In the Right(s) Business

Wednesday, 2 April, 2008 - 11:26

By Hilary HoveBusinesses play an influential role in society, one that extends far beyond their economic impact. From its employees to its consumer base, business activities have both tangible and int

By Hilary Hove

Businesses play an influential role in society, one that extends far beyond their economic impact. From its employees to its consumer base, business activities have both tangible and intangible impacts upon individuals - including their rights.

Why should businesses care about human rights? A consensus on this issue is hard to come by, as diverging opinions persist within both the public and private spheres. While the discussion continues, it is becoming increasingly apparent that human rights are relevant to business.

To date, a major catalyst of corporate attention to human rights has been reputation. The advance of globalisation, the rising economic presence of corporations, and the spread of communications technologies have culminated in greater awareness of - and concern for - the impact of business activity. With this shift has also come a change in expectations of business conduct.

According to a recent international survey conducted by Globescan, as many as 8 in 10 people - both experts and regular citizens - think companies should be responsible for reducing human rights abuses. Ninety percent of company shareholders in Europe and North America agree that CEOs and Boards should closely monitor corporate social responsibility (CSR) policies, of which human rights is an important part. These perceptions are not relegated to the developed world. Globescan’s ‘Africa Report’ survey finds that near majorities of respondents think global companies are responsible for improving the lives of the poor.

As various high-profile cases have demonstrated, when businesses are perceived to be complicit in human rights cases its reputation is compromised. Given the strong links between reputation and brand value, share prices often drop in the event of negative exposure. Overlooking human rights can thus be expensive: companies must engage in costly public relations exercises and internal protocol overhauls, forgoing millions in revenue.

While human rights-related risks are escalated when companies operate in politically volatile areas, they are evident across the entire gamut of business activity. From workplace safety to supply-chain management, each area touches upon a valid human rights principle. The notion that human rights is an issue external to business operations is an assumption that must be challenged.

Encouragingly, there is evidence that businesses are realizing the widespread applicability of human rights to their mandates. Around 100 major corporations have explicitly acknowledged the Universal Declaration of Human Rights, and nearly 150 have specific human rights policies. Over 3000 prominent companies have signed the Global Compact, a United Nations initiative whereby companies voluntarily agree to abide by ten universal principles - two of which explicitly address human rights.

These trends provide a further impetus to the human rights and business agenda: competitive advantage. The spread of corporate citizenship has encouraged triple-bottom-line thinking, an approach that requires companies to think beyond economic indicators and consider the social impacts of their operations. Corporations now report on their performance in this domain, providing a new area in which businesses may gain competitive advantage over their rivals. There are many tangible benefits of this trend. For example, international corporations that have evaluated human rights risks will be much better equipped to enter new markets, and maintain a license to operate once there.

Furthermore, there is evidence that human rights policies may actually improve productivity. According to a study by the Philippine Department of Labour and Employment, measures taken to improve working conditions within certain companies resulted in a 23 percent increase in production capacity, while absenteeism declined by nearly 5 percent. The International Business Leadership Forum also reports that employee retention rates improve when labour rights policies are enhanced.

Although factors of risk, reputation and competitiveness are certainly encouraging companies to implement human rights policies, a more subtle influence is at play. The steady entrenchment of CSR issues into core business operations reflects the ongoing exploration of business’ larger role in society. No longer are businesses seen merely as profit-maximisers, but also as valued stakeholders in development.

This ‘stakeholder approach’ sees businesses as an integral part of creating a healthy, functioning society. As the President of the World Business Council for Sustainable Development, Bjorn Stigson, observes, “Business cannot succeed in a society that fails.” The private sector thus forms part of a shared community of interest, whereby the promotion of human rights and sustainable business practice are mutually reinforcing.

While the private sector, government, and civil society can share a common goal in promoting human rights, their roles herein are different. Mary Robinson, the former United Nations High Commissioner for Human, stresses, “It’s not a question of asking business to fulfill the role of government, but of asking business to promote human rights in its own sphere of competence.” Each actor has a separate, yet crucial, role to play.

Increasingly, the private, public and non-profit sectors are using their unique perspectives to collaborate on solutions to lasting development challenges. This partnership approach has the potential to produce innovative, ground-breaking solutions to a number of societal issues, including human rights.

This realization underpins the Human Rights and Business Project South Africa, a multi-stakeholder network coordinated by the African Institute of Corporate Citizenship (AICC), which takes a collaborative, cross-sectoral approach to advancing human rights in South Africa.

The Human Rights and Business Conference 2008 - which was jointly organised by the South African Human Rights Commission, AICC and the Office of the High Commissioner for Human Rights - provided a platform whereby business, government and the non-profit sector discussed human rights in a constructive environment. As a parallel event, the National Business Initiative hosted a business breakfast for CEOs for the Global Compact Learning Network in South Africa. Through these initiatives, each sector represented at the conference hopefully realised new opportunities for partnerships and future engagement surrounding human rights and development.

Hilary Hove is based at the African Institute of Corporate Citizenship.

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