You have nothing to fear but fear itself

British philosopher, historian and mathematician Bertrand Russell famously said, ‘Fear is the main source of superstition, and one of the main sources of cruelty. To conquer fear is the beginning of wisdom.’

Sound words of guidance perhaps, as the global business community moves into a new era of human rights practice. A year on from publication, Professor John Ruggie’s UN Guiding Principles on Business and Human Rights are becoming common parlance in CSR circles.

We’re starting to get under the skin of the ‘Protect, Respect and Remedy’ framework, and understand what it’s all about. But there is an understandable fear – the framework sounds fantastic in theory, but businesses are anxious about what requirements it places on them.

ETI is actively exploring these questions with our members. The more we talk and share information, the clearer it becomes that while the guidelines will present challenges, there is more to be gained here than feared.

New demands on companies?

The framework and guiding principles do place new requirements on businesses about how they interact with their supply chains, and meet their responsibilities to those working in them.

Due diligence is a central concept. In this context, it means the steps and processes by which a company understands, monitors and mitigates its human rights impacts on an ongoing basis. The due diligence element of the guidelines is more than compliance. It makes new demands of companies, such as conducting human rights impact assessments, and establishing grievance mechanisms.

These challenges should not be underestimated. There is still a shortage of metrics that help business understand what social sustainability looks like, for example. This creates a risk that companies will focus more on measuring activities such as audits or compliance actions, rather than the outcomes for people.

However, the tide might be turning. In the ethical trade arena, we’re starting to see a shift away from a purely compliance-based approach towards one that is better aligned with the rights and development agenda.

What strikes me most is this – embracing the UN Guiding Principles on Business and Human Rights might present challenges, but it doesn’t require going back to the drawing board for the development of new systems or processes. In fact, its success is contingent upon effective use of the core tools of good business practice. We’re talking here about the tried and true processes of strategic planning, policy development, feedback mechanisms and wider stakeholder engagement.

Taking the first step

We know that large, well-known companies such as GE and the Coca-Cola Company have endorsed the guiding principles, as have big law firms, like Clifford Chance. But what about smaller businesses, which don’t have the same infrastructures and resources?

The European Commission spotted a need for introductory guidance to help small and medium-sized businesses grapple with these questions. Its new guide for SMEs outlines a six step process:  

1. Commit to respect human rights and embed the commitment in your business

2. Identify your human rights risks

3. Take action to avoid and address the risks you identify

4. Enable remedy for those affected, if you are directly involved in a negative impact

5. Track your progress

6. Communicate about what you are doing

So where’s the best place to start? Firstly, remind yourself that you are not in this alone. Businesses of all sizes, across all sectors, will be starting to look at their policies, systems and processes through a protection of human rights lens.

Start by getting your board on board. Governance level discussions will be most effective when they also include external, and expert, input. These conversations will help you establish your commitment to the principles, and what shape and form this might take. There is no prototype, according to the European Commission. Your commitment could be expressed in a statement on your website, or it may be something you incorporate into your CSR policy. It’s all about what works best for your business.

We’re all in this together

The next step is to identify your human rights risks. It’s worth bearing in mind that while corporate risk management is important, this framework is about more than that. It asks you to understand both the actual, and potential, human rights impacts of your business.

It might be helpful to engage with wider business and sector partners. Talk to your suppliers, and find out what they’re doing to address their human rights impact. Can you learn from them, or find other like-minded businesses to buddy up with? There is a very real opportunity to invite constructive criticism from civil society, and save money on consultants.

Once you’ve got external feedback, it’s time to prioritise the actual and potential impacts. The urgent ones are those which are immediate, serious and which your intervention could mitigate. Then develop a mediation plan, using the criteria set out in the guiding principles.

For other impacts (including potential impacts), decide what you can do. Perhaps there are other partners you need to work with, if problems are broader, or the risk is related to a failure of the state to undertake its role. It’s important to remember that the guiding principles place responsibility with every enterprise in a supply chain. This challenges traditional supply chain thinking, which tends to place all the responsibility with the more visible western brand.

Reviewing and revising your action is the next step. It’s important that you also seek an external critique, as part of this. Effective grievance procedures can act as a vital feedback loop, a release valve and an early warning system for a company and its suppliers.

Finally, communicate what you are doing. Bertrand Russell tells us that confronting fear can ultimately lead to wisdom. We will reach that goal a little faster if we collaborate, and share what we learn along the way.

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This blog originally appeared on the Ethical Corporation website. Peter McAllister is presenting at its 12th Annual Responsible Business Summit, from 7-8 May 2013 in London.