Checking in on Corporate Human Rights Reporting

Commentary, 31 May 2010

By Elizabeth Umlas, Independent researcher and consultant

At the Global Reporting Initiative’s (GRI) biennial conference last week, one of the sessions was dedicated to “the Future of Human Rights Reporting”. The panelists, drawn from diverse sectors, covered a wide range of issues.

These included the expectations of investors, civil society and government regarding corporate human rights reporting; the mandate of the UN Special Representative on Business and Human Rights (SRSG) and the implications of his framework for human rights reporting; and the results of a recent study [32 pages, 1.77mb] undertaken as part of the initiative Human Rights: A Call to Action, which explores current trends in corporate human rights reporting. The packed room and lively discussion following the presentations were indicative of the rising level of interest in this area.

So where are we today on corporate human rights reporting? In a nutshell, most companies do not report at all on human rights, and many that do report on human rights do so selectively.

But the vast majority of companies still need to move past the starting line, and even “leader” companies in this area have their work cut out to produce reports that fulfill principles such as those outlined more generally for sustainability reporting in the Global Reporting Initiative (GRI) G3 Guidelines.

These include balance (not simply reporting on the positive); materiality (covering topics that reflect a company’s significant impacts, in this case on the human rights of its stakeholders); and sustainability context (not merely reporting narrowly on performance numbers but looking more broadly at how one’s operations affect the larger picture).

There is a growing number of relevant tools, including ones that outline clearly what human rights means in a business context, that show how various companies have tried to integrate human rights into their everyday operations, and that aim specifically at introducing newcomers to reporting. The way forward will probably entail simultaneously helping these beginners to learn quickly from what is already out there while challenging current reporters to do a much better job tackling the toughest questions. We could use a good debate on some of these. Here are a few things that call out for candid discussion:

Root causes: for years, human rights groups have pointed out that there are structural or “root” causes to corporations’ involvement in persistent human rights abuses, and that companies themselves have to address these. Examples include purchasing practices and their impact on factory shop floor conditions, and corporate lobbying and its impact on drug pricing and access to medicines.

GRI’s G3 principle on sustainability context is one way to get at this, and a handful of companies have begun to review root causes in relation to their potential and actual impacts on society. It took years to get to this point, but with this notion now more firmly on the radar, how can we get all companies to start at the root cause level when undertaking reporting?

Complicity and relationship reporting: knowing your relationships is an essential part of corporate due diligence on human rights, according to the SRSG’s “Protect, Respect & Remedy” framework. Reporting is a key element of due diligence, too. Complicity, by definition, involves a company’s relationship with others who commit human rights abuses.

Recent extensive work on corporate complicity has brought further clarity and useful debate on the issue. But disclosure about relationships, especially in circumstances in which there might be (or are) human rights abuses, is much less far along. How should companies report on relationships and potential or actual complicity, including in situations where there is a legitimate concern that such disclosure could endanger parties on the ground? What is reasonable to expect a company to report with regard to complicity? In what forum should this discussion take place?

GRI indicators on human rights-related screening of investment agreements and suppliers and contractors are part of the story, but as the issue of complicity is probed further, there must also be discussion on what the implications are for disclosure.

State-mandated reporting: The SRSG’s latest report notes that state-mandated sustainability reporting requirements form one of several policy tools that could enhance state duty to protect human rights. But he notes that among existing examples, most state-required reporting does not refer explicitly to human rights.

Some states have begun to offer guidance on reporting on certain issues (e.g. the UK’s Combined Code on Corporate Governance; the US Securities and Exchange Commission’s recent guidance on climate change reporting). To what extent can these provide models for state-offered guidance on human rights reporting? How, if at all, has state-mandated sustainability reporting affected the quality and extent of human rights reporting per se? If not at all, how can this reporting be taken beyond its presently very general level?

In its concluding remarks, the panel at the GRI conference noted that, despite the challenges of human rights reporting, silence in reaction to known controversies or exposés on human rights impacts is not an option. In addition to being a key element of corporate accountability, reporting is an important part of the process through which companies can identify and eventually mitigate or prevent negative impacts on human rights, as well as a path into two-way dialogue with stakeholders on difficult questions. The long-term engagement with stakeholders that goes into robust reporting is also an integral part of how companies face human rights challenges generally. While individual companies will have to grapple with these questions as they face rising external demands for transparency and candor, other stakeholders can and must be involved in defining the parameters of good human rights reporting.

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