Corporate respect for human rights in the Chinese context

RBC ForumKatryn Wright, Programme Director, Outreach and Capacity Building, Global Business Initiative on Human Rights (GBI). The views expressed here are the author’s and do not represent the views of the GBI member companies or partner organisations.

With China’s growing importance in the global economy, increasing overseas foreign direct investment, and very real human rights impacts, Chinese and international companies face greater imperatives at home and abroad to address human rights. In China and internationally, there are greater pressures and incentives to address business and human rights – from rights-holders, governments, business partners, investors, consumers and civil society. In this context, Chinese approaches to responsible business will be discussed as part of the agenda of the OECD’s 3rd Global Forum on Responsible Business Conduct in Paris on the 18th and 19th June 2015.

How are Chinese policymakers and business leaders responding to increasing pressures to prevent business-related human rights harm? And what is needed to support business to live up to standards and prevent adverse human rights impacts?

The baseline international normative standards on business and human rights are clearly articulated in the UN Guiding Principles on Business on Human Rights (UNGPs) which clarify the respective duties and responsibilities of State and business actors. The UNGPs outline that the corporate responsibility to respect human rights entails developing a policy commitment, implementing human rights due diligence processes, and providing or cooperating in remedy when the business causes or contributes to human rights abuse. Increasingly the UNGPs are being integrated into other international standards, including the human rights chapter of the OECD Guidelines for Multinational Enterprises. The Chinese government expressed its appreciation and support for the UNGPs at the UN Human Rights Council in 2011.

Recent years have also seen a shift in Chinese government policy in relation to business and human rights and corporate social responsibility. The China Chamber of Commerce of Metals Minerals and Chemicals Importers & Exporters (CCCMC) Guidelines for Social Responsibility in Outbound Mining Investment call for companies to ‘observe the UN Guiding Principles on Business and Human Rights during the entire life-cycle of the mining project’. Other policy developments include: the incorporation of human rights in social responsibility guidelines for the electronics industry that refer to the UNGPs; the mandating of social impact assessments for large footprint projects; and the drafting of a law on public participation in environmental protection and impact assessments. In parallel, a recent draft law relating to foreign NGOs has been the subject of concern, with the European Chamber of Commerce in China expressing particular challenges as it pertains to partnerships between businesses and NGOs.

Within this context, there is therefore growing urgency for companies – including Chinese-headquartered private and state-owned companies, multinational companies operating and investing in China, and companies that have business relationships with Chinese companies around the world – to develop knowledge, tools and experience to implement respect for human rights in practice. This was apparent when in 2013, a coalition of Chinese and international organisations convened 200 predominantly business representatives in Beijing to discuss (for the first time) human rights within the framework of the UNGPs. There are a number of complementary avenues that should be pursued in order to build learning, capacity and practice on the corporate responsibility to respect human rights by Chinese business leaders – with crucial roles for the Chinese business community, along with OECD companies and business partners, civil society and other stakeholders.

One avenue that has clear value is the creation of learning forums on human rights, tailored to Chinese business needs and impacts. This may require safe-space forums for companies that may be competitors to collectively address human rights impacts. Companies should leverage their business relationships to engage joint venture partners, suppliers and customers to increase scale and momentum around commitments to progress. Safe-space forums established so far have enabled learning and exchange between Chinese and OECD companies on human rights issues such as community engagement, community grievance mechanisms, local content issues in Africa, indigenous peoples’ rights and collective bargaining. There is strong interest from business leaders in exploring how to address a range of human rights issues, good practices and lessons learned. Yet there are currently few platforms for companies to turn to for support and expertise.

Another avenue could involve constructive and innovative engagement between diverse stakeholders, including companies and business associations, civil society and international organisations. One example is the collaboration between CCCMC, Global Witness and the OECD to deliver guidelines for overseas Chinese mining companies which incorporate human rights and the UNGPs. Further collaboration between CCCMC and the OECD in developing due diligence guidelines on responsible mineral supply chains will encourage alignment with international standards. Such collaborations are productive ways to utilise expertise, meet standards and expectations and improve business practices. Dialogue and collaboration between multiple stakeholders on human rights is also needed in order to consider how to interpret standards, identify good practice, create transfer of expertise and ideas, and work together to innovate and find creative solutions, particularly in complex situations and across business relations. Civil society can also play important roles by acting as key interlocutors for stakeholder and rights-holder engagement on the ground in locations where Chinese companies are operating overseas.

There is a clear need for more concerted and collaborative efforts by all stakeholders to advance business and human rights in the Chinese context. This will require commitments and collaboration by business and other stakeholders. Some companies are beginning to take action, but increased support is needed from multiple stakeholders to achieve scale. Shared standards and norms need to be aligned to the UNGPs, and good practices need to be identified. Capacity-building, behaviour change and relationship-building are needed now and will require commitment and support from all stakeholders.

Useful links

GBI member companies had combined revenues of over $1.5 trillion in 2014 and have 1.75 million employees operating in diverse industries and in over 190 countries including China. Since 2012 GBI has been working in partnership with Chinese and international organisations to engage business leaders on the corporate responsibility to respect human rights in the Chinese context. For more information visit: http://www.global-business-initiative.org/work/china1

Third Global Foru‌‌m on Responsible Business Conduct, 18-19 June 2015, Paris, OECD

As demands for better human rights reporting grow fast, help is at hand

RBC ForumRoel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct and a member of the Eminent Persons Group that has overseen the development of the UNGP Reporting Framework (@nieuwenkamp_csr); and Caroline Rees, President of Shift, the leading centre of expertise on the UN Guiding Principles, which co-facilitated the development of the UNGP Reporting Framework together with Mazars.

When the OECD Guidelines for Multinational Enterprises were revised in 2011, one of the most important changes was the addition of a new chapter on human rights. Over the four years since that chapter was introduced, ever more companies have begun the journey of conducting human rights due diligence: the process of assessing and addressing their human rights impacts, and tracking and communicating how well they do so. And ever more initiatives have developed or refined sector-specific tools to support these efforts: from the Equator Principles for banks to the Voluntary Principles on Security and Human Rights, to the Roundtable on Sustainable Palm Oil.

Now we see another and important trend emerging: as time passes, and the guidance becomes more sophisticated, there are fast rising expectations among investors, governments and civil society that companies provide evidence of what they are doing to put the Guiding Principles into practice. Yet companies’ reporting on their human rights performance remains at best the poor cousin of other non-financial or ‘sustainability’ reporting.

Many reports still focus on philanthropic projects divorced from the human rights issues associated with the company’s core business, or on community volunteering and other commendable but discretionary activities. Where there is relevant information on supply chain audits or community consultation, it is often unclear how these processes inform core business decisions.

Meanwhile those who write reports are frustrated, and understandably so. It’s unclear who actually reads the reports they produce. And the prospect of more demands from more sources leads inevitably to groans at the prospect of chasing down more data for the sake of data.

It doesn’t need to be that way. The UN Guiding Principles Reporting Framework, launched in February, takes a different approach to what human rights reporting could and should be. Two features stand out in particular.

First, the UNGP Reporting Framework asks companies to focus their human rights disclosure on their salient human rights issues: those human rights at risk of the most severe impacts through the company’s activities and business relationships as defined by how grave they are, how widespread, and how hard to remedy. This is not a new idea – in fact, identifying salient human rights issues is simply the first step of human rights due diligence as required under the OECD Guidelines and the UN Guiding Principles on Business and Human Rights.

Importantly, this process starts from the perspective of risk to human rights, not risk to the business. But for any company, an understanding of its salient human rights issues is also indispensable to business success over time.

We don’t have to search long in our newspapers these days to find evidence of how severe impacts on people bring significant risk also to the businesses involved. We can read of literally scores of extractive, construction and other projects delayed or disrupted when communities protest their displacement from land and their loss of livelihoods. Research shows the many kinds of costs companies incur from the conflict that so often ensues.

We see brand company reputations suffer when their products are made by people who die in Bangladeshi factory fires and building collapses or by forced labourers in the Thai fishing industry. With research showing that over one-third of the market capitalization of large listed companies in the UK lies in their reputations, these are hits they cannot afford to carry.

Indeed, research shows that under the complaints system provided through the OECD’s own National Contact Points (NCPs), the largest category of complaints today relates to human rights and typically an alleged failure to conduct human rights due diligence. Most recently a case was brought to the NCP system against FIFA for failing to engage in due diligence concerning human rights for migrant construction workers in Qatar. While non-binding, the NCP mechanism has brought about real results through its mediation procedures. For example recently in two separate cases respectively involving Formula One and Karl Rieker (a German apparel retailer), NCP mediation processes resulted in the companies’ agreement to strengthen their environmental, social and governance (ESG) due diligence systems. In another case, the government of Canada barred future financial support through commercial diplomacy to a mining company which refused to participate in the NCP mediation process and which was alleged to have contributed to adverse human rights and environment impacts through its activities.

In short, the evidence is strong and growing that where risks to human rights are greatest, they converge strongly with risk to business. So for any company, knowing and addressing its salient human rights issues just makes good sense.

Second, the Reporting Framework provides a set of questions for companies to answer: questions such as, ‘How does the company demonstrate the importance it attaches to the implementation of its human rights commitment?’ and ‘How does the company integrate its findings about each salient human rights issues into its decision-making processes and practices?’.

In other words, the Framework does not impose indicators or metrics from outside the company, but offers a set of meaningful questions that any company can answer in some way. Most importantly, these are questions to which any company needs to have answers internally, even if they are not reporting externally. It is in finding those answers that they will understand whether human rights risks are being managed effectively.

So the Reporting Framework is much more than a tool for reporting – it can be seen and used also as a tool for improved human rights due diligence. It translates the human rights chapter of the OECD Guidelines, and the UN Guiding Principles on Business and Human Rights that it mirrors, into simple questions in everyday language. The Reporting Framework’s Annex also helps companies recognize and understand the array of internationally-recognized human rights that need to be addressed through their due diligence, and the kinds of ways in which impacts can occur.

As a result, using the UN Guiding Principles Reporting Framework is not an additional reporting burden on companies. It’s a means of doing better business that meets both OECD and UN standards with regard to human rights.

Useful links

The UNGP Reporting Framework was launched on 24 February, and is already being used and promoted by a wide range of companies, NGOs and investors, including through a statement of support from over 80 investor groups representing $4.26 trillion in assets under management. For more on the Reporting Framework see www.UNGPreporting.org.

Third Global Foru‌‌m on Responsible Business Conduct, 18-19 June 2015, Paris, OECD

Born a girl: bad karma?

international women's dayThe ILO estimates that at least 2.45 million trafficking victims are currently working in exploitative conditions worldwide, and that another 1.2 million are trafficked annually, both across and within national borders. Of these, up to 80% are women and girls according to the UN.

A widely-quoted UN estimate says that human trafficking and slavery is the third most lucrative illicit business in the world after arms and drug trafficking, although the UN doesn’t actually give any source for this claim. That could be because of the inherent difficulty in obtaining data on criminal activity or because the estimate includes other activities like taking money to smuggle illegal immigrants into a country. The US Department of State definition of trafficking is “all of the criminal conduct involved in forced labor and sex trafficking, essentially the conduct involved in reducing or holding someone in compelled service.”

Why does it still happen, and why are women the main victims? Economics, culture and tradition are all to blame.

Economically, you can look at it on the global or local level. Trafficking and the modern slave trade are driven by the same factors that encourage other aspects of globalisation such as increased mobility, cheaper travel and the ease of organising international networks. They are also reinforced by economic misery and absence or removal of social protection in countries opening up to the international economy, and the illusions engendered by images of a better life elsewhere on satellite television and other easily accessible mass media.

It sounds cynical, but you can also look at trafficking of women in terms of supply and demand factors, as the World Bank does here. For instance, on the demand side, employers want cheap labour, and not just in the sex industry. In 2004, the Council of Europe drew attention to the fact that domestic slaves are predominantly female and usually work in private households, starting out as migrant workers, au pairs or “mail-order brides”.

The supply of women and girls is maintained by poverty (some UN estimates say that nearly 70% of the world’s poor are women) and lack of opportunity. But social norms that consider women as inferior play a role too. Religion is one of these, and the World Bank report linked to above says that one of the factors pushing women into prostitution in the Mekong region is that under Theravada Buddhism, “women and girls are thought to be unable to achieve enlightenment. Thus, while men can show gratitude and respect to their parents by becoming monks and pursuing the spiritual life, many girls feel that they must make sacrifices for the benefit of their families, villages and their own karma.”

In addition, as this short guide published by the OECD points out, trafficking often emerges where many human rights violations are prevalent already. The most common violations are the right to personal autonomy, the right not to be held in slavery or servitude, the right to liberty and security of person, the right to be free from cruel or inhumane treatment, the right to safe and healthy working conditions and the freedom of movement. Governments can be guilty too, even towards people who have escaped from trafficking. Policies often give priority to detention, prosecution and expulsion of trafficked persons for offences related to their status, including violation of immigration laws, prostitution or begging. Victims may be treated as “disposable witnesses” whose sole value is their ability to assist in prosecuting traffickers.

What can be done?

The 2003 “Protocol to Prevent, Suppress and Punish Trafficking in Persons” is the leading international instrument. It goes beyond trafficking for forced prostitution and takes into account other forms, including forced domestic work and commercial marriage. These aren’t just problems in developing countries. The slaves referred to by the Council of Europe were working in its member countries. Earlier this week, the UK’s Forced Marriage Unit reported that a two-year-old girl was among the victims it helped last year.

The 2003 Protocol recommends that governments allow victims of trafficking to remain in the destination country, temporarily or permanently. Governments should also ensure their safety and protect their privacy and identity. It also recommends that governments establish legal measures to award victims compensation.

At national level, efforts in source countries to tackle poverty and lack of rights would strike at the root of the problem, but a number of measures can have more immediate impacts, such as awareness-raising campaigns, given that many victims are deceived into migrating. Given the importance of poverty in fuelling trafficking, funding to start small businesses could help women.

Destination countries can contribute to such programmes. They can also help victims by protecting them even if they are not prepared to help the authorities investigating the trafficking networks, and not deporting them back to the country they were trafficked from.

Useful links

A Women’s Day Challenge, article on the educationtoday blog by Barbara Ischinger, OECD Director for Education and Skills

OECD work on gender

OECD work on gender equality and development

Evaluation of the International Organization for Migration and its Efforts to Combat Human Trafficking  

Sahel and West Africa Club (SWAC) Regional conference to combat child trafficking

A Bank account should be a human right

“Financial literacy is the new civil rights of today” says John Hope Bryant, Founder, Chairman and CEO of Operation HOPE.   Speaker at this week’s OECD Forum, Bryant insists that understanding the fundamentals of finance is a must for everyone. Fighting poverty and unemployment cannot be successful if we don’t give people that knowledge. Check out his contribution to OECD’s educationtoday

Useful links:  OECD work on financial literacy