Michael Sippitt, Chairman of Clarkslegal LLP and of the Commonwealth Environmental Investment Platform, is this week at the UN Forum in Geneva and reports below.
The Forum is the UN platform to assess implementation of the UN Guiding Principles on Business and Human Rights. This 2017 Forum has particular focus on access to remedies for victims of abuse of human rights.
There is much dialogue at the Forum about supply chain risks and how to mitigate them. Legal remedies are as yet not fully developed but are trending towards more responsibility on corporates for supply chain abuses, which reinforces the effect of the Modern Slavery Act in the UK which is an example of leading legal intervention to help prevent forced labour and such abuses.
It is acknowledged that most businesses are still at an early stage in getting due diligence about their supply chains right. However, some are working hard to improve and it is clear that significant investors are looking at how corporates perform In this area. The Human Rights Benchmark is identified as a useful measure of performance other than on purely financial criteria. It is likely this will become increasingly significant to large corporates and they will inevitably look to their suppliers to help comply with best practice.
The UN Forum exemplifies the pressure on governments and corporates to achieve greater compliance with the UN Guiding Principles and the Sustainable Development Goals. One challenge that is plain at the Forum is that although large multinationals are increasingly engaged with these issues, small to medium sized enterprises (SMEs) are notable by their absence, and are of course relatively ignorant of the direction of travel about higher standards that will be reinforced by supply chain requirements imposed by the ultimate corporate customers.
It is important that the UK helps its SMEs to appreciate and be fully competitive on meeting international standards that may prove to be barriers to business both in supply chain procurement and increasingly in trade agreements.
This equally goes for Commonwealth member nations who naturally place huge emphasis on the economic benefits of SME sector growth, but again may find they are missing out if multinationals avoid risking business with SMEs whose practices do not satisfy due diligence.
There must be a substantial effort by the UK and the Commonwealth to promote standards of business among their corporates of all sizes, sponsoring training and capacity building to implement standards to meet the UN Guiding Principles.
As the UK talks of the trade agreements it hopes to negotiate after Brexit, this will not just be about doing deals, but it will also be about having a strong SME sector that will not fall short of international best practice requirements. The UK Government wants industry to be fit for the future and that must include improving corporate commitment to not only meet but preferably lead on international standards.
It is to be hoped that the Commonwealth Summit taking place in London next April will encourage Commonwealth nations to adopt measures to promote trade and investment across the Commonwealth that demonstrate the combination of building mutual prosperity with safeguarding human rights and responsible business practices.