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Trending topic: corporate responsibility

Maria Prandi
Researcher and professor/consultant on issues of corporate social responsibility and human rights. Has published various books on the role of companies with respect to human rights, development and peace
Maria Prandi

Maria Prandi

We are now at an important turning point. Never before in human history have there been so many manuals, guides, industry recommendations, directives, multi-player conferences and debates focused on analysing and increasing the responsible practices of companies in terms of their impact on human rights at a global level. This means, first of all, that much progress has been made on the issue since the first scandals in the textile industry in Southeast Asia broke out 20 years ago, and that, second of all, companies now have few excuses for not including human rights in their everyday management.

But this fact also has another important interpretation: a large number of players have actively helped to put this issue on the agenda. The fact that certain companies currently manage their risks in human rights in a more responsible way does not only have to do with their own initiative, but also, above all, with the active pressure by other players that have wanted to contribute to the governability of this issue. Consumers, employees, labour unions, shareholders, NGOs, governments, multilateral organisations, industry organisations, and investment funds, among others, have been essential to consolidating significant progress.

The strategies of the various players have been different and flexible over time. While NGOs have historically played a crucial role of confrontation with the private sector, multilateral organisations and other international bodies have built a network of voluntary instruments and rules that, in the form of recommendations, have gradually permeated decision making practices at companies. However, nowadays we are seeing some NGOs change their strategy, while we are also witnessing the emergence of new players occupying a specific role.

Among the most significant aspects, it should be noted that today, in parallel to the pressure exerted by some NGOs, other organisations of the third sector have chosen the alternative of collaboration and negotiation with companies. This phenomenon has given rise to a wide range of academic literature on the subject. In addition, investment funds and pension funds, both public and private, are putting more and more pressure on companies and excluding those that violate the human rights of their workers or of the communities in which they operate. Among these, it is important to highlight the leadership of the Norwegian Pension Fund, the second largest in the world, which has excluded over 50 companies in recent years. These players are important, because they go against the traditional belief that only some sectors that are traditionally more likely to receive external pressure (like the textile industry) are bound to be called upon to improve their human rights record.

Other players remain less active, including, most significantly, consumers and governments. Despite the fact that in a recent survey most Spaniards (83%) stated they would stop consuming a particular product if they had information that it involves human rights abuses, the truth is that mass consumers remain oblivious to these kinds of considerations in their buying decisions. Furthermore, governments have not sufficiently developed the options offered by public procurement to encourage certain corporate behaviours. Public spending in Spain in recent years has accounted for approximately 18% of GDP. Despite the initial difficulties that may arise when defining social and environmental standards that at the same time assure free competition, this recourse serves a dual extremely important function: that of creating a market of responsible companies (especially SMEs) and that of increasing the much required social responsibility of the government itself.

Nonetheless, 10 years ago it would have been unthinkable for textile companies to make their list of suppliers in southern countries public in a clear exercise of transparency, or for companies in the technology sector to allow independent organisations to audit their supply chain, or for global companies to require their local partners to reinstate dismissed trade union representatives, or for mining companies to implement specific policies concerning indigenous populations or to adopt protocols in the area of private security in accordance with international principles of human rights.

Throughout this process, corporate social responsibility has moved from the margins to the mainstream. This means that there are increasingly more human rights issues that companies must address. The sphere is no longer limited, like we thought 10 years ago, to child labour (even though in some countries this continues to be a top priority), but instead the 'social licence' to operate depends on what happens beyond a company's walls, like, for example, in its supply chain, in the management of security in complicated environments, or in the local communities in which it operates anywhere in the world.

Moving to the mainstream also means that companies have needed to learn to interact differently with the world around them, i.e., not only considering their traditional stakeholders (customers, employees and shareholders), but also including in their decision making everyone who in some way interacts with the company, whether positively or negatively. To do so it must know that conflict is inherent and inevitable in all relationships. Conflict (without violence) is positive, because it makes it possible to learn, progress, become something better, build other kinds of more sustainable relationships, and overcome the resistance to change that often wedges companies into positions that, in the long run, do not favour them. Companies have learned that the globalisation of trade and technology inexorably makes the world a smaller place. A worker at an electronics plant in China commits suicide and investors in Silicon Valley take note. Employees at an oil plant in Nigeria threaten to go on strike and the oil market responds. A dispute concerning land in Ethiopia becomes an issue of concern for pension funds in California.