In July 2015, Unilever released its UNILEVER HUMAN RIGHTS REPORT 2015, the first corporate human rights report issued in compliance with the Human Rights Reporting Framework. We have covered the mechanics of the Framework - published in February 2015 - in previous editions of this newsletter. In this edition, we briefly highlight the Unilever report and how it, and the Reporting Framework, can provide useful guidance for Japanese companies.
Leading Practices on Information Disclosure on Human Rights
In July 2015, Unilever released its UNILEVER HUMAN RIGHTS REPORT 2015 (*1), the first corporate human rights report in compliance with the Human Rights Reporting Framework. The report may be considered in part Unilever's response to calls from international civil society for businesses to increase disclosure in relation to efforts to address actual and potential human rights impacts.
In the report, the CEO of Unilever clearly acknowledges that the risk of human rights abuses does exist across its vast value chain. Unilever identifies eight salient human rights issues that are particularly relevant to the company, in line with the requirements of the Human Rights Reporting Framework:
- Fair Wages
- Forced Labour
- Freedom of Association
- Health and Safety
- Land Rights
- Working Hours
On the issue of Fair Wages, the report points out that the legal minimum wage in each country is not necessarily a fair wage that secures the living standards of employees, including supply chain workers, worldwide. Unilever highlights the issue of poverty of farmers in its value chains for the production of tea, a core product. The company is focusing on Malawi as a key area, where it works in cooperation with NGOs and is in dialogue with a range of stakeholders, including the Malawian Government, tea buyers and experts, to ensure that fair wages are paid. Unilever will extend its activities in Malawi to employees of outsourced service providers. By disclosing these challenges, and the ongoing process towards resolution, Unilever will deliver on its commitment to tackle this issue and possibly attract greater attention from the international community. In recognizing that the issue of paying wages at the legal minimum wage does not necessarily ensure the improvement of living standards, as part of its efforts to respect human rights of employees, Unilever demonstrates its commitment to social responsibility beyond legal requirements.
- ①Our Commitment: Respecting Human Rights Across Our Businesses
- ②Embedding Human Rights: A Focus On Salient Issues
- ③Compliance And Beyond
- ④Looking Ahead: From Respecting To Promoting Human Rights
Japanese Companies and the Reporting Framework
Unilever's report serves as useful momentum in the movement towards greater corporate human rights disclosure. As reported in the previous newsletter, the international community has taken an increasing interest in corporations' human rights initiatives following the United Nations' endorsement of the Guiding Principles on Business and Human Rights ("Guiding Principles") in 2011. The aftermath of the global financial crisis of 2008 has seen the private sector take note as well, as a growing number of investors reference non-financial information in their investment decisions and companies look to secure their business longevity by emphasizing not only economic value, but also social value, in light of the interests of a broad-ranging variety of stakeholders including customers and employees.
In its report, Unilever identifies fair wages as a key issue the company must address to meet stakeholder human rights expectations. However other issues may be more salient for Japanese companies operating in different industries and markets. In Japan, mandatory disclosure up to now has taken a rules-based approach, with businesses required to disclose information on matters in accordance with relevant regulations. By contrast, the Reporting framework takes a principles-based approach, requiring businesses to identify their own salient human rights issues, decide on ways to address them, and disclose related information.
Unilever openly acknowledges that human rights issues exist in its supply chain and doesn't claim to have resolved them all. Unlike reporting standards familiar to many Japanese companies, the Reporting Framework asks businesses disclose the progress of their activities towards addressing actual and potential human rights impacts, even if they are unable to achieve all their goals during the relevant reporting period. The effort by a company to address human rights issues is not a finite process that can be reported as complete. The purpose of reporting is to share the initiatives on human rights with companies and societies, and is to improve the level in action and awareness about human rights. Many Japanese businesses are not accustomed to disclosing information on matters not yet fully resolved. However, Japanese companies are increasingly expanding into new markets with unique human rights issues and attracting greater attention from civil society both at home and abroad. In order to keep pace with global standards, Japanese companies should acknowledge potential human rights issues in both domestic and global contexts and adjust their approach to information disclosure to disclose the policies and processes implemented to identify and address issues, rather than seeking to remain reticent until issues are "resolved" completely.
Ayuko Yoshioka, a member of our CCaSS Tokyo team, is involved in projects on business and human rights, sustainability and integrated reporting, with a focus on human rights advisory.
Ayuko has experience in audit, internal control system development assistance and internal control assurance of both domestic and foreign financial institutions.