Tag Archives: social license

Business and human rights – do we have the right incentives?

2015-08-19-Sydney

My keynote speech to the 2015 Australian Dialogue on Business and Human Rights, 19 August 2015, Sydney (reproduced here by kind permission of www.ihrb.org)

“Business and human rights – do we have the right incentives?”

I would like to thank the Australian Human Rights Commission and the UN Global Compact Network Australia for inviting me to join you today. It’s my first time visiting Sydney and I’m delighted to have the opportunity to share a few thoughts on the business and human rights agenda. I do so from my position at the Institute for Human Rights and Business. We’re a global “a think and do tank” with regional centres in Myanmar, Kenya and Colombia as well as a consortium in China. Our thematic research and policy activities focus on the connections between private sector activity and human rights across four global flows of workers, finance, commodities and information.

We should take a moment at the start to reflect on how far the business and human rights agenda has moved in recent years. You will recall that in 2011, the Australian Government supported the UN Human Rights Council resolution that unanimously endorsed the Guiding Principles on Business and Human Rights, the final outcome of John Ruggie’s six-year mandate as the UN Secretary-General’s Special Representative on Business and Human Rights. This was a historic achievement, not only in reaffirming states’ duties to protect their citizens against human rights abuses in which business is implicated, but also in establishing for the first time that business itself has its own responsibility to respect these same rights. The Guiding Principles make clear that the corporate responsibility to respect human rights must be backed up with concrete action through ongoing due diligence processes. The GPs stress as well that both governments and businesses need to provide effective remedies for victims when abuses do occur.

In the years since their endorsement, the focus has rightly been on implementing the GPs in different contexts. This has included efforts by global institutions like the UN and OECD as well as regional bodies such as the European Union, African Union and ASEAN. It has also involved sector-specific initiatives by a range of industry groups and national action plan processes and other initiatives including dialogues like this one.

Four years later, business and human rights is slowly becoming a bigger part of the international policy agenda. We can see this in a number of contexts, but let me point to just a few examples over recent months. The families of the 1,100 victims of the Rana Plaza factory collapse two years ago in Bangladesh have finally received compensation owed them, thanks to the personal intervention of Chancellor Merkel of Germany whose leadership was also critical in the recent G7 statement on responsible business and supply chains. That statement included explicit references to the UN Guiding Principles and the OECD Guidelines on Multinational Enterprises. The International Labour Organization has made responsible business supply chains its focus for 2016. Even sporting bodies such as FIFA have come out with new human rights commitments.

At national level the debate has moved forward as well. For example, the China overseas mining guidelines, launched at the end of 2014, are more explicit in human rights terms than most OECD equivalents although it remains an open question how far China might move on such issues during its chairing of the G20 next year. The Asian Infrastructure Investment Bank has received a good deal of discussion although it is too soon to predict where it will emerge on standard setting. Here in Australia, it is encouraging that more and more companies are developing their own human rights policies and domestic and international supply chain issues have particularly been in the spotlight. An increasing number of companies are joining international multi-stakeholder initiatives like the Voluntary Principles on Security and Human Rights.

It is notable too that Australia is one of the first countries where the concept of “social license to operate” arose, largely in the mining sector. The subject of “The Social License” is one I was foolhardy enough to write a book about last year. My aim was to point out that social license is an increasingly material concept that no longer just relates to mining activities, but to the activities of all businesses and – if we think in social contract terms – to government and civil society as well.

There is nothing new about the idea of social license but it is re-emerging today as a way of expressing new forms of social relationships between non-state actors principally. Don’t take my word for it. Just read the recent Mansion House speech given by the Governor of the Bank of England, Mark Carney – a Canadian – in which he uses the term five times in relation to the need to reform financial markets. Carney is making our work much easier – he is connecting the dots and beginning to create space for much greater financial incentives for businesses that do the right thing. I should also add that Mark Carney chairs the G20 Finance Committee.

I think we would all agree that communities expect more of businesses today, indeed, society expects more. The idea that shareholders are the beginning and the end for incentivizing publicly listed companies is an increasingly redundant concept, as is the notion that shareholders do not see longer-term value in minimizing risk by acting responsibly. Some contend the short-term concept of shareholder value is actually destroying business. For me, the concept of “stakeholder” does not cut it as a replacement however. The people upon which businesses have their greatest impacts – workers, communities, consumers – they are not merely stakeholders. They are “rights-holders” to whom businesses have clear responsibilities as set out in the UN GPs.

What then is the nature of the social contract between business and the rights-holders upon which they have the most significant impacts? This is the fundamental social license question in my mind. And there will be big advantages for those businesses that can figure it out. Investors are important stakeholders for most companies, but if business can build greater trust, consent and legitimacy with all those whose rights they may affect – positively and negatively – then the rewards will be far greater still.

So there is much happening – perhaps more than at any time in the past 15-20 years when I first worked on these issues for Anita Roddick at The Body Shop. But will business and human rights ever become a truly mainstream issue in the way that discussions about health and safety, climate change or anti-corruption have? I think it might, but for that to happen we need to be honest about the real incentives and disincentives at play, and how we might scale up from where we are today. Let me turn briefly now to five business and human rights trends that in my view are key to determining how this agenda will unfold over the coming years.

(1) Aligning government policies and opening pre-competitive space for business to act responsibly

First to the role of government – fundamental in human rights terms and also as the first pillar of the UN’s “Protect, Respect, Remedy” framework – that is, the state duty to protect human rights. There are currently 19 governments that have undertaken or are undertaking National Action Plans on Business and Human Rights. These are no longer restricted to European Union member states, as the list now also includes countries such as the US, Colombia, Chile, Mexico, Mozambique and Kenya. These processes vary significantly in their ambition and scope. But what they have in common is a focus on implementation of the UN Guiding Principles including the need for policy coherence across government departments and also making business and human rights a permanent area of policy. They also, in my opinion, perform a deeper function – which is important to how seriously business can and should take this whole agenda: that of where the line can be drawn between competitive and pre-competitive action.

One example is the issue of Corporate Social Responsibility or CSR. CSR has many definitions around the world. Sometimes when I am teaching I challenge students to marry up national CSR definitions of G20 countries with their owners. CSR is generally seen as a competitive space – part of the way businesses can compete against each other through reputational benefits or in substantive terms (particularly when we consider climate change adaptations, or micro-finance for example). But does business and human rights fit here? Well yes to some extent above the baseline of the corporate responsibility to respect human rights (that is, beyond the minimum requirement that businesses “do no harm”) and into activities aimed at supporting human rights – in other words – voluntary positive actions that advance and promote rights. In GPs terms, the corporate responsibility to respect is now an international norm of expected conduct and therefore should be understood as a pre-competitive issue for all businesses. Does business understand this? Some do. Do governments communicate this clearly? Not many.

So National Action Plans, and with them government policies relating to trade, development, investment, public procurement and different aspects of law are very important tools in signaling and creating pre-competitive space in which businesses can work together, with government and other stakeholders to find the best ways of responding to human rights dilemmas. The process of drafting these plans too can be helpful in and of itself to build networks and partnerships between different stakeholder groups.

Through its participation in the Voluntary Principles on Security and Human Rights, Australia is no stranger to multi-stakeholder dialogue in this area and the benefits of collaboration for government policy coherence, clarification for business and other stakeholders of government expectations and support for companies trying to do the right thing. I understand Australia does not yet have a national action plan though progress is being made in specific areas. I hope we can discuss today whether a more holistic approach through a national action plan type vehicle would help in further supporting all stakeholders in this area. And in particular, whether you think a National Action Plan on business and human rights for Australia could help signal other national priorities, at home and overseas, where business, governments, trade unions and civil society can and should collaborate for better human rights outcomes.

(2) Implementing the UN Sustainable Development Goals (SDGs)

The Sustainable Development Goals to be signed off at the UN in New York next month represent the pathway forward for us all over the next 15 years on some of the world’s most pressing developmental and environmental concerns. The role of business has been factored in much more than for the Millennium Development Goals in 2000. Arguably many of the SDGs are unachievable without active business engagement. Take for example SDG 8 to “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. There are very few economies where work can be provided for the majority without a vibrant and competitive private sector. But how will this be done? Full employment for all by 2030 is one heck of a goal in its own right. Ensuring these jobs meet the ILO’s definition of decent work is even more ambitious. It is interesting how far debates on living wages have progressed over recent years in many parts of the world. Yes, it took the factory collapse in Rana Plaza for the Bangladeshi minimum wage to be increased by 60% and many would argue it is still far below what a decent wage should be. But interesting also that the right of centre new British Government also committed itself to a living wage a few weeks ago.

But decent work is about more than wages. It is also about the fundamental rights of workers themselves, to organize, assemble, bargain collectively and so on and also in a wider human rights context where trade unionists and human rights defenders are not at risk, and where the families of workers can live with dignity. Perhaps the most widespread of business and human rights issues around the world is the use of third party labour providers – labour agencies have become a powerful adaptation to the flexible nature of global labour markets. Most of these agencies do a good job, but there is the unregulated bottom end of the market, which relies on coercion, exploitation and – at times – forced labour and human trafficking.

Whether it be berry pickers in Scandinavia, fruit and vegetable pickers in Florida, farm workers in the UK (or Australia), Burmese fisherman in Thailand, Serbian construction workers in Russia, internal migrants in China, domestic workers going to the Gulf – the issues are remarkably the same. Anyone with a global supply chain should know these issues – and recent legislation in the USA and UK require full disclosure for business on this issue. I understand recent legislative changes create obligations on business here regarding the worst forms of labour exploitation and also that the Attorney-General’s department is convening an expert group to look at other policy responses including disclosure.

It is clear that SDG 8 will not be reached if we don’t understand how domestic labour markets respond to international pressures and global supply chains, not least through labour migration. It is also the case that economic growth no longer creates the same number of jobs and technology is intervening – therefore entrepreneurs are essential, in particular those that create local sustainable jobs within communities. We should also recognise that human rights are central to many more of the SDGs – ending poverty and hunger, addressing inequality, ensuring healthy lives, inclusive education, gender equality, access to water, sanitation, energy, making cities safe, peace and good governance. Human rights sit at the heart of these, and there are significant opportunities for businesses that contribute. Next month we at IHRB will be releasing our own take on the business role in fostering sustainable development and encouraging implementation of the SDGs as part of our ongoing State of Play report series. These reports look at how the business and human rights agenda is influencing different issues of policy and practice and we look forward to engaging on the important links between responsible business, sustainable development and respect for human rights.

(3) Shaping real market incentives for greater transparency

The UN Guiding Principles – in elaborating the second pillar of the “Protect, Respect, Remedy” framework – the corporate responsibility to respect human rights – ask companies to “know and show” in relation to their most salient human rights impacts. The question always comes then – well how much knowledge of potential adverse impacts should my company actively acquire? Gaining knowledge of human rights risks clearly takes time, resources and might embody short-term risk for the business. Likewise, just how transparent are companies expected to be about such information? On some issues, governments are starting to introduce much needed regulation, which moves us towards a more level playing field. For example, the due diligence guidance in the US and elsewhere on conflict minerals, the US reporting requirements on Myanmar, that in the UK and US on trafficking and forced labour in global supply chains, the recently agreed EU reporting requirement for the largest 6,000 companies and due diligence legislation currently being debated in the French Parliament all suggest new state action in this area. Added to this, the important work and public statements of National Contact Points within the OECD system. All of these examples suggest we are slowly getting to greater clarity on “knowing and showing”.

One important development in this area is the UN Guiding Principles Reporting Framework providing guidance to companies on how to report their salient human rights risks in line with the GPs. You will see a growing number of companies follow the lead of Unilever and Ericsson both of which are using this new reporting tool. Another important initiative we are involved in is developing a Corporate Human Rights Benchmark, eventually for the top 500 globally listed companies, which will rank companies not just on intent but also actual human rights performance. More locally, our Myanmar Centre for Responsible Business now ranks the 100 largest Myanmar companies on basic human rights practices and other criteria – an important tool for international companies seeking responsible local partners.

So slowly, and sometimes on the back of the anti-corruption movement, we are seeing the case for greater human rights transparency being made and won, partly on high impact human rights issues such as trafficking, forced labour or conflict and partly in the context of high human rights risk countries such as Myanmar. Let’s see what gets developed for the rush of international investment into Iran that we expect to see over the years ahead, and to a smaller extent in Cuba. My own organisation, through the Corporate Human Rights Benchmark project and other tools, believes this greater transparency should lead to firmer penalties for abusers but also greater rewards for companies trying to do the right thing, and sometimes succeeding. We hope the ranking of corporate human rights performance will start to move investors and eventually consumer behavior. We think governments, including the Government of Australia, might find such disclosure and comparison important in terms of its own public procurement decisions.

(4) “Striving for excellence” – Mega-Sporting Events and human rights

There is no better metaphor for human rights than sport. When sport has gotten behind particular human rights issues – be it the Para-Olympics, kicking racism out of football or gender equality in events – the results have been significant. Without equality of treatment on the field, sports do not work. This same understanding is now beginning to affect the way we think about sports off the field as well, in particular in relation to the tendering, delivery and legacy of Mega-Sporting Events. If you think about it, the 7-9 year life cycle of such an event is the microcosm for just about every business and human rights issue, from land acquisition and resettlement, to construction and infrastructure, security, supply chain to freedom of expression in relation to the event itself.

One of Australia’s next major international sporting events is the Commonwealth Games on the Gold Coast in 2018 and it is the Commonwealth Games Federation, more than any other international sports bodies, that has led the way on committing itself to human rights due diligence as we saw in Glasgow 2014. So we have high expectations for the Gold Coast and then for Durban in 2022.

We expect that by the end of 2015, many of the world’s major sporting bodies – including the International Olympic Committee and FIFA, will join the Commonwealth Games Federation in making human rights statements. Major sponsors and broadcast companies will need to do the same. We have a golden opportunity but only if we can show tangible results. This means more transparent and accountable processes in how Mega-Sporting Events are bid for and awarded, and events that deliver real value to the communities and societies in which they are hosted. There is much that needs to be done in relation to Qatar 2022 and Russia 2018 to rehabilitate the world’s trust in FIFA. You will all be aware of the significant human rights concerns that have surrounded both events. Similarly, the learning between London 2012 and then on to Rio 2016 and Tokyo 2020 has been stronger within the Olympic tradition but human rights concerns have all too easily been relegated to a less prominent position. For example, the role of an independent oversight committee, so important in London 2012, has not been replicated in Rio and has not yet been confirmed for Tokyo. We also hope the Gold Coast Games in Australia will be one that many learn from including in human rights terms. Many of you in this room can help whether in the capacity of sponsors, investors, suppliers or civil society members encouraging greater accountability.

(5) Tracking the potential for new developments in international law

A final trend worth watching concerns UN discussions on the potential for a new international legal instrument on business and human rights. A range of governments led by Ecuador and South Africa met last month in Geneva to begin consideration of this question. Key so called “home country” governments including Australia, the US and the EU declined to participate, suggesting significant hurdles to implementation of any eventual outcome of this process.

The evidence suggests there might well be a need for binding international rules in this area. We are all aware of cases when businesses have operated with a sense of impunity, taking advantage of different legal jurisdictions to try and lessen the risk of being sued for alleged human rights abuses. This would be one driver for new international law – to try and control some of the perceived governance gaps associated with global business activity, in particular when operating in weaker jurisdictions. But this is not the same as a Treaty focused on what are already international crimes (the very worst forms of human rights violation), which is different again than focusing on the most widespread of negative impacts relating to business activity.

Until there is agreement on the governance gaps that need to be addressed at international level, it is hard to be specific about what the scope of a new instrument should be in terms of the type of company, range of human rights or even the category of law it targets. In our submission on the new UN process, we reiterated our support for binding rules that might really reduce human rights related harm. Of much greater concern to me, however, is how the focus on a proposed Treaty distracts from much more immediate legal opportunities. For example, how many civil society organisations are pressing for the effective ratification and implementation of the 2014 ILO Forced Labour Protocol, which looks to business to undertake human rights due diligence relating to forced labour, human trafficking and modern day slavery. Where do countries currently stand on the ratification of this historic protocol? What forms of human rights due diligence could help businesses comply with the Protocol through their global operations and supply chains?

All of these debates matter because ongoing global attention concerning business and human rights issues can drive momentum for policy and regulatory changes at home. So I would encourage you to get involved in increasingly public consultations around these issues to ensure your views are heard.

Conclusion

I conclude by saying how much I welcome this opportunity for us all to take stock of what is happening here in Australia on the business and human rights front, and in relation to developments in other countries as well. I am particularly interested to hear from you about domestic business and human rights related issues including what I understand to be important work around indigenous reconciliation as well as issues concerning migrant workers. I hope we can also share ideas about what is working well and what more the Government of Australia, business, civil society, investors and trade unions can actually do to harness national opportunities for better human rights outcomes while engaging effectively in different partnerships aimed at creating real and lasting change.

Thank you again for the invitation to join you today. I look forward to our conversation.

The social licence and the Bank of England

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Mansion House speech, City of London, 10 June 2015

Inspiring to hear the Governor of the Bank of England, Mark Carney, use the term “social licence” so much in his Mansion House speech in London tonight when making the case for greater accountability. Excellent. Lets hope his audience were listening.  Here are some quotes:

On Markets:

“Markets are not ends in themselves, but powerful means for prosperity and security for all.  As such they need to retain the consent of society – a social licence – to be allowed to operate, innovate and grow.  Repeated episodes of misconduct have called that social licence into question.”

… “Real markets are resilient, fair and effective.  They maintain their social licence.”

On Financial Reform:

“This reform agenda has increased the effectiveness of FICC [fixed income, commodities and currencies] markets and reinforced their social licence.  It is frustrating for us all that such major progress risks being overshadowed by misconduct problems.”

On the Governance of the Bank of England:

“The Bank’s arcane governance blurred the Bank’s accountability and, by extension, weakened the social licence of markets.”

Mark Carney’s full speech can be found here. For more on the social licence.

 

The 7 May 2015 “British” election

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“Those who expect to reap the blessings of freedom, must undergo the fatigues of supporting it.”    - Thomas Paine (1777)

Thursday 7 May 2015 is the date of the UK election. It  is more than a British election in a number of ways. The fact that there is no adjective for “United Kingdom” – you are either British (i.e. English, Scottish or Welsh) or Irish – is a linguistic clue to a deeper force at work once again. Being of the United Kingdom of Great Britain and Northern Ireland seems to be diminishing still further as a collective identity.

For the first time in over 300 years of union, Scotland might (just might) return only pro-independence nationalist representatives to the Westminster Parliament – something Wales or Northern Ireland have never done (nor for that matter the rest of Ireland before its independence). Even if the Scottish Nationalists fall slightly short of winning all 59 Scottish seats, it is likely to be a historic achievement. The 2015 election looks like being not just about the respective number of Members of Parliament (MPs) but also about the legitimacy of different parties to be part of a government given that none is likely to command an overall majority.

The arithmetic itself highlights what is wrong with the current British democratic system. It maps very poorly onto the new political allegiances that have emerged across the UK over recent years, partly due to our “first past the post” electoral system (in Britain) but also due to how concentrated some votes are. The United Kingdom Independence Party (UKIP) – who despite the name are de facto English Nationalists – looks like gaining 10-14% of the overall UK vote, but perhaps only one or two seats in Parliament. Nationalists in Wales and Northern Ireland will gain more MPs than UKIP but with a much smaller percentage of the overall UK vote (largely because they are concentrated in a few seats each) and it should be noted, that Sinn Fein (part of Irish Nationalist community) will not take their seats in Westminster anyhow.

But the Scottish Nationalists (SNP) will command perhaps only 4-5% of the overall UK electorate but might win 54 or more of the 59 Scottish seats in Westminster. The 50% of Scotts who do not vote SNP tomorrow might not see many or any Scottish Labour, Liberal or Conservative MPs in Westminster. Apart from being a bit weird it is huge drain of talent from the Labour and Liberal Parties and from Westminster as a whole.

But I am not blaming Plaid Cymru or the Scottish Nationalists for this state of affairs – both have advocated for proportional representation. As commentator and satirist Armando Iannucci points out, it is the system itself that is rotten and for this we must blame the two parties that have dominated UK politics for too long: Labour and the Conservatives – for not reforming it. Whilst the de facto English nationalists – UKIP – also claim to be a reaction against the status quo – unlike the Irish, Welsh or Scottish nationalists they cannot credibly claim to be progressive with their anti-immigration and anti-European rhetoric. Intriguingly, if the UK does start to pull apart, even only through greater devolution, it will open political space for any progressive English nationalist party should they ever choose to be labeled such terms given hegemonic problems of being labeled “English”. I am not a nationalist – so I leave this bone for those that think nationalism is a legitimate dogma in the twenty first century.

What makes the May 7th result particularly interesting is that the two main parties are neck and neck at around 33% of the popular vote between them across the UK. In terms of seats, however, this favours the Conservatives in terms of numbers of MPs as their vote is concentrated in England (and particular the South of England). But even this advantage looks as if it will not give the Conservatives enough seats to rule on their own – another coalition will be essential but their partners of the past five years, the Liberal Democrats, will be the biggest losers on May 7th in loss of vote – as were the Liberals in Germany after their first coalition with Chancellor Merkel. There might not be enough Liberal Democrat MPs in the new Parliament to give the Conservatives what they need.

What the colour combination of the next UK coalition will look like is a matter for those who like to set bets and gamble. Unlike Germany, a Red-Blue (Social Democrat – Conservative) “grand coalition” is impossible in UK terms. It happened unofficially last year in Scotland during the referendum on independence and many Scottish voters still resent it. As much as nationalism is emerging as a powerful force in UK politics, it does not trump the much deeper class divide anywhere with the possible exception of Northern Ireland. British politics remains tribal on class grounds, much less so than it was, but the two main parties still have their core votes determined more by genetics than manifestos. What is truly radical about what is happening in Scotland, is that this might be shifting to a new model (albeit an independent Scotland could not be governed by a spirit of nationalism forever and would revert to left-right divisions).

What we will see in the next few days is a hint of a new style of politics in the UK – and one in which legitimacy places an increasing role. Not all the permutations for building a 326 MP coalition in the Westminster are easily legitimate in representative terms – given the imbalances I have outlined above. Until the voting system is reformed (replaced by proportional representation) and we move to a more permanent multi-party system, Westminster will feel its social licence draining away. Its political licence might be cobbled together for another five years, it might have legal licence in constitutional terms, but the social license – the result of the social contract between the peoples of the United Kingdom and their representatives in Westminster is increasingly badly damaged and must be repaired before democracy can once again thrive on these isles west of France.

To end with the words of a British man, in fact an Englishman who perhaps gave the world more in democratic ideas than just about any other. The democracies of France and the USA both owe much to Thomas Paine, but he was never much liked by the elite back at home – in fact he was wanted for sedition: to be hanged for his dangerous thinking. But Paine reminds us in his quote from 1777 (that starts this commentary) that democracy itself is a lot of hard work.

Has “fracking” lost its social licence?

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As we approach the next general election, will the UK ever develop an impartial national debate on hydraulic fracturing?

The first time I came across hydraulic fracturing (or “fracking”) was when interviewing geologists at test sites in the north of South Africa and Botswana seven years ago. I was looking at how such technologies might affect fragile populations where water is already scarce and where nomadic communities, as well as farmers, rely on shallow aquifers for their livelihoods, as does wildlife for its survival. I came away with a range of questions and have followed the debate since. Frequent reference was made then to the “fracking debate” in the USA but little did I know we also had hydraulic fracturing in the UK even then and had done so for decades, albeit mainly off-shore.

Now, several years later, we do have a national debate in the UK but it is far from being impartial or arriving at any consensus. It seems rooted in mistrust, conflicting information and entrenched positions: like the debate on Genetically-Modified Crops twenty years ago. Why did our policy-makers allow this to happen again?

There are very good reasons, even at a time of falling oil and gas prices, why the UK should be more self-sufficient in its energy supply. Issues surrounding pipelines from Russia receive a lot of publicity as do human rights in Saudi Arabia. By comparison, much less attention is given to Qatar (one the UK’s major overseas gas suppliers). There are good geo-political reasons, at a time when the North Sea Oil Fields resources are declining – or at least the UK’s bit of them, to look seriously at other sources of UK energy production. There are also very good environmental reasons why we should be shifting away from coal and oil to gas for our power generation in the medium term, whilst also building a solid base of renewables and possibly nuclear energy.

There are good arguments, but have they been heard by the British people? Public opinion polls suggest a low baseline of awareness as to what hydraulic fracturing actually is. The Government’s own research suggests that whilst three quarters of the population have heard about “fracking shale gas” about half of the population do not have an opinion either way about its efficacy, whilst those in opposition represent less than a quarter. Other polls suggest that opposition continues to grow to about 30% of those questioned, rising to 40% if it relates to a local area or up to 70% if in a National Park.

In my book on the “social licence” of activities, I define the concept as having three core definitional elements: legitimacy, trust and consent. The first is notoriously difficult to define but vested interests must be seen as part of it – is the case for fracking objectively made or do some stand to profit more than others. The ownership structure of the companies that hold the exploration licenses is perhaps a surprise to those outside of the industry and can raise concerns over potential or perceived conflicts of interest. There are hundreds of oil and gas exploration companies registered in London and operating across Africa and parts of Asia. It is possibly only those operating in the UK that have received scrutiny. It is not surprising that these companies employ former government officials or former captains of industry – they bring expertise but they also bring access. Cuadrilla, one of the leading UK fracking companies, is chaired by Lord Browne (a man I happen to admire greatly), the former BP boss but also an advisor to Government and there are number of former government ministers connected to the industry. There is of course nothing wrong with this necessarily but the state-energy nexus will need careful explaining to the public for the industry to maintain its legitimacy. It is one thing for BP or Shell to hire former government bods for their global operations, quite another when the drilling is in Sussex or Lancashire it would seem.

When it comes to “trust”, the polling suggests there is a significant way to go and that it is Greenpeace and the Green Party that are currently winning the national debate. And “consent”, well although exploration licenses have been granted by central government, local authorities seem increasingly willing to deny or delay planning permission in the face of local concerns. The protests in Balcombe during 2013 might only be the start of what is to come. All of this seems out of kilter when the real risks are considered. It seems the British people are more than willing to allow those in the Middle East or Africa to face environmental degradation or human rights abuses (such as those in the Niger Delta that have gone on for decades) but much more squeamish about drilling in their own leafy backyard – even if the impacts of which will be incomparably less. This Nimby-ism has rarely been called out (which politician, NGO or business sees it in their interests to do so?) but is clearly a strong component of the UK debate.

It might not be too late for the next UK Government to lead a national debate on the future of our energy supply and the many advantages of domestic energy production. And yes, as much of this as possible should be renewable in the short to medium-term with renewables dominating in the long-term. If there is no need for gas over the medium–term – and I mean really no foreseeable need – then fine, but I have yet to read any compelling evidence of this. Rather, if part of our national strategy is to move from oil and coal to gas over the shorter term – then the UK’s own gas should be part of the mix, surely, and not just that from Qatar and Norway. There are clearly environmental risks associated with fracking in the UK but the impacts of these will be far less than those in drought-prone parts of Africa where British companies are also leading the charge and the British public asks no questions. If the UK wants gas, then why not shoulder some of the risk at home, where it can be better managed and is subject to the full force of British law? We have for decades exported the environmental and human rights impacts of our energy demands.

The next government, likely to be a coalition of some kind, would do well to make Britain’s future energy policy as non-partisan and transparent as possible. Perhaps a multi-stakeholder approach could be developed where government, industry and civil society sit down together to identify and manage the risks of which ever energy sources are exploited here at home. The UK has led on such approaches internationally in relation to revenue transparency in the extractive sectors (the Extractive Industries Transparency Initiative currently chaired by Claire Short and which now has 48 member countries) and also in relation to the use of public and private security forces (the Voluntary Principles on Security and Human Rights which the UK currently chairs). Why not a multi-stakeholder approach relating to energy exploration here at home? This might, just might, ensure that that communities can give informed consent to whatever comes next energy wise.

What part of “no” don’t you understand?

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The following is a short reading from my book The Social License I recently recorded for “Author’s Corner” on National Public Radio in the USA. It relates to Chapter Six of the book and the issue of community consent.

(Start)

When we talk about an enterprise as having a “social license” what do we mean? I mean it has legitimacy through accountability to the people and not just powerful interests. But cultures surely differ in how they understand this.

As one indigenous leader in Guatemala explained to me: “Companies want to consult with us about their operations. They often want to know how long it will take our community to respond. We tell them that sometimes it will take one night, sometimes it might be a week, or even years. It depends on the question they ask.”

There was once a mining company desperate to open a mine deep within the Australian outback. The challenge for the company was the fact that the mine would sit upon the land of indigenous peoples. Under Australian law, the company needed to gain the consent of the local community before any mining could start. Every month, the company’s anthropologist went to talk to the village elders. One old lady sat there in silence during every visit with her eyes closed, letting the men of the village voice their fears and concerns.

The anthropologist was concerned by the silence of the woman. After two years of visits, the community was still withholding its consent. After one awkwardly long silence, the anthropologist was surprised to see that the woman had opened her eyes. The woman fixed the anthropologist in a long stare and said in her broad Aussie accent: “What part of ‘no’ don’t you understand?”

I’m author John Morrison

(End)

A naïve wish for 2015

 

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Radically transparent supply chains

Once upon a time, in a far away land, the people decided to find out who made all the wonderful things that appeared in the town shop every morning…

As we approach 2015 there is perhaps a small opportunity for some wishful thinking upon a star. The coming year looks like being a tough one. Whilst we might expect good news on US-Iranian relations, tensions between the West and Russia could well deepen and extremists of various kinds are likely to inflict more horrors on the innocent, as recently took place in Pakistan. Europe looks like it will continue its walk towards increasing populism and xenophobia. We can only hope that enough multilateralism will prevail for forthcoming agreements on Climate Change and the Sustainable Development Goals. But what on business and human rights?

We all wish there will not be another incident of the scale of the Rana Plaza factory collapse in Bangladesh (which killed over 1,100 in April 2013) or the Turkish mine disaster (which killed over 300 in May 2014). Globalisation has lifted millions, if not billions, out of abject poverty over the past thirty years but it has also widened national inequalities and increased the power of non-state actors such as business. We can and should work for stronger laws, stronger enforcement and greater accountability but will it be enough? The social contract that binds our societies is shifting and national governments are struggling to keep up with the demands of communities and the wider population.

There perhaps has not been a time in history when democracy has been so widespread but also so undervalued. There are also signs that some governments want businesses to play an increasing role in the social contract itself, be it in terms of internet governance, on the one hand, or public-private partnerships to realise the Sustainable Development Goals, on the other. Given it will take years, if not decades, to respond adequately to these changing power dynamics, what are the essential steps we take in the meantime?

Greater transparency is clearly an essential step and this will not be news to any reader. Over the past ten years, there have been a range of important initiatives between governments, business and civil society on issues such as extractive sector revenue and tax, conflict minerals, timber or even the social audits of ICT, apparel or food companies. But we have a problem. These important initiatives, or laws that mandate transparency, operate outside of wider public awareness or scrutiny. And this lack of public interest limits the political prioritisation given to human rights by governments, the responsiveness of business and the resources available to NGOs.

Fundamentally, there is a lack of sufficient incentives within most value chains for lasting systemic change. For example, this week’s BBC Panorama undertook another documentary on a leading brand, this time Apple, and allegations of the abuse of migrant temporary workers in the supply chain including excessive overtime. In previous years it has been other brands with allegations of  child labour and so on. The issues raised are very serious but they are often, but not always,  systemic in nature. If you might think that such media attention would lead to changes in consumer behavior, well think again. The BBC journalist fronting the documentary on Apple admitted at the start of the piece how much he loved the product, as do I, and many people I know. Just looking at the number of iPhones and Macbooks evident at the recent United Nations Annual Forum on Business and Human Rights – that says it all – we all love to buy quality brands if we can afford to, perhaps feeling that even experts do not have the knowledge they need to make consumer choices either way.  Let me be clear – we don’t yet have the objective benchmarks to make such a decision about any ICT company and this is part of the problem and well as the frustration every time such a documentary is made.

If companies do change, and some are making big efforts, it is not driven by consumer behaviour or investors at the moment. Just think how much more we could achieve if we brought consumers and investors with us!

There are clearly not enough incentives and disincentives in the system for fundamental change. Law should provide more of these – particularly laws that capture the “submerged” actors who are not brought into the debate by public or political commentary. Conflict mineral legislation is one example of this and we can hope in 2015 to see more binding law relating to modern day slavery and the incorporation of the 2014 ILO Forced Labour Protocol into national legal regimes. And, yes, there might well be a case for a binding international treaty on business and human rights (more on this in 2015). But it would indeed be naïve to think that law alone will really drive the behavioural change we need amongst consumers and investors.

Also needed are market-based drivers. That is why many of us think that the public ranking of companies performance against human rights benchmarks is critical and we have recently launched a broad-based initiative to achieve this over the years ahead. Investors have a critical role to play: few companies will want to be bottom of their sector’s league table in terms of their human rights impacts. But consumers are also a critical factor that can no longer be over-looked.

So here are two radical fairytale endings.

The first possible ending: imagine that we in our fairytale town and when we go to the large furniture store (well known for its wonderful flat-packs) and you have the chance of interacting with a human being at the other end of the value chain. Through the magic of information technology and an image projected onto a screen, you would be able to pose questions to a worker representative at that week’s featured supplier on the other side of the planet and ask whatever question you liked (through an interpreter) about working conditions, the worker’s concerns and aspirations. Within the next ten years, one of the major retail brands will do this and, by doing so, begin to change the whole dynamics of corporate responsibility. It is nonsensical that consumers currently carry no responsibility for their own purchasing behaviour, this can and will change if consumers are given an opportunity to engage in the “kingdom of the supply chain” as Auret Van Heerden once called it.

A second possible ending: imagine a chain of fairytale theme parks in major cities such as Los Angeles, Orlando, Paris, Tokyo and so on and who currently spend many millions of dollars on supply chain auditing for the soft toys and other items sold therein. Imagine that they decided that supply chain auditing alone was never going to end the eternal risk of being caught out should some wicked goblin decide to scrutinise the supply chain with the hope of finding something, anything, that might embarrass the magic kingdom. Given that the theme parks touch hundreds of millions of people at some point of their lives, then they have an unrivalled opportunity to bring visitors into some state of awareness about supply chain conditions. Imagine that in every theme park there is a “supply chain interactive museum”, full of wondrous information about the real world.

Over time, consumer awareness of the complexities of supply chain management would increase and they would begin to ask the right questions of their own buying behaviour, and begin to reward those brands trying to do the right thing. This would save millions if not billions of dollars currently spent on auditing across industries, and instead some of this money into consumer awareness. Auditing would still have an important role to play – but disclosure and reporting would be more meaningful and be much more accessible to the most important stakeholder for any retailer – the consumer (or as we used to call them, the customer).

Sorry for the wishful thinking, but it is that time of year. I hope we will all live happily ever after, or at least until 1 January.

Remember, remember, the tenth of December…

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What should business do about shrinking civil society space?

Every year, on 10 December, the Institute for Human Rights and Business publishes its “Top Ten” issues to watch in the coming year. This year the plight of civil society and human rights defenders made the list, we cite examples from Africa, Australasia, Asia and Europe. But why?

It is undeniable that the space for civil society to play its independent role in defending the rights of citizens, and in particular the most marginalised, is shrinking in many parts of the world.  But why should businesses care? Human rights defenders around the world, who we remember today on International Human Rights Day, are a thorn in the side to governments and sometimes to businesses as well. Can a case really be made for businesses to defend the rights of  human rights defenders who might challenge the very governments with whom the companies wish to conduct their business? It might be #HumanRightsDay – a time for hope – but surely this is beyond the bounds of even idealistic wishful thinking?

Today, a range of civil society organisations were invited to join diplomats at the Foreign and Commonwealth Office in London to celebrate International Human Rights Day. Similar events were taking place in many other countries around the world, sometimes involving governments, sometimes not. This is not to give the UK Government a clean bill of health, questions were asked about the UK’s role in rendition relating to the victims of torture, following yesterday’s US Senate report on the CIA post 9/11, as well as why the European Convention of Human Rights has such a bad reputation in the eyes of some leading British politicians. But it remains the truth that the people who asked these questions today will not be fearing a knock on the door in the middle of the night for daring to do so. This cannot be said for an increasing number of countries. Marginalisation, violence and torture, or just the fear of them, can have a freezing effect on future dissent and freedom of expression. The important role of protecting privacy within this regard has already been made in an earlier commentary.

My friend Phil Bloomer from the Business and Human Rights Resource Centre asked the question about what the business response should be to this shrinking civil society space. It is an interesting question. Some companies will react that this is a political issue, an issue of civil and political rights and for any government and its citizens to sort out between themselves. Others, who have “gotten” the UN Guiding Principles on Business and Human Rights (UNGPs) might also point out the role of business is to respect human rights – not to protect them. Therefore, some might argue that the rights of human rights defenders can be respected, but if a government or other entity wishes to abuse their freedom of expression or privacy on an issue not related to their core business activity, why is of their concern?

This, however,  would be an incorrect reading of the UNGPs as responsibility needs to be understood in terms of contribution or linkage to a negative impact – businesses can benefit from the status quo in countries where human rights defenders, trade unionists and others are routinely rounded up – just by staying quiet.

But we don’t even have to go there. Business logic itself suggests that human rights defenders are of core business concern. The number of companies that now have “stakeholder engagement” programmes is incalculable. But far fewer actually define what they consider a stakeholder to be. Interestingly, many shareholders, for whom the company actually has legal and fiduciary duties, resent the term as it dilutes their primary relationship to the company. This is very understandable. Therefore, I must admit I remain confused as to why so few companies actively use the term “rights-holder” to describe those people upon which their activities might have a direct impact.

Anyhow, if we accept that many companies now feel the need to talk to people (and not just shareholders and regulators) about their activities, then – by definition – they must take an interest in the ability for these people to think, speak and act freely, otherwise what is the point?  I would argue that is implicit in the whole stakeholder concept, in particular if we include rights-holders within it, that business should take an interest in the space allowed to civil society in any given market or production site.

I don’t often single out companies for praise, but I am excited by H&M’s public statements in relation to living wage and collective bargaining: that the only way to obtain meaningful understandings of what a living wage is within a particular context is to allow workers the freedom and security of negotiating one. “Trade Union space” is not often discussed within the same context as “civil society space” but the two are heavily linked. The abuse of rights outside of a workplace will eventually permuate the workplace itself, and vice versa. Arguably, most of the active human rights defenders in the world today, and especially when we consider the role of business, are trade unionists. But there are many other examples, companies have often given safe spaces to those vulnerable to exploitation and even murder, from Oskar Schindler forward, there is nothing new to this. Business leaders have to remain very quiet about what is perhaps the most sensitive of business and human rights issues. Even now we are still learning about the role business leaders played during the last years of apartheid South Africa.

But business can be more transparent about what it is doing proactively to help secure civil society space. The United Nations has itself clarified the essential role of human rights defenders. But in specific business leaders might like to consider steps such as:

  • Being more precise about who really are the affected rights-holders in a given country and to assess their vulnerability. Do nothing that will make them more vulnerable (including identifying them publicly if this is against their wishes) but do what you can to make them less vulnerable. In some contexts formalise your relationship with them if it helps to protect them.
  • Think very carefully about your corporate philanthropy. Whilst giving grants can often strengthen civil society, over dependency, co-option, corruption and discrimination can weaken it.
  • Even casual references to the importance of civil society in business operations can surprise governmental counterparts or the local security services which might make assumptions about what business is expecting. This is perhaps one of greatest public policy contributions of international multi-stakeholder processes such as the Voluntary Principles on Security and Human Rights or the International Code of Conduct for Private Security Providers.
  • Have rapid response procedures to protect known human rights defenders or trade union representatives, which might mean bringing such people under the temporary protection of a company, international organization or a foreign embassy.
  • In conflict areas, use enhanced due diligence to assess the true vulnerability of all individuals and communities, and consult independent experts on the ground such as the International Committee of the Red Cross/ Red Crescent.

In my book, The Social License, I argue that civil society plays an essential role in defending the social contract itself – the ability of society to hold its governments to account. Less civil society means less social license, in definitional terms, as the consent granted to business activities is likely to be tacitly and not actively given. There is much that business could do to defend civil society space – we must first remind business leaders worldwide why it is in their own best interests.

So business, remember, remember, the tenth of December and in particular lets remember human rights defenders such as Kailash Satyarthi and Malala Yousafzay, winners of this year’s Nobel Prize for Peace.

Men. Just say no, politely…

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No more male-only panels or boards

Gender inequality is returning in new forms, and of course in most places it never went away.

A recent debate in the UK has been about whether a football player, who is a convicted rapist, should be allowed to return to his former football club after serving his prison term.  For some, this has reaffirmed a view that once the letter of the law has been followed, there is no further ethical issue. Curious. Many commentators, mostly male but not exclusively, cannot accept that such a football player has lost his social licence for a high-profile job which provides a role model to many young men (and women). He could not conceivably run in politics and therefore nor should he run for any other position in public life where his behaviour influences others.  This should not have to be an issue of legislation, but one of good governance and sound decision-making by the Boards of sporting bodies and football clubs.

You think I am over-reacting? Then ask yourself why so few British footballers are openly gay, when there must be hundreds who are. Its a different issue but the answer is the same. Culture plays a very significant role in hiding human rights abuse, whether it be in society, business or sport (don’t get me started on this week’s FIFA report).

The revelations about how so many British celebrities secretly behaved in the 1970s and 1980s have not yet served as enough of a wake up call. Now there are even allegations of murders in political cover-ups perhaps the biggest revelations are yet to come.

Even more pernicious are the hateful tweets that female BBC journalists received this week after robustly questioning a British comedian who tells rape jokes. Even some of the liberal left make light of sexual violence, defending the right of Julian Assange not to face justice in Sweden for charges of alleged sexual assault. Incredible. This is not to mention the everyday sexual violence that women face all around the world and the bravery of women who stand up to this.

If you are a man, like me (or unlike me it doesn’t matter), and wonder what you can do about the current state of affairs, here is one small example – inspired by our Scandinavian and Australian brothers. The next time you are invited to speak at an event and you the notice that the panel contains not a single representative of a non-male gender (and gender is more than a binary), then do not accept to speak. Don’t say “no” in a horrible way, but instead suggest the very many well-qualified non-male alternatives to yourself and try to persuade the organizers to invite them instead. I know this is tough advice for any young male trying to get into public life, but believe me a male-dominated public life is not worth the effort (have you ever been to a golf club AGM?).

It might not surprise you that Norway and Sweden have led the way with the “Equalisters” campaigners and the “Men Say No thanks” campaign #tackanej (in Sweden) and #takknei (in Norway). You might be more surprised that Australian men are also getting active. What about the rest of us?

Much less seems to be happening in my own country, the UK, but am pleased to see that the NGO Article 36 raised the issue of gender discrimination in policy making.  In May 2014 at the meeting of the Convention on Certain Conventional Weapons (CCW) at the United Nations, 17 experts were invited to speak and all 17 were men. Nothing more macho than lethal weapons it would seem.

And we all know that only a handful of FTSE-100 or Fortune-500 companies have female CEOs, or Board Chairs. But how many of us have really tried to do anything about it? The change starts with each of us in the day to day decisions we each make.

Of course it is more than gender – it is fundamentally about power. When sitting at the annual stakeholder meeting of a large European multinational I couldn’t help noticing that of the 300 people in the room, 95% were men. But equally as noticeable was that 99% were white, and no one removed their suit jackets (all uniformly black, the jackets that is) until the “chairman” of the Board had done so – oh yes, the chairman was a man. As power gradients steepen, diversity decreases.

You will meet many women working in CSR roles in business, but far fewer in risk management or strategic roles. You might think that you have gender and ethnic diversity sitting on a panel in London, Bogota or Delhi, only to find out at closer inspection that you are sitting exclusively with the elite 1%. Class or Caste discrimination is amongst the most invisible and pernicious but anyone with a working class background will know what I mean here.

So why this diatribe you might ask? Is this just Morrison being all politically correct all of a sudden.  Well I guess we all have the power to say “No thanks”. We might not sit in positions of power, on the boards of multinationals or in the inner sanctums of FIFA, but we can all say “no thanks” to many things and lets start with gender inequality.

The start: Why The Social License?

I wanted to write a book about the current state of affairs at the business-society interface and wanted a fresh approach – not one following the tramlines of existing ‘corporate social responsibility’  (CSR) thinking or another book on business and human rights, there have been several excellent books already written on the latter (not least by my colleagues at the Institute for Human Rights and Business). I wanted to come to the issues afresh and from first principles as much as possible. I am therefore wholly to blame for the arguments set out in the book and this blog.

The enduring vision I have of why I work in this area is that of the evolution of the marketplace – a point Anita Roddick was lucid on. Several hundred years ago, and still in physical markets in many parts of the world, buyers and sellers operate in close proximity – they know each other, where each other lives and are likely to meet on a weekly or daily basis. There has been and still is, in such market places, a greater sense of interpersonal accountability. This is not to say that there were not long complex supply chains in past ages (obsidian, for example, was traded over thousands of kilometres over thousands of years) and also there were clearly abusive practices such as slave labour, but customers were much more actively involved in making judgements about the quality and reliability of not just the product but also the behaviour of the seller. Contrast this with the world of the past 20 years, where global value chains are hugely complex and where the humans involved (be they workers, investors, customers or consumers)  are very much disempowered in their ability to  influence the way the business of business is conducted.  We need new tools, awareness and laws to bridge this gap which has externalised the true social and environmental cost of production. At a instinctive level, the book is a reaction to the dehumanising effect of much of what we now call the global marketplace.

I was also interested that the term ‘social license to operate’ was emerging in many different places around the world and for different reasons. True, it remains a term still associated mainly with the extractive industries, but it I hear it elsewhere – within constitutional think tanks in Kenya, for example, or US-based beverage  companies. It is an attractive term because it is suggestive of a rationale about why any non-state actor should engage in social issues, particularly why an organisation whose primary stated purpose is not social (i.e. a business) should do so.  Unlike CSR or even human rights, it is an outcome and not just an objective. That said the term ‘social license’ was not clearly defined and was at risk quickly moving into the category of ‘self-declaratory CSR’ – as John Ruggie would call it.

So the book tries to pin down the ‘social licence’ concept and in a way relevant not just to business, but all other types of organisation. The pinning required something of a conceptual framework, more perhaps than a non-academic book should attempt (particularly when written by someone who is very much not an academic).  I had the work of all my colleagues in the business and human rights field as ballast – which reminds us that a human-centric approach must be about impact and impact in human rights terms. And that accountability is about redress and remedy, but it is also about prevention as well as transparency. This I had ‘in my back pocket’ so to speak and those of you that read the book will see it becomes an important feature of the later chapters. But I needed to get there – and particularly for the more skeptical reader who might think that ‘social licence’ sounds nice but is just a fashionable buzz word, and that human rights and business have little to do with each other.  Therefore I evoked the thinking of some of the greatest in making some superficial but important links back to social contract thinking of 200-300 years ago. It is not so easy to dismiss social contract theory as fluff given the influence it had on shaping democracies and ideas of civil society in many parts of the world.

It seems I am one of the first in the world to define social license in social contract terms, and you can judge to what extent I pull this off. The social contract experts who have seen my book have been polite and kind, but I knowingly dip my toe into what are very deep waters. However, there is much of what I seen in the writing of those such as Locke, Hobbes and Rousseau which does resonate with questions about the role of business (and other organisations) in contemporary society. At a minimum, I hope to provoke a reaction from which we all might learn something. And, as my patience with the ‘CSR industry’ is wearing thin, I give us all a good collective kick to do better and too ask the tougher questions about the activities of all of our organisations.

I will not just be blogging to promote this my first book. Rather I wish to develop my own voice and thinking on a range of issues, perhaps resulting in future books perhaps to be written by others. I hope some of you will share this journey through your own comments and writings. The role and legitimacy of non-state organisations in today’s world (be they businesses, NGOs, communities, religious organisations, regional authorities and so on) is one of the most fundamental of our life time and so tough questions need to be asked.