Human rights becoming major focus for global firms

by |
Human rights are increasingly becoming a major focus of businesses worldwide, a new survey has found.
In a survey of senior in-house counsel, Herbert Smith Freehills and Legal Business found that not only are businesses keeping human rights in mind, they are also making changes to how they operate.
The survey of 275 senior in-house counsel found that 51% of companies had changed their supply chain management practices to incorporate human rights duties, including as part of an increased focus on ethical sourcing, HSF said.
Furthermore, 46% of respondents’ organisations have made public commitments to respecting human rights, the survey revealed. The same number of organisations has encountered human rights clauses in commercial contracts.
In terms of overall responsibility for human rights matters, legal teams are still assigned most of the time to the issues at 29%. Meanwhile, 27% indicated compliance departments while 19% said corporate social responsibility (CSR) teams handles human rights matters.
“Companies and lawyers need to change their mindsets. Hard sanctions can increasingly be imposed via soft law mechanisms, or by what can be described as ‘new judges’ (any stakeholders) and companies must anticipate and get ahead of this risk,” said Stéphane Brabant, co-head of the law firm’s business and human rights group.
“We have come a long way from a few decades or even a few years ago when some multinationals did not feel concerned by human rights and did not want to hear about respecting human rights. Developments including the approval in 2011 of the UN’s Guiding Principles on Human Rights and Business have seen some of the very same companies become model citizens,” added Brabant.
“There is now a growing recognition among corporates, as reflected by our survey, that human rights are not a law free zone for businesses and business’ obligation to respect human rights in their supply chains is no longer an option, it is a necessity.”
Among those who responded that their organisations had a commitment to human rights, the study also found that 51% said their firm had codes of conduct for suppliers while 44% said they had formal human rights policies.
However, 22% of respondents were unsure whether their organisation had made such a commitment, HSF said.
Asked whether senior management were aware that their organisation may be held liable for non-compliance with its unilateral commitment on human rights, 65% of the respondents said they were either not aware, unsure or only partially aware. Only 35% said senior management were fully aware.
The survey also revealed that 66% of senior in-house counsels believe the growing momentum for international and national standards and legislation on human is an opportunity for their organisation, with only 34% seeing this as a risk. More than half, 60%, of legal teams had taken steps to raise awareness of human rights in their organisation.
HSF partner Daniel Hudson said in-house counsel need to also be focused on human rights pledges of their organisations because there is a potential for litigation.
“It is also important for companies to go beyond what is strictly required under the law, they need to look beyond the strict legal litigation risks and consider reputation risk. Customers, shareholders, NGOs and lenders will expect them to be doing this and meeting high standards,” Hudson said.