Issue Brief: Human Rights
Human rights abuses remain omnipresent around the world. From authoritarian regimes, to the repression of free speech, to oppressive working conditions, some populations experience exploitive, unjust, and harsh living conditions. Fortunately, since the mid-20th century, the rise of international standards and an international human rights community have become the basis for progress and hope. Following World War II, the United Nations developed the Universal Declaration of Human Rights, which set forth 30 fundamental rights, including the right to safety, work, livable wages, education, free expression, and freedom from torture. These rights have been subsequently expanded upon in international treaties, regional agreements, and new laws that address the political and civil dimensions of human rights, as well as their economic, social, and cultural aspects. The Universal Declaration explicitly called on “every organ of society” to share responsibility for human rights.
Over the last 20 years, there has been a growing focus on the human rights risks and responsibilities of businesses. According to the UN Human Rights Council, virtually every industry and business faces human rights risks, challenges, and responsibilities in today’s global economy. In 2011, the Council unanimously endorsed the Guiding Principles on Business and Human Rights: Implementing the UN Protect, Respect and Remedy Framework, which clearly delineate the respective roles and responsibilities of governments and companies regarding human rights. [hyperlink to sidebar article]
For many years, Calvert has led initiatives pressing companies and entire industries to respect human rights—from improving factory labor practices, curtailing human trafficking in global supply chains, and divesting from Sudan—to promoting freedom of expression and the right to privacy on the Internet. Calvert believes it is critical for companies to adopt core human rights standards throughout their operations and proactively manage human rights-related risks.
In the Workplace
Companies worldwide face human rights challenges in their workplaces, across their global supply chains, and in the communities and countries where they operate. Several industry groups, however, are at higher risk for potential human rights abuses, including footwear and apparel; consumer electronics and toys; and agriculture, food, and beverages. Calvert has long encouraged companies in these industries to work with their suppliers to implement robust codes of conduct—ideally consistent with the International Labor Organization’s (ILO) core labor standards.
Human trafficking and forced child labor are examples of growing problems in the apparel industry and Calvert has worked to address these issues head on. For example, Calvert worked with a multi-stakeholder coalition of retail trade associations, human rights groups, apparel companies, and trade unions to curtail the sourcing of cotton from Uzbekistan, where forced child labor is sanctioned by the government and ILO standards are ignored.
In the consumer electronics industry, forced overtime, low wages, and poor safety procedures are prevalent problems in company supply chains, and Calvert has focused sharply on these issues. We also have encouraged several beverage giants to strengthen the implementation of their labor codes with bottlers and agricultural suppliers.
Beyond the Factory Floor
Outside the workplace, companies face human rights risks and responsibilities in the communities and regions where they operate—especially those in proximity to conflict zones or in countries with poor governance or weak rule of law. Companies with operations in countries like Sudan, for example, may be inadvertently funding a regime committing atrocities such as genocide.
Another prime example lies with the electronics industry, whose products may use certain minerals—such as gold, tin, tantalum, and tungsten—that may be obtained from mines in the Democratic Republic of Congo or adjoining countries. The profits from these “conflict minerals” have been used to buy weapons that have fueled the world’s bloodiest conflict since World War II. The human rights of Indigenous Peoples are also at risk from international companies, particularly in the oil and gas and mining sectors, which have a history of transgressing on indigenous lands and depleting their natural resources without permission or compensation.
While the Internet has created an unprecedented information and communications platform, Internet and communication technology companies increasingly face free expression and privacy issues in authoritarian and democratic countries alike.
Calvert evaluates corporate policies and actions in all these areas. We work directly with companies and with coalitions of investors, human rights groups, and industry leaders to establish global standards and effect change from the top-down. For example, we participated in the SEC rule-making process of the Dodd-Frank Act provisions that require companies to disclose their efforts to source and remove conflict minerals from their supply chains. Calvert has also pressed companies to endorse the UN Declaration on the Rights of Indigenous Peoples and to accept the principle of Free, Prior, and Informed Consent (FPIC) as the standard for operating in proximity to indigenous lands and communities. In the area of the Internet, Calvert joined the multi-stakeholder Global Network Initiative (GNI) to establish international, baseline human rights standards for technology companies and governments with regard to free expression and privacy issues.
The Business Case
In Calvert’s view, corporate commitments to identifying and managing human rights risks are vital to a company’s long-term profitability. A lack of goodwill from investors, local communities, or governments can threaten a company’s social license to operate—and in turn its operations. For example, one U.S. mining company operating in South America lost $2 million a day when its operations were suspended due to large community protests over environmental and human rights issues.
A company with substandard records on labor or human rights—or that operates in a country with a poor track record in these areas—faces a range of business risks, including:
- Legal and regulatory actions
- Government shutdowns of local facilities
- Negative publicity and a damaged reputation or brand
- Loss of local community support
- High turnover, low productivity, and other costly labor problems
In our view, companies that directly and aggressively address human rights issues can reduce these business risks and costs, facilitate overseas expansion, protect and extend their brand reputation, and generate valuable goodwill among consumers, investors, and the community.
Evaluating Commitment and Performance
Calvert evaluates the effectiveness of a company’s human rights policies and risk management against a range of industry best practices. This typically includes analyzing supplier and vendor codes of conduct, the application of international labor standards, and supplier training.
Monitoring all suppliers and tracing all raw materials can help ensure that effective measures are in place throughout a company’s supply chain. Therefore, Calvert examines suppliers’ efforts to address human rights issues and publicize their results.
In the past, human rights transgressions in offshore operations were not well known or reported. But that is changing fast. Bloomberg now discloses information about companies’ suppliers. And, the recent groundbreaking California Transparency in Supply Chain Act (SB 657) requires California manufacturers and retailers to report and publish their efforts to eradicate slavery and human trafficking throughout their direct supply chains on their corporate websites. Calvert worked with others to promote passage of the Act and has co-authored a guide to help companies implement the Act’s requirements.
We also evaluate how companies handle violations or seek to improve a poor track record. In this regard, independent, third-party audits that report on the extent to which a company is complying with international standards, such as the UN Global Compact and the Voluntary Principles on Security and Human Rights, are important information sources.
Challenges and Opportunity Ahead
Human rights issues loom large in the media and with consumers, investors, and shareholders alike. In our view, to be globally competitive, companies must establish a firm-wide human rights policy that addresses their operational and regional challenges.
Calvert urges companies to use the UN’s landmark Guiding Principles for Business and Human Rights [link to it] to analyze and manage their human rights-related risks and responsibilities. The Guiding Principles are a practical due diligence tool that clearly delineate the respective roles of governments and companies regarding human rights.
We believe the Guiding Principles should be considered a floor upon which companies and investors—as well as governments and civil society—must stand as the minimum acceptable standard for the early 21st century.
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