In response to the increasing global awareness that companies need to evaluate the effects their operations have on human rights, private entities and organizations have developed arguably competing guidance to achieve that end. These private compliance frameworks can be useful resources but present challenges to businesses seeking to implement the United Nations (UN) Guiding Principles on Business and Human Rights (Guiding Principles).
The UN's endorsement in 2011 of the Guiding Principles signified the growing consensus that corporate entities have a responsibility to account for their operations' impact on human rights. In the time since the UN adopted the Guiding Principles, there has been a flurry of activity within civil society, and at the government and company levels, regarding appropriate implementation.
One product of this activity has been the development and marketing of various reporting frameworks and measurement tools by certain investment groups and other stakeholders, with the objective of measuring companies’ commitment to implementing the Guiding Principles.
Two recently developed frameworks are the Human Rights Reporting and Assurance Frameworks Initiative (the "Frameworks Initiative," also known by the acronym “RAFI”)1 and the Corporate Human Rights Benchmark (the “Human Rights Benchmark”).2 The Frameworks Initiative and the Human Rights Benchmark are in relatively nascent stages of implementation and development. Both have expanded upon commonly known reporting frameworks such as the Global Reporting Initiative (GRI). Further, they each present some competing requirements, and as described herein, they have received a mixed response.
Questions and concerns have also been raised about the process employed to develop these frameworks. The frameworks’ developers have publicized their efforts to secure the perspectives of a wide variety of stakeholders. However, the structure and limited time allotted for consultation, particularly when compared to the thorough vetting process employed by UN Special Representative John Ruggie in the development of the Guiding Principles, raise concern about the process’s inclusiveness, and in particular whether employers or employer federations’ perspectives have been (or indeed can be) meaningfully included.3
The frameworks, and the broader extension of formally reporting compliance with the Guiding Principles, present challenges regarding whether “human rights” or “performance” under the Guiding Principles can be meaningfully measured and reported. These questions, in context, illustrate just one facet of a growing discussion regarding the appropriate scope of business responsibility for human rights concerns.
Setting the Stage -- The Guiding Principles
The Guiding Principles comprise three pillars: (1) clarifying the existing role of states to protect human rights; (2) ensuring that business entities respect human rights; and (3) ensuring the proper access to remedies for human rights violations. The two new reporting frameworks focus on the second and third pillars, and purport to measure a particular company’s compliance with them.
Though the Guiding Principles may be adopted by any entity, they qualify that compliance can and should vary by the size and complexity of a particular entity’s operations.4 With that context in place, the Guiding Principles instruct that all adopting entities should implement a “statement of policy” demonstrating commitment to respecting human rights and developing transparent “due diligence” mechanisms to ensure that human rights are properly respected throughout the entity’s operations.5 Such mechanisms, like a statement of policy, should be prepared with the involvement of the entity’s internal personnel, with assistance from external experts, and with “meaningful consultation with potentially affected groups and other relevant stakeholders.”6 Additionally, under the third pillar of the Guiding Principles, entities are instructed to effectively and timely remediate any “severe human rights impacts” to which they have caused or contributed.7
The Advent of Privately Developed Human Rights Reporting Frameworks
The Frameworks Initiative
The Frameworks Initiative (“Initiative”) was jointly developed by the non-profit organization Shift, which focuses on issues related to the Guiding Principles, and the global accounting firm, Mazars.8 The Initiative utilizes an accounting framework for reporting quantifiable financial data. Since its introduction in 2014, the Initiative has gained acceptance among some larger multinational companies, which have begun using it to report on their human rights commitments. The Initiative, however, has not escaped criticism. The International Organisation of Employers (IOE), for example, while expressing its commitment to supporting the Guiding Principles’ implementation, has expressed legitimate concerns that a reporting framework based on easily quantifiable financial information is not a good fit for the deliberately flexible and subjective criteria within the Guiding Principles. In addition, the Guiding Principles’ specific reference that “severe human rights impacts”9 should provoke formal reporting suggests that the Initiative’s purported reporting application to all human rights impacts – regardless of their severity – may be overstated.
The Human Rights Benchmark
The Human Rights Benchmark (“Benchmark”) was developed recently by a number of investment groups in combination with certain civil society organizations, and with the financial backing of the United Kingdom10 and Dutch governments.11 The Benchmark is a work in progress and is not in its final form. It proposes metrics that go well beyond the metrics contained in the Frameworks Initiative and focuses only (in contrast to the Guiding Principles’ application to all business entities) on the 500 largest companies in the world. The Benchmark, most fundamentally, calls into question the sufficiency and efficacy of the Frameworks Initiative by presenting companies with a competing set of reporting guidelines from which they may be judged by investors and other stakeholders.
Beyond concerns with the Benchmark’s process, significant concerns also exist within the substance of its proposed guidelines, including the following:
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The Benchmark measures whether an employer remains “neutral” with respect to union organizing campaigns. Neutrality is a uniquely U.S. phenomenon, and can be interpreted as requiring silence on the part of employers in the context of union organizing efforts. That concept is inconsistent with the principles of freedom of association as they are defined and understood at the international level. Indeed, the free exchange of ideas, information and opinions are fundamental to the existence of a free-trade union movement. This “neutrality” metric therefore eschews the notion that principles of freedom of association, as defined at the international level, promote the free exchange of information and ideas regardless of their source or affinity. The Benchmark encourages freedom of expression and opinion at the international level so long as its manifestation does not interfere with an employee’s free choice to be represented, or not represented, by a union.
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The Benchmark also includes a metric measuring whether the company “faces criticism or negative news stories related to Labour and Human Rights” or has responded to similar reports. A report, and even more cryptically, a “criticism,” does not equate to an actual adverse human rights impact contemplated by the Guiding Principles, and allowing unsubstantiated reports to affect a company’s “rating” does not appear to further the Guiding Principles’ effective implementation.
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The requirement to report every claim relating to certain International Labour Organization conventions, as well as accompanying reports on “corrective actions taken,” presupposes the legitimacy of every claim that is raised and that every claim requires some corrective action.12 Again, questions remain regarding whether this metric furthers the Guiding Principles.
Looking Forward
Increasingly, companies will need to be aware that reporting guidelines exist and prepared to field inquiries from investors and other groups regarding the company’s position on, and commitment to, human rights and currently available reporting guidelines. The Frameworks Initiative and the Human Rights Benchmark, and perhaps future initiatives or frameworks may produce conflicting and costly directives, and may serve to create confusion among employers seeking to embrace the Guiding Principles.
