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June 11, 2008
Investors Support UN Business and Human Rights Mandate
by Anne Moore Odell
Coalition of socially responsible investors sends a letter to the United Nations Human Rights
Council supporting businesses' responsibility for human rights.
SocialFunds.com --
Three years after being appointed by then United Nations Secretary-General Kofi Annan as a special
representative on the issue of human rights and transnational corporations and other business
enterprises, Professor John Ruggie presented his findings on business and human rights to the United Nations Human Rights Council last week. His
third report on the subject, entitled "Protect, Respect and Remedy: a Framework for Business and
Human Rights," provides a framework for corporations to be held responsible for global human
rights.
 A coalition of socially responsible investors, led by
the Social Investment Forum (SIF),
showed their support of Ruggie's framework in a letter sent to the Eighth Session of the United
Nations Human Rights Council, asking it to extend Ruggie's mandate. The International Chamber of
Commerce and the Business Leaders Initiative on Human Rights support Ruggie's work as well.
Professor Ruggie is the Kirkpatrick Professor of International Affairs and Weil Director
of the Sharmin and Bijan Mossavar Rahmani Center for Business and Government at Harvard University.
In 2005, the UN Commission on Human Rights charged Ruggie with the Herculean task of identifying
corporations' responsibilities on human rights and also the role states should play in regulating
international companies' human rights records. He was likewise asked to create materials and
methodologies assessing companies' human rights impact along with a list of best practices by
states and corporations.
The SRSG report (which is short for Special Representative of the
Secretary-General) points to the "governance gaps created by globalization" which allow companies
to act largely without consequence: "How to narrow and ultimately bridge the gaps in relation to
human rights is our fundamental challenge."
Ruggie's framework rests on three principles:
"the State duty to protect against human rights abuses by third parties, including business; the
corporate responsibility to respect human rights; and the need for more effective access to
remedies."
The framework lays out the due diligence companies should extend to protect
human rights, both labor rights such as freedom of association and the abolition of slavery, and
non-labor rights such as the right to life, liberty, and security of the person, and the right to
marry and form families. Companies should then look at three factors to perform this due
diligence. The first factor is to consider the country in which their company is working; the
second factor is to examine their own impact on human rights in that area. Thirdly, companies must
then look at their business relationships to see if they are contributing indirectly to human
rights abuses.
Due diligence must include company-wide, detailed human rights policies.
The policies need to be assessed, integrated, and tracked everywhere the company does business. As
companies work to expand human rights policies, Ruggie suggests companies and industries share
information and assessment tools. The UN's Global Compact could help provide a platform for helping
these exchanges, Ruggie offers.
In their letter to the Human Rights Council, the investors
wrote "we believe that significant and urgent work must be undertaken by companies to scrutinize
their own operations to minimize the possibility of complicity in human rights abuses. We also
believe that greater disclosure of corporate information related to human rights policy and
performance will enable investors to correlate the financial performance of companies with prudent
management of human rights-related risks in general and to assess the possibility of human
rights-related corporate liability in particular."
"We believe that socially responsible
investors have played and continue to play a critical role in identifying early warnings signs for
companies related to human rights and potential reputational risks through their social screening
and shareholder advocacy work," said Lauren Compere, director of shareholder advocacy for Boston Common Asset Management and one
of the letter's signers.
Compere continued, "There has been a history of this through
our work on sweatshops, Burma, Sudan, global supply chain issues, project finance (Three Gorges Dam
is a great example of this), indigenous rights, FPIC [Free, Prior and Informed Consent] and large
extractive sector projects."
The mandate would offer investors greater transparency into
the companies they own, the letter states. Although more companies are releasing information on
their environmental and social performances, only a select few release similar information on their
human rights records. Ruggie's mandate further points to the need for companies to perform due
diligence on human rights.
The need for companies to have effective human rights policies
and programs is especially important in some parts of the world. "In absence of the rule of law in
some countries and to avoid direct culpability for human rights abuses committed by the government
or some faction, companies need to have higher standards related to human rights, such as seen by
such protocols as Publish What
you Pay or Voluntary Principles for Security Forces," added Compere.
The investors
make the business case for companies embracing their responsibility for human rights, stating in
the letter "given the rapid growth of shareholder-driven activity, risk-conscious corporations may
benefit from an affirmative approach to human rights issues. As suggested in the SRSG Report, such
an approach may mitigate shareholder resolutions and campaigns."
Compere signals out BP for their Human Rights Impact Assessment process
that was first used comprehensively with the Tangguh liquefied natural gas plant in Indonesia. In
the 1990's natural gas was found in a remote area of the island Papua, a province of Indonesia by
ACRO. In 2000, BP acquired ACRO and is now a 37% owner of the site. BP has worked over the past
eight years to protect the environment and the population in the area. BP reports studying the
villages directly and indirectly impacted by the project, offering health services, and employment
to the native population. An independent panel on the project, lead by former US Senator George
Mitchell, has worked to address human rights concerns as well.
"Both NGOs and social
investors play an important accountability role for companies on human rights," explained Compere.
"I think the critical role that social investors play is having a more balanced perspective on
human rights issues. We usually come somewhere in the middle - while we understand the NGOs
perspective on a certain issue like FPIC, we also understand the companies need to operate on a
global basis."
The thirty plus signers included religious investors, foundations, asset
managers, and other socially and environmentally concerned stakeholders.
©
SRI World Group, Inc. All Rights Reserved.
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