Risky Business: Social Due Diligence and the Role of

Operationalizing the Ruggie Framework
Michael Auerbach, V.P., Social Risk Consulting
What are human rights?
Human rights are basic standards aimed at securing dignity and equality for all.
International human rights laws constitute the most universally accepted standards for such
treatment, but there is an intuitive aspect to the respecting of human rights that goes
beyond laws and conventions. Put simply, what feels wrong is in all likelihood wrong.
“Whatever other differences may exist in the world, starting with the 1948 Universal
Declaration, human rights are the only internationally agreed expression of the
entitlements that each and every one of us has simply because we are human
beings. Thus, securing respect for human rights must be a central aim of governance
at all levels, from the local to the global, and in the private sector no less than the
public.” – J. Ruggie
*60% of Fortune 500 corporations reference the UDHR in their policies
What’s the difference between CSR and Human Rights?
Top Down: (Philanthropy, Pollution Control, Environmental Stewardship, Donations, etc..)
Bottom Up: (universal, indivisible, interdependent and interrelated)
Irene Khan, Secretary-General of Amnesty International, noted: "Human rights are
rooted in law.Respecting and protecting them was never meant to be an optional
extra, a matter of choice. It is expected and required. It should be part of the
mainstream of any company's strategy, not only seen as part of its corporate social
responsibility strategy
Framework: Protect, Respect, Remedy
Control Risks endorses the principles set forth by John Ruggie, United Nations Special
Representative on the issue of human rights and transnational corporations, which outline:
– That the primary responsibility to promote and PROTECT human rights and
fundamental freedoms lies with the State,
– That transnational corporations and other private enterprises are responsible for
RESPECTING human rights in their practice, and
– That access to effective REDRESS of grievances for individuals and
communities claiming abuse is essential for the promotion of human rights.
The second principle, Responsibility to Respect, essentially calls upon transnational
organizations to conduct Social and Human Rights Due Diligence.
What is Social/Human Rights Due Diligence?
The principle that, within a business context, a company is expected to ensure it operates in
accordance with internationally agreed standards of fairness and reasonableness. In
Protect, Respect, Remedy, John Ruggie defines Due Diligence as “the steps a company
must take to become aware of, prevent and address adverse human rights impacts.”
“Look Before you Leap”
– Appropriate care, risk management
– Program to identify, manage, mitigate and eliminate risks to the company
– Human rights due diligence: build on known and widely used management processes
– Use due diligence to help a company to know if its meeting its responsibility to respect
human rights.
The Purpose of Social/Human Rights Due Diligence
 Measure the direct results and impacts of the operation
 Monitor the implementation of strategies, policies, and procedures
 Measure the efficiency of the management process
 Evaluate the policies and procedures
 Focus on challenges and opportunities
 Indicate the need for corrective measures
The Process of Conducting Human Rights Due Diligence
Describe the proposed business activity
Consider the full cycle of the business
Map international, national legal framework, including standards, conventions, requirements from investors, company code
of conduct, customary (or indigenous) laws and traditions
Describe the human rights conditions in the surrounding area
Engage with local stakeholders
Describe baseline conditions
Describe the view of multiple scenarios of the possible changes in business activity
Prioritize human rights risks
Make practical recommendations
Include company action and collaboration with government and local community members
Integrate plan into general management structure
The Business Case for Human Rights Due Diligence
There is a strong business case for performing human rights due diligence. The main
objective of conducting Human Rights Due Diligence is to identify, understand the
corporate impacts in the field of human rights. And for a company to gain a thorough
understanding of the impact of corporate activities, a better understanding of
stakeholders perspectives, and ways to manage corporate impacts in the process
that benefits all involved.
Maintaining a good company and product reputation
Effective risk identification and management
Improvement of stakeholder relations
Creating a legal and social license to operate
Increased motivation and productivity of workers
Understanding the society in which the company works
Attractive investment climate
Contribution to CSR and sustainable development