“Nowadays, it’s difficult for companies to turn a blind eye to human rights issues due to various risks that could have a significant impact on their business,” says Anna Triponel, a project associate from Shift, the leading centre of expertise on the UN Guiding Principles. UPM and the Ilmarinen Mutual Pension Insurance Company invited Anna Triponel to Finland for a comprehensive presentation on human rights in business.
“Expenses are often difficult to quantify, but once a crisis hits, companies will regret not paying attention to human rights from the outset,” she adds.
There is a growing tendency for governments, international financial bodies and the EU to integrate human rights agendas into their regulations.
“For example, the Modern Slavery Act impacts all companies over a certain size that conduct business in the United Kingdom. Furthermore, OECD countries are setting up national contact points to address allegations of human rights abuses.”
Pressure is also coming from inside companies, as employees’ values are drivers for respecting human rights. Specifically, there are more and more millennials who want to do the right thing and work for responsible companies. Human rights need to be embedded in the corporate culture and DNA.
Giving people a voice
“Companies are increasingly setting up mechanisms to engage people on the ground,” Triponel says. “For instance, this might involve engaging specific NGOs, workers and trade unions or creating effective channels to hear about people’s concerns and complaints.”.
She continues that prevention and mitigation efforts are focused on attempting to stop potential impacts before they happen, or to reduce their severity as much as possible.
Triponel emphasizes that workers and community members need to be able to express their concerns about working conditions and other company impacts. They mustn’t live in fear of raising their voice.
Blind spots in audits
Supplier audits play a role, but audits alone are an insufficient method of knowing exactly what is going on. “Many recent factory collapses or cases of modern slavery have happened in factories that had been audited previously,” notes Triponel.
“We are moving towards a new system of audits that is less of a compliance tick-box approach and more a way of looking at how to work with business partners to develop their human rights risk management processes.”
Triponel admits that there is still a lack of visibility in many companies’ supply chains, whether concerning migrant flows, sub-contracting of labour or poor environmental standards that then negatively impact on people.
“There is still a lot of work to be done, but it is encouraging to see the level of uptake of the UN Guiding Principles by companies.”
Ilmarinen focuses on the strategic side of ethical investment
Beyond just looking for a reliable return on investment, Finnish pension company Ilmarinen also takes into consideration environmental, social and governance (ESG) issues when making investment decisions.
“Our key values follow international norms, active ownership and integration of sustainability analysis into investment decisions,” explains Tiina Landau, Senior Advisor for Responsible Investments at Ilmarinen.
“We expect companies to comply not only with national legislation but also with the principles of the UN Global Compact. In our analysis, we also look at issues such as excessive working hours, poor wages and mistreatment of migrant workers” she explains.
Complying with international norms
About a year ago, Ilmarinen adopted its own sustainability rating system for over 3000 companies.” Our rating system has four categories: There are some 600 companies in the two lowest categories,” says Landau. The most serious cases are companies that have systematically violated norms or caused significant damage through their operations.
“Violations are easier to confirm if companies have caused them directly with their own actions. Finding evidence that a company is responsible for the wrongdoing of suppliers is more difficult,” notes Landau.
“Our goal is to ensure that the undesirable activity ends and that similar violations are not repeated in the future,” she adds.
“Responsibility requirements have become much tougher lately. It’s no longer enough for companies just to follow local rules – they have to comply with international norms as well.”
UPM is committed to full compliance with the United Nations Universal Declaration of Human Rights. For more information, please read the UPM Code of Conduct.
Main picture: “We expect companies to comply not only with national legislation but also with the principles of the UN Global Compact,” says Tiina Landau, Senior Advisor for Responsible Investments at Ilmarinen.