Increasing amount of people find themselves coming across the term Human Rights Impact Assessment (HRIA) while designing sustainability strategies, drafting ethical codes, or preparing sustainability reports. Paying more attention to human rights impacts of private sector is an emerging trend, not the least because the EU is making steady progress with the new Corporate Social Responsibility (CSR) Directive. In the latest proposal, the directive is titled under Corporate Sustainability Due Diligence. The directive would make larger companies directly obliged to monitor human rights impacts in their sphere of influence.
The key word is due diligence, which requires companies to assess their human rights impact in advance. Early awakening to the issue is prescient. Incorporating human rights thinking into an organisation's culture can be time-consuming and companies might find themselves in a hurry, if the directive gets accepted. CSR is also a huge factor for a company's reputation and brand. For many companies, impact assessment has been topical for some time now, due to other CSR and sustainability obligations stemming from the EU legislation, for example from accounting and finance side. In ESG, human rights impacts can easily fall under all the headings.
Carrying out a human rights impact assessment
As concepts, environmental impact assessment and data protection impact assessment are perhaps already better known than human rights impact assessment. Putting human rights impact assessment into practice can be a particularly difficult to approach, and for a good reason. Human rights impact assessments are harder to put into the same kind of precise mathematical data as a carbon footprint calculation or a data breach registration. It can also be challenging to quantify severity and predict situations where there is a risk of human rights violations.
There are useful frameworks available for impact assessment. The UNGP (the UN Guiding Principles on Business and Human Rights) is already well established as the main guidance on the subject. The UNGP is referred to, for example, in a number of CSR and sustainability instruments, guidelines, and proposals for future legislation in the forum of EU. The UNGP itself is not binding, but if the EU obliges companies operating on its territory to align their activities with the Guidelines, it will in practice become binding regulation for companies operating on the EU territory. The OECD also has a comprehensive set of guidances available. OECD guidelines are broader in scope, which can make them more cumbersome and slower to use if the intention is to limit the scope of review to human rights.
The UNGP itself provides useful information for impact assessment, but it can be used to derive simpler, more practical templates for conducting a human rights impact assessment. These outlines can then be used to help keep track of the specifics of the assessment. We prefer a five-step methodology, starting with the identification of essential instruments and ending with a severity assessment. The process also inspects accountability and organisational procedures. It is essential that the impact assessor has an in-depth knowledge of human rights and how they function.
In practice, to carry out an evaluation, one should be familiar with the content and interpretation of the UN human rights instruments. This content is already closely present in all kinds of activities, on private side, because UN treaties are part of national binding legislations in many states via states’ international obligations. Effects permeate practically all regulation. These obligations include, for example, labour rights, equality, right to a healthy environment, right to culture and education, and freedom of expression.
Direct human rights responsibility of private sector differs from the current situation in that, until now, human rights obligations have been seen as binding on the state, and the state assigns responsibility to companies through national legislation. Direct responsibility may at first sight seem like a harsh notion, but it can also be seen as a clarifying one. There is a bewildering amount of terminology associated with CSR. Putting the focus on human rights impact assessment can serve as a way of seeing the bigger picture. Playing field for business is also becoming increasingly fragmented in the area of CSR. Conducting responsible business could become much easier, if everyone had to play by the same set of rules.
Would you like to discuss further? I am happy to help with the human rights impact assessment and any CSR or Code of Conduct matter.
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- Jenna Nordman