Posted by Stuart Bell

Reflections on Ergon’s work: 18 years since we started

Stuart Bell, a founder director of Ergon, is stepping back from the business after eighteen years. He reflects here on what’s changed, and what hasn’t, in the years since Ergon’s establishment.

Ergon: past and future

When Steve Gibbons, Alastair Usher and I set up Ergon in 2005, globalisation was in full swing with the rise of China as the world’s factory and investment in ‘emerging’ markets powering ahead -particularly in the so-called BRIC economies. In parallel, stories about sweatshops and child labour were regularly being reported as NGOs and the media focused on working conditions within these increasingly dispersed supply chains.

At a time when neo-liberal economics was unassailable, voluntarism rather than regulatory action was the response, through the development of corporate codes of conduct enforced by social auditing, and the creation of sector-wide and multi-stakeholder initiatives (MSIs), such as the UK’s Ethical Trading Initiative (established 1998), to promote collaborative solutions. Most such policies were based around the Fundamental Principles and Rights at Work (aka the ILO Core Conventions) – also agreed in 1998 – covering child labour, forced labour discrimination and freedom of association/collective bargaining – and more recently, health and safety. This was crucial in providing a central reference point, and one with the UN’s imprimatur, for the development of private sector labour standards.

But while many corporations and other bodies had codes and operating policies against labour abuses, experience and capacity to implement them on the ground was limited. That’s where Ergon came in. Bringing together experts from the world of international labour law, industrial relations and socially responsible investment, we were well-placed to provide support and practical advice to companies and international investors on interpreting labour standards, in terms of what the ILO Conventions actually meant for corporations and investors, and applying them in practical workplace situations where high-level principles need to be translated into workable action plans.

From the very beginning, we worked with ETI and its corporate members, other MSIs such as Better Cotton, the ILO, and investing institutions such as the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD). We continue to do so, but it is notable that at that time our agenda focused on labour issues.

So what’s changed?

In terms of the macro-environment, many of the certainties of the 2000s have been blown away. The global financial crisis of 2008-9 challenged the credibility of unfettered financial markets, a protracted slowdown in the global economy challenged developmental growth models, slowing the pace of globalisation and putting strains on social cohesion. US global hegemony has given way to more polarised global politics, while automation has accelerated at an ever faster pace as demonstrated most recently with emergent AI. While there has been a decline overall in absolute poverty, the share of global wealth accruing to labour has also declined as workers’ leverage has decreased, meaning wages have stagnated in many developed countries.

Perhaps most importantly, the past two decades have seen ever clearer manifestations of the climate crisis, which at its heart challenges the fundamental tenets of economic development, based on natural resource use, consumerism and growth.

A widening agenda

Against this background, the agenda of ‘social responsibility’ issues facing companies has dramatically widened, notably with the adoption of the UN Guiding Principles on Business and Human Rights (UNGPs) in 2011. This not only broadened definitions of corporate responsibility to include the full spectrum of human rights issues, but it also clarified the depth of responsibility (all through supply chains) and the processes that should be used to address impacts (comprehensive due diligence not just auditing).

However, the UNGPs were still presaged on principles of voluntarism, and in fact were a compromise in the face of disagreement on a global corporate human rights convention. Ironically, in recent years the concepts behind the UNGPs, especially due diligence, have been included within national and supra-national regulation – starting with laws on forced labour and modern slavery, and more recently broader corporate human rights due diligence legislation in various European countries, soon to be at EU level and beyond.

Ergon was an early adopter of the broader human rights agenda, and in fact we completed our first Human Rights Impact Assessment (HRIA) on a proposed gas pipeline across Greece and Albania to Italy in 2011. We have continued to pioneer HRIAs in various sectors including hotels, energy, food and chemicals. Such studies were unheard of when we started but now provide a deep-seated diagnostic of drivers of impact, that can be used to develop practical actions for buyers, suppliers and stakeholders.

The types of sectors exposed to human rights scrutiny has also expanded. Sporting events, platform economy actors and tech giants have joined apparel and food in the firing line. It is also notable that several important issues have moved up the human rights agenda, for example gender-based violence and harassment (GBVH) (particularly since the #MeToo movement), living wages and even unionisation. None of these were high up corporate agenda in 2005.

Human rights and the climate crisis

The overlap and interplay between the climate crisis and human rights impacts is also relatively novel. Among many clients, there is far closer integration between sustainability teams working on environmental impacts and social issues, and for Ergon, work  on JustTransition as well as analysis of human rights issues within renewables and the basic human right to a healthy environment are all growing areas.

Over the years, there have been few countries or regions where we haven’t operated. I’ve been privileged to have worked in more than 30 countries, and to have visited worksites ranging from cement plants, LNG terminals and hydro-schemes through to tea estates, coffee farms and chicken processing units, speaking to hundreds of workers, managers and community members along the way. While many situations experienced by workers on a daily basis are grim, even where this is the immediate responsibility of managers and supervisors, the problems at heart are systemic – insufficient resources within a value chain to pay decent wages or enforce standards, poor management training, production pressures, corruption, entrenched political and/or cultural attitudes towards unions, women and minorities, to name but a few.

Ergon’s breadth of work means we have built up a huge knowledge base of human rights risks in different sectors and contexts – recorded in risks databases, country profiles, and sectoral analysis. We have also continued to work with a broad range of sectors – from finance to food and from infrastructure to electronics. We have been able to take valuable experiences from one sector and apply to others, and we have built an almost intuitive understanding of the structural drivers of risk, value chain dynamics and potential practical actions.

Future uncertainty

But pitted against steps forward in terms of awareness of issues, due diligence regulation, and techniques to address negative risks and impacts, there are important counter-trends which may undermine progress.

As Asian markets and sources of finance have grown relative to the ‘West’, it is unclear whether the established concepts of corporate responsibility and due diligence will maintain their traction.

Populist politics in many countries has generally come at the expense of a more internationalist outlook. Against this background the prospects for international agreement on key issues, such as the climate crisis, or funding for international development programmes or collaborative initiatives are less sure. The rise of more authoritarian governments has also closed down the space for civil society to report on or challenge corporate abuses in many countries.

Finally, in terms of processes to manage risk, while human rights due diligence may be the current watchword, the pace of change is slow.  Some leading international companies are pursuing a more holistic and comprehensive approach to understanding and addressing risks, but many still rely on social audits which fail to penetrate much beyond Tier 1 or 2, in spite of long-standing critiques of their value. Many companies and brands still lack visibility over who is making or growing their stuff, let alone the conditions they are working in. Investment in human rights due diligence capacity lags behind other risk areas, and reports of corporate abuses continue to come with alarming regularity.

As someone who has worked in the field of corporate responsibility for nearly 40 years, the fact we are still debating whether companies are responsible for their impacts can feel frustrating, but also as an amateur historian, I recognise that fundamental change is hard to achieve and persistence in promoting higher standards is all.

Uncomfortable though it may be, uncertainty is the natural state of human affairs. One thing I’m confident of is that based on our long experience and the commitment of my (former) great colleagues, Ergon is well-prepared to provide relevant, insightful and professional advice on established and emerging issues whatever the future may bring.