The Leadership Series: Where business meets human rights

In this introduction to our 20th Anniversary series of opinion pieces, The Leadership Series, ETI's Chair Philip Chamberlain reflects on some of the business and human rights issues that he thinks will be a key part of the ethical trade agenda in 2018 and beyond - discrimination, inequality, transparency and representation – all within the context of the world's ever more complex trading models.

When I was asked to introduce ETI's 20th Anniversary series of leadership blogs, my initial thoughts were that ethical trade is not just evolving, but that the pace of change is clearly accelerating. In 2017, we witnessed burgeoning legislative reform, campaigning scrutiny and new accountability benchmarks. All positive initiatives as far as ETI is concerned. 

Yet we also saw industrial unrest when rights to decent work were ignored, physical attacks on worker representatives, and in some countries a rolling back of democratic rights.

Perhaps, just as worryingly from a corporate perspective, we saw what could be the beginning of a widening gap between the ethical performance of responsible companies and the performance of what the authors of the newly launched Corporate Human Rights Benchmark describe as laggards. 

Bridging the gap

It is crucial that the gap between the top ethical business performers and the rest is bridged. So how do we encourage all companies to implement the UN Guiding Principles on Business and Human Rights (UNGPs) with their call to protect, respect and remedy? When does business have a duty to speak out, as ETI's Executive Director Peter McAllister asked over countries such as Cambodia and Myanmar?

I strongly believe that no company can afford to ignore social responsibility issues. That's what this series of blogs will therefore be about - re-affirming the case for ethical trade. 

Once a month during 2018 we'll ask leading thinkers and influencers in the global business, trade union and human rights communities to reflect on some of the key ethical trade issues that confront workers and their representatives, businesses, NGOs and governments.

In line with ETI's way of working we want to encourage a constructive approach that looks forward to the future whilst learning from the past. 

Clare Short's business initiative

In 1998, the UK's then Secretary of State for International Development, Clare Short, announced government support for an initiative to develop a code of business conduct for trading with the world's poorest countries. ETI was established.

Our role was to develop a benchmark set of voluntary rules - our Base Code - covering the conditions under which the goods UK companies imported from developing countries were produced. Today, we are increasingly seen as a global organisation and the ETI Base Code is viewed as a global reference standard. 

Clare Short also recognised that the role of business is critical to development. Private trade and investment, she pointed out, dwarfed official aid flows in scale.

Twenty years on

Clare Short’s recognition remains as true today as in 1998, as acknowledged within the Sustainable Development Goals.

The need to maintain a sense of urgency is also vital.

In the past 20 years, thinking and understanding has inevitably developed, while new concerns have arisen. We’ll ask our contributors to address those concerns, but here are just five to spur thinking:

• Discrimination: Witness the recent raft of media coverage around the sexual harassment of women in the film industry. Now ask yourself how much more harassment exists in industries and workplaces where women do not have the same access to publicity? Or to remedy? That comes on top of other hurdles that women face, from pay gaps to glass ceilings. Neither is it just women that have to deal with discrimination. Minorities, the LGBTI community and those with disability all face some level of disadvantage in supply chains, as we have discussed with ETI members in our Ethical Insights debating space.
• Inequality: Recent economic and financial crises, as well as factors such as globalisation and technological change, have led to a widening gap between rich and poor. Oxfam says that 700 million more people could have escaped poverty if action had been taken to reduce the gap. The charity, an ETI member, also points out that experts including the World Bank and International Monetary Fund warn that further progress is under threat because of inequality. Having said that, inequality is not just related to income, but includes access to education and healthcare too. Yet how do you sustain the transformational aspects of new technology and globalisation in helping to deliver economic gains while mitigating their impact on inequality? That requires public policy changes in order to ensure a better balance in the sharing of those gains. How can business play its part?
• Transparency: Fiona Sadler, Head of Ethical Trading at Marks and Spencer laid it on the line to the more than 80 corporate delegates who attended our latest company roundtable in November 2017 when she said: "Transparency is coming whether businesses like it or not, so if you don't want to be left behind, you'd better make sure you're on the bus.” As such, Fiona was articulating what ETI has promoted for some time (transparency is a key part of our current strategy). Now, as part of our contribution to moving forward that thinking, we have published a Business Case Towards Greater Transparency and ETI Direction of Travel. These lay the foundations for more in-depth and concrete work to come, as we have noticed that most thinking and advice on this important issue is fragmented. Companies need clarity and a well-defined roadmap if they are to have an action plan which works for them commercially, as well as for workers in their supply chains. We'll be addressing that over the next year but we’ll also ask our contributors to say what they think.
• Worker representation: ETI has always promoted freedom of association, not simply as an element of the ETI Base Code, but fundamentally as an enabling right for workers: workers must be front and centre of ethical trade, such that they can play an active role in ensuring that they enjoy their rights.  It’s why it’s important that business works with representative trade unions to ensure that workers have their voice heard on issues which affect them directly. There is an increasingly acknowledged business case that respect for workers' rights is integral to a businesses' ability to thrive and remain profitable in the long-term. We want that to be further explored.
• Trade flows: I worked for 40 years in the fashion retail sector, many of those spent managing Asian supply chains. In past years, those chains were defined by the traditional North-South model of trading. Today, trade flows in every direction and latest ETI-commissioned research on Chinese investment overseas throws light on this change. China's textile industry's outward direct investment hit a historic high of US$2.66 billion in 2016 - an 89% increase over the previous year, and these overseas-based factories are trading worldwide. Yet the researchers found that many lack understanding of local culture, customs and business environments, and often neglect due diligence, all of which can lead to an exacerbation of existing problematic working conditions. This is something global buyers need to be aware of and factor into their relationships. As our China research paper points out, that means using their leverage to cultivate “awareness of corporate social responsibility". How can they do this?[1]

Principled pragmatism

ETI is about embedding a philosophy of continuous improvement. That’s why, in addition to the concerns I’ve just outlined, we'll be asking our contributors from around the world to think about other issues.

They will range from migration and labour rights to the role of the informal sector in global supply chains. We'll also ask for views on topics such as the challenges facing workers in the UK's post-Brexit trade deals as well as other country-specific business and human rights matters.

We'll expect our authors to be robust on what they believe to be the current state of play within their field of expertise. But we also want them to be inspirational and motivating to businesses that want to engage with and improve on their management of human rights risks.

Essentially, we will ask our contributors to approach the series in what the author of the UNGPs, Professor John Ruggie, has called a spirit of "principled pragmatism". 

It only remains for me to say, watch this space.

[1] Here I would like to mention our 2017 guidance for companies on purchasing practices, drawing on the findings of a collaborative supplier survey run in partnership with the ILO, with support from SEDEX. Our Guide to Buying Responsibly includes best practice examples and outlines the five key business practices that influence wages and working conditions.