Allegations of modern slavery, trafficking, sweatshops, unsafe working conditions and long, corruptible supply chains are just some of the issues threatening businesses and their reputations. Yet some still hold the view that HR is not responsible for those working more peripherally, through agencies and similar, or in supply chains.
This approach is looking harder to sustain, particularly for HR professionals working for listed or public-facing employers. Factors contributing to this change include increasing regulation, growing engagement from the boardroom, higher expectations from governments, investors and financiers and new evidence that working conditions for some are deteriorating, with incidents of trafficking, slavery and other abuses in the UK.
As more business leaders realise the significant reputational and legal risks posed by human rights abuses and look to HR for help, will the function be ready to respond?
What changed in 2014?
A new requirement for UK listed companies to publish information about the effectiveness of human rights policies in their annual reports was followed by EU legislation, adopted last autumn, that widens this disclosure duty. A third measure aimed at increasing corporate transparency was added to the Modern Slavery Bill last year. This will require larger companies to publish an annual statement detailing the steps taken to ensure that slavery and trafficking is not taking place in their business or their supply chains.
The importance attached to such disclosures was highlighted during 2014 when key investors and shareholders confirmed the use of human rights information when evaluating a company. Similarly, procurement processes are increasingly incorporating human rights into the terms of business – a potential barrier to winning work for those organisations slow to respond.
Another pressure point for employers emerged at the end of the year, when a government-backed index ranking businesses on their human rights performance was launched. Its aim was to highlight good practice and hold others to account. At the same time the topic became politicised during pre-election skirmishes, with the main political parties promising to tackle exploitative working conditions in the UK.
Taken together, these recent developments are helping to move human rights on to the boardroom agenda. In particular, directors of public-facing companies with long supply chains are recognising the risk to corporate reputation, customer goodwill, turnover and employee retention if they fail to act.
Looking forward
As more employers focus on workers' human rights, many are expected to involve HR given the subject matter. Where organisations have already responded, HR has either played a key role or has worked cross-functionally.
Typically, this has involved the introduction of human rights policies and training, identifying and addressing human rights risks, creating processes for raising issues (such as stakeholder consultation and whistleblowing hotlines) and ongoing monitoring. For example, one major retailer has recently announced an ethical audit of a supply chain and another is training its employees to identify worker exploitation in the supply chain.
The way forward will depend on the organisation and there is no one-size-fits-all solution. However, given mounting evidence of worker exploitation in UK and global supply chains, ignoring such risks is not a sustainable long-term option for most employers.
Tom Player is a partner at Eversheds, an international law firm
