Human rights: Asean firms among least prepared for them

EXPECTATIONS of responsible company approaches to human rights are rising fast across the world and the tremors of activism are beginning to shake Asia-Pacific businesses, threatening investment and profits.

Yet, South-east Asian companies remain among the least prepared globally despite the high risks in the region, where activists have accused many international and regional brands of using forced labour and debt bondage in their factories and operations, particularly in Thailand, Malaysia, Bangladesh, Nepal, Myanmar and Indonesia.

The evidence is startling, even eight years after the introduction of the benchmark-setting United Nations General Principles of Business and Human Rights (UNGP), which provide guidelines for countries and companies on how to prevent and remedy human rights abuses in business operations.

A new report shows just 18 per cent of the top 250 listed companies in Thailand, Malaysia, Singapore, the Philippines and Indonesia publish any human rights policies at all. Only a quarter of the companies provide any operational information or data on monitoring or reporting of human rights while, overall, on average they disclose less than 22 per cent of human rights data recommended by UNGP.

Put together by the Asean CSR Network, The Institute of Human Rights and Peace Studies at Mahidol University and Article 30, the report concludes South-east Asian companies have been "marginally responsive" to the global business and human rights push, creating a situation where they are becoming "under or unprepared and non-compliant without realising it".

Most companies in the region have not experienced the level of pressure faced in Europe and the Americas where a generation of companies have responded to the white heat of activism and outspoken criticism and now pay close attention to human rights as a key element of their business strategy.

Asia-Pacific companies with human rights exposure, particularly in trafficking and migrant worker use, need to be ready for increased focus, not only from growing societal pressure in the region but also increasing scrutiny from global campaigners looking to broaden their focus and follow supply chains deep into the region.

Risks are high, particularly in the Asian corridor of Bangladesh, Nepal, Thailand, Myanmar, Malaysia and Indonesia, which are either large importers or exporters of migrant labour. Many regional companies have manufacturing facilities in these areas and China, another country with large populations of migrant labour under the intense scrutiny of activists.

Often, companies appear unaware of the risks and simply do not have standards or systems to monitor performance. These risks are often not in plain sight, obscured in supply chains.

Research shows that much of the abuse of migrant workers happens before their first day at work. Undisclosed recruitment fees charged by agents can plunge workers into heavy debt that they cannot repay during the lifetime of their contract.

Once at work, they may be subject to poor conditions, long overtime hours and confiscation of passports. Some are employed by an agent and shunted from factory to factory, giving them even less control over their conditions of work.

Navigating the migrant worker industry is complicated by a lack of transparency, differing and often absent national regulations, limited national capacity to police what regulations may exist, and unscrupulous operators.

The solution to this complex situation is for companies to understand and take control of the risks they face, take steps to protect reputations and plan and deliver responsible business plans to budget.

RIGHT THING TO DO

It starts with understanding the risks. Most companies have a risk management system but only a few seem to adequately identify societal/human rights risks. Employing migrant labour is a key risk and companies need to understand how it can impact the business and what they need to do to manage it. Companies that simply hire agents to find workers and don't look further do not understand the risk.

A reputation-centred issues management process owned by senior leadership is the best way to achieve this. It should be separate from (but integrated with) the risk management process which sometimes gets cluttered by the white noise of financial and procurement risk.

Management of migrant labour risk starts with recognising human rights as one of the company's values which needs to be delivered through clear, mandatory policies and standards across geographies and businesses. This also means awareness raising and training, particularly at critical points in the organisation, such as HR recruitment, where corruption can be a problem.

The reach of those standards and processes is critical. They need to be adopted through the supply chain. It is not acceptable any more for a contractor to use different values when it comes to treating people respectfully.

Transparency and contract fidelity are key risks operating across borders with a vulnerable stakeholder group. The ordinary rules of Contracting and Procurement do not apply. Independent, third-party monitoring and audits are expected as part of the monitoring of supply chains, agents and brokers. To remain a key part of an existing global or regional supply chain, companies must demonstrate a commitment to internationally-accepted standards.

The most advanced Asia-Pacific companies are those that have been through the experience of being targeted by activists, such as the electronic goods manufacturers Panasonic and Samsung, and Wilmar International, the Singapore agribusiness group. But maintaining oversight and standards deep in the supply chain remains challenging, even for the best.

Companies must be seen to be doing the right thing. That means a process to report standards and performance and engage externally. Sharing problems externally demonstrates a commitment to improvement and helps boost the overall health of the industry.

Improving human rights performance is integral to business. For companies that get it right, the benefits will flow straight to the bottom line.