greatest attention. While many of the monitoring and review activities are internal—tracking metrics on progress toward human rights-related goals tied to operational matters—consideration must also be given to the opinions and insights available from external stakeholders. Companies must continuously review changing conditions or expectations, legal or regulatory developments affecting social responsibility, and new opportunities for enhancing their efforts on social responsibility. One of the most important tools with respect to review and improvement is the grievance mechanisms that should be established as part of the human rights due diligence process, mechanisms which not only provide stakeholders with an easily accessible means for providing feedback on the company’s human rights performance but also enable the company to identify situations that require additional attention and perhaps changes in policies and practices.
This article is an excerpt from the author’s new book, Business and Human Rights: Advising Clients on Respecting and Fulfilling Human Rights, published by the ABA Section of Business Law. More information on the book is available here.
 Alan S. Gutterman is a business counselor and prolific author of practical guidance and tools for legal and financial professionals, managers, entrepreneurs and investors on topics including sustainable entrepreneurship, leadership and management, business law and transactions, international law and business and technology management. He is the co-editor and contributing author of several books published by the ABA Business Law Section including The Lawyer’s Corporate Social Responsibility Deskbook, Emerging Companies Guide (3rd Edition) and Business and Human Rights: A Practitioner’s Guide for Legal Professionals. More information about Alan and his work is available at his personal website at www.alangutterman.com.
 Doing business with respect for human rights: A guidance tool for companies (Global Compact Network Netherlands, Oxfam, and Shift, 2016), 40.
 For discussion of an effective enterprise-wide culture relating to respect for human rights, including schematic diagrams attempting to capture the spectrum of diverse corporate cultures in this context, see S. Maslow, Business and Ethical Challenges: Human Rights Requirements, Due Diligence, Remediation and Brand Protection (Business Law Today, November 4, 2019). The article suggests the following spectrum of corporate cultures: “good global citizen” (active anti-human rights violations policies and procedures), “rule follower” (some recognition of applicable law); “two-facer” (policies only); “eyes wide shut” (plausible deniability); “negligent actor” (“benign” neglect); and “bad actor” (endorsement). Each of these cultures has a unique approach to managing involvement in human rights harm and preventing violations.
 Background Note: “Corporate human rights due diligence—Identifying and leveraging emerging practice” (UN Working Group on Business and Human Rights, April 2018), 4-5.
 The report of the Working Group on the issue of human rights and transnational corporations and other business enterprises (UN Working Group on Business and Human Rights, July 16, 2018), 6.
 P. Hohnen (Author) and J. Potts (Editor), Corporate Social Responsibility: An Implementation Guide for Business (Winnipeg CAN: International Institute for Sustainable Development, 2007), 68.
 F. Maon, V. Swaen and A. Lindgreen, Mainstreaming the Corporate Responsibility Agenda: A Change Model Grounded in Theory and Practice (IAG- Louvain School of Management Working Paper, 2008), 37.
 CSR Self-Assessment Handbook for Companies (Vilnius, Lithuania: UAB “Baltijos kopija” (Financed by the European Union and United Nations Development Programme), 2010), 13-14.
 Based on Mayne Pharma Group Limited Sustainability Report 2016, 12, https://www.maynepharma.com/media/1896/myx_2016_sustainability_report.pdf.
 Finnish Textile & Fashion Corporate Responsibility Manual (Helsinki: Finnish Textile & Fashion, 2016), 12.
 A Guide for Integrating Human Rights into Business Management (Business Leaders Initiative on Human Rights, United Global Compact and Office of the High Commissioner for Human Rights, 2004), 24-27. The Guide encouraged companies to tap into the resources of sector-specific initiatives with expertise in human rights codes and procedures including the Ethical Trading Initiative, Fair Labor Association, Social Accountability 8000, the Voluntary Principles on Security and Human Rights, the Extractive Industries Transparency Initiative, the Equator Principles and the Electronic Industry Code of Conduct. Id. at 27.
 Id. at 28-30, 36.
 ISO 26000 Guidance on Social Responsibility (Geneva: International Organization for Standardization, 2010), 81.