Evidence from CSR Reports
Our longitudinal analysis of CSR reports illustrates that UK firms have consistently increased their engagement with the human rights agenda since the early 2000s. In 2015, the most recent period in our analysis, 84% of the firms included some information on human rights, a steady increase since 1995–1999 when only 17% of reports touched upon rights issues. By 2005–2006, this proportion had already reached 80% of reports (see Table 1). British TNCs thus increased reporting on their human rights policies and impacts in the mid-2000s before policymakers directly pressured them to do so through the adoption of the UNGPs, the UK National Action Plan and increased reporting requirements. This early engagement was most likely shaped by greater stakeholder pressure and the efforts by NGOs in the UK to advocate for the uptake of prominent international codes in the CSR field such as the UN Global Compact that promote human rights (Arkani and Theobald 2005).
The publication of the UNGPs in 2011 and the UK National Action Plan in 2013 however do appear to have augmented these earlier efforts. In particular, the increase in the number of firms from 42% in 2006 to 58% in 2015 that indicate they are carrying out human rights due diligence assessments of their operations--the center piece of Pillar II--illustrates the likely impact that the implementation of the UK NAP in 2013 had on firm practices. Perhaps more telling than this relatively modest increase in due diligence reporting is the expansion of the number of firms that gave a detailed account of these due diligence procedures after 2011. This number increased from just 6% of firms in our sample in 2007 to 29% in 2015.
Similarly, the proportion of firms that indicate they have put grievance procedures in place to address past human rights violations increased significantly after the publication of the NAP from just 14% of firms in 2007 to 56% in 2015. UK firms also appear to monitor their supply chains for human rights abuses more rigorously than in the past. These commitments to monitor suppliers indicate that TNCs increasingly are willing to take at least some responsibility for their indirect human rights impacts in addition to the impacts for which they are strictly legally liable. It is in these three areas that the UK NAP appears to have had its biggest impact on the human rights practices of British firms. It is notable, however, that just over half of large British TNCs report that they conduct systematic human rights due diligence assessments of their operations (Fig. 1).
If our findings reveal that British firms have increased the attention they pay to human rights in their CSR programs, our analysis also reveals that they have largely done so by focusing on procedural changes such as adopting human rights policies and reporting on due diligence reviews. Most TNCs remain hesitant to report their impacts on specific groups of rights, thus indicating their reluctance to engage with the ‘know & show’ procedures of the CSR field. Although the scope of the rights issues that firms report on did expand after publication of the UNGPs, the disclosures of their impacts on specific rights remains quite low (Table 1). With the exception of certain labour issues such as health and safety, diversity and collective bargaining less than a third of firms disclosed their impacts on other core rights including child labour, a living wage or forced labour in any period. Fewer than 10% of firms disclose information on emerging rights issues such as privacy, indigenous rights or the use of private security forces.
Even more striking is how few firms publish information on their targets for future improvements in these human rights areas. Such continuous improvement targets lie at the heart of the CSR approach embedded in Pillar II of the UNGPs and highlight a firm’s commitment to particular issues as well as the organization’s willingness to ‘show’ the effectiveness of its human rights policies and practices. The proportion of firms disclosing future targets even in core areas such as collective bargaining, child labour, forced labour or living wage barely reaches 10%, even in the most recent time period of 2015. In addition, disclosure of these rights is brief and seldom supported by quantitative or qualitative data, again suggesting only a shallow commitment to improving the realization of these rights.
Our findings, however, highlight some important exceptions to this general story of rights neglect. The firms in our sample in relatively high numbers disclose information about three core ILO labour rights: collective bargaining, health and safety and diversity. In addition, for diversity and health and safety firms often go beyond simply assessing current impacts and make clear and measurable commitments to improving their future performance. By 2015, more than a third of the firms in our analysis had made commitments to future improvements in these two areas. In all the time periods we examined, firms’ disclosure on health and safety and diversity are comparatively detailed and comprehensive thus indicating a commitment to taking responsibility for these issues that surpasses other substantive rights issues promoted within the UNGPs and CSR field more broadly (Table 1).
Overall, our analysis of CSR reporting practice suggests that British firms’ engagement with the human rights agenda has increased since the publication of the UNGPs in 2011 and UK NAP in 2013. As outlined above, this engagement has no doubt also been spurred by NGO pressure as well as the adoption of more stringent human right reporting requirements by the UK government and the EU. But the growing proportion of British firms that claim to have implemented due diligence reviews and grievance mechanisms highlights the role of the UNGPs. For many firms, these commitments do not go beyond procedural change. Outside of health and safety and diversity, the vast majority of firms still fail to be transparent about their impacts on specific rights or engage with the ‘know & show’ practices promoted by the UNGPs and the CSR field.
It is likely that the quality of British firms’ disclosures in the area of health and safety is at least partly related to the stringent regulation and mandatory reporting requirements that exist in this policy area. Stringent regulation, however, offers a less compelling explanation for firms’ increased focus on gender diversity. Although legislation on equal pay (for equal work) and discrimination in the workplace is long-standing in the UK, firms’ commitments to diversity predate either the requirement for such reporting in the 2013 legislation or later rules adopted in 2016 that mandate firms disclose their gender pay gaps (UK Equalities Office 2017). Indeed, with the possible exception of conflict minerals, all ten of the rights issues we analyse are subject to significant regulation in the UK. But firms still selectively engage across these issue areas. Further government regulation cannot account for why firms in large numbers commit to making improvements in health and safety and diversity that go beyond what is currently required by law, but largely chose not to make such commitments in other rights areas.
These findings echo a recent study that shows regulation influences firms’ sustainability disclosures, but that large firms’ policies and reporting behaviour often predate legislative requirements and are driven by legitimacy concerns and stakeholder requests for relevant information (Carini et al. 2020). Thus, regulation can only partially account for firms’ selective engagement with the new human rights agenda and the know and show practices encouraged by Pillar II of the UNGPs. To a considerable degree firms have been able to pick and choose which rights they take responsibility for.
Barriers to Greater Corporate Human Rights Engagement
To shed light on why firms have engaged partially and unevenly with human rights issues, we turn to interviews with the CSR managers of the UK firms included in our analysis as well as key CSR stakeholders. The interviews confirm the main findings of the content analysis while lending insight into the barriers that prevent firms from engaging more substantively with the expanding business and human rights agenda. There was almost uniform agreement across the CSR managers and stakeholders we spoke with that the policies and management practices UK firms have put in place to minimize their negative human rights violations are generally not as developed as the practices firms have in place to promote environmental sustainability. Most managers noted that human rights have become a more important focus of their CSR programs and are a growing priority for the British business community.Footnote 1 This view was shared by the stakeholder groups including NGOs. As one NGO representative who works on fair labour practices explained, 15 years ago firm managers would often claim that the human rights abuses that occur along their supply chains were ‘not their responsibility’; I do not hear that much anymore’.Footnote 2
The managers and NGO representatives highlighted several factors to explain why British firms began engaging more intensively with the human rights agenda after 2000. Echoing the findings of Arkani and Theobald (2005) cited above, most managers indicated that firms’ increased human rights engagement in the early 2000s was primarily driven by legitimacy concerns and the increased scrutiny of key stakeholders such as consumers, NGOs and policymakers. A number noted that the fallout from the 2008 financial crisis accelerated this trend. Many large corporations began to focus on their human rights impacts to restore trust in markets and large corporations.Footnote 3 A few explicitly noted the influence that the UN Global Compact and subsequently the UNGPs have had on their human rights practices. These managers noted that these UN initiatives have helped ‘raising awareness’ and to put rights ‘higher on the agenda’.Footnote 4
Despite the increased emphasis on human rights, most managers acknowledged that when compared with environmental sustainability significant barriers still exist to fully incorporating human rights into their firms’ CSR programs. Most frequently managers—nine out of eleven—noted that the business community’s engagement with individual human rights issues is hindered by a lack of common indicators and the difficulty of measuring firms’ human rights impacts.Footnote 5 These managers said they would welcome more standardized methodologies for measuring and monitoring issues such as the living wage and indigenous rights. Such standards often exist for firms’ environmental impacts, but several managers noted the difficulty that exists in agreeing useful and legitimate indicators for labour and human rights issues across countries and national markets.Footnote 6
Indeed, widely accepted global standards for many of the labour and human rights issues are lacking. For example, there is still no commonly accepted international or even European standard for measuring a living wage despite the issue being recognized as a core labour standard by the ILO since the latter’s creation in the early twentieth century (Anker 2011). Efforts to create an international standard have accelerated in recent years (Anker and Anker 2017). But this work is significantly less developed than measures for organizational greenhouse emissions, for example. These measurement issues make it difficult for firms to conduct credible human rights risk analysis, which may explain why firms’ commitments to human rights due diligence are often largely procedural in nature and lack detail about organizations’ specific impacts.
The interviews indicate that the difficulties firms face in measuring their human rights impacts are not simply technical, but also political in nature. Several managers explained that human rights are simply ‘a harder space to navigate’ than other parts of firms’ CSR programs, particularly environmental sustainability. Some managers expressed uneasiness about adopting uniform human rights policies that would apply to their firm’s operations in other countries, especially in instances where national governments had not endorsed or do not adequately enforce such rights. In general, there seems to be some discomfort among managers about taking broad responsibility for the realization of human rights. One manager went so far as to say that in their ‘personal view there is a bit of cultural imperialism from the West’ within the business and human rights agenda.Footnote 7 Another CSR manager echoed these concerns and noted that ‘it is very hard to say what is a local politics issue and what is a categoric abuse of human rights’.Footnote 8 These responses highlight the ambiguity that still exists in the British business community about how to define corporations’ human rights responsibilities.
In addition to the difficulties involved in defining firms’ human rights responsibilities, NGO representatives noted they felt it was simply more difficult to make a positive business case for corporate engagement with human rights when compared with environmental sustainability. Most firms do not yet see how their human rights performance touches on their core business strategy or interests. One NGO representative explained it this way.
Human rights are more about reputation management rather than risk avoidance or market opportunities. Firms care about their reputations, but it is not a direct market concern.Footnote 9
Another NGO representative put it more bluntly by noting that firms are often reluctant to address their labour and human rights impacts because it ‘costs them [firms] money.’Footnote 10 These views about the difficulty of creating a positive business case for labour and human rights were echoed by several CSR managers. One manager explained the difference this way.
How many companies are going to be excluded from a market because of a failure to have a living wage? None. How many are going to be excluded because of a breach of your [pollution] discharge license? Some.Footnote 11
This impression that it is difficult to create resonant business case arguments for human rights is reinforced by the number of managers that noted investors—although not customers—tended to focus more on firms’ environmental risks and opportunities rather than on their human rights risks. Thus, the market drivers of labour and human rights engagement still appear to be under-developed in the eyes of many UK corporations particularly when compared with the market drivers for environmental sustainability.
The lack of clear business case arguments for social CSR may be related to the final barrier to corporate human rights engagement highlighted by our interviews, namely the lack of insider champions within TNCs who are willing to push a stronger human rights agenda. Some noted the ‘CV bias’ of CSR managers who often had an environmental background and were passionate supporters of pushing a green agenda. Human rights issues by contrast are often handled by human resources departments, which one manager noted do not always have as proactive views on labour rights.Footnote 12 Although many firms have re-balanced their CSR programs towards labour and human rights since the mid-2000s, it is not clear that human rights issues always have ‘insider champions’ who are willing to push the agenda in the same way as seen with environmental issues. Such insider champions may also explain why the issues of diversity and health and safety have remained important exceptions to the tale of corporate human rights neglect. Health and safety is often included in the remit of environmental offices, while diversity, unlike many other labour issues, has become a key goal of many organizations’ human resource departments (Dobbin 2009).
Our interviews echo findings from earlier studies of the human rights practices of British firms that were conducted before the publication of the UNGPs, indicating that some 4 years after the publication of the UNGPs and more than 2 years after the adoption of the UK’s NAP British firms were still reluctant to expand how they define their human rights responsibilities (Preuss and Brown 2012; Obara 2017). The comparison with firms’ engagement with environmental CSR helps to shed light on the reasons behind firms’ continued resistance. The under-development of business case arguments for human rights and the absence of insider champions to make such arguments in part explain why British firms remain reluctant to take greater responsibility for their human rights impacts as Pillar II of the UNGPs calls on them to do (for a similar argument see Gregg 2020). The interviews suggest that firms’ engagement is likely to remain focused on vague commitments and management procedures unless something changes in the structure of the CSR field. The creation of market rationales and standards for measuring environmental sustainability, combined with changing professional norms, have spurred more substantive corporate engagement with environmental CSR issues and practices. Their continued absence and underdevelopment is notable in the human rights field.
This outcome may imply that more stringent legislation is needed to spur greater corporate accountability for their human rights impacts. Indeed, as we have outlined above, the UK government has passed such legislation in the form of the 2015 Modern Slavery Act, which requires large firms operating in the UK to publish a statement outlining how they combat forced labour in their supply chains. Because our data ends in early 2016 before this legislation had been fully implemented, it is likely that British firms have increased their disclosures of forced and child labour in the intervening years. More recent studies, however, have shown that this legislation has had only minimal impact on UK corporate practice (CIPS 2017; Field et al. 2019). A review ordered by Home Office and published in 2019 enumerated numerous flaws in the Act. These include confusion about which firms must publish reports on slavery in their supply chains, a lack of government sanctions to punish non-compliant firms, low-quality corporate disclosures that fail to make transparent forced labour and other violations in firms’ supply chains and insufficient change in corporate culture (Field et al. 2019: 9–14).
Although the UK government adopted its National Action Plan for business and human right and the Modern Slavery Act before most other European countries, many analysts argue that this legislation was too weak to significantly change corporate human rights practices (LeBaron and Ruehmkorf 2017, 2019). These scholars argue that legislation that relies primarily on transparency and reporting mandates will not change corporate behaviour to the same extent as policies like the Corporate Duty of Vigilance Law adopted in France in 2017. In addition to reporting requirements, this law mandates that firms combat rights violations in their supply chains and ties these mandates to legal liability. Numerous European states including the UK as well as the EU are now considering similar legislation.
These more stringent mandates would likely do more to change corporate culture and increase their monitoring of supply chains for labour rights abuses. But such legal mandates are not likely to be a panacea for the negative impacts that business have on human rights (Schilling-Vacaflor 2020). Liability rarely stretches beyond individual legal jurisdictions. NGOs in France have already run into difficulties using the Vigilance Law to hold corporations to account in French courts (Reed 2020). Furthermore, the legal liability of corporations continues to be difficult to establish in global production chains where ownership and control of many suppliers is fragmented and diffuse. Indeed, it was these weaknesses in the legal system that led to the creation of private governance schemes and the incorporation of CSR practices into Pillar II of the UNGPs (Ruggie 2013). Thus, while such legislation may well improve business accountability for human rights violations, firms’ engagement will likely also be determined by the evolving norms and practices of the CSR field.