This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.
Author: Andre Hoffmann, Vice-Chairman, Roche
- Businesses have a duty of respect for human rights, even if and when states fail to fulfill their obligations to protect workers, communities, and the natural environment.
- The European Commission draft of standard-setting legislation for sustainable corporate governance could change the face of corporate accountability.
- Firms must demonstrate a commitment for good corporate governance and a sustainable future by demonstrating their support for mandatory human rights and environmental due diligence.
As we enter the third year of the COVID-19 pandemic and with the threat to war looming over Europe and the US, protecting people and the environment is not an option but a necessity. A consensus is emerging: business has a duty of respect for human rights, even when states fail in their duties to protect workers, communities, or the natural environment.
The European Commission will release a draft of standard-setting legislation regarding sustainable corporate governance next week. This is intended to ensure that the environment and human rights are protected in all EU-based companies’ value chains. This could be a turning point in corporate accountability, despite multiple delays. If the EU achieves the high goals it set two years ago, it will be a significant moment. As Didier Reynders, EU Justice Commissioner, stated April 2020It is time to ensure that responsible business conduct, and sustainable supply chains, become the norm.
Putting inclusion into practice
There is increasing pressure on boards and companies to identify and solve problems in their value chains. Investors are also welcomeIt extends to the need of engaging more directly with communities affected by business activities. This is a great opportunity for business to practice inclusion. It is essential that the company’s top leadership champions proactive behaviors. My company, Roche, has recognized the benefits of creating an environment in which all people are actively included, treated fairly and respectfully, have equal access to opportunities and resources, and can be themselves while contributing fully to the organization’s success. This can only be achieved through the involvement of the company’s business partners. The same approach can be applied to communities throughout the value chain.
A wide range companies, investors, and business initiativesCompanies have recognized that effective mandatory human rights compliance and environmental due diligence are a way for them to raise the bar and ensure long term stability and sustainable business performance.
The voluntary regime established by the governing body has guided business efforts to ensure due diligence over the past decade.UN Guiding Principles for Business and Human RightsTheOECD Guidelines For Multinational Enterprises. Due diligence is a mitigation strategy that allows companies to identify and show their risks, then take appropriate action. However, it is not widely used according to a 2020 study done by the British Institute of International and Comparative Law. Only 37% percent of businesses are currently doing environmental and human rights due diligence. Businesses continue to pose a risk to people and the environment. Abuses still persist in areas where visibility is poor. As our natural world becomes more fragile, the risks to vulnerable workers will only increase.
We must understand how business activities affect and depend on all forms of capital to transform businesses for the better. The foundation of company performance is management systems. However, company boards are crucial to this change and must be held accountable for its consequences and diligence. Corporate governance must be in line with investors and stakeholders.
As a corporate compliance director for over a decade, I have learned that corporate responsibility is not a box-ticking exercise. Due diligence in company culture, practice, and policy not only respects human rights and the environment but also creates a business opportunity that leads to business stability and inclusive economic development. Responsible stewardship can and should be part of the success of our businesses.
Civil Society
What is civil society?
Civil society can be called third sector, social sector, volunteerland or volunteerland. It encompasses a variety of causes, groups and unions, as well as NGOs. They all have the same goal: to hold governments accountable, promote transparency, lobby for human rights, mobilize in times of crisis and encourage citizen engagement.
Civil society includes small online campaigns as well as giants like Amnesty International or Greenpeace. It employs approximately 54 million full-time workers, and has a global volunteer force that exceeds 350 million.
The World Economic Forum is committed towards accelerating the impact and participation of civil society organizations. In this spirit, it established Preparing Civil Society For the Fourth Industrial Revolution, a platform that supports the transformation of the social system and its inclusion in governance of emerging technologies.
The key stakeholder is civil societyForums mission and driving public-private collaboration. Through platform initiatives and dialogue series civil society actors from many fields collaborate with business leaders and government to find solutions to global problems.
Setting the bar higher for environmental and human rights issues
The first step in understanding and addressing the company’s impacts is due diligence. Due diligence aligns investment, policy, and practice with the purpose. The path to sustainable business performance is to measure and then invest in all capitals. This will give us a real chance of achieving the European Green Deal or the UN Sustainable Development Goals. Impact management opens up new business opportunities and gives new meaning to business’s role as a force of good. Corporate boards and their risk management processes must include sustainability in their corporate governance procedures.
Many European countries, including France and Germany, have already established national standards for mandatory human right and environmental due diligence. The Netherlands, Belgium and other countries are also making plans. It is sensible to coordinate and consolidate these efforts through EU, elevating Europe to the top of the list for enforcing such practices. European companies could also raise the bar in addressing environmental and human rights issues around the globe. This would help to level the playing field between regions and stakeholders. If we want to scale up these efforts, international coherence will be necessary.
The EU must act now and act boldly. The EU will set a new standard for companies and their boards with its legislation. Business leaders will be able to demonstrate their commitment to good corporate governance and a sustainable tomorrow by introducing mandatory human rights and environmental due diligence.