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Corporate Human Rights Benchmark set to drive reporting and action

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Last week, the UK government published the long-awaited revision of its National Action Plan on Business and Human Rights. As this was an update rather than a complete rewrite, unsurprisingly the government’s expectations on companies remain largely unchanged. These centre on the UNGPs’ structure of asking companies to respect human rights in their own operations and supply chains, including through the assessment and mitigation of risks, engagement with affected stakeholders and provision of effective remedy.

The revised Action Plan contains more by way of an update on what the government has done over the last two and a half years to support companies in meeting those expectations. This includes new guidance for Board members on business and human rights, published in May by the Equality and Human Rights Commission (EHRC), forthcoming guidance on operationalising the UNGPs and grievance processes (which Ergon has worked on)  and the government’s guidance on reporting requirements under the Modern Slavery Act.

The most notable new area of government support is probably the Corporate Human Rights Benchmark (CHRB), a joint initiative by Aviva Investors, the Business & Human Rights Resource Centre, Calvert Investments, Vigeo-Eiris, the Institute for Human Rights & Business and VBDO. Designed as a tool to provide a comparative and objective ranking of companies’ human rights performance, the Benchmark is intended to encourage a ‘race to the top’ by companies seeking to outdo their peers. Government notes that it was business representatives themselves who underlined the need for such a tool, when 39% of respondents to a survey by the Economist Intelligence Unit (EIU) stated that a public ranking of companies’ human rights performance would help them fulfil their human rights responsibility. We have already worked with several companies to strengthen their human rights processes in preparation for the application of the Benchmark.

Pilot phase of the Benchmark

After extensive consultations on methodology, the CHRB team have now started the pilot assessment of the 100 largest global companies from the extractives, garment and agricultural sectors (although some of the latter, strictly speaking, are not agricultural companies themselves but retailers with agricultural supply chains). The disclosure platform, set up to enable the companies in the pilot’s sample to submit supporting material, is starting to fill up. Over the summer, the CHRB team will conduct research, analyse publicly available materials as well as the documents uploaded onto the platform and engage with companies. Scores will be calculated across the following dimensions: Governance and policies (accounting for 10%), embedding of respect and human rights due diligence in practice (25%), remedies and grievances (15%), human rights practices and responses to serious allegations (each making up 20% of the score) and an overarching assessment of transparency over human rights policies and practice (10%). The final ranking is expected to be published in November 2016.

Improved transparency, broader reporting

The first and most obvious impact of the Benchmark is likely to be improved transparency. Transparency is both a stand-alone set of indicators in the Benchmark and inherently reflected throughout all other measurement themes, many of which score not only based on the quality of information but also on the availability of it. Both the results as well as all supporting documentation submitted through the disclosure platform will be publicly accessible and Benchmark scores will be strictly based on publicly available information.

The disclosure platform, in particular, is a great opportunity for companies to show what they’re doing both in relation to specific human rights topics as well as in broader terms. As well as companies seeing what their peers are doing, it is also a great resource for the public and consumers wishing to quickly access human rights-related information.

Ultimately, this may help to create a push for broader reporting on human rights, which also forms part of the expectations of business contained in the National Action Plan.

Strengthen due diligence

But transparency is only one part of the equation. A key objective of the Benchmark is to improve companies’ actual human rights performance and this means deepening due diligence. The best reported policy won’t produce much of a Benchmark score if it is not accompanied by evidence of application in practice through risk and impact assessments, mitigation and, ultimately, remediation.

Using transparency requirements as a driver for changes in practice is in line with current trends in policy-making as evidenced by the Modern Slavery Act, which also uses corporate reporting to motivate companies to develop broader, underlying approaches to human rights due diligence (which, as our analysis shows, is still missing in most Modern Slavery statements so far).

From the work with our clients, we know that successful and robust human rights due diligence needs to be informed by a thorough understanding of human rights risks and impact dynamics. Not surprisingly, but far less mentioned, 32% of respondents to the same EIU survey stated that they would need more reliable information on country risks to meet their human rights responsibilities. In this respect, assembling information for the CHRB benchmarking process can also be an important tool helping companies uncover gaps in their current approach, identify areas where there is a need to build further knowledge and understanding as well as to prioritise actions to fill these gaps.

If you would like to discuss an indicative benchmarking of your human rights processes and disclosures against the CHRB’s themes, please contact us.