Overarching question
The reporting company has already described, in response to Section B2, how it identified the salient human rights issues on which it is reporting: those human rights that are at risk of the most severe negative impact through the company’s activities or business relationships. This question is about reporting on how it identifies changes in the level of risk associated with those salient issues over time.
Under the UN Guiding Principles, the severity of an impact is determined by one or more of three characteristics:
A. its scale: the gravity of the impact on the human right(s);
B. its scope: the number of individuals that are or could be affected;
C. its remediability: the ease with which those impacted could be restored to their prior enjoyment of the right(s).
A number of factors may change either the potential severity of a salient issue or its likelihood. For example, the company may enter a new market where laws or social practices place the right at greater risk; it may undertake a new acquisition or joint venture in a location or with another company that brings added risk; it may expand into new product areas or sell products to new customers that carry a greater risk of abusive use of the product; it may be subject to changes in certain operating environments such as increases in conflict or significant changes in democratic freedoms.
The reporting company does not need to give specific details of changes where doing so jeopardizes delicate situations, for example, if naming a government that is abusing human rights would jeopardize the company’s ability to do business within the country. However, the company can nevertheless use this question to reflect in more general terms on how it goes about keeping up to date with such changes in the risk environment, and incorporating them into its assessments of its salient human rights issues over time.
Relevant information for the company’s answer could include:
- Processes through which the company identifies changes in the type or level of risk to human rights associated with its salient human rights issues (e.g., periodic repeat impact assessments; engagement with relevant stakeholders; patterns and trends in complaints received; responsiveness to political developments; due diligence as part of mergers and acquisitions);
- Any role that internal or external audit or assurance processes play in informing assessments of changes in the type or level of risks involved;
- Any key performance indicators or metrics that help the company identify changes in the nature of its salient human rights issues.
The robustness of the reporting company’s response to this question will be improved to the extent that it is able to answer the supporting questions that follow.
UN Guiding Principle 18 provides that:
“In order to gauge human rights risks, business enterprises should identify and assess any actual or potential adverse human rights impacts with which they may be involved either through their own activities or as a result of their business relationships. This process should:
(a) Draw on internal and/or independent external human rights expertise;
(b) Involve meaningful consultation with potentially affected groups and other relevant stakeholders, as appropriate to the size of the business enterprise and the nature and context of the operation.”
UN Guiding Principle 17 provides that:
“…Human rights due diligence:[…]
(c) Should be ongoing, recognizing that the human rights risks may change over time as the business enterprise’s operations and operating context evolve.”
The commentary to UN Guiding Principle 18 states that:
“Because human rights situations are dynamic, assessments of human rights impacts should be undertaken at regular intervals: prior to a new activity or relationship; prior to major decisions or changes in the operation (e.g., market entry, product launch, policy change, or wider changes to the business); in response to or anticipation of changes in the operating environment (e.g., rising social tensions); and periodically throughout the life of an activity or relationship.”
See the cross-references to other initiatives page for a key to the initiatives referenced.
| Initiative | Reference point |
|---|---|
| CHRB | B. Embedding Respect and Human Rights Due Diligence: B.2.1, B.2.2 *Section D of the CHRB refers to sector-specific key human rights risks identified by the CHRB. |
| DJSI | For specific salient human rights issues identified: |
| FTSE ESG | For specific salient human rights issues identified: Human Rights & Community Indicators: Strategy & Practice Social Supply Chain: Strategy & Practice Health & Safety: Strategy & Practice Risk Management: Strategy & Practice |
| GNI | Where freedom of expression and/or privacy are salient human rights issues: |
| GRI | Where salient human rights issues include human rights in the supply chain: |
| ICMM | For specific salient human rights issues identified: ICMM Requirement: The company’s description of its process for identifying material issues (as reported). For specific salient human rights issues identified: |
| IR | Content Element 4G: Outlook |
| KTC | Where forced labour and human trafficking are salient human rights issues: 1.5 Stakeholder Engagement 5.0: Worker Voice 6.0: Monitoring |
| OECD | Where supply or use of minerals from conflict-affected and high-risk areas is a salient human rights issue: OECD-3 |
| UNGC | For specific salient human rights issues identified: Criterion 7 and specifically: |
| VPSHR | Where security and human rights is a salient human rights issue: |
Please note:
- Assurance provided at the higher tiers should include indicators from lower tiers.
- These indicators are supported by further notes in the Microsoft Excel version of the indicators. For all support materials on assurance of human rights performance and reporting, please see our website section on assurance.
TIER ONE ASSURANCE
- There is evidence that staff with lead responsibility for human rights risk management:
- understand the distinction between causing a human rights impact, contributing to a human rights impact, and being linked to a human rights impact through a business relationship
- review potential impacts to identify in which of these ways the company might be involved
TIER TWO ASSURANCE
- The company has processes, indicators or other means through which it assesses how risks related to its salient human rights issues evolve over time, and which are capable of identifying significant changes in those risks.
- There is evidence that the company accurately identifies the nature of its involvement in actual and potential human rights impacts.
TIER THREE ASSURANCE
- There is evidence that the company has identified significant changes in the nature of risks related to its salient human rights issues in a timely manner.
AND
- There is no evidence that the company has failed to identify significant changes in the nature of risks related to its salient human rights issues in a timely manner within the period under assessment.
Supporting questions
Question 3.2 focuses on specific impacts that have occurred within the reporting period. In responding to question 3.1, the reporting company can point more broadly to the factors that make the issue salient and how they have developed over the reporting period. This might include, for example, trends in evidence of a certain impact from the company’s supply chain audits, an increase (or decrease) in complaints about a certain kind of impact in relation to the company’s operations in a particular region, patterns in the cases or reports of a certain impact across the company’s industry.
The company may have specific quantitative or other indicators that would provide useful data as a means of answering this question. These can be particularly helpful to the reader and also demonstrate the existence of a systematic approach to assessing impacts on the human rights in question.
Relevant information for the company’s answer could include:
- Aggregated information from social or human rights audits or assessments;
- Aggregated information from a grievance or complaints mechanism;
- Aggregated information from an internal risk register;
- Industry, government or expert data relevant to the salient human right issues;
- Anecdotal evidence of trends or patterns gathered through other means (e.g., media, stakeholder engagement, government or intergovernmental action);
- Other metrics or key performance indicators that support the company’s conclusions about trends and patterns.
UN Guiding Principle 17 provides that:
“…Human rights due diligence:
(a) Should cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships;
(b) Will vary in complexity with the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations;
(c) Should be ongoing, recognizing that the human rights risks may change over time as the business enterprise’s operations and operating context evolve.”
See the cross-references to other initiatives page for a key to acronyms.
| Initiative | Reference point |
|---|---|
| CHRB | *D. Performance: Company Human Rights Practices: D.1.6, D.1.7, D.1.8, D.2.7.a, D.2.7.b, D.2.8, D.2.9.a, D.2.9.b, D.3.5.a, D.3.5.b, D.3.8.a, D.3.8.b, D.3.9.a, D.3.9.b *Section D of the CHRB refers to sector-specific key human rights risks identified by the CHRB. |
| DJSI | — |
| FTSE ESG | — |
| GNI | — |
| GRI | — |
| ICMM | — |
| IR | Content Element 4C: Business model – outcomes (particularly relates to C3.1 and C3.2) |
| KTC | Where forced labour and human trafficking are salient human rights issues: 2.2 Risk Assessment |
| OECD | Where supply or use of minerals from conflict-affected and high-risk areas is a salient human rights issue: |
| UNGC | — |
| VPSHR | — |
Please note:
- Assurance provided at the higher tiers should include indicators from lower tiers.
- These indicators are supported by further notes in the Microsoft Excel version of the indicators. For all support materials on assurance of human rights performance and reporting, please see our website section on assurance.
TIER ONE ASSURANCE
- There is evidence that the company ensures that any significant trends and patterns in impacts that it identifies are shared with the relevant parts of management so as to inform decision-making and improve practices.
TIER TWO ASSURANCE
- The company has processes in place to assess trends and patterns in impacts, which are capable of reliably identifying and analysing relevant information.
- There is evidence that trends and patterns in impacts identified by the company are based on information that is:
- relevant
- from credible sources
- timely
- sufficient for the conclusions being drawn
TIER THREE ASSURANCE
- There is evidence that trends and patterns shared with relevant parts of management have been factored into their decision-making.
In response to this question, the reporting company should go beyond trends and patterns to focus on specific cases.
The most important factor in selecting examples should be the severity of the impact. Other factors may include an increased likelihood of the impact recurring (such as in a market where it was not previously seen, or was not previously severe), particular challenges in addressing the impact (for example, due to conflict or the role of third parties) or the high public profile of the impact.
Responses to this question may best be provided together with responses to questions C4.3 and C6.5 about how the company has addressed potential and actual impacts respectively.
Severe impacts may already be publicly known and discussed, whether they are individual incidents or part of an endemic pattern, such as systemic child labour or forced labour in particular countries where inputs to a company’s products are sourced, or where it operates. There may be concerns on the part of a reporting company about reporting publicly on severe impacts, particularly if they have not fully been addressed. The opportunity of responding openly to questions 3.2, 4.3 and 6.5 lies in the ability to demonstrate that actual and potential impacts are recognized and actions are under way to address them, while also acknowledging that it takes time to do this and often requires the involvement – sometimes the leading involvement – of third parties as well. In particular, where impacts are publicly known, the greatest risk to a company may lie in the failure to acknowledge them and to explain how they are being addressed.
In exceptional circumstances, it may not be possible for a company to disclose certain information that would be necessary to respond accurately to this question. In such cases, the company should indicate the nature of the information it has omitted and explain its reasons for the omission: for example, risk to the human rights of stakeholders, specific and legitimate legal prohibitions or confidentiality constraints, or the unavailability of reliable information. Where the company is prevented from disclosing information in specific or explicit form, it should, wherever possible, provide it in aggregated or anonymized form in order to avoid significant gaps in its disclosure.
Relevant information for the company’s answer could include:
- Examples of severe impacts that are systemic in a certain area of the company’s operations or value chain and relate to a salient issue (e.g., child labour in a certain sourcing country, impacts on indigenous and other communities in relation to natural resource extraction, impacts on access to water due to agricultural activity in water-scarce regions);
- Examples of non-systemic impacts related to a salient issue that were the most severe within the reporting period;
- Examples of incidents discussed in the media or in an NGO or expert report that relate to a salient issue;
- How the company was involved with the impacts, that is, by causing or contributing to them, or because they are linked to its operations, products or services, but without contribution on its part.
UN Guiding Principle 17 provides that:
“…Human rights due diligence:
(a) Should cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships;
(b) Will vary in complexity with the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations;
(c) Should be ongoing, recognizing that the human rights risks may change over time as the business enterprise’s operations and operating context evolve.”
UN Guiding Principle 21 provides that:
“In order to account for how they address their human rights impacts, business enterprises should be prepared to communicate this externally, particularly when concerns are raised by or on behalf of affected stakeholders. Business enterprises whose operations or operating contexts pose risks of severe human rights impacts should report formally on how they address them. In all instances, communications should: …
(b) Provide information that is sufficient to evaluate the adequacy of an enterprise’s response to the particular human rights impact involved…”
See the cross-references to other initiatives page for a key to acronyms.
| Initiative | Reference point |
|---|---|
| CHRB | E. Performance: Responses to Serious Allegations: E.1.1 |
| DJSI | — |
| FTSE ESG | — |
| GNI | — |
| GRI | For specific salient human rights issues identified: |
| ICMM | — |
| IR | Content Element 4C: Business model – outcomes (particularly relates to C3.1 and C3.2) |
| KTC | Where forced labour and human trafficking are salient human rights issues: |
| OECD | Where supply or use of minerals from conflict-affected and high-risk areas is a salient human rights issue: |
| UNGC | For specific salient human rights issues identified: |
| VPSHR | — |
Please note:
- Assurance provided at the higher tiers should include indicators from lower tiers.
- These indicators are supported by further notes in the Microsoft Excel version of the indicators. For all support materials on assurance of human rights performance and reporting, please see our website section on assurance.
Note
The practitioner should seek to identify any severe impacts that have occurred during the period under assessment, which are known to the company or its key stakeholders or are otherwise in the public domain, and should assess how they are being addressed in line with indicators under sections C4, C5 and C6 below.
Cross reference
B4 also addresses actual impacts, with a focus on any severe impacts that occurred outside of the company’s salient human rights issues. This section looks at impacts associated with one or more of the company’s salient human rights issues.
TIER ONE ASSURANCE
no additional indicators
TIER TWO ASSURANCE
[Relevant for the assurance of human rights reporting]
- If the company reports on how it has determined whether an impact is sufficiently severe to require disclosure, there is evidence that:
- it has focused on the three factors of:
- how grave the impact is (scale)
- how widespread it is (scope)
- how hard it is to put right the resulting harm (remediability)
- it has focused primarily on the severity of the risk to people’s human rights rather than just the risk to the business
- it has focused on the three factors of:
- If the company reports on the nature of its involvement with the severe impacts concerned, there is evidence that:
- the company has accurately understood the distinctions between whether it has caused an impact, contributed to an impact, or is simply linked to the impact through its operations, products or services, but without any contribution on its part
- the company has accurately understood the nature of its responsibility in relation to the impact, based on whether it caused, contributed or is linked to the impact
- Any severe human rights impacts with which the company has been involved in relation to any of the salient human rights issues – and which are known or reasonably capable of being known by the company – have been clearly disclosed, or, if not disclosed, the company has provided a credible explanation for their omission.
TIER THREE ASSURANCE
no additional indicators