By Rosa Kusbiantoro, Associate Director, BSR. This article originally appeared on the BSR Blog

The UN Guiding Principles on Business and Human Rights (UNGPs), released in 2011, provide the first coherent framework for how businesses should manage their human rights risks and impacts. The framework clearly specifies the responsibilities of government and business and outlines clear steps for business with regards to due diligence, oversight, and remedy. The Guiding Principles necessitate detailed engagement by companies with impacted stakeholders—part of a wider shift in the business community from considering risk to understanding societal impact.

In particular, stakeholder engagement is needed for: conducting any credible Human Rights Impact Assessment; seeking Free Prior Informed Consent from communities and other affected stakeholders before establishing mining, infrastructure, and energy operations; and providing remedy for any harmful human rights impacts.  

Indeed, effective remedy requires directly seeking the perspective of stakeholders who have been harmed. This entails, among others, identifying which stakeholders suffered what harm, from which business activities, and what the underlying root causes of the harm were. This also requires ensuring that affected stakeholders’ perspectives are central in the remedy discussions. All of these developments have been incorporated into BSR’s Five-Step Approach to Stakeholder Engagement, which aims to show how companies can initiate and sustain constructive relationships with stakeholders over time, throughout the organization, by engaging early and often—and acting based upon what they hear. In 2011, when the original report was published, our approach was driven by considerations of risk to the company. Now, we have revised our framework to incorporate central human rights concepts of vulnerability and impact.

Evidence suggests that businesses are still struggling to respond to this new environment. In 2018, the Corporate Human Rights Benchmark assessed 101 of the largest publicly traded companies in the world across agricultural products, apparel and extractives industries. The findings of the assessment depict a "deeply concerning" picture, with four in 10 companies "failing" on human rights.

The responsibility is on companies to follow the Guiding Principles in order to do business in a way that respects the human rights of workers, customers, and communities where they operate.

It is clear that there is still a significant gap between companies responding to allegations of harming human rights and actually engaging with the affected rightsholders to ensure that appropriate remedy is provided. The Benchmark found that less than half of the serious allegations of negative human rights impacts reviewed by the Benchmark resulted in meaningful engagement with the alleged affected rightsholders, and only three percent of the reviewed allegations were resolved by providing remedy that was satisfactory to the victims.

Effective remedy itself is comprised of the following five elements:

1. Restitution, which is intended to restore, to the extent possible, whatever has been lost to the victim preceding the harm.

2. Compensation, which is appropriate in cases where damage/harm to the victim can be economically assessed.

3. Rehabilitation, which covers medical or psychological care and social or legal services needed to restore the victim.

4. Satisfaction, which includes measures as a cessation of the violations.

5. Guarantee of non-repetition, which includes actions and measures to prevent further abuses or similar future violations.

Although stakeholder engagement is an underlying theme throughout the UNGPs, 60 percent of companies assessed in the Benchmark were unable to disclose their stakeholder engagement approach, with 38 percent of the companies unable to demonstrate a commitment to, or evidence of, engaging with potentially or actually affected rightsholders.

In addition, there has been a growing number of cases globally where banks are considered to have contributed to human rights abuses through their financing decisions. These include projects involving farmers being forced off their land, the destruction of sacred indigenous sites, and violence against community members. In June 2018, BankTrack and Oxfam Australia called on banks to ensure access to remedy for victims of human rights abuses. The paper “shows that banks have barely begun to implement their responsibilities to develop grievance mechanisms under the UNGPs” and indicates that banks are not doing enough to ensure that stakeholders impacted by bank-financed activities are obtaining proper remedy.

For companies working across geographies, including financing projects that affect local communities, it may be beneficial for companies to establish, through engagement with local stakeholders, a standard response for certain common grievances. Engaging with local stakeholders is essential to ensure that the response is acceptable within the local context and also to satisfy the criteria for effective remedy. 

It is important for companies to consult with local stakeholders to ensure that all affected communities, including vulnerable groups, have access to remedy if a human rights violation occurs. 

In line with this, it is important for companies to consult with local stakeholders to ensure that all affected communities, including vulnerable groups, have access to remedy if a human rights violation occurs. Companies should first map the different vulnerable groups which may exist to understand the specific, distinct barriers that these groups may have in accessing remedy. Vulnerable groups can include people who are marginalized due to life circumstances (poor, uneducated), people who are discriminated against by formal laws, people who are marginalized and in hiding such as LGBTI people or people living with HIV/AIDS, or people who are marginalized due to societal discrimination or bias.

Stakeholder engagement is especially important to ensure the most vulnerable groups are aware of the various remedy options available. In order to ensure that all vulnerable groups have access to and understand the remedy pathways available to them, companies should:

1. Provide information on the company’s grievance mechanism in written, illustrated, and oral formats.

2. Create open, safe, and confidential stakeholder engagement forums for the ongoing collection of and follow-up on community grievances.

3. Consult local communities to ensure that these accessibility measures suit the needs of vulnerable groups, including those who are illiterate or semi-literate.

The UNGPs have defined for businesses how they can manage human rights impacts and risks. Now, the responsibility is on companies to follow the Guiding Principles in order to do business in a way that respects the human rights of workers, customers, and communities where they operate. Stakeholder engagement is key in all these aspects, but especially in cases of grievance, engaging stakeholders is necessary to ensure the people affected are granted access to remedy.