Why Human Rights Are Good for Business

Nike has transformed its approach to sustainability from reputational crisis to driver of innovation.

By Laura Quinn for Tea & Water

When the East India Company industrialised exploitative business practices in the 17th century, it revealed a terrifying truth – that an absolute lack of concern for human rights could be very, very, profitable. And, despite the increasing number of standards, guidelines, and regulations around human rights in business since then, it’s not always been easy to prove that the opposite could also be true.

Looking for ROI is asking the wrong question

But in 2017, we are operating in times unlike anything we have ever seen before. Consumer demand for transparency is at all-time high. Million-dollar marketing campaigns are losing out to consumer video uploads and online activism. (United Airlines spent $220 million on advertising costs in 2016, only to see $1 billion knocked off the value of its holding company by a customer video of Dr. David Dao being violently deplaned). And recent regulatory frameworks now demand risk assessment, due diligence and reporting on human rights from all public companies, particularly in Europe and the UK.

In the business climate we find ourselves in today, looking for the financial return on investment from improved human rights might just be asking the wrong question. As it becomes less of a choice and more of a necessity, the question is no longer whether to improve human rights across the value chain, but how to maximise the business advantage of doing so. It will be the business leaders who can crack that question who will build the strongest, most resilient organisations ready to survive an increasingly transparent world.

The good news for those leaders is that potential gains from improving human rights does include a financial benefit but the overall returns go far further.

The potential benefits are financial and beyond

A better organised and more respected workforce is more stable, predictable and productive, which reduces the risk of resource shocks and creates productivity gains, all great for a company’s bottom line. Legal costs and lost days due to worker or community disputes are minimised and negative financial impacts from backlashes and boycotts become less of a risk. Investor relations teams can leverage this lower risk when speaking to potential investors, as well as being able to target a new base of ethically-minded investors who, as it happens, also tend to be more stable and long-term investors.

In terms of operations, identifying and remedying human rights issues before they happen reduces disruption and lost work time from protests, union action and activism, while improving community relations and building license to operate in local communities. Workers can be easier to hire and retain at a local level and, at a corporate level, overt human rights commitments have been shown to drive staff satisfaction and help attract new talent.

However, in the age of transparency and people power, it’s possibly the reputational benefit that will be most potent for business. For any brand, its brand value is amongst its most important assets – and human rights infringements have the potential to seriously damage that value. Nike bore the brunt of the first public sweatshop backlash in the 1990s, at the height of which its brand ambassadors were publicly shamed and the company’s stock price dropped by half from 1996 to 1997. (Nike has since transformed its approach to sustainability from a reputational crisis into a driver of innovation, and has seen its stock price rise over 400 percent in the nine years since it formed its impressive “Sustainable Business & Innovation” team.) Beyond simply reducing reputational risk, getting human rights right also enables brand teams to take a leadership stance on an issue that is of fundamental interest to consumers and to build market differentiation around the organisation’s commitments.

Communications are a critical tool to drive improvement

Seeing the opportunity is one thing; being able to effectively implement it right through the organisation is another. A well-crafted human rights policy is the start point – and critical for assessing risks and establishing key priorities and mitigation procedures – but in itself a policy doesn’t create change. To make sustained progress requires a large-scale cultural shift that brings the entire organisation along on the journey, and that’s where powerful communications become a critical tool. Going beyond policies, engaging communications have the potential to impact the way every person in the business engages with, and acts on human rights in the long term. For great corporate leaders, this is where they can play their most powerful role in changing the game on human rights.

Transparency is a great place for leaders to start. As an internal approach it enables businesses to identify where violations are likely to happen and raise awareness of risks across departments. Transparently talking about issues externally also enables companies to avoid becoming hostage to exposés and instead take the lead in conversations with human rights defenders and activists. Bringing these groups into the conversation can build more positive relationships and lead to co-created solutions.

Educating employees and suppliers is another simple but impactful communications tool that leaders can deploy. Internal communications that speak at the right level, in the right language, not only drive awareness and engagement but can highlight specific, simple actions towards improving human rights that every employee and supplier can take on. And it is these small, daily changes that add up to habitual shifts in mindset and a long-term transformation. Going beyond education and actually exciting employees about the role they play can further transform human rights from a mandated policy into a something that everyone can feel good about.

Lastly of course, showing customers that you’re serious about the commitment is key to building differentiated brand value around human rights. Consistent and honest communication about the organisation’s targets and challenges builds a cushion of positive reputation that enables the business to respond positively instead of defensively if and when issues arise. Consumers appreciate honesty so breaking the issue down simply, talking in human terms, and avoiding corporate speak all make a huge impact in perceived transparency levels.

The reality for any big business is that tackling human rights is not only a moral obligation but a corporate imperative. By understanding the potential business opportunity of improved human rights, acting on it effectively, and bringing the whole organisation on the journey, the best business leaders will transform the perception of human rights from a complicated mandate to a route towards building a more resilient business and, ultimately, a more equitable world.

Laura Quinn consults on behalf of Tea & Water, a multi-local agency that combines insight, strategy and communications to help companies motivate real behavior change around their sustainability agendas, throughout the supply chain.

Image credit: Manny Valdes

 

Corporate Responsibility

Recent headlines from the 6925 articles in this category:

3p Contributor

TriplePundit has published articles from over 1000 contributors. If you'd like to be a guest author, please get in touch!

Leave a Reply