Australia

Tue Feb 25

Some of Australia’s largest companies are failing to ‘know and show’ their respect for human rights

Written by: David Birchall, Senior Lecturer in Law, Macquarie University

In our complex, interconnected world, there are risks of human rights violations ^[1] throughout global supply chains. Examples include not only modern slavery and child labour, but also gender discrimination and violations of land, food and water rights.

Many people care deeply about whether the companies they support are monitoring and addressing these issues. So, how do some of the biggest Australian companies measure up?

To answer this question, we analysed ^[2] the human rights commitments of 25 of the top companies listed on the Australian Securities Exchange (ASX), including some of our largest banks and mining companies.

We found Australian companies have a long way to go in “knowing and showing” a commitment to respect human rights, suggesting an urgent need for reform.

One response could be for Australia to follow the European Union’s lead and create a mandatory human rights due diligence regime ^[3].

International best practice

Our analysis used the World Benchmarking Alliance’s Corporate Human Rights Benchmark Core UNGP Indicators ^[5].

This benchmark uses 12 indicators that draw on the United Nations Guiding Principles on Business and Human Rights ^[6] (UNGP), the authoritative international standard.

aerial view of shipping containers and cranes

There are human rights risks across many stages of global supply chains. JULY_P30/Shutterstock ^[7]

The indicators are grouped into three themes:

policy commitments to respect human rights
embedding respect through ongoing human rights due diligence ^[8]
enabling accessible remedies and grievance mechanisms for workers and external stakeholders.

Companies score between zero and two points on each indicator, depending on how they satisfy its requirements. The maximum possible score is 24.

It’s important to understand that the aim of our study was not to assess whether these companies have been violating human rights. Rather, it was to evaluate whether companies have disclosed their policies and processes to respect human rights.

The UN Guiding Principles expect companies to have suitable due diligence processes in place and make these publicly available in an accessible form.

Ideally, companies should clearly state that they respect all human rights. This includes rights such as nondiscrimination, the prohibition on forced or child labour, freedom to join trade unions, and the right to a clean environment.

They should outline in detail the mechanisms in place to identify and address actual or potential abuses. On top of this, detail which officials in the company hold responsibility for managing these issues.

The better companies would even disclose examples of human rights abuses that they discovered in their operations, such as modern slavery or a gender pay gap.

Poor performance overall

Our research ^[9] covered the 25 largest Australian companies by market capitalisation that had not previously been assessed under this benchmark.

This included some of the leading Australian companies from a range of sectors – mining, banks, energy, insurance, transportation, telecommunication, media, health care and pharmaceuticals.

Scores were poor overall. The best-performing company scored eight out of a possible 24 points. The average score was 3.6.

Many companies were found to be making vague or ambiguous human rights commitments or only focusing on a narrow set of modern slavery risks.

No company disclosed all of the human rights due diligence processes needed to identify, prevent, mitigate and remediate human rights risks. Nor did any disclose how they consulted with relevant stakeholders such as workers or displaced communities to help them understand and identify relevant human rights risks in company operations.

Only ten of the 25 companies provided a mechanism for external individuals and communities to raise human rights complaints or concerns.

Child working at a leather tannery in a low-income area in Dhaka, Bangladesh

Child labour remains a human rights risk in global supply chains. NurPhoto/Getty ^[10]

Companies scored particularly poorly on the second group of indicators: embedding respect through ongoing human rights due diligence. The average score here was 0.58 out of 12.

Many companies only focused on identifying and addressing modern slavery in their operations, to the exclusion of other human rights risks such as sexual harassment or environmental pollution.

It was also concerning that companies we assessed often passed the burden of compliance to suppliers. That is, they established higher expectations for suppliers’ conduct than they set for their own.

Legal requirements made a difference

Our research found that companies scored well in making human rights commitments where there was a legal obligation to do so.

Every company, for example, scored the point available for hosting a grievance mechanism for workers to raise concerns about the company. This is because Australia’s Corporations Act ^[11] requires companies to create a whistleblower mechanism.

Similarly, most companies disclosed elements of their modern slavery due diligence process, because this is legally required under the Modern Slavery Act ^[12].

Proactive steps

It is clear from our research that many large Australian companies are not operating in line with international standards.

That means they also aren’t ready to comply with the ripple effects of the mandatory human rights due diligence laws recently introduced ^[13] in Europe.

These laws will require large Australian companies that do significant business in Europe to conduct comprehensive human rights due diligence.

Row of EU Flags in front of the European Union Commission building in Brussels

The European Union has recently introduced mandatory human rights due diligence laws. VanderWolf Images/Shutterstock ^[14]

Australian companies must take proactive steps to comply with international standards. This means making a public commitment to respect all human rights, establishing and publicly disclosing their human rights due diligence process.

It will also mean involving everyone who is affected by or has an interest in the company’s activities throughout the due diligence process. This includes making sure they have a way to raise concerns and seek remedies.

The Australian government has a vital role in ensuring that companies take their human rights responsibilities seriously. The current reporting regime under the Modern Slavery Act has proven very weak, confirmed under a recent formal review ^[15].

Our findings suggest the government should enact a stronger and broader mandatory human rights due diligence law covering all human rights.