Taking Stock of Business and Human Rights: Policies and Practices

Mar 22, 2007

Christine Bader, Joanne Bauer, and David Schilling discuss corporate social responsibility.

This talk was part of the event "Taking Stock of Business & Human Rights: Policies and Practices," cosponsored by the Business & Human Rights Resource Centre and the Carnegie Council. It was the first in a series of workshops for ethics in business.

CHRISTINE BADER: Greetings, and thanks very much for having me here today. I am going to speak about my experience with British Petroleum (BP) working on human rights issues, first on the front lines and then in policy development, and then talk a bit about my work with Professor John Ruggie, the UN Special Representative for the Secretary-General on Business and Human Rights, whom I have been on loan to for about a year now from BP.

I moved to Indonesia for BP in 2000 to work on the Tangguh project, a liquefied natural gas (LNG) plant that we are building in the province of West Papua. This project was not short of social and environmental challenges. It is in one of the world's most diverse marine ecosystems and sensitive mangrove forest areas. It is in a province that had recently won the right to, but did not yet have the capacity to, manage the massive influx of revenue that would be accrued from the project, in a fragile, young democracy, with local residents who claimed historical neglect from their government and lacked decent infrastructure, to be protected by a military accused of corruption and abuses. We didn't have an instruction manual for how to deal with these issues, that is to say a global human rights policy.

Following allegations of complicity and abuses by a rogue element of the Colombian military about ten years ago, BP's Board formally approved public support of the Universal Declaration of Human Rights. But there wasn't exactly a policy, in that it did not provide guidance for what to do beyond the fundamental principle of respecting human rights and respecting the government's sovereignty and primary responsibility for protecting and promoting the rights of its citizens.

So for Tangguh we embarked on our own program of external engagement, a program and policy development. We took a number of actions with regard to human rights.

We commissioned a standalone human rights impact assessment, which led to the creation of our community-based security program, in which we aspired to implement both the letter and the spirit of the Voluntary Principles on Security and Human Rights, which is the international initiative for the extractive industries.

We instituted multiple programs of outside monitoring of our operations, including periodic follow-up assessments and the Tangguh Independent Advisory Panel, chaired by Senator George Mitchell, and reporting directly to our Chief Executive.

Major construction for Tangguh is now well under way. Our community relationships there are strong right now. But anyway, clearly these are long-term efforts that were undertaken at Tangguh.

From Indonesia I moved to Shanghai, where I was similarly looking at potential social impacts of a petrochemicals joint venture. Again, there was no human rights policy to guide my work there, but I was focused on the labor rights of the migrant construction work force, namely, ensuring fair working conditions and health and safety standards and their temporary accommodation.

I then moved back to London, where I had started with the company, and eventually rejoined our Group Policy Advisor, who asked me to focus on human rights.

There were a number of reasons for this, both internal and external. This was the beginning of 2005, when a number of our projects in difficult places were ramping up at once. We were starting to see first oil come out of the BTC pipeline in Azerbaijan and Turkey and Georgia, and major construction on Tangguh and in Angola, all of which had attracted the attention of human rights organizations, since many of those governments had an unfortunate history of interference with the realization of rights of their citizens.

Externally, the debate over the Draft UN Norms was still carrying on, soon to end with John Ruggie's appointment. Plus the uptake of initiatives like the Business Leaders' Initiative on Human Rights and the establishment of a Human Rights Task Force in our industry association. All of these things made it clear that this topic was worthy of reexamination right now.

I began by holding lots of workshops and conversations with our staff around the world working in difficult places. I didn't begin the exercise thinking that a policy was going to pop out the other end. I was merely charged with finding out what the issue or issues were and what our staff needed.

Much to my surprise, they actually did want a piece of paper. They were all inventing the spoke solutions that were appropriate for their particular situations, as I had been in Asia, but they actually needed robust language that had been thought about and agreed upon to help them frame and communicate our issues.

So the Tangguh team would receive a letter from a human rights organization accusing us of complicity in the abuses of the Indonesian military. They would fret and draft a letter and send it out to headquarters to the folks that oversee Asia. They would worry about, "Well, how do we respond? What do we say?" At the same time, our staff on the BTC pipeline would get a letter accusing us of complicity in the abuses of the Azerbaijani military. So we were having these siloed conversations.

When everyone realized this, there was a demand for a common language. So what is our response when we are accused of complicity? What is our position on human rights?

From all these workshops, I produced a document that attempted to answer these questions. It was a Human Rights Guidance Note. It grouped the rights that BP impacts the most into three categories: employees and security and communities. It explained what existing functions have accountability for what issues. It discussed terms like "complicity." It didn't provide the answers, because there aren't any, but some language and principles to help our staff consider these issues and engage on them internally and externally.

So why was it a guidance note, not a policy? The purpose was to explain how human rights are managed within the company, and that is through existing functions. So employee issues are handled either by our human resources function or by the compliance-and-ethics function that has responsibility for implementing our Code of Conduct worldwide. That is, in fact, mandatory for every single BP employee around the world.

Our security function is responsible for, obviously, security of our people and assets. This includes implementation of the Voluntary Principles on Security and Human Rights.

Our community engagement is handled by our Communications and External Affairs Function.

The Guidance Note doesn't instruct people on how to behave. It doesn't spell out something that every employee in the company must do. It is a statement about how we think about human rights, how human rights are addressed in our operations, and again, who is accountable for what issues. Then each of those functions has their own operating procedures and policies.

For example, the Communications and External Affairs Function will soon be piloting our new set of social requirements for new projects. It's a suite of performance requirements on topics like resettlement and indigenous people. For those of you who are familiar with the IFC Performance Standards, it will look quite familiar. In due course, this will become mandatory for all of our new projects, along with our environmental requirements for new projects which were recently rolled out. The Human Rights Guidance Note will sit alongside those.

These requirements will eventually fit in with our new operating management system, which will apply not just to new projects but to every single BP operation around the world. Establishing and rolling out that system is a long-term effort that is going to take many years. All of this is to say that policy is not a straightforward issue. It's not as if someone in headquarters writes a policy and then it is truth.

We are trying very hard to enable people to focus on what they need to do to deliver safety and performance. As you can imagine, in a company of our size and complexity, it can be quite overwhelming to receive information about topics that are relevant to operations that are very far away, both geographically and in terms of content. So does a gas station in Connecticut have any issues in common with a pipeline in Azerbaijan? Probably not too many. So there are very few group-wide policies that apply to every single employee. I think the only two are our Code of Conduct, which covers a broad range of issues, and our Driving Safety Standard.

Let me spend a few minutes talking about the UN mandate.

As many of you know, John Ruggie was appointed UN Special Representative on Business and Human Rights in 2005 with the mandate to identify and clarify standards of corporate accountability and responsibility with respect to human rights, among other simple tasks.

There is a lot to talk about with respect to the mandate, but here I just want to focus on the pieces of work carried out for the mandate that have been focused specifically on corporate human rights policies. There are two studies that are relevant to that. The first was a questionnaire survey of the Fortune Global 500 firms. The second was a study that looked at over 300 actual company policies, rather than questionnaire responses. Both of those studies can be found at the Business and Human Rights Resource Centre.

The studies sought to determine what rights companies themselves recognized. They found that labor rights were far and away the most recognized of rights in corporate policies. So all of the Fortune 500 respondents cited nondiscrimination as a core corporate responsibility. The highest rate of recognition in actual policies was of nondiscrimination and workplace health and safety. In addition, about two-thirds of all the companies examined recognized freedom of association, the right to collective bargaining, and the prohibition against child enforced labor.

Not surprisingly, there are variations among sectors. For example, extractive companies are far more likely to have policies that recognize communities as important stakeholders--for example, policies on community consultation and engagement--whereas retail and consumer products firms are most likely to recognize the right to a minimum wage.

So the good news is that so many companies have human rights policies. Had these studies been conducted a few years ago, the sample size would have been much, much smaller.

The bad news is that recognition is only one step in a long journey. First of all, recognition of any rights is a voluntary exercise, so there is no guarantee the companies are actually going to recognize the rights that they could potentially impact the most.

Secondly, once a company does recognize a right, the form of recognition varies greatly, with words like "strive," "aim," "respect," "support." And as I mentioned earlier, what does it mean for BP to "support" the Universal Declaration of Human Rights? What does such a policy actually tell employees to do? And how can compliance with such a policy be measured?

Not only that, but sometimes the international instruments are not referenced verbatim, but instead are translated or interpreted. Many would say that it is hardly the place of companies to be paraphrasing international human rights standards, fearing that it would lead to those standards, obviously, being watered down.

And most importantly, while policies are an important indicator of awareness of human rights within a company, they are only a means to an end. So what is much more important is how the policy is implemented. Is it simply a piece of paper, or is it part of a broader program of building awareness and working to strengthen a company's performance with respect to human rights?

With both my BP and Team Ruggie hats on, I will just conclude by saying that is how a company should be judged, by what is happening on the ground.

Thank you.

JOANNE BAUER: I am here today to talk about the Resource Centre's work on human rights policies and how and why we think they are important. I wish we could have a debate about how much I disagree with everything that has been said, but I am actually going to be here really supporting the very eloquent statements made by both Christine [Bader] and David [Schilling].

But first a word about the Resource Centre for those who don't know us. The Resource Centre was founded in 2002 by a group of advocates from Amnesty International and Oxfam and former businesspeople to meet the need for up-to-date, impartial information on companies' human rights policies. We are based in the U.K. and in the U.S., with researchers also in Hong Kong and South Africa, and we hope in other regions in the future.

Our website, www.business-humanrights.org, covers 3,500 companies spanning over 180 countries and over 170 sectors and 150 issues. We provide information and tools to assist NGOs and companies, including our Corporate Human Rights Policy Section, which I would like to talk about here.

Our weekly updates are sent to over 3,500 opinion leaders worldwide, and they draw attention to the top stories and breaking news about business and human rights, both positive initiatives as well as alleged abuses. Each week we invite companies to respond to items that criticize them, which keeps our website and weekly updates balanced and encourages companies to publicly address important concerns raised by civil society. Since launching the weekly updates in February 2005, over 80 percent of the companies we have invited to respond have done so. The site is updated hourly. It receives over 1.5 million hits a month.

Former UN High Commissioner for Human Rights Mary Robinson chairs our International Advisory Network.

Now, we focus on facts rather than rhetoric, on victims rather than theory, and we take an impartial and balanced approach. We post materials representing a wide range of views from NGOs, companies, journalists, policy institutes, governments, and the United Nations.

We have three main aims:

    • To support NGOs and community groups by drawing more attention to their concerns;

    • To provide greater recognition to those companies taking positive steps; and

  • To provide greater public accountability for abuses by those companies.

So why does our organization, with our website focusing on the actual practices of companies, go to the trouble of maintaining a special section on human rights policies? I will answer that question in a minute. But let me first tell you a little bit about what this section is about. To take stock, 16 years ago, when Geoffrey Chandler founded Amnesty International's UK Business Group, which I believe was Amnesty's first business group, virtually no company had a human rights policy, or even used the term "human rights" in their business principles. He devoted his efforts to talking with companies and urging them to adopt human rights policies.

When the Resource Centre was founded in 2002, we began identifying and posting on our site, accessible from our home page, links to formal company policy statements referring explicitly to human rights. Today we have links to over 100 such statements on our site—112 to be precise. The formal policy statements that we have are contained in many different forms. It can be the company's overall business principles, it can be in its social citizenship and sustainability policy, or it can be a stand-alone human rights policy.

Now, we make no assessment as to the quality of the policy when we post it on our site. Our approach is to be inclusive rather than exclusive. The single most important criterion is that the company uses the words "human rights" in their policy, indicating that the company acknowledges that it has a human rights responsibility and is comfortable framing its social impacts in human rights terms. This criterion is one of the reasons that there is some difference here in the number of companies in the Ruggie Business Recognition Report, which numbers 300, and ours, which numbers 112. I can talk about that in the discussion.

We indicate whether or not a company's policy refers to the Universal Declaration of Human Rights. If it does, that indicates the policy anchors its understanding of human rights in internationally accepted standards. For all the 3,500-plus companies that we cover on our website, we indicate whether or not they participate in the UN Global Compact. I'm really happy to have some people from the UN Global Compact here today. It has been a very important initiative. The companies that participate in the Global Compact express support for ten principles, including principles 1 and 2 which refer to human rights.

Yet, for this list for our corporate human rights policy section, we do not include all UN Global Compact companies, which number in the thousands. We only include those companies that have gone an extra step to refer explicitly to human rights in their own corporate policy statements. That said, we recognize how significant a commitment to the Global Compact is and can be, and that it is often a first step for companies in developing their human rights policy.

I want to say again that the Global Compact really deserves a great deal of credit for its success in bringing human rights into the thinking and vocabulary of mainstream companies. It is partly because of the Global Compact that so many more companies now have human rights policies.

We do not include on this list policy statements that only refer to the rights of employees. As John Ruggie has noted in his recent report, corporations generally acknowledge greater responsibility for their employees than other stakeholders. Yet, human rights are indivisible, interdependent, interrelated, and interconnected, as the international community has repeatedly recognized. They are universal standards that apply equally to every individual, not just employees, or even employees within their supply chain, which is of course very important. All companies have human rights impact beyond their employees—on their communities where they operate, on consumers, on other stakeholders, and in their lobbying efforts—and a human rights policy, we believe, really needs to acknowledge that.

So what is the value of a company having human rights policy statements?

As has been said here already, it demonstrates that the company itself recognizes its human rights responsibilities and defines them as such. It demonstrates business recognition of international standards, implying that the company strives for consistent good conduct throughout its operation, regardless of national laws. A company that has a strong policy on individual human rights issues, such as discrimination or health and safety, should be commended for that. But if the company does not articulate those commitments as human rights, their statement is tantamount to stating no more than a commitment to complying with the minimum requirements of variable national laws, some of which might not meet internationally agreed upon standards.

A publicly stated commitment to human rights suggests the company is committed to high standards and the whole range of its impacts on society, rather than the "candy shop" approach of picking and choosing just one of those rights with which the company feels most comfortable.

For many companies, having the board or senior management person agree to a human rights policy statement is a first step towards improving practices and the impact of rights. But of course, as we have noted, a policy does not guarantee improved performance.

And finally, the policy gives the public a means to hold a company to their human rights commitment and to explore with the company how to put that policy into practice and flesh out the implications of its commitments.

We passed out a handout where we have printed what our policy sections look like with all the companies by sector, by country, and whether or not they refer to the Universal Declaration. Of these 112 companies, 85 do refer to the Universal Declaration, which is a very positive development. I can talk more about some of the insights we gleaned from this when examining this.

For us, the function of our policy section serves to demonstrate an increasing recognition of human rights among businesses. It places on the public record companies' own acknowledgment of their human rights obligations. It encourages companies that do not yet have human rights policies to adopt them by showing them up against other companies in their sector that do. It provides examples for companies to draw on as they develop their own policies. And it provides a tool that social investors, NGOs, and others can use to compare companies' policies with each other, to hold companies to the policies they have adopted, and encourage new companies to adopt those policies.

I will stop there.

DAVID SCHILLING: Ten years ago this month in 1997, The New York Times had an editorial that essentially said that environmental issues were about 25 years ahead of the discussion of business and human rights. But, the editorial said, this is an emerging issue, and more and more companies are seeing, and are going to see, that this is a critical issue that they need to address, and that there is business interest in doing so. So if we are taking stock of where we are, I think, for me, that is a helpful beginning point. For us at the Interfaith Center on Corporate Responsibility, we have been working on human rights for longer. Starting in 1971, when we came together as faith-based investors, and then added socially responsible investors and public pension funds later. We have been working on a whole range of social and environmental issues, but human rights has been at the core of that— from South Africa, to infant formula, to issues related to supply chain, workplace human rights—and trying to get companies to adopt comprehensive human rights policies. So I think the first thing is that we have to recognize that they have come some ways. I mean sometimes we at the Interfaith Center can be very critical, always wanting more of companies—and that will continue—but we also need to see the larger picture, that this discussion is really engaging right now, and it is engaging on a lot of the right issues. What we bring to it: We have helped to create that discussion by filing shareholder resolutions when necessary. If you look at the last five years, in 2003 there were well over 60 resolutions. If we look at workplace human rights and human rights resolutions all the way through to last year, in 2006, there were probably about 25. About 60 of those went to a vote, and the average vote was about 15 percent, which indicates it's not just a few religious investors but there is a broader interest by institutional investors on these issues. So I think that is part of the backdrop. We have worked a lot in the extractive industry, apparel, footwear, toy, electronics, consumer products industries, as well as some of the industries that really have yet to begin to address these issues. A little bit of perspective: Our members see this first and foremost as a moral issue. The reason for that is there are so many people being hurt, not just by companies—it's not that simple—but by governments, by a number of groups. I mean look at some of those communities, whether it's a mining company in Colombia where people have had to be removed from their land; or whether it is 116 workers fired last year in the Philippines who were part of a legally organized union but were fired and have yet to be reinstated; issues related to China, all the human rights issues there; Internet censorship, health and safety issues. What motivates us is really getting our cues from the communities that are affected and impacted by policies, corporate policies as well as governmental policies. The second is the business case. I think that we have gotten better at that, because it's not that the business and moral case are separate, but I do think that we are more and more articulating our moral passion in terms of business risk, in terms of some of the proactive issues. If you are really taking care of issues in the supply chain or in the communities, you won't be having to react to the negative. That is kind of where we are moving. What do we ask of companies? Let me just quickly tick this off:

    • Policies aligned with international human rights standards.

    • Accountability from the board, all the way to the CEO, to the appropriate staff, in some companies including country-specific staff that are tracking these issues.

    • Third, embedding the policies into the business itself. We don't like ghettoization of CSR (Corporate Social Responsibility) or of human rights policies. It needs to be really embedded in operation lines. That's really, really important.

    • A fourth is the kind of rigorous implementation, in terms of training of staff, business partners, suppliers, in human rights requirements. That's absolutely essential.

    • And then the monitoring. It is a combination. We hope, we think—it is essential—that internally, you've got to have your hands on it. But also necessary is independent verification.

    • And a strong emphasis on remediation, not simply identifying what the issues are.

    • Stakeholder engagement—not just a fluffy consultation. We need more than that. We need really, really serious—especially in industries that are impactful over the years—consent of communities. You need to get a social license to operate, not simply having a couple of consultations with communities, getting them involved, getting their input, and then going off and making decisions separate from communities. So I think that is really, really critical.

  • And finally, public reporting. I'm glad GE is really moving in this direction. So many of the reports—and they are just proliferating, and I read a lot of them—are not worth reading. They really aren't.

So we have to say that reporting has to be with specific human rights indicators. We need to know the management system that you have in place, that is operational. And we need much more robust reporting. A paragraph about the fact that you are aligning yourself with the Universal Declaration of Human Rights is important, but then we have to see how that is fleshed out. You were talking, Christine, about some of the ways that you are doing that through your guidance documents and through your community policies to assess impact in new projects. This is a long-term process. We started, for example, engaging Alcoa in 1995, and in 2001 a human rights statement was promulgated. We've had a good, productive dialogue on two levels: with corporate on issues related to broader human rights policies; and also at the local level in Mexico, two plants that Alcoa Automotive owns, where we have workers meeting with the president of Alcoa Automotive on a regular basis so that they can give their specific issues directly to the president. That came out of a long shareholder engagement with Mr. Paul O'Neill, and it has been a very productive dialogue for both of us. But it has been very, very long term.

Johnson Controls, some of these companies that aren't these—you know, if you have the consumer companies, if there's a schlush [?], you know where that comes from. With Johnson Controls, you may not necessarily know that your building is being heated. They have been under the radar screen, but in the last five or six years, filing a resolution, meeting with them, developing their capacity, developing those kinds of policies has been a step-by-step process. Finally, they are integrating some of the human rights into their Code of Business Practice.

What are some of the challenges?

    • There is still only a small number of companies that have policies and practices on human rights.

    • Human rights often aren't integrated into the business itself. It's sort of "out here" somewhere. And a human rights statement, unless it gets grounded, I don't think is going to quite do it.

    • Third, companies tend to adopt practices and programs around some rights but not a full range of rights. I think that needs to be addressed.

    • Companies need to do a better job of interacting with the communities where they are operating. I think BP is really doing a good job, from the material I've seen—and some of our shareholders have worked with some of your colleagues on some of the social impact assessments. That is really, really an important, important area, particularly in industries that are in a community for a very, very, very long time.

  • Also, we have to learn from voluntary initiatives, voluntary codes, within companies, but also the multi-stakeholder initiatives that really have helped to move some of these issues forward. But I think those aren't enough. There is still a handful of companies that are in those initiatives.

So I think as we take stock we need to call for greater transparency and we need to build on some of the work that the UN Special Representative has done, some of the work that Amnesty International, Human Rights Watch, Economic Social and Cultural Rights Network, have done to really start saying what are some of the global rules around human rights that we can set, so that we are creating a level playing field for not just large multinational companies, but also mid-size and small enterprises. Because that's where we need to go. The voluntary initiatives—obviously as shareholders we are going to continue to ask companies, "What are your policies? How are you implementing them? Who are you engaged with on the ground? But that's not going to do it. So I'm hoping that, as we move forward from where we are right now, through the UN process, through other processes, we can really address that issue so that it is going to become clearer and clearer what the obligations are for business in this area, as for governments and other entities. Thank you.

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