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Adopting human rights due diligence is good business for companies

Adopting human rights due diligence is good business for companies This file photo taken on April 18, 2017 shows the French headquarters of US multinational technology company Microsoft in Paris. (AFP/Lionel Bonaventure)
Norimasa Shimomura
Jakarta   ●   Sat, February 20, 2021 2021-02-20 02:18 87 0920e6703081f028872405a5261e589f 2 Opinion UNDP,human-rights,business,boycott,investment,Asia,COVID-19,consumer,producer,multinationals,workers Free

How would you feel if you found out that the beautiful pair of shoes you bought last week were sewn with the hands of a hungry child who works long hours to earn so little?  

When presented with a choice whether you purchase products from a company that fully complies with human rights standards, or a firm with a murky record on human rights abuses, chances are, as a socially conscious consumer, you will do the right thing. Consumer preferences for responsible business practices eventually may wipe out market share for unethical producers who fail to change their behavior. A number of states turning these expectations into a legal requirement speeds up the process and changes the lives of millions to the better.

But what exactly can Indonesian businesses do to show they respect human rights?

This week, the United Nations Development Program (UNDP) cohosted a high-level dialogue on the practical applications of the UN Guiding Principles on Business and Human Rights (UNGPs), focusing on Human Rights Due Diligence (HRDD) practice, with the support from the Government of Sweden and the European Union (EU). This event complemented the government of Indonesia (GOI)’s ongoing efforts to develop a National Strategy on Business and Human Rights, due to be launched later this year.

The ongoing COVID-19 pandemic has made us reexamine where we stand as an integrated global  community. Consumers and producers worldwide are now calling for the reshoring of production, particularly among critical industries, while highlighting the negative impact of long tail supply chains on the planet’s resources.

Concurrently, ongoing human rights abuses by some multinational enterprises have resulted in consumer boycotts, divestment campaigns and investigations by government authorities. In 2020, credible allegations that companies used forced labor in the production of exported goods prompted US customs agents to return shipments back to Asia at least a dozen times—a record.

As such, the UNGPs and its guidance in conducting Human Rights Due Diligence have gained new currency among business leaders, trade and investment policy analysts. Widely regarded as the world’s most authoritative, normative framework guiding responsible business conduct, the UNGPs articulate the shared responsibility of government and business in ensuring human rights in business operations are protected, respected and promoted. Guidance on HRDD is a key feature of the UNGPs, carrying significant implications for leading Indonesian businesses.

The recent uptake of the UNGPs is not unique to Indonesia. In 2020, Japan launched its National Action Plans on Business and Human Rights, the second of such national plans coming out of the Asia-Pacific region, after Thailand. Other countries in Asia are also in the process of developing policy frameworks to implement the UNGPs, including India, Malaysia, Mongolia, and Viet Nam. These countries are following the footsteps of the Netherlands, France and Germany where they have adopted laws on HRDD.

Despite the trendlines, the practical implications of HRDD for business are not well understood. Dialogues such as the one which UNDP co-hosted this week are, therefore, imperative.

At its core, HRDD is an ongoing assessment that helps businesses to assess and mitigate threats to the lives and dignity of stakeholders, including employees, vulnerable groups, communities, and consumers. In carrying out HRDD, businesses need to assess the risks, act upon the findings, track performance, and communicate the results to the public.

The case for businesses to embrace UNGPs and its guidelines on HRDD is clear. Though HRDD is focused on risks to people and not centered on profitability, conducing HRDD would help companies avoid reputational and operational harm that might for example, accompany charges of forced labor.  In carrying out HRDD, business need to identify their impact on human rights issues and demonstrate measures to prevent these rights violations from occurring.

Nonetheless, a great deal of works lies ahead for Indonesian businesses if they are to stay current. A survey of 100 Indonesian companies conducted by UNDP’s partner, the Foundation for International Human Rights Reporting Standards (FIHRRST), concluded that only a tiny percentage of companies have conducted HRDD. At the same time, Indonesia’s National Commission on Human Rights (Komnas HAM) reports increasing numbers of complaints filed against business for rights violations

Promoting Gender Equality through HRDD

HRDD can be a means to combat inequalities at the workplace, and throughout the organization chart – including supply chains, links with distributors, manufacturers and beyond.

Women are generally more prone to discrimination and unfair practices at the workplace. According to the International Labor Organization, female workers often face pregnancy and maternity-related discrimination, and on average, are paid approximately 20 percent less than men across the world. Currently, just 4.8 percent of the CEOs of Fortune 500 companies are women, while women workers make up the bulk of the workforce in industries where most positions are filled by casual and low skill workers.

Conducting HRDD and involving women in the discussion – through women’s rights groups and other avenues – can help identify and put an end to discriminative practices and become a catalyst to remove barriers which prevent women from climbing up the ladder in the corporate world.

In an era of shifting global supply chains and rising consumer expectations for responsible behavior, efforts to mitigate human rights risks cannot be the rare experiment by Indonesian businesses, but rather normal business practice. If business and government leaders choose to fully embrace the UNGPs and its provisions for HRDD, Indonesia will be more poised to enjoy the fruits of economic recovery and sustainable development.

As the popular saying goes, the bucks stop at you as the consumers. When the time comes for you to make responsible choices, it is our hope that you will start buying products from companies that are seriously committed to upholding human rights practices

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The writer is UNDP Indonesia resident representative.