LECTURE 3: Corporate Accountability & HR: HR Impact and Risk Assessment

Question 1

REMEDIES

Answer 1

• Are aimed at counteracting/ making good any human rights harms that have occurred (substantive element)
• Procedures for the provision of remedy should be impartial, protected from corruption and free from political or other attempts to influence the outcome (procedural element)

Question 2

GRIEVANCE

Answer 2

A perceived injustice evoking an individual’s (or a group’s) sense of entitlement which may be based on law, contract, explicit or implicit promises, customary practice or general notions of fairness of aggrieved communities.

Question 3

GRIEVANCE MECHANISM

Answer 3

Process through which grievances concerning business related human rights abuse can be raised and remedy can be sought

• state/non-state
• judicial/non-judicial

Question 4

State level remedies

Answer 4

Judicial - courts

Non-judicial - National human rights institutes, human rights commissions.

Question 5

Company level remedies

Answer 5

judicial - N/A

non-judicial - Operation level grievance mechanisms, complaint mechanisms.

Question 6

International/Interstate organisation level

Answer 6

Judicial - international and regional human rights courts commissions and committees
Non-judicial - ILO, OECD, World Bank, IFC

Question 7

How do different mechanisms create a system of remedy?

Answer 7

• Operation level mechanisms represent “early-stage” resource and resolutions.
• States have a primary responsibility with respect to remedies.
• International/regional initiatives have a supporting role.

Question 8

Corporate grievance mechanisms

Answer 8

Business Enterprises should establish or participate in effective operational-level grievance mechanisms for individuals and communities who may be adversely impacted” (29)

• Support the identification of adverse human rights impacts (part of due-diligence)
• Allows grievances to be addressed and for adverse impacts to be remediated.

Question 9

What is the aim of grievance mechanisms?

Answer 9

• Facilitate the identification of grievances.

- Used for raising concerns about the impact an enterprise has on individuals/groups and seeking remedies.

Question 10

Administration/management of grievance mechanisms

Answer 10

• Internal

- External including stakeholders/experts

Question 11

Features of grievance mechanisms

Answer 11

• Based on dialogue
• Accessible to individual impacted
• Should handle complaints that may not be HR violations
• Transparent and fair processes/overeen by line of responsibility.

Question 12

PROTECT RESPECT DUALITY

Answer 12

HR as direct moral obligations for corporations reaching into the governance gaps (Cragg 2012)

Question 13

Three problems of protect respect duality

Answer 13

• Do HRs rights exist at all outside legal obligations?
• If so, do HRs as moral claims generate obligations for corporations?
• If s, what obligations do they produce?

Question 14

RATIONAL FOR RESPECT

Is enlightened corporate self-interest an adequate foundation for corporate responsibility to respect HR (Cragg 2012)?

Answer 14

• HR not all respected in the various parts of the world where an MNC may operate
• Social expectations may not always require or even support respect for HR.
• The self-interest rationale may be weak.
• International opinion and NGO’s may help fill the gap.

Question 15

Implications of intrinsic respect (Cragg 2012)

Answer 15

“Central to my argument is the view that what the SRSG is calling for must be seen as justified and justifiable from a corporate perspective. What this means is that it must be possible from the perspective of corporate governance and the requirement of accountability, which is itself a corporate moral as well as a legal obligation, to justify decisions taken in pursuit of corporate objectives. Both the means and the goals and objectives of corporate decision making must be seen as justifiable from this perspective.”

Question 16

Difference between “the responsibility to respect” and the “duty to protect”?

Answer 16

“It is the view of the Commission that while business has a baseline “responsibility to respect” as identified by the “Protect, Respect and Remedy” framework, this should be subject to an evolutive interpretation which recognises the increasing societal expectation and responsibility of business to change their practices in recognition of the important role they play in society. The implications of Article 28 must be a business should be held to account for human rights violations and also must adjust their practices to take their place in a world order that promotes the realisation of human rights for everybody.”

Scottish Human Rights Commission comment on Ruggie’s draft “guiding Principles SHRC, Jan 2011http://www.scottishhumanrights.com/application/resources/documents/SHRCGuidingPrinciplessubmissionJan2011FINAL.doc

Question 17

Enlightened self-interest vs moral obligation (cragg 2012)

Answer 17

“ let us assume that the “responsibility to respect” emerges as a widely accepted corporate moral obligation. Under these conditions, corporations may well face a significant risk that they will be singled out by unevenly applied public pressure by NGOs, for example. … the possibility of informal “enforcement” by public exposure will unavoidably create competitive risks that will be hard to anticipate and therefore manage. It may also be very unfair. Under these kinds of conditions, legislated standards have clear advantages seen from a corporate perspective.”

Question 18

Enlightened self-interest vs moral obligation (Amnesty International 2010)

Answer 18

“At present, the draft Guiding Principles only suggest that States provide guidance to private companies on human rights due diligence […] the draft Guiding Principles effectively make corporate human rights due diligence a voluntary tool for business.”

“In so doing, the Guiding Principles speak only to those companies that are willing to ensure their activities respect human rights. Those companies – a small minority – then face an unlevel playing field, as other companies may choose not to undertake human rights due diligence.

Question 19

What are the implications of sustainable development goals on business?

Answer 19

-Future business growth opportunities and new market preferences that are more socially and environmentally aware are strongly aligned to the SDGs. These are as likely to arise in emerging and developing economies - which are not only where the largest proportion of future global growth is likely come from but also where SDGs issues are most acute - as they are to occur in rich nations.

Professional accountants will bei involved in assessment and pursuit of SDGs- related opportunities.

Question 20

How are environmental and social risks linked to SDGs and business?

Answer 20

SDGs and Business
Environmental and social risks linked to many of the SDGs are growing for business at an exponential rate. For environmental risks, particularly climate change, this is already demanding a new level of precision when it comes to analysis, monitoring and reporting. Social risks are also rising up boardroom agendas.
Professional accountants are well placed to meet this growing demand for better, more inclusive risk assessment and for making explicit – through using tools such as the Integrated Reporting Framework – the connections between social, environmental and financial value creation and destruction.

Question 21

Why is digital technology important in SDGs and business (accountability)?

Answer 21

Digital technology and the rise of data analytics and artificial intelligence (A.I.) are growing in application for the profession.
Combined with core technical professional competencies related to areas including ethics, judgement, reporting and audit, familiarity with a growing set of digital tools that support environmental and social data collection and analytics are growth areas for the professional accountants of the future

Question 22

How are SDGs being implemented and what needs to be improved?

Answer 22

SDGs and Business
New investor preferences aligned to the SDGs will spur an increasing demand for better SDGs related disclosures from companies.
Reliability of quality information will be critical
Governments are reporting on their progress on the SDGs to the UN.
Not only will the SDGs be incorporated into frameworks for government action at many tiers, they will increasingly emerge in regulatory discussions.

Question 23

Qualities of the old order of corporate reporting.

Answer 23

• Long and cluttered
• Boilerplate language
• Backward looking and short-term
• Complex
• General purposes
• Focused on financial results for shareholders
• Rule bound, narrow disclosures
• Reflects stewardship of financial capital
• Locked in, static

Question 24

Qualities of new order of corporate reporting

Answer 24

• Concise material
• Effective communication
• Forward looking and longer term
• Simple and easily navigable
• Sensitive to audience needs
• Focused on value creation for the organisation and its stakeholders.
• Transparent and responsive to individual circumstances
• Reflects stewardship of all forms of capital on which the organisation is dependent and that it affects.
• Technology enabled.

Question 25

Accountability as justification

Answer 25

Accountability is “the obligation to explain and justify conduct” (Bovens, 2007)

Question 26

HR and justification (Forst 2010)

Answer 26

• HR claimed in response to forms of oppression, exploitation and disregard for human dignity.
• Weapons in a battle against certain evils.
• Claiming standards of treatment that no human can justifiably deny to others.

Question 27

What is the one basic moral right that give HRs a common ground?

Answer 27

The right to justification.

The legal and political function of HR is to make this right socially effective, both substantively and procedurally.

Question 28

Substantive aspect of right to justification

Answer 28

Formulation of rights that express adequate form of mutual respect the violation of which cannot be properly justified between free and equal persons.

Question 29

Procedural aspect of right to justification

Answer 29

No one should be subjected to a set of rights and duties the determination of which he or she cannot participate in as an autonomous agent of justification.

Question 30

What is the moral basis for human rights?

Answer 30

The moral basis for human rights is the respect for the human person as an autonomous agent who possesses a right to justification, that is, a right to be recognized as an agent who can demand acceptable reasons for any action that claims to be morally justified and for any social or political structure or law that claims to be binding upon him or her (Forst, 2010)

Question 31

Three forms of moral justification?

Answer 31

Reciprocal

• No one may make a right claim s/he denies to the others (reciprocity of content)
• No one may project one’s own perspectives/value onto others such that one claims to speak in their “true” interests (reciprocity of reasons)

General
- The reasons that are to ground the claim’s validity have to shareable by all affected persons given their (reciprocally) legitimate interests and claims.

Universal

Question 32

Societal role of accountability

Answer 32

• Societies cannot function without effectively defining the rights and responsibilities of those who legitimately impact others.
• Accountability concerns the manner in which societies seek to ‘civilize power’, establishing an accommodation, albeit often temporarily, between the needs of power and the claims of justice
• This is considered to be a major tenet of democracy, arguably global civilization’s greatest-ever accountability innovation.

Question 33

MONOLOGIC ACCOUNTABILITY

Answer 33

• The answer/ the true and fair view
• Claim to “neutrality”
• Premature closure

Question 34

DIALOGIC ACCOUNTABILITY

Answer 34

• A conversion/ multiple perspectives
• Allows suppressed voices space to be heard
• Plural vs neo-plural, critiques around SEA.

Zadek (2005):
Today’s accountability wave is rooted in the principles and practice of what might variously be called open source, dialogic, horizontal, people-centred approaches to bringing power to account

Question 35

DUE DILIGENCE (RUGGIE 2010)

Answer 35

because human rights concern affected individuals and communities, managing human rights risks needs to involve meaningful engagement and dialogue with them

Question 36

PASSIVE RESPONSIBILITY

Answer 36

Why did you do it?

Question 37

ACTIVE RESPONSIBILITY

Answer 37

What is to be done?

Question 38

Relevant accountability questions to be asked (Mashaw 2007)

Answer 38

• Who is accountable?
• To whom?
• For what?
• By what standards?
• Through what process?
• With what potential effects?

Question 39

Who is accountable?

Answer 39

• Engaged business
• Activist states
• Civil society

the most significant new actor on the development scene is, paradoxically, none and all of these. It is their complex combination into blended forms of collaborative organization that is already becoming, and will increasingly be the really extraordinary new actor. This emerging organisational form needs to be understood as an actor in its own right rather merely than as an ad hoc combining of existing actors
(Zadek, 2008)

Can this actor be held to account by those impacted by its decisions/actions?
These new actor re-shape the relation between public good and private gains
Reinvention of practices of governance and accountability

Question 40

Extensive vs intensive accountability

Answer 40

• Public interest organisations have “extensive” accountability in having to make decisions and take actions framed by accountability to many stakeholders with often diverse and conflicting interests.
• Business have been understood as having [..] a more “intensive” accountability to their owners.

Question 41

Potentially interested parties (to whom is held accountable)

Answer 41

• Shareholders
• State and nation/international courts
• Stakeholders
• Pressure groups
• Individuals/communities affected by corporation.

Our institutional expression of to whom and for what we and others are or should be accountable, has yet to catch up with our lived experience. The more entangled the world becomes, and the more we see just how interrelated things are, the clearer it is that something has gone badly wrong on the accountability front. There is, to say the least, a need to reinvent our practice of accountability (Zadek, 2005)

Question 42

What are businesses held accountable for?

Answer 42

• Due diligence (risk and impact assessment)
• Reporting
• The corporation’s own activities/performance plus (supply chain, local state government)
• Complicity

Question 43

COLLABORATIVE GOVERNANCE

Answer 43

Institutional arrangements that involve a deliberative multi-stakeholder collaboration in establishing rules of behaviour governing some or all of those involved in their development and potentially a broader community of actors. (Zadel 2008)

Question 44

Principal agent model and how it’s changed

Answer 44

1. From here...
A Principal
->
B Accountability
->
C Agent -> Action
->
D Accounting/Audit
->

2. To here…
   A Society/nature

B Social accountability

C Corporations Environmentally relevant action

D Environmental accounting/audit

Question 45

Description of change in principal agent model

Answer 45

To whom/for what
From the brief discussion of Figure 2 it is more apparent that the general principal-agent model is fluid and contestable in the context of environmental audit. One consequence of this is that no point of the model is necessarily prior to any other, since they are all open to negotiation.”
(Power, 1991, p.36)

The logic of collaborative governance is historically framed by how actual and potential partners, and those who do not choose to participate, perceive their organizational self-interest, which in turn is determined by the basis on which they are held to account
(Zadek, 2008)

Question 46

Standards of accountability

Answer 46

UN Global Compact
http://www.unglobalcompact.org/

Global Reporting Initiative
https://www.globalreporting.org/Pages/default.aspx

Social Accountability International SA8000 (labour standards)
http://www.sa-intl.org/

Question 47

Accountability processes (Through what process)

Answer 47

HR risk and impact analysis
Monitoring
Accounting/ performance measurement and reporting
Assurance and auditing
Systems/ mechanisms for hearing grievances and giving redress where appropriate

Question 48

Guides/tools available for HR impact assessment

Answer 48

Various guides/ tools available:

• International Business Leaders Forum and International Finance Corporation “Guide to human rights impact assessment and management”
• Human rights impact assessments - resolving key methodological questions (Ruggie, 2007)

Question 49

Potential issues (harrison 2011) of HR impact assessment

Answer 49

Potential issues (Harrison 2011):

• Are methodologies sufficiently sophisticated?
• Will measurement focus on the simpler more objective HR issues at the expense of difficult, long run problems?
• Will measurement defuse the radical power of the HR perspective?

Question 50

Eight core methodological elements (Harrison 2011)

Answer 50

• Screening
• Scoping
• Evidence gathering
• Consultation
• Analysis
• Conclusions and Recommendations
• Publication
• Monitoring and review

Question 51

What are the potential effects of being held accountable?

Answer 51

• Legal sanctions (loss of legal license to operate)
• Market and investor power (loss of market share and value)
• Stakeholder/social power (loss of social license to operate)