Human rights

The responsibility to respect human rights applies to all companies. They may impact human rights in several ways through their business operations and supply chains, their community interactions and the marketing and use of their products and services. Respecting human rights is an inherent part of good business practice and risk management. We expect companies to integrate human rights into their policies, corporate strategy, risk management and reporting.

The fund holds a diversified portfolio across sectors and markets. The long-term legitimacy of those sectors and markets depends, among other things, on operations, products and services that are ethically acceptable.

Companies’ operations impact on their employees, contract workers, workers in supply chains, customers, communities and the environment around their operations. End-users of products or services may also be affected by companies. It is broadly accepted that companies have a responsibility to respect human rights, including in supply chains and other business relationships. Respecting human rights is, more generally, part of good business practice and risk management.

Under international law, the legal obligation to protect human rights rests with governments. Although international human rights treaties do not impose direct legal obligations on business enterprises, they nevertheless constitute important standards for companies. The UN Guiding Principles on Business and Human Rights refer to the responsibility of companies to respect the human rights expressed in the International Bill of Human Rights[1] and the core ILO conventions[2] as a minimum. These encompass economic, social and cultural rights, civil and political rights, and fundamental principles and rights at work.[3]

The Guiding Principles establish a normative starting point for companies’ strategies with respect to human rights. The Guiding Principles moreover provide a reference point for companies in understanding what human rights are, how their own activities and business relationships may affect them, and how to ensure that they prevent or mitigate the risk of adverse impacts on human rights.[4] 

The responsibility to respect human rights applies to all companies. It is the duty of companies themselves to decide how and to what extent the Guiding Principles and other relevant principles and guidelines apply to their operations. In practice, certain human rights will probably be more at risk of being impacted than others, depending on sector, geographical area and other circumstances.

Our expectations are especially relevant for companies with direct operations, supply chains or other business relationships in high-risk sectors, high-risk geographical areas or otherwise high-risk operational environments. In line with the Guiding Principles, we encourage companies to identify their salient human rights issues, i.e. the human rights that may be at risk of the most severe negative impact through a company’s business operations, including its supply chains and other business relationships, as well as through the use of its products and services.

We acknowledge that information on human rights can be sensitive, both for companies and for affected stakeholders. We nevertheless encourage companies to be transparent, as far as possible, about the dilemmas they face and priorities they set in their efforts to respect human rights. Principles and practices for companies’ human rights reporting have been developed over time.[5] We support the ongoing development of good practices. Appropriate and timely reporting and measurable data are important in this regard. For selected companies, we use such information to assess their human rights risk exposure, management and performance.

A. Integrate human rights into policies and strategy​

  • Companies should understand the business implications of human rights issues and integrate findings into their strategic business planning.
  • Companies should make a public commitment regarding the respect of human rights, including in their supply chains and other business relationships.
  • Companies should adopt strategies and policies based on emerging industry standards and good practices addressing human rights. Strategies and policies should be appropriate to company size, sector, operational context, ownership and structure.
  • Companies should regularly consider whether their organisational structure, incentive systems, training programmes and wider company culture integrate sustainable business practices appropriately. Employees and contractors should be engaged in these efforts and made aware of company policies and practices.
  • Companies should consider putting in place a mechanism for third-party expert input into their human rights strategies and policies. This should not replace appropriate internal processes, roles and responsibilities.

B. Integrate salient human rights into risk management

  • Companies should conduct ongoing human rights due diligence, based on the perspective of those who may be negatively impacted. They should strive to identify actual and potential negative impacts on relevant human rights in relation to all aspects of a business operation.
  • Human rights due diligence processes should be guided by the severity of the risks of adverse human rights impacts and practical considerations such as company size and the nature and context of its operations.
  • Company policies should include measures to address salient[6] human rights risks, including, where appropriate, through cessation, prevention, mitigation and remediation of adverse human rights impacts.[7]
  • Companies should, where relevant, define qualitative and quantitative indicators that enable monitoring and tracking of abuses of human rights. The performance of preventive and corrective actions should be tracked.
  • Companies should carry out relevant impact and risk assessments before, for example, making significant investments in new business activities, agreeing mergers and acquisitions, entering new countries, regions or locations, and establishing new business relationships.
  • Companies should have an adequate supply chain management system, including policies for detecting and preventing supply chain human rights abuses, monitoring systems, contractual clauses, incentives and corrective instruments, such as education and training.

C. Report on salient human rights

  • Companies should publicly disclose their human rights strategies, policies and processes and report on their implementation of the UN Guiding Principles on Business and Human Rights and other relevant international standards.
  • Companies should, for example, disclose human rights action plans, governance structures, operational procedures and risk and impact assessments, as well as information about stakeholder relationships and remediation processes, where appropriate.
  • Companies should ensure that information is communicated in a relevant and accessible manner, which demonstrates explicit and active commitment from senior management.
  • Companies should identify, monitor and report on the status of relevant topics. Performance reporting should, where appropriate, use metrics that enable year-on-year comparison in line with applicable internationally accepted reporting standards or initiatives.
  • Companies should disclose information at the appropriate level of detail on their activities in high-risk sectors and geographical areas or otherwise high-risk operational environments and, as far as possible, be open about dilemmas they face and priorities they set.
  • Where appropriate, companies should report the above information for supply chains and other business relationships, taking a full value-chain perspective.

D. Engage transparently and responsibly on human rights, including through grievance mechanisms

  • Companies should, as appropriate to their size and the nature and context of their operations, consult and engage with their workers and their representatives, health and safety representatives, potentially affected groups and other relevant stakeholders on human rights issues.
  • Companies should establish or participate in effective and accessible operational-level grievance mechanisms for individuals and communities that may be adversely impacted by their operations.
  • Companies should, where relevant, have policies or guidelines for engaging constructively with policy makers and regulators on human rights and be transparent about those policies and guidelines.

Footnotes

[1]   The Universal Declaration of Human Rights of 1948 and the two Covenants on Economic, Social and Cultural Rights and Civil and Political Rights of 1966.

[2]   The core ILO conventions pertaining to forced labour, child labour, freedom of association and collective bargaining, and discrimination.

[3]   The Guiding Principles state that other standards dealing with specific or collective rights may also apply to business enterprises, depending on the context. A comprehensive list of rights and how they might be relevant to business enterprises can be found at: www.ungpreporting.org/resources/how-businesses-impact-human-rights/.

[4]   The concept of human rights due diligence concerns risk management processes to identify, prevent, mitigate and account for how a company addresses its adverse human rights impacts. It will vary in complexity with the size of the company, the risk of severe human rights impacts, and the context of its operations.

[5]   The UNGP Reporting Framework, the GRI Standards and the SASB Standards are examples. In some jurisdictions, companies are also required to report on human rights issues and supply chain due diligence.

[6]   For an explanation of saliency, see http://www.ungpreporting.org/key-concepts/salient-human-rights-issues/

[7]   As laid out in the Guiding Principles, appropriate action will vary according to whether a company causes or contributes to an adverse impact, or is involved solely because the impact is directly linked to its operations, products or services by a business relationship. The extent of a company’s leverage in addressing the adverse impact may also be relevant.

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Last saved: 02/03/2020

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