Australian business & Human Rights: inaction no longer cuts it

Human rights violations largely happen everywhere else – don’t they? We have mature legislation around labour practices and working conditions here in Australia, so why worry?

I think we can say that’d pretty much be the rule of thumb for most Australian businesses.

But – and it’s a big but – globalisation has totally changed the game.

Nowadays many Australian-based companies rely on complex and multi-layered supply chains in locations where labour laws and regulations relating human rights are far less mature and visible than here in Australia.

Also importantly, social media highlights issues at home and abroad more quickly than ever before.

Reputational risk

For example you may recall the human rights issues that impacted Australian businesses from their supply-chains as well as their own Australian operations that recently hit the media headlines? There was comprehensive hard hitting coverage around some surf wear companies tied to overseas sweatshops as well as serious allegations of under-paying workers within several industries in Australia that severely impacted their reputations.

These examples highlight why Australian businesses can no longer afford to take a back seat when it comes to managing such issues.

It is no longer acceptable to say ‘I didn’t know’.

Stakeholders expect businesses to prevent such activities taking place in operations under both their direct and indirect control (including their supply chains); as well as providing appropriate grievance mechanisms to enable issues are addressed.

Guidelines offer a framework

The United Nations Guiding Principles on Business and Human Rights (UN Guiding Principles), introduced in 2011, provide a framework to assists businesses engage with human rights issues. They are widely viewed as the global standard for preventing and addressing adverse human rights impacts related to business.

In addition to this, and in recognition of its growing importance for businesses, there are some recent developments, both on the mandatory and voluntary fronts, which are assisting companies secure greater transparency over their supply chains. This is enabling them to address human rights issues strategically and holistically.

human rights

These developments include:

The UK Modern Slavery Act 2015: effective October 2015

  • This legislation requires companies to publish an annual ‘slavery and human trafficking statement’, which includes steps taken to ensure slavery and human trafficking are not taking place anywhere in their business or supply chain.
  • The legislation covers any company operating in the UK with an annual global turnover of more than $AUD 72 million.
  • Importantly, where companies are not taking action to address issues of slavery, they are required to publicly disclose this.
  • Australian companies with operations in the UK, which exceed this turnover threshold, will need to be prepared to publish a slavery and human trafficking statement on their website as soon as reasonably practicable, beginning with companies with a financial year that ended on or after 31 March 2016.

Sustainable Development Goals: the United Nations’ Sustainable Development Goals were introduced in September 2015

  • They include 17 goals related to health, education, water, energy, equality and justice on a global scale over the next 15 years.
  • These goals, which are intimately linked to human rights, were developed in close consultation with the business community and are seen as a tangible way for business to play an active role in addressing human rights issues.

Growth in Sustainability Reporting

  • It is important to increase the understanding of key stakeholder groups, including the investment community, of how companies manage traditional non-financial risks (including social, environmental and governance issues) and how that continues to drive the maturity of corporate sustainability reporting.
  • The introduction of the Global Reporting Initiative’s G4 Sustainability Reporting Guidelines in 2014 has triggered an increased focus on supply chains and human rights-related disclosures and the guidance assists companies with their disclosure on these issues.

While the majority of Australian companies are at a preliminary stage when it comes to fully understanding the scope of their human rights risks across their supply chain. This will improve over the medium term as companies increasingly understand the full extent of risks across both their direct and indirect supply chains, and introduce systems and processes to manage them.

  • Promoting Transparency: in addition to corporate sustainability reporting, widespread benchmarking on the human rights performance of listed companies over the coming months, such as the Business & Human Rights Resource Centre’s ‘Corporate Human Rights Benchmark’[1] is likely to further increase the focus on these issues by companies.

The bottom line

The bottom line is that businesses must take stake steps to demonstrate that they are addressing human rights issues in their business and supply chain. Stakeholders expect more and the impact of both the reputational and legal implications of not managing these issues can be significant.

It is time to act.

[1] http://business-humanrights.org/en/corporate-human-rights-benchmark

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