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ARTICLE:
Moving at the Speed of Light: Major Developments in Corporate Human Rights Reporting 2015-2016
by Steve Voien
Originally published in three parts as a LinkedIn posting.

Updated July 12, 2016 (All rights reserved.)

Human Rights Reporting during the last couple of years — driven in particular by increased concerns about conflict minerals, forced labor and human trafficking — has expanded from a subset of sustainability reporting into a full-fledged business activity in its own right.

Probably the most notable development has been the 2015 publication of the UN Guiding Principles Human Rights Reporting Framework (UNGP RF), described as the “first comprehensive guide for companies to report on their human rights issues.” But a steady stream of other milestones — standards, frameworks, rankings, ratings and legal requirements — have further defined the field since January 2015.

In the three-part article below, I profile 10 of these milestones. Readers who would like to read the Discussion and Conclusions first may click on that title in the Table of Contents below.

ARTICLE TABLE OF CONTENTS
    Part One
  1. UN Guiding Principles Reporting Framework (UNGP RF)
  2. Corporate Human Rights Benchmark (CHRB)
  3. UK Modern Slavery Act (MSA)
  4. Part Two
  5. OECD Due Diligence Guidance on Conflict Minerals (Third Edition)
  6. UN Sustainable Development (SDGs)
  7. Paris Climate Agreement
  8. Part Three
  9. EU Directive on Non-Financial Information Disclosure
  10. Global Initiative for Sustainability Ratings & Rankings (GISR)
  11. Committee on Supplier Ratings (COSR)
  12. ILO Protocol to the Forced Labour Convention
  13. Discussion
    Conclusions

Part One
In Part One of this article, I provide profiles of the UNGP Reporting Framework (UNGP RF), Corporate Human Rights Benchmark (CHRB), and UK Modern Slavery Act (MSA).

Each of these developments has a direct bearing on how corporations assess and report on their human rights performances.

1. UN Guiding Principles Reporting Framework (UNGP RF)
Read more at ungpreporting.org
  • What: Voluntary annual human rights reporting framework.
  • Goals: To help companies understand where the most severe human rights risks lie in their activities, and provide guidance on how to answer key Human Rights questions with relevant information.
  • Applies to: All companies of all sizes globally. Phased approach allows companies new to the Framework to meet a minimum first-year threshold by reporting on as few as eight of the framework’s KPIs.
  • What’s New & Different: Described as world’s first comprehensive guidance for corporate human rights reporting. Takes a “salient” issues approach (versus materiality) that focuses on people whose human rights are most at risk.
  • Content/Format: Seven Reporting Principles and a concise set of 27 KPIs.
  • Linkages: Suggests using the Integrated Reporting Framework or the GRI G4 Framework for guidance on information to be included. Cross-referenced to 10 broader sustainability reporting frameworks, and to industry and issue-specific initiatives including DJSI, OECD Due Diligence Guidelines (Conflict Minerals) and Global Compact.
  • Notes: An Assurance Framework companion document due out later in 2016 will provide guidance to assurance providers and internal auditors.
2. Corporate Human Rights Benchmark (CHRB)
Read more at Corporate Human Rights Benchmark
  • What: Annual public ranking of the human rights performance of the world’s largest listed companies.
  • Goals: Aims to create a competitive “race to the top” in corporate human rights performance.
  • Applies to: Pilot benchmark to be published in November 2016 will rank 100 companies in the agricultural, extractives and apparel sectors. Over time will expand to include more industries and the world’s largest 500 listed companies.
  • What’s New and Different: Described as first ever ranking by human rights performance of the world’s largest publicly listed companies. Rather than creating its own Indicators, asks companies to choose KPIs from a menu of “Disclosure Points” drawn from GRI G4, UNGP RF, SASB.
  • Content/Format: Published rankings based on information found in company reports, websites and other publicly available information.
  • Linkages: Designed to complement the UNGP RF.
  • Notes: Similar model to Oxfam’s annual “Behind the Brands” ranking of 10 major food and beverage companies. Complemented by the CHRB Framework Paper for Multi-Stakeholder Consultations.
3. UK Modern Slavery Act (MSA)
Read more at Transparency in Supply Chains
  • What: Legislation requiring annual public disclosure "Statement" that describes actions taken to ensure slavery, compulsory labor and human trafficking are not occurring in the company’s supply chain. Increases oversight and penalties for violations.
  • Goals: Prevent slavery in companies and supply chains through increased transparency and consumer pressure. Level the playing field between companies taking steps to address the issue and companies not doing so.
  • Applies to: Companies and large subsidiaries operating in the UK valued at £36 million (about $53 million) or more. Required for financial years beginning on or after April 1, 2016.
  • What’s New and Different: First country to require corporate slavery-focused reporting. Companies must post a link to the Statement on their website home pages.
  • Content/Format: Refreshingly non-prescriptive, but recommends discussing supply chains, policies and practices, areas of risk, effectiveness of measures taken, and staff training efforts.
  • Linkages: Some parts of the MSA are modeled on the California Transparency in Supply Chains Act of 2010.
  • Notes: Boards must consider and a director or Partner must sign the Statement. Corporations may satisfy the requirement by stating they took no action.
In Part Two of this article, I’ll provide snapshots of the UN Sustainable Development Goals, Paris Climate Accord and OECD Due Diligence Guidance on Conflict Minerals (Third Edition, April 2016). Stay tuned!

Part Two
Teaser alert: One of the developments I describe below offers a menu of 834 KPIs to corporate reporters — but that's less alarming than it sounds, as you’ll see.

In Part One of this article, I laid out three of 10 major developments in corporate human rights reporting since January 2015. Here are profiles of three more.

4. OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (Third Edition, April 2016)
Read more at OECD Due Diligence
  • What: Expanded due diligence management framework and annual reporting guidance for conflict minerals in company supply chains. Not legally binding, but widely seen as “soft law” that can prompt investors, governments and others to pressure companies into taking action.
  • Goals: Help companies respect human rights, establish transparent mineral supply chains, avoid contributing to regional conflicts, resolve conflict/complaints through mediation, and promote responsible private sector engagement in post-conflict fragile states.
  • Applies to: For use by any company that may be sourcing conflict minerals or metals at any point along its supply chain.
  • What’s New and Different: Third Edition is described as the only recognized due diligence framework for conflict minerals, with the only global grievance mechanism. Signed for the first time by non-OECD governments (12) in addition OECD members (34).
  • Content/Format: Five-step risk management framework includes risks of forced and child labor engaged in artisanal mining. Step Five entails producing an annual public report addressing specific questions regarding supply chain management systems, risk assessment procedures and findings, and risk management steps taken including follow-up and outcomes.
  • Linkages: In line with the UNGPs on Business & Human Rights and ILO standards. Referenced and used for binding regulations in the U.S. (SEC Final Conflict Minerals Rule), draft EU regulation, and the legal frameworks of countries including the Democratic Republic of the Congo (DRC), Republic of the Congo (RC), Burundi and Rwanda.
  • Notes: The OECD and FAO recently developed Guidance for Responsible Agricultural Supply Chains, and the OECD is currently developing Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector. Both address forced and child labor.
5. UN Sustainable Development (SDGs) 2015-2016
Read more at Sustainable Development Knowledge Platform
  • What: Seventeen global goals for all stakeholders that provides companies guidance on how to report their contributions and align their strategies toward achieving the goals; eight or more of the goals have a direct bearing on human rights. Signatory governments are to provide leadership, establish National Contact Points and monitor progress.
  • Goals: To end all forms of poverty globally, fight inequalities and tackle climate change by 2030.
  • Applies to: All stakeholders including businesses of all sizes and national governments.
  • What’s New & Different: Compared to their predecessor Millennium Development Goals, the SDGs are more ambitious in scope, explicitly call on companies to apply creativity and innovation to solving sustainable development challenges, apply to all countries instead of only developing countries and state that addressing climate change successfully — Goal 13 — is essential to achieving the other 16 goals.
  • Content/Format: The SDG Inventory of Business Indicators provides companies with a menu of 834 (!) existing KPIs drawn from GRI, CDP and Women's World Banking Gender Performance Indicators, to help them measure and report their contributions toward the achieving the goals.
  • Linkages: Linked with Paris Climate Change Accord.
  • Notes: Adopted in 2015, came into force January 2016. The menu of KPIs to choose from sounds alarmingly long, but any company reporting to GRI and CDP standards will have already done most of the work necessary to create a standalone SDG Index or incorporate the SDGs into their GRI indexes.
6. Paris Climate Agreement 2016
Read more at Framework Dimension on Climate Change
  • What: New global climate change agreement that sets a specific temperature ceiling, strengthens transparency requirements, and creates universal harmonized reporting and verification requirements.
  • Goals: Aims to hold global average temperature rise since pre-industrial levels to well below 2 degrees C, promote clean energy, increase the world’s ability to adapt/foster climate resilience to the adverse impacts of climate change, and assist developing countries as they establish climate change inventory and reporting processes.
  • Applies to: Countries and all stakeholders including companies.
  • What’s New and Different: Increases transparency and strengthens scrutiny of the steps countries take to meet their emissions goals.
  • Content/Format: Replaces Kyoto Protocol.
  • Linkages: Explicitly links climate change and human rights in the Preamble, although there are no direct human rights provisions in the text.
  • Notes: Adopted December 2015; signing began April 2016. Takes effect after ratification/accession by 55 of the 177 signatories accounting for 55% of global GHG emissions.
In Part Three of this article, I’ll profile the EU Directive on Non-Financial Information Disclosure, Global Initiative for Sustainability Ratings & Rankings (GISR), Committee on Supplier Ratings (COSR), and the ILO Protocol to its Forced Labour Convention.

Part Three
In the first two parts of this article I profiled six of 10 major milestones in corporate human rights reporting since January 2015. See below for profiles Seven to Ten.

Following the 10th profile, I provide a brief Discussion and four Conclusions.

7. EU Directive on Non-Financial Information Disclosure
Read more at EU Directive Factsheet
  • What: Expanded EU disclosure requirements for human rights, diversity, community, anti-corruption/anti-bribery and environmental issues.
  • Goals: To strengthen non-financial disclosure, and to harmonize and streamline reporting practices while retaining a degree of flexibility.
  • Applies to: 6,000+ European companies with more than 500 employees, including listed and unlisted corporations, and other companies such as insurance companies and banks that EU Member States designate.
  • What’s New and Different: As with CHRB, the idea that new disclosure requirements can be established without creating new KPIs is welcome and overdue.
  • Content/Format: Designed to be non-prescriptive and flexible; see next bullet.
  • Linkages: Encourages use of guidelines and principles put forth by the UN, OECD, ISO, ILO and GRI among others.
  • Notes: Amends the 2013 EU Accounting Directive. First reports may be required for 2017.
8. GISR — Global Initiative for Sustainability Ratings & Rankings (GISR)
Read more at About GISR
  • What: Global multi-stakeholder initiative that aims to establish a widely-accepted best practice tool for raising the quality of sustainability assessments and ratings.
  • Goals: To enable investment dollars, procurement decisions and consumer purchasing to flow toward “true” sustainability leaders. To serve as an impartial ratings standard-setter that does not itself rate companies.
  • Applies to: The initial aspects of the framework will apply to all business sectors; sector-specific adaptations will follow.
  • What’s New and Different: Appears to be the first initiative of its kind.
  • Content/Format: Will provide accreditation to ESG ratings based on their adherence to GISR’s 12 Principles (materiality, impartiality etc.)
  • Linkages: No explicit linkages. Convened by Ceres and the Tellus Institute.
  • Notes: CDP is among the first organizations to be included in the GISR “Hub,” which provides best practices and profiles of ESG research and ratings organizations.
9. Committee on Supplier Ratings (COSR)
Read more at Committee on Supplier Ratings
  • What: Nonprofit initiative that provides institutional sustainable purchasing programs with professional development, research, case studies, working groups and annual awards.
  • Goals: To help organizations strengthen environmental, social and economic performance within their supply chains through sustainable purchasing. To serve as the basis for a future rating system.
  • Applies to: Public and private entities across sectors.
  • What’s New and Different: Appears to be the first initiative of its kind.
  • Content/Format: Various; see first bullet.
  • Linkages: Put forth by the Sustainable Purchasing Leadership Council. Complements. Some features align with ISO’s 20400 International Standard for Sustainable Procurement.
  • Notes: Version 2.0 of COSR’s Guidance for Leadership in Sustainable Purchasing was published in June 2016.
10. ILO Protocol to the Forced Labour Convention
Read more at ILO Labour Standards
  • What: New legally binding protocol and recommendations that enter into force in November 2016.
  • Goals: To update and fill implementation gaps in ILO Convention 29 on Forced Labor, which dates to 1930. To make the Convention more effective in fighting contemporary forms of forced labor and human trafficking.
  • Applies to: The 177 ILO member states.
  • What’s New and Different: Stronger measures for prevention, protection and remedy, especially with regard to human trafficking.
  • Content/Format: Requirements include sanctioning perpetrators, providing victims with protection and access to appropriate remedies (including compensation), and educating those vulnerable to forced labor.
  • Linkages: To ILO Convention 29 and ILO Abolition of Forced Labour Convention 105 (1957).
  • Notes: A recent ILO report found that illegal private-sector profits from modern forms of slavery amount to $150 billion a year. An estimated 21 million people are the victims, more than half of them women and girls.

Discussion
Mitigating human rights impacts in corporate supply chains may be the toughest management challenge companies face in their journeys to become fully sustainable — engaging, as it does, the most rapidly morphing situations on the ground and the greatest number of stakeholders and cultural differences, and requiring the greatest number of judgment calls in ambiguous situations.

Look for the trend toward greater scrutiny and transparency of human rights — in the form of standards, guidelines, ratings, rankings and regulatory requirements — to continue for the foreseeable future.

    Conclusions
  • Every one of the 10 developments profiled includes greater due diligence and transparency around human rights impacts in company supply chains, with a particular focus on modern slavery/trafficking, conflict minerals and security forces.
  • Human Rights Reporting (like climate change reporting) has moved beyond desirable to become an essential business activity for most industries, and is increasingly enshrined in legal and regulatory requirements.
  • GRI continues to be the only global reporting format sufficiently comprehensive to satisfy most emerging human rights transparency standards and requirements. This is particularly true given that G4 placed an increased emphasis on human rights, and that the modular GRI Standards likely to be introduced in October of this year will lead to more frequent updates.
  • Having said that, many companies — depending on their industry and impacts — will need to go beyond GRI reporting, and begin publishing some combination of freestanding reports that includes: Conflict Minerals reports, Forced Labor and Human Trafficking reports, Human Rights Assessment reports (per the 2015 UNGP Reporting Framework), and Implementation Progress Reports on the Voluntary Principles for Security and Human Rights.

Steve Voien
Copyrighted material 2016 — all rights reserved.

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