Corporate governance

Holding business to account

 

The promotion of responsible business conduct has taken an important step forward with the launch of a new reporting framework. Businesses now have no excuse for not explaining how they’re meeting their human rights obligations.

In 2011 the UN Human Rights Council unanimously endorsed the UN Guiding Principles on Business and Human Rights, which I had developed over the course of a six-year mandate as the Secretary-General’s Special Representative for this issue. Around the same time, the OECD adopted its updated Guidelines for Multinational Enterprises (MNE), incorporating a new human rights chapter mirroring the UN Guiding Principles.

The parallels are no coincidence. My team and I worked closely with those leading the OECD revision process. This collaboration helped provide clarity and convergence regarding the expectation that companies should, at a minimum, respect human rights across their operations and value chains. The same expectations are now also reflected in other international standards.

In my visits to company headquarters and operational sites, I have seen just how committed many companies are to respecting human rights in often challenging contexts and through sometimes bafflingly complex supply chains. These companies are transforming the way they do business. They understand that this is fundamental for their own success as well as for the basic dignity and welfare of everyone affected by their decisions.

It is gratifying that just four years on from the endorsement of the Guiding Principles and the updated OECD MNE Guidelines so much has been achieved–indeed, far more than is often recognised. A recent survey of companies and governments by the Business and Human Rights Resource Centre and a recent report by the Economist Intelligence Unit show striking uptake and progress in remarkably little time.

Yet, even though the number of companies now working with the UN Guiding Principles and the OECD MNE Guidelines extends far beyond the “usual suspects”, it remains a very small proportion of the global business community. And, as the news media regularly remind us, some businesses continue to have a devastating impact on the human rights of many of the world’s most vulnerable people.

So what can we do to speed up the pace of change? Transparency is critical. It is an essential ingredient for gaining insight into the real challenges of implementation that companies face. It is also key for highlighting where governments need to up their game. It can enable constructive collaboration to address the systemic issues that no one actor can resolve alone. And it is essential to building markets for responsible business conduct that can reward the real leaders and shine a light on the laggards.

In this regard, the launch in March 2015 of the UN Guiding Principles Reporting Framework in London could not have been more timely. For the first time we now have a comprehensive framework for companies to report on how they respect human rights in line with the UN Guiding Principles and OECD MNE Guidelines’ human rights chapter.

Yet this is much more than just a reporting framework. It puts the corporate responsibility to respect human rights into everyday language: a set of smart, straightforward questions to which any company of any size needs to have answers–inside as well as outside its own walls. It offers companies a powerful tool to deepen internal conversations, identify gaps in performance and drive improvements in practice. It provides a basis for building constructive and meaningful conversations with their investors, civil society stakeholders, and groups directly affected by their operations and business relationships.

The reporting framework also empowers all these stakeholders to call for essential information about how companies are tackling human rights challenges. Reporting that glosses over these realities with easy anecdotes no longer meets the grade. Governments, stock exchanges and rating systems the world over, with an interest in advancing non-financial reporting, can now turn to this framework to set clear expectations for corporate disclosure and to drive improved accountability in relation to human rights. Companies that respond should be recognised and rewarded.

The UN Guiding Principles Reporting Framework represents an indispensable contribution to the collective effort to embed both the UN Guiding Principles and the human rights components of the OECD MNE Guidelines into practice, and to scale up the pace of progress. Many companies began using the framework, and investors and civil society began supporting it, even before it was launched. This attests to its value and its practicality. I urge others to follow in their steps.

 

References

UN Guiding Principles Reporting Framework

OECD Guidelines for Multinational Enterprises 

Business and Human Rights Resource Centre – Company Action Platform

Visit www.shiftproject.org

 

OECD work on Corporate Governance

Global Forum on Responsible Business Conduct

OECD Watch

OECD Forum 2015 Issues

 

OECD Observer articles on Responsible business conduct

OECD Observer website

 

‌‌‌‌

John G Ruggie
Berthold Beitz
Professor in Human
Rights and
International Affairs,
Kennedy School of
Government, Harvard;
Chair of the Board of
Trustees, Shift Project


© OECD Yearbook 2015

 

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