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The business case for human rights driving positive change

Home / EOS Blog / The business case for human rights driving positive change

Christine Chow
29 November 2016

The dialogue on business and human rights has moved on from the Why to the How – from the alignment of company priorities to Sustainable Development Goals (SDGs), following the UN announcement of the 17 SDGs in September 2015, and to the deployment of innovative methods that drive positive social impact. In this context, this year, we participated in the panel on the Business Case for Companies to Respect Human Rights at the UN Forum on Business and Human Rights in Geneva in November 2016.

Linking human rights engagement to SDGs

As part of the panel discussion, we described the four main sub-themes derived from a number of SDGs that frame our human rights engagement programme, namely access to resources, access to health and nutrition, access to finance and access to information. Our approach is based on a focus on human rights as a risk, while also taking into account the opportunities that human rights can bring.

We highlighted the importance of considering companies not as standalone businesses but inter-connected actors that are part of a business ecosystem.

We gave the example of a textile manufacturer in Southeast Asia, which found that despite paying the standard living wage to its employees, the practice of taking payday loans was common among its staff due to the legacy debt cycle of the workers, which continued to spiral. The company approached local banks to set up a corporate-backed account for their staff, providing access to safe finance.

Elsewhere, a bank expanding into the emerging markets found access to local credit data for individuals challenging. By providing a corporate-connected account, the bank could gain access to a group of retail customers with stable income flows and a range of financial service needs, from education saving plans to insurance and consumer credit.

These are two examples of mutually beneficial situations whereby approaching issues through the SDG lens has enabled companies to turn their business challenges into opportunities for each other.

Another example we gave on the panel was about access to information, in other words the use of mobile technology to enable better decision-making.

Through anonymous online chat rooms and mobile surveys, companies have been able to gain instant feedback on employee benefits that mean most to their staff. Big data analysis helped identify trends by work site, age group and job nature, resulting in more customised and impactful benefit. For example, at a group level, a company that had previously experienced multiple labour practices scandals harnessed a technology that helped it to develop an ergonomics programme, creating a healthier work environment and routines for workers. At a sub-group level, meanwhile, educational programmes – from application designs to basic chemistry for health and safety precaution were developed, tailored to different workers based on their needs and interests.

In all of the above, we pointed out the interconnectedness of different types of capital – financial, human and social.  Successful examples show that feedback on human rights and labour practices has become new information – intellectual capital – that re-enters the decision-making processes of a company, affecting the allocation of financial and human capital. This re-creation of new and applied knowledge is vital to companies meeting their own SDGs, as well as a potential business value driver.

Challenges remain
However, we continue to face challenges as we push the boundaries of sustainable development. First, there is still a significant disconnect between the identification of human rights risks and connected opportunities and the investment that is required to go into addressing those issues.

Equally challenging is that many global companies have departments that continue to work in silos and so cannot effectively tackle human rights issues.

There is also a risk of a clash of cultures and insufficient oversight in the joint ventures of large companies that may have a different approach to addressing human rights related issues than that of their joint parent companies.

The most striking comment came from a labour union representative from Sierra Leone speaking on the panel, who said that she found our discussion on human rights issues far removed from the on-the-ground situation. It showed that we, as stakeholders of businesses, still have much to learn. It also demonstrated the importance of looking at extended global supply chains.

We hope that disruptive digital technologies, complemented by political stability globally, will aid the pursuit of enhanced human rights. In the meantime, we will continue to push for strong human rights in our engagements at the company and public policy level.

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Christine Chow Dr Christine Chow manages the team of engagement associates at Hermes EOS and is responsible for the financial services, technology and extractive sectors in Asia ex-Japan. She has over 20 years of experience in portfolio management, research and investment consulting. Christine's PhD thesis on shareholder engagement for responsible investment was short-listed for a UN award in Sweden for industry relevance and academic excellence. Christine is a member of the Court of Governors of the London School of Economics and a member of the School’s Investment Sub-Committee.  She was an adjunct associate professor in the Department of Finance at the Hong Kong University of Science and Technology. She was also a member of the greater China committee of the Hong Kong Retirement Funds Association between 2014-2016. Christine has worked at a number of multinational corporations such as Merrill Lynch, Schroders and Hewitt. In the 1990s, she was responsible for establishing strategic partnerships in fund management for the Schroders Group, especially in Mainland China. Christine is a graduate of the London School of Economics and the University of Melbourne. She also completed an executive education course on financial engineering at Stanford University.
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