Step-by-step Tutorial for Developing a Human Rights Strategy for an SME

Human rights are the fundamental rights and freedoms that every individual is entitled to, irrespective of their gender, race, ethnicity, nationality, religion, or any other status. They by and large derive from the International Bill of Human Rights. While human rights have always been important, they have become a significant concern for businesses worldwide. Just some of the reasons: more than 200 million people (including 160 million children in child labour) in modern slavery, gender pay gap in Europe robbing European working women of 76 billion EUR every month, 48 million people in the EU suffering workplace bullying, 82 million women in Europe being sexually harassed in the workplace, gender pension gap leaving women more than 30% worse off and more likely to retire from the workplace into poverty, and 85 million workers in Europe suffering racial discrimination at work.

You get the idea. There are billions of reasons human rights are a corporate matter. It is kind of ridiculous it is only just now people are waking up to this.

As an interpolation, if you are interested in getting more advice for your SME, I can recommend checking out my book, “An SME Playbook on Human Rights Due Diligence” on Amazon, for tools, templates, practical advice.

So, let’s proceed with the tutorial. We have clearly established that companies do need to ensure their operations don’t violate human rights, and to do so, there exists this modern business imperative to develop a human rights strategy. In this article, we will cover how you can develop a simple but effective human rights strategy step-by-step for your SME. Note that I don’t define an SME; if you self-identity as one, you are.

As I said, there are billions of reasons to do it. But perhaps one of the leading reasons for you to consider it is that developing a human rights strategy makes an SME a better place to work. By providing decent working conditions and fair pay, businesses can attract and retain employees who share their values. By having a plan to eliminate gender pay gap, bullying, all forms of discrimination and harassment, your staff are far better off and will be far more productive and cohesive. And studies have shown that one of the strongest human rights interests of staff in companies is that their supplier’s staff, and their supplier’s supplier’s staff, are okay.

A strong human rights strategy fosters a sense of community and shared purpose among employees, leading to increased job satisfaction and productivity. And of course, respecting human rights can help build a trusted and loyal relationship with your customers and supplier, as well as avoiding potentially costly legal action and reputational damage, which can lead to significant costs and loss of business. Overall, a human rights strategy contributes to creating a positive work environment and enhancing the overall reputation and success of your business. So why wouldn’t you?

Understanding Human Rights and their relevance to SMEs

Human rights are essential to ensuring that all people are treated with dignity and respect. They are basic rights and freedoms that everyone is entitled to, regardless of their nationality, race, gender, religion, or any other status. Although human rights may seem like a distant concept that applies only to governments and international organisations, they are becoming increasingly relevant to SMEs. So, let’s start with the importance of understanding human rights and their relevance to SMEs.

Why Are Human Rights Important for SMEs?

Human rights are fundamental to creating a fair and just society, and businesses have an important role to play in promoting and protecting them. SMEs can contribute to the realisation of human rights in various ways, such as:

Providing decent work and fair pay to employees.
Ensuring that products and services are not associated with human rights abuses.
Respecting the rights of local communities and indigenous peoples.
Avoiding harm to the environment.

Studies clearly and widely show that businesses that respect human rights are more likely to attract and retain customers, investors, and employees who share their values. If improved year-on-year sales growth is important to you, then demonstrating your ethical stance on human rights helps you attain that. Ethical consumption is also burgeoning at 8% per annum across the OECD, so there’s that, too. As an additional bonus, businesses that respect human rights also tend to have better relationships with all their stakeholders and are less likely to face reputational damage or legal action.

Legislative Demands on Businesses

There is an increasing expectation from governments and civil society that businesses must respect human rights. Since 1977, and amplifying significantly in the 2020s, the responsibility for human rights have gradually shifted from solely the domain of governments, to be something for which companies are also responsible. To bring that home to you, since 1977 and ever more so in recent years, human rights due diligence and modern slavery laws are coming into vogue, including:

The Sullivan Principles
The UN Guiding Principles on Business and Human Rights
The Modern Slavery Act in the UK
The French Duty of Vigilance Law
The Australian Modern Slavery Act
The California Transparency in Supply Chains Act
The German Human Rights Due diligence Law
The Norwegian Transparency Law
The Belgian Corporate Due Diligence Law (forthcoming)
The EU Directive on Corporate Due Diligence (forthcoming)
The EU Regulation on Forced Labour (forthcoming)
The Austrian Corporate Due Diligence Law (forthcoming)
The Dutch Child Labour Law

And many, many more are afoot.

If/when the EU Directive mentioned above at comes into effect (probably during 2023 it will pass so come into effect on 1 January 2024) every EU member state will have to have a national human rights due diligence law before 1 January 2027. All of these laws will apply to the suppliers of the bigger companies who are more directly required to report. When the EU Directive on Forced Labour mentioned above comes into effect, probably 1 January 2024, all European companies regardless of size are immediately prohibited from importing goods that have any forced labour behind them, and the burden of proof will fall on the company to prove there isn’t. You know that cocoa, coffee, sugar, rubber, cotton, silk, electronics, gold, leather etc you buy? Yep, you better absolutely know there is no forced labour buried in the chain. It is 77% likely it does, BTW. It is a big responsibility on business to know more about their supply chains, and a very powerful demand that will cost any breaching company very, very dearly.

These principles and laws require businesses to identify and address any actual or potential human rights impacts of their operations, supply chains, and business relationships. They also require businesses to publish annual reports on their efforts to prevent and mitigate human rights abuses.

Although these laws apply mainly to large corporations, you are also affected, as SMEs often operate in global supply chains or provide services to larger companies. SMEs that do not have a human rights strategy or are not aware of the potential risks of human rights abuses in their operations may face reputational damage, legal action, and loss of business.

As you can see clearly, there is an amplifying wave of such laws, many OECD countries bringing like laws into place, expanding the complexity and coverage of the international web of business responsibility for human rights. If you are in Europe, Oceania, North America, it is inevitable you will soon be swept up in this wave. Some laws apply to only the biggest business – such as Germany. Some laws – such as Norway – apply to all business. What is going to happen though is that, because these laws address human rights due diligence in supply chains, if you supply a big business, or what you make ends up there, or if you source from a big business, you will be swept up. Pressure will come down, from vastly bigger companies, to provide proof of your own human rights due diligence. You need to be ready.

So, it’s important. But you aren’t a human rights expert, are you? But even a non-expert in human rights can do it, without breaking the bank and without taking up too much of your time. A human rights strategy does not need to cause you headaches.

Here’s my short step-by-step guide. There are really just 4 steps for an SME to Develop a Human Rights Strategy: it’s as easy as ABC….D:

Conduct a Human Rights Assessment
Set Human Rights Goals and Targets
Develop and Implement Human Rights Policies and Procedures
Monitor and Evaluate Progress

Let’s look at each of these steps in a little more detail:

Conduct a Human Rights Assessment: The first step in developing a human rights strategy is to conduct a human rights assessment. This is an important process as it helps you identify and understand potential human rights impacts your business may have on stakeholders. It is a vital component of a human rights strategy as it can help mitigate risks to stakeholders and the business itself.

Here are some practical, inexpensive, actionable tips on how SMEs can conduct a human rights assessment. Now, be pragmatic. Not all of these can or should apply equally from tiny to large SMEs. Do what you can. Do what makes sense for you.

Identify key stakeholders: Start by identifying key stakeholders such as employees, suppliers, customers, and local communities. They are critical in providing valuable insights and perspectives on potential human rights issues.
1. Develop a survey: Once key stakeholders are identified, develop a survey or questionnaire that includes questions about the human rights impact of the business on stakeholders. The survey should be designed to be inclusive, culturally sensitive, and should account for language barriers.
1. Conduct interviews: In addition to surveys, conduct interviews with employees, suppliers, and customers to gain a deeper understanding of potential human rights risks in the value chain. These interviews can be conducted in person, over the phone, or via video conferencing.
1. Focus groups: Consider organising focus groups to gather stakeholders’ feedback on the impact of the business on human rights. This will give the business a more comprehensive understanding of the risks and opportunities for improvement.
1. Review documents: In addition to gathering information from stakeholders, review relevant documents such as policies, contracts, and supplier codes of conduct.
1. Analyse the data: Once all the data is gathered, analyse it to identify potential human rights risks and impacts. This will enable the business to understand where to focus its efforts on mitigating these risks.
1. Develop an action plan: Based on the results of the assessment, develop an action plan that outlines how the business will address the identified human rights risks. The plan should be realistic, specific, and measurable, with clear timelines and responsibilities.

Set Human Rights Goals and Targets: Once you have conducted a human rights assessment and identified any potential risks and impacts on human rights, the next step is to set human rights goals and targets. This is an essential part of a human rights strategy, of any strategy, as it provides a clear direction for the business to follow and ensures that the company is accountable for its actions. Here are some practical steps that you can take to set human rights goals and targets:

Review Existing Policies and Procedures: You should review your existing policies and procedures to ensure that they are aligned with human rights principles. This includes reviewing policies on recruitment (an area of human rights failings in 99% of companies) employment, health and safety, environmental protection, and community engagement. The company should ensure that all policies and procedures comply with relevant national and international standards and regulations, such as the Sullivan Principles and the UNGPs. Google these, or get my book. 😊
Identify Key Areas for Improvement: Based on the human rights assessment, you should identify key areas for improvement. For example, the assessment may have revealed that your supply chain poses a risk of human rights abuses. That will be the case for the overwhelming majority of companies. You should then set goals and targets to address this issue. Remember, like all strategies, the goals and targets should be specific, measurable, achievable, relevant, and time-bound.
Develop an Action Plan: Once the goals and targets have been set, you should develop an action plan (see A viii above) to achieve them. The action plan should include a timeline, a budget, and clear responsibilities for implementation. It should also include a system for monitoring and evaluating progress towards the goals and targets.
Engage Stakeholders: You should engage with your stakeholders, including employees, customers, suppliers, and local communities, in setting human rights goals and targets. This will help to ensure that the goals and targets are relevant and achievable, and “owned”. You should also communicate your goals and targets to stakeholders and seek feedback on progress.
Build Capacity: You may need to build your capacity to implement your human rights strategy effectively. This may involve training employees, developing new policies and procedures, or engaging with external experts. Certificate courses for a few of your people might help. EdX, Coursera etc all have human rights offerings.

By following these practical steps, you can set human rights goals and targets that are aligned with international standards and best practices. This will help to ensure that you operate ethically and responsibly and avoid any potential risks or impacts on human rights.

Develop and Implement Human Rights Policies and Procedures: Once the goals and targets are set, you need to develop and implement human rights policies and procedures. The policies and procedures should be consistent with the UNGPs and cover all aspects of your business’ operations. The policies and procedures should be communicated to all employees, suppliers, customers, and other stakeholders.

Developing and implementing human rights policies and procedures is an essential step in your human rights strategy. It is a very common failing, and largely because of the way it is done, not necessarily just whether it is done or not. Your policies and procedures need to provide clear guidance on how to identify, prevent, and address potential human rights abuses in the business’s operations and supply chains. I would argue they absolutely, 100%, must be participatory. Get your staff involved. Heavily. Okay, so here are some practical and actionable tips for you to develop and implement human rights policies and procedures:

Involve Employees and Stakeholders: Developing policies and procedures is not a one-person job; it requires collaboration and input from employees, suppliers, customers, and other stakeholders. You also want staff to feel a part of it, be intimately familiar with the policies, and better “own” the policies. You should involve your employees and stakeholders in the development process to ensure that the policies and procedures are relevant, practical, and effective.
Develop Clear and Specific Policies: You should develop clear and specific policies that outline the business’ commitment to respect human rights. The policies should cover all aspects of the business’ operations, including supply chains, products and services, and interactions with employees and stakeholders.
Communicate Policies and Procedures: Once the policies and procedures are developed, you need to communicate them to all employees, suppliers, customers, and other stakeholders. The communication should be clear and accessible to all, and employees should be trained on the policies and procedures to ensure that they understand their responsibilities.
Monitor and Evaluate: You should regularly monitor and evaluate your policies and procedures to ensure that they are effective and achieving their intended outcomes. You don’t have to do it yourself, if you are the boss. Delegate. But make sure the delegate gives a damn. You can use various methods such as audits, surveys, and evaluations to monitor progress and identify areas for improvement.
Address Non-Compliance: You need a clear process for addressing non-compliance with your human rights policies and procedures. The process should outline the steps for reporting and investigating non-compliance, taking corrective action, and preventing recurrence. Maybe consider a whistleblowing mechanism, like WislPort for example, Employees seeing things and letting you know is not a threat, it is a godsend.

Monitor and Evaluate Progress: The final step is to monitor and evaluate progress. Monitoring and evaluating a human rights strategy is crucial for you to ensure that they are meeting their goals and targets. Regularly reviewing the strategy is important to identify any potential issues and make improvements. Here are some practical and inexpensive ways that SMEs can monitor and evaluate their human rights strategy:
Conduct Internal Audits: Internal audits are a useful way for SMEs to evaluate the effectiveness of their human rights strategy. They don’t have to be arduous, or time-consuming. Just do what you can. And, again, you don’t have to do it yourself. Delegate it. I recommend two people doing it collaboratively. It spreads ownership. These audits involve reviewing the policies and procedures that you’ve put in place to ensure that you’re complying with human rights standards. The audit should assess the company’s adherence to relevant laws and regulations, the implementation of the human rights strategy, and the effectiveness of training programs.
Implement Employee Surveys: Employee surveys can help you evaluate your human rights strategy by gathering feedback from employees on your experiences with the strategy. These surveys can be conducted anonymously to ensure that employees feel comfortable sharing their honest opinions. Questions should be designed to evaluate employee awareness of human rights policies, how comfortable they feel reporting concerns, and whether they feel your company takes their concerns seriously.
Use Key Performance Indicators (KPIs): KPIs are a measurable way for you to monitor your progress towards achieving their human rights goals. Examples of KPIs include the number of employees trained on human rights, the degree of staff comprehension after that training, the number of incidents reported and resolved, and the percentage of suppliers that comply with human rights standards. KPIs should be specific, measurable, achievable, relevant, and time-bound (SMART).
Implement a Complaints and Feedback Mechanism: A complaints and feedback mechanism provides employees, customers, and other stakeholders with a way to report concerns about the SME’s human rights practices. This mechanism can be a simple email address or phone number where concerns can be reported, or a more sophisticated system that allows for anonymous reporting. When it comes to human rights, whistleblowing is not a threat; it is a competitive advantage and a boon for your business. Whichever way you go, you need to ensure that you have a process in place for addressing and resolving concerns that are reported.
Engage with Stakeholders: Engaging with stakeholders such as customers, suppliers, and local communities can provide you with valuable feedback on your human rights practices. One of your most important stakeholders in this is those companies that might be the ones to bring the demands down on you; your bigger suppliers and any B2B clients. This engagement can take the form of surveys, focus groups, or one-on-one conversations. By listening to stakeholders, you can identify areas where you can improve their human rights practices and build trust with your stakeholders. They themselves might have ideas about human rights strategies that you haven’t considered; leverage the experience of others.
Regularly Review and Update the Strategy: You should regularly review your human rights strategy to ensure that it remains relevant and effective. This review should include an assessment of the effectiveness of the monitoring and evaluation methods used, and whether any changes need to be made to the strategy or KPIs.

So, overall, developing a human rights strategy is essential for you to ensure that your operations do not violate human rights. You can follow these steps to develop a practical and effective human rights strategy. Conducting a human rights assessment, setting human rights goals and targets, developing and implementing human rights policies and procedures, and monitoring and evaluating progress are crucial steps to ensure that your company respects human rights. By developing a human rights strategy, you can not only respect human rights but also improve your reputation, mitigate risks, and contribute to sustainable development.

Developing a human rights strategy is a process that requires dedication and commitment. By following the steps mentioned in this blog post, you can rather quickly, easily, and cheaply develop a human rights strategy that is practical, effective, and compliant with all relevant principles and laws. Developing a human rights strategy is not only a growing legal requirement but also a moral and ethical obligation that every business must fulfil.

Get there sooner rather than later, and you will at least in the meantime be creating a better workplace for you and your people. Human rights are, after all, all about people.

#humanrightsstrategy #SMEs #corporatesocialresponsibility #ethicalbusiness