Ethical Performance
inside intelligence for responsible business


guest column: human rights and the role of companies

September 2000

Companies need to consider the human rights implications of overseas projects at the earliest possible stage, argues Frances House

 Many senior executives have argued that it is inappropriate for them to speak out on human rights in areas where their company is operating, on the grounds that governments should deal with any abuses. This view is misplaced. It is true that governments, rather than companies, sign up to the Universal Declaration of Human Rights and other human rights conventions. However, the declaration calls on ‘every individual and every organ of society’ to uphold the principles enshrined within it. Any company is part of society and is therefore responsible for protecting human rights within its legitimate sphere of influence.

It is helpful to consider corporate spheres of influence as four concentric circles, with the inner circle representing the core business operations over which the company has total control. The human rights concerns within this inner circle principally relate to employee rights and labour standards.

The next circle represents business partners and suppliers. The company can influence labour practices here by referring to codes of conduct in contracts with business partners, and in monitoring compliance. Moving outwards, the third circle represents the host community. A company whose activities touch on local land rights, for example, could avoid or minimise problems by regular stakeholder consultation. This needs to begin at an early stage, when the human rights risks are being assessed and before investment takes place, and to continue throughout the project. Rigorous internal and independent monitoring of compliance with stated human rights commitments will be needed, and also action to remedy any abuses.

The final, outer circle represents the government. Company managers have a variety of means of raising concerns with the government. They may practise quiet diplomacy, speak out publicly or act collectively with other companies when, for example, state security forces violate the rights of local protesters at company installations. When a company knows human rights abuses are taking place, but remains silent, the media and the public may view the company as tacitly complicit. Corporate reputational risk will increase and the licence to operate may be affected.

CEOs need to endorse human rights issues as part of corporate values and to make senior managers responsible for integrating them throughout the business. Regular consultations with stakeholders, plus independent monitoring and reporting, is vital. Companies need to exercise their legitimate influence on their supply chain, on governments and on other companies. This approach will enable them to address human rights concerns systematically and, where possible, collaboratively.

Frances House is Director, Operational Policy at the
Prince of Wales Business Leaders Forum


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