Organizational Change
What the Coronavirus Outbreak Reveals About the Current Corporate Response to Human Rights

Dealing with the spread of the coronavirus — which started in the Chinese province of Hubei and has taken hold in more than 30 countries — is demanding a truly global, collaborative effort. Public health authorities are working tirelessly across borders to share information and, to a lesser extent, resources, to stop infections spreading and taking even more lives.

While the crisis has shined a light on a positive, collective response; it has also exposed an ongoing failure by corporations to put people first, and profit second.

In China, a number of factories have reportedly resumed normal operation. In Wuhan — the capital city of Hubei and the origin of the virus — construction workers have been tasked with keeping the city moving, despite a clear lack of adequate protective equipment.

Many Chinese firms have allowed staff to work from home to reduce the risk of infection. But one employee at the Hong Kong online news portal, HK01, alleges that he was fired after he took to Facebook to criticize the company for not allowing regular staff members to work from home and failing to provide effective face masks.

In some countries, many firms have stopped workers returning to work if they’ve been in China recently. And while airlines all over the world have proactively suspended flights to and from China; in the US, American Airlines’ only did so after pilots and flight attendants filed a lawsuit seeking an immediate halt to flights to the country.

The situation is even worse for migrant workers returning home to Myanmar from China to escape the virus. According to reports, many of the thousands crossing the border into China since late January have left their jobs working in chili and eggplant plantations without their salary or any money they had saved, because their bosses did not want them to leave.

Of course, many large companies will have supply chains with tentacles that reach into Chinese markets, and are clearly exposed to malpractice in human rights protection. There is ever-growing interest and awareness of environmental, social and governance (ESG) issues among both consumers and investors. Investments that consider ESG criteria worldwide are today worth more than $10 trillion, with the percentage of US investors claiming to be interested in investing in sustainable projects and companies increasing some 10 percentage points (to 85 percent) in the last three years.

Yet, corporate performance on developing more robust policies to boost human rights protection remains slow, according to the latest Corporate Human Rights Benchmark (CHRB).

Yes, the original 100 companies that signed up to the CHRB have improved their average scores — tracking progress on policies, grievance mechanisms, and dealing with serious allegations made by staff, among other things. This group, which includes the likes of Unilever, Marks & Spencer and adidas, are recording an average score of 32 percent. This was just 18 percent in 2017.

But most companies, including Costco and Starbucks, are still lagging behind. In fact, the average score for the newest 100 firms to sign up to the benchmark is around 17 percent.

The benchmark suggests that most companies are not implementing the UN Guiding Principles on Business and Human Rights, with half of companies failing to meet any of the five basic criteria for human rights due diligence. It is something that “should alarm governments and investors,” according to Steve Waygood, Chair of the CHRB and Chief Responsible Investment Officer at Aviva Investors.

The current situation can be attributed to a number of factors. Too few companies have a good understanding of their supply chain, particularly beyond the first tier of contractors. As such, they rely too heavily on suppliers along the chain adopting the principles and codes of practice that might have been instigated at the top of the chain.

Meanwhile, certifications — driven by audits — are having limited impact. Benchmarking, too, is not having the desired effect, with companies lacking the motivation and incentive to move up the league table. The reporting demands of the UK Modern Slavery Act and the EU’s Non-Financial Reporting Directive are clearly not working as they should, either.

Many people working in responsible procurement hope that increased government legislation will offer the appropriate amount of both carrot and stick. A raft of national and international laws is currently being worked up, designed to get companies to up their game on human rights and the due diligence that must be carried out if people working in supply chains across the world are to be protected properly.