Business and Human Rights: Setting the Scene for 2016

More than two thirds of the worlds fifty largest companies already have a specific human rights policy 1. This reflects a
growing trend in corporate awareness of human rights impacts. This note summarises what Sancroft believes will be
the business and human rights trends for 2016.

Legislation - The last five years have seen a shift from voluntary requirements to mandatory regulation
around forced labour and Modern Slavery. In 2010, the California Transparency in Supply Chains Act
was passed. In 2015, the UK Modern Slavery Act became law with transparency in supply chain provisions
and updates were published to the US Federal Acquisition Regulation (FAR) to strengthen protections against
trafficking in persons in federal contracts. The EU Directive on Non-Financial Reporting and the ILO Forced
Labour Protocol will come into force in 2016.

Standards proliferation - With almost 90 frameworks now in circulation2, businesses have been
grappling with which standards to use or comply with. These include GRIs G4 Sustainability Reporting
Guidelines, OECDs Guidelines for Multinational Enterprises, ISO 26000 Guidance on Social Responsibility
and the IFCs Sustainability Framework and Performance Standards.

Measurement - In the past, corporate responsibility was primarily environmentally focused with
measurement and reporting chiefly a quantitative exercise. When businesses began to grapple with other CR
issues, they did it in the way they knew best quantifying, measuring and reporting with numbers. There is
now a notable increase in accountability surrounding the social aspects of responsible business operations;
evolving from a purely quantitative reporting to include qualitative disclosure and transparency.

Collaboration - There has been an increase in companies working in partnership to address business
and human rights related issues. For instance, almost 90% of companies surveyed (up 14% from last
year) stated that corporate-NGO partnerships have improved business understanding of social and
environmental issues, and 59% think key partnerships have helped their companies to change their practices
for the better. This trend looks set to continue with 90% believing that partnerships will become more
important over the next three years.3

Stakeholders - Investors and customers are taking more interest in the ethical practices of companies
they invest in and buy from and are demanding increased transparency. 55% of people are willing to pay extra
for products and services from companies committed to positive social and environmental impact 4.On the
investor side, Socially Responsible Investing (SRI) has grown by 929% since 1995.5

What does this mean for business?

1. Beginning in 2016, companies with an annual turnover of 36m or more with operations in the
UK will need to comply with the UK Modern Slavery Act (MSA).
o The MSA requirements provide a good opportunity for businesses to begin to consider broader human
rights issues. Due diligence activities designed to identify modern slavery risks such as detailed supply
chain and operational assessment on trafficking and forced labour can also be used to consider other
relevant human rights risks.

2. With an increasing number of companies reporting under the MSA and other frameworks, there will be
considerable debate around how to measure progress on human rights; about the practicality and value
of measuring human rights performance.
o Although monitoring progress on human rights may be more challenging than the quantitative nature
of measuring environmental impact, the qualitative elements of measurement will allow businesses to
UN High Commissioner for Human Rights, http://ohchr.org/en/NewsEvents/Pages/DisplayNews.aspx?NewsID=16760&LangID=E
http://business-humanrights.org/sites/default/files/reports-and-materials/MB%26HR_List%20of%20initiatives%20featuring%20indicators_12%20Nov%202014.pdf
3 http://www.candeadvisory.com/sites/default/files/Final_C%26E_Corporate-NGO_Partnerships_Barometer_2014.pdf
4 http://www.nielsen.com/content/dam/nielsenglobal/apac/docs/reports/2014/Nielsen-Global-Corporate-Social-Responsibility-Report-June-2014.pdf
5 http://www.cnbc.com/2015/09/24/doing-well-while-doing-good-socially-responsible-investing.html
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better understand and forecast potential and actual risks. This type of reporting will also allow
businesses to become more transparent and to more easily communicate their progress to their
stakeholders.

3. Companies will be criticised if human rights issues and abuses are not addressed, regardless of whether the
company has direct influence to resolve the situation. Leverage becomes crucial.
o Successful companies will be the ones that partner with credible NGOs and organisations, or are part
of collaborative initiatives that have knowledge and expertise of the local circumstances.

How Sancroft can help

Sancroft is a sustainability consultancy with offices in London and Washington D.C.
Founded in 1997 by former Secretary of State for the Environment, The Rt. Hon John Gummer, Lord Deben, Sancroft
helps some of the worlds leading companies improve their environmental, ethical and social performance. Clients
include The Coca-Cola Company, Primark, John Lewis Partnership, Hilton Worldwide, Nestle and Whitbread.
As specialists in Responsible Sourcing and Human Rights, Sancroft is ideally placed to support
businesses in their compliance with the Modern Slavery Act.
Through evaluation of existing policies, strategy development and training programmes, we can advise on industry
best practice and ensure that your required Slavery and Human Trafficking statement meets all stakeholder
expectations.
Our expertise also covers every level of the development and implementation of a human rights strategy, including:

Supply chain and risk mapping

UN Guiding Principle alignment and reporting
Internal capacity building
Priority setting
Policy development
Due diligence system creation
Reporting and training

Sancroft also offers advice on the design of ethical trading strategies, auditing programmes, root cause analysis,
emergency response, remediation of critical issues and internal and external communications.
For further information please contact Georgina Erangey (Consultant) on georgina.erangey@sancroft.com or 0207
960 7901