Companies looking to embed the Ruggie Principles – the definitive global standard to help business avoid and address their human rights impacts – remain wary of reporting on their human rights performance. Many view it as a potential minefield of legal liabilities.
Yet, the demand for corporate transparency on human rights has only increased. Several governments have adopted or modified legislation requiring companies to report on this issue. The United Kingdom, for example, amended its Companies Act to require companies to report on human rights issues in their annual reports. Similarly, stock exchanges, including the NYSE Euronext and NASDAQ, now ask listed companies to disclose environmental, social and governance information. See this Shift paper for a comprehensive list of human rights reporting initiatives.
One company has risen to the challenge. In September 2014, Unilever announced a collaboration with Shift to report, for the first time, on how the company implements its human rights strategies. The pilot is part of Shift’s multi-year Human Rights Reporting and Assurance Frameworks Initiative (RAFI). RAFI is developing two frameworks, one on reporting and the other on assurance. The frameworks will be finalised in 2015, and Unilever’s experience will inform the process.
For those running for cover under the onslaught of reporting frameworks (think G4), the good news is that GRI is very much a part of the RAFI development process. The RAFI team has promised to ensure that the reporting and assurance frameworks will dovetail with the GRI reporting guidelines. Unlike regular CR reporting, however, human rights reporting will emphasise ‘salient human rights risks’, rather than materiality, as the filter point. The idea is that for human rights, reporters should focus on the severity of their risks rather than on the interests of their stakeholders.
It promises to be an exciting experiment. RAFI has conducted stakeholder consultations, both in the West and in Africa and Asia, to develop both frameworks. Several have emphasised the need to go beyond quantitative indicators. To obtain more meaningful responses from companies, the RAFI reporting framework will use ‘smart questions’. Structured around company commitments, risks, policies, tracking, remediation, etc., these should help companies give clear answers regarding their programmes and performance, within the context of their specific operations. The framework will also have indicators, but these will only be added after the smart questions have been finalised.
For RAFI, an important consideration is to push companies not just to report on their policies, but also on their performance, i.e., their human rights impacts. For companies, this presents a legal risk. RAFI has said that experience shows that the risk of reporting is often lower than the risk of being non-transparent, which fuels “suspicion, distrust, and rumour.” It will be interesting to see whether they are able to convince company boards and their legal teams on the benefits of this type of disclosure.