New study links human rights to business risk

Source: Amnesty UK, 26 March 2002

Corporate policy makers from FTSE-listed companies have met with human rights advocates and fund managers to discuss the potential business risks associated with human rights abuses in the countries where they operate.
Amnesty International UK and The Prince of Wales International Business Leaders Forum organised several international business briefings to launch the results of new research. The findings are presented in a series of seven detailed world maps illustrating the links between human rights and significant business risk. This is the first study of its kind.

This publication, Business and Human Rights: A Geography of Risk, aims to raise business awareness of the human rights context of their activities. It also aims to support companies and investors in achieving high levels of ethical conduct in their global operations.

The maps indicate where companies are vulnerable to the costs and reputational damage associated with human rights violations. The sectors covered include extractive, food and beverages, pharmaceutical and chemical, infrastructure and utilities, heavy manufacturing and defence, IT hardware and telecommunications. The nature of the business risks varies from sector to sector and include human rights demands such as how companies manage relationships with security forces, issues surrounding the relocation of indigenous communities, allegations of employing forced labour, or disputes over working conditions. The maps use the example of 129 major companies that have significant investments in 34 countries where poor human rights records present risks to business.

Chris Marsden OBE, Chairman of Amnesty International’s UK Business group says:

"This publication will alert business, consultancies and investors to the risks to any company of being associated with human rights abuses. These risks are increasing because the social impact of companies is coming under greater scrutiny than ever before, and because victims of human rights violations have better means of seeking redress through litigation. Through their relationships with campaigning organisations and through the media."

A Geography of Corporate Risk reflects the consequences of the huge growth in foreign direct investment during the last decade, coupled with the growth in intra-state conflict. This means that companies are much more likely now, than in the past, to have a presence in conflict zones where their relationships with security forces might come under scrutiny. Companies may also find themselves at loggerheads with communities over access to resources such as land, water, forestation which are essential for even subsistence livelihoods. The research undertaken also reflects the extent to which the supply chains of businesses have come under scrutiny with regard to the labour conditions in which a company’s products, components and raw materials are produced.

Robert Davies CMG, Chief Executive of The Prince of Wales International Business Leaders Forum says:

"The growing threat of violent conflict and international terrorism highlight the unfamiliar challenges business now faces in a fragile world. As an extension of its Business and Human Rights programme IBLF has collaborated with Amnesty International on this project to alert companies to the tangible risks they face from links with human rights violations around the globe and to help them navigate the challenges. This first ever series of maps should help progressive companies to recognise, assess, manage and minimise the risk and create opportunities to be seen positively to uphold human rights standards wherever they do business."

Shareholders, particularly institutional investors, are becoming increasingly sensitive to these risks, seeking reassurance from companies that they are being addressed effectively. UK based fund manager, Friends Ivory and Sime remarked: "As a shareholder we work actively to promote the adoption of prudent risk management practices. This research lays the groundwork for companies to develop practical management tools that will address human rights-related risks and ultimately enhance financial performance."

The maps offer a starting point for companies seeking to address these issues by referring to relevant international initiatives and standards. Associated with every risk is an opportunity for companies to gain a better understanding of how they can contribute to the protection of human rights having regard to internationally accepted standards and in line with societal expectations.

Both Amnesty International and The Prince of Wales International Business Leaders Forum believe that the most effective way for a company to minimise the risk of contributing to human rights violations is to have appropriate human rights policies and practices in place, which are both transparent and properly enforced right across the company’s global functions and operations. They say companies that respond to this challenge will be in a much better position to protect their brands and reputations in the longer term, while protecting and promoting the human rights of employees and the wider community.

The business briefings are being hosted by Public Relations firm Edelman, in association with financial institutions, Friends Ivory and Sime and Clerical Medical Investment Management (the asset management arm of HBOS plc).

Download the maps