Comment: Responsible business: Audits to innovation!

On 13th November2014, I had the pleasure of attending the Business Social Compliance Initiative (BSCI) annual forum in Brussels, where Prof. John Ruggieaddressed us on the Promote, Respect and Remediate framework, which he actively promotes in the UN Guiding Principles (UNGPs).  It was encouraging to witness more than 50 participants attending this forum, from businesses and civil society. Business in the modern world are powerful and have a big role to play in respecting human rights throughout the value chain. Many business leaders such as Henry Ford have strongly emphasised this point.

Business which makes only money is not good business”- Henry Ford.

Prof. Ruggie touched upon the burning issue of social audits not bringing the anticipated changes on the ground. There is a need for innovation in business. Reflecting on this,  I would like to share my experiences in assisting businesses on their journey of respecting human rights in their value chain.

Going beyond audits and compliance: UNGPs have provided the basis of thinking on how businesses can make a positive impact. Even though it might be tempting to use UNGPs as a tookit to plug in existing processes, however the real idea is to make businesses think differently. Audits have been the norm till date to assess social, environmental, ethical performance of businesses. However, it has been commented by many scholars and experts that audits have failed to bring change on the ground for deeply rooted issues such as freedom of association, living wages, discrimination, etc.  Unless information from audits is used to launch improvement project and create  work-plans, sadly the whole activity remains counterproductive.

UNGPs are basis of creating new thinking for business rather than a providing a tool kit”- Prof. John Ruggie at the BSCI 2014 forum.

Building capacity within company, suppliers and partners is curtail for embedding human rights in businesses. Using more ‘carrots’ than ‘stick’ and providing incentives to employees and suppliers to improve their performances is essential. Responsible purchasing is as important as responsible manufacturing.

Transparency in supply chain: UNGPs encourages companies to ‘know and show’. This is particularly important for the supply chains. In the light of internationalisation, supply chains have become very complex. Mapping of supply chain is an important step in the human rights due diligence process. Unfortunately, there are few companies who fully understand their own supply chain. The consequences of technology and speed of change has enabled better access to information and increased sensitivity of stakeholders, who are demanding more transparency of the supply chain. Transparency in supply chain seems impossible at first but then in today’s world it is hard to avoid.

Transparency has been challenging for companies, however is it something they do not have the luxury to avoid. Openness and accountability of business is the order of the day, so the faster a company can know about its supply chain the sooner it can show what actions are being take to address human right issues. Moreover, new regulation (such as California Transparency Act) will mandate companies to be more transparent about their supply chain, thus being ahead of the curve is a good business strategy. New initiatives such as ‘FairPhone’ are leading the way in more transparency in the supply chain and as a strategic stance of the company.

Mapping of supply chain is an important step in the human rights due diligence process.

So what can businesses do more?: I wish there was a simple solution to these complex issues. However, understanding the current position of a business in its journey of embedding human rights is a good beginning. Every business is different and might strive for leadership position depending on its sector, size and challenges. Obviously SMEs face a different challenge than multinational corporations. Forming meaningful partnerships with other businesses and civil society organisations is a good way to leverage best practices (such as the Bangladesh Accord). Undertaking a Human Rights Due Diligence is a step going beyond traditional audits and creates meaningful dialogue on human rights opportunities and challenges within business and within suppliers and partners. I salute the role models which have adopted human rights in businesses, however there is much more to do and I hope many full follow suite.