Launch of Human Rights in Supply Chains: Promoting Positive Practice

Key note address - Launch of Human Rights in Supply Chains: Promoting Positive Practice

Thank you for the introduction and warm welcome. I would like to start by acknowledging the traditional owners of the land. I pay my special respects to elders – past, present and future – and to all the Aboriginal and Torres Strait Islander men and women.

I am delighted to be here today to launch a landmark report, ‘Human Rights in Supply Chains: Promoting Positive Practice’.

As Leeora has mentioned the key findings in the report include:

•  That Australian businesses increasingly understand that to respect human rights, for example through diversity of employment, it is good for business, but that human rights is not yet a priority;
•  That employees, rather than customers, are a key driver for respecting human rights, and they recognise the importance of human rights to brand and reputation, and to productive relationships with customers, partners, and local communities;
•  The role of employees was confirmed by 93% of respondents who said efforts on human rights are focused on their workplaces, construction sites and offices – indicating that businesses tend to focus on human rights where they have direct operational control;
•  That fewer than half of the respondents to the survey (47%) said that their company had a written policy on human rights; and
•  Some of the key barriers include the limited visibility into practices of suppliers and limited staff capacity and authority to address impacts.

This morning I will speak to you about the role of the business community in protecting and promoting human rights and the work of the Australian Human Right Commission in this area.

I want to commence by talking about business in human rights law.

After years of debate and consultation led by Professor John Ruggie, the United Nations Special Representative for Business and Human Rights, there is now clarification at the international level about the responsibility of business through the United Nations Guiding Principles on Business and Human Rights.

The Principles have a three-pillar framework, - Protect, Respect, Remedy. Under the second pillar, the corporate responsibility to respect human rights, companies are expected not only to avoid causing or contributing to adverse human rights impacts, but also to address ‘human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.’

The Guiding Principles also provide that a business must provide access to a remedy when a breach of human rights occurs.

The Guiding Principles were endorsed unanimously by the United Nations Human Rights Council in 2011.

No legal obligations for companies have been created by the Guiding Principles, but they are now recognized as the authoritative global standard that brings a strong moral and ethical force to, at minimum, do no harm. Indeed, the specific focus on access to a remedy for breaches of human rights has created an environment where business is developing innovative and creative solutions to provide redress as well as implementing changes to work practices to better respect human rights.

Since the endorsement of the UN Guiding Principles – there has been a remarkable update from both governments and the private sector alike. We have also witnessed a number of trends that encourage ethical action

The role of business in human rights is a relatively new phenomenon. Traditionally, human rights were considered a state-based responsibility. Even now, from a human rights law perspective, it is the sovereign state and its government that bears the legal duty for human rights compliance. But this is changing. In an environment of heightened transparency through digital media, civil society and consumer activism, the connections between business and human rights are rapidly becoming more tangible.

A number of one-off events, spurred by media and consumer attention, have thrust the business community into the spotlight. Events such as the collapse of the Rana Plaza factory in Bangladesh in 2013, and the release of the Australian Broadcasting Corporation’s Four Corners program earlier this year, which alleged a number of fundamental rights violations on Australian soil, have galvanised the desire of businesses to do the right thing.

This also comes hand-in-hand with the increasing power and influence of corporations across the globe. Many global corporations have revenues that rival the entire GDP of sovereign nations. Of the 100 largest economies in the world, 51 are transnational corporations, and only 49 of these economies are nation states. The top 200 corporations' combined sales are bigger than the combined economies of 182 countries.

From the Commission’s perspective we consider that such significant power brings responsibility and thus, that the private sector has a vital role to play in achieving practical human rights outcomes.

This is particularly true where the power to protect people from violations is uniquely in the hands of corporations, and is not balanced by a government able to prevent human rights violations.

Professor John Ruggie refers to this predicament as the governance gap.

As supply chains in particular become increasingly complex and scattered across the globe, the power of nation states to effectively police against violations is becoming negligible.

For example, the United Nation's International Labour Organisation (ILO) estimates 21 million people globally are trapped in forced labour, generating $US150 billion ($208.5 billion) in illegal profits in the farming, fishing, mining, construction and sex industries. Unfortunately this forced labour often lies along the supply chain, with multiple suppliers in many different countries involved in all stages of the final product. Where it is difficult or impossible for states to legislate, the moral burden on businesses escalates.

Encouragingly, Australian businesses are coming to their own conclusions about their responsibilities, and quickly recognising that human rights are not just good for business, they are the right thing to do.

On the one hand, our report has found that the greatest driver for change is a true conviction on the part of businesses that a commitment to human rights is ethical and important.

On the other, businesses have a significant cost incentive to collaborate. If actual or potential negative human rights impacts are not identified and managed, cost implications of supply chain disruptions, reputational damage or corrective action can be substantial.

Consumers, shareholders, civil society organisations, governments and the international community are becoming increasingly informed. These actors are asking businesses to take responsibility to improve the labour practices of their suppliers, and to actively contribute to the wellbeing of people who are indirectly connected to them. This means that businesses stand to gain much in the way of branding and reputation. They also stand to build stronger relationships with stakeholders, including local communities, which can lead to a wealth of other potential benefits. Not participating however, can have a very costly effect on businesses.

As an example, in August of this year, a major health fund manager, HESTA, withdrew its 3.5% investment in Transfield Services (now called Broadspectrum Limited), which currently provides services to Immigration detention centres in Nauru and Manus Island. In this case, the risk of litigation, arising from the Senate confirmation of the adverse health impacts of prolonged mandatory detention of asylum seekers, alongside allegations of sexual and physical assault, significantly affected the share price of Broadspectrum. Major investors now recognize that it would be a breach of directors fiduciary duties to their shareholders not to take into account the social and governance risks of human rights abuses. To give you some idea of the power of such decisions to divest, HESTA is part of an international group with a total of $59 trillion to manage. Others such as First State Super, and Christian Super have also blacklisted the company.

A second example shows a more positive outcome. The 2022 FIFA World Cup in Qatar has been subject to scathing criticism for its association with alleged human rights violations suffered by migrant labourers used in the construction of sporting facilities. Social media campaigns have influenced sponsors to take action, promoting better labour conditions in Qatar. Remarkably, in July, FIFA agreed to recognise the UN’s Guiding Principles on Business and Human Rights and said it would make it compulsory for contractual partners and all those within the supply chain to comply with these principles. 

4 Role of the Australian Human Rights Commission
At the Australian Human Rights Commission we are in a unique position to understand the role of business in human rights. We know from our investigation and conciliation service that the overwhelming majority of the public’s human rights concerns arise in the area of employment, and to a lesser extent, the delivery of goods and services in the private sector.

Last year the Commission received 19,688 enquiries and 2,223 formal complaints about discrimination or breaches of human rights. The majority of these complaints involved businesses in their role as an employer or as a service provider.

For example, 80% of all complaints received under the Sex Discrimination Act were in relation to employment. Similarly, 62% of the complaints received under the Age Discrimination Act were in relation to employment and 37% under the Race Discrimination Act. Under the Disability Discrimination Act, 33% of all complaints received arose in relation to employment and 39% of disability complaints were made in the context of the delivery of goods and services.
When the Commission receives an enquiry, it investigates the facts, determines if we have jurisdiction under our statute and, if admissible, we attempt to conciliate a complaint. The Commission is successful in conciliating around 72% of the formal complaints. The service is free to both complainant and respondent and is confidential. Importantly, no complainant can go to the Federal Courts without first coming to the Commission. If the matter is not settled, a party can appeal to the Federal Court under the laws that prohibit discrimination on the grounds of race, sex, disability or age. About 2-3% of matters go to court and in the last 15 years or, the Commission has never been overruled on a substantive question of law.

In addition to our investigation and conciliation service, we work very closely with business on the development of resources to assist employers to comply with the specific discrimination laws that apply to their workplaces and the way they provide services, but also on other human rights issues that emerge for business.

In these various ways, the Commission provides a valuable service to business that effectively resolves complaints and diverts most matters from the Courts. Importantly, the Commission’s process is seen to be a fair process that provides access to justice to both parties in a dispute.

The Commission also works alongside government. Last year the Attorney-General’s Department established a Supply Chains Working Group to propose strategies to address the use of labour exploitation in the supply chains of good and services.

The Commission is a member of the multi-stakeholder working group that will shortly present a number of recommended policy responses to the Minister for Justice.
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Conclusion

At the Australian Human Rights Commission we have prioritised business and human rights as a strategic priority – we look forward to working with Australian businesses in meeting the human rights challenges of the 21st century. This report marks an important step in that partnership.