Tracking Performance

Overarching question

C5 — How does the company know if its efforts to address each salient human rights issue are effective in practice?

Objective

To explain how the reporting company understands if it is successful in reducing risks to human rights in relation to each salient issue, such that it can continuously improve in its efforts to meet its responsibility to respect human rights.

Supporting guidance

As noted elsewhere in the Reporting Framework, implementation of the corporate responsibility to respect human rights takes time and resources, and the human rights challenges faced by most companies evolve over time, with changes in the company’s operations, operating contexts and business relationships. This Framework explicitly recognizes the ongoing nature of implementation, and enables companies to explain their progress along a path, over time.

This section of the Framework therefore focuses on the company’s processes and indicators for tracking its performance. Particularly relevant are methods of tracking that go beyond identifying whether certain actions have been taken by the company, and assess their effectiveness in preventing and mitigating potential impacts, or in enabling remedy if actual impacts occur. Information about how the company tracks its own progress is particularly important for demonstrating that it is consistently seeking and appraising improvements in its human rights performance.

Relevant information

Relevant information for the company’s answer could include:

Particular processes through which the company assesses its success in addressing each salient issue (e.g., internal review processes, internal audit, supplier audits, surveys of employees or other workers, surveys of external stakeholders, other processes for affected stakeholders to provide feedback, including stakeholder engagement processes and grievance mechanisms, databases that track outcomes when actual impacts or complaints arise);

Any plans to develop further processes for assessing the company’s success in addressing each salient issue;

Particular qualitative and/or quantitative indicators used to assess how effectively each salient issue is being managed (e.g., indicators developed by the reporting company or by a relevant industry association, multi-stakeholder initiative or in a more general reporting framework);

Any challenges in assessing the effectiveness of the company’s processes to address a salient human rights issue (e.g., due to limited visibility into a supply chain, difficulties in confirming cause and effect; difficulties in gaining qualitative information that would help interpret quantitative data such as a reduction in complaints received).

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.

The UN Guiding Principles

UN Guiding Principle 20 provides that:

“In order to verify whether adverse human rights impacts are being addressed, business enterprises should track the effectiveness of their response. Tracking should:

(a) Be based on appropriate qualitative and quantitative indicators;

(b) Draw on feedback from both internal and external sources, including affected stakeholders.”

The commentary to UN Guiding Principle 20 states that:

“Tracking is necessary in order for a business enterprise to know if its human rights policies are being implemented optimally, whether it has responded effectively to the identified human rights impacts, and to drive continuous improvement.

Business enterprises should make particular efforts to track the effectiveness of their responses to impacts on individuals from groups or populations that may be at heightened risk of vulnerability or marginalization.

Tracking should be integrated into relevant internal reporting processes. Business enterprises might employ tools they already use in relation to other issues. This could include performance contracts and reviews as well as surveys and audits, using gender-disaggregated data where relevant. Operational- level grievance mechanisms can also provide important feedback on the effectiveness of the business enterprise’s human rights due diligence from those directly affected (see Principle 29).”

The commentary to UN Guiding Principle 21 states that:

“The responsibility to respect human rights requires that business enterprises have in place policies and processes through which they can both know and show that they respect human rights in practice. Showing involves communication, providing a measure of transparency and accountability to individuals or groups who may be impacted and to other relevant stakeholders, including investors.

Communication can take a variety of forms, including in-person meetings, online dialogues, consultation with affected stakeholders, and formal public reports. Formal reporting is itself evolving, from traditional annual reports and corporate responsibility/sustainability reports, to include online updates and integrated financial and non-financial reports.

Formal reporting by enterprises is expected where risks of severe human rights impacts exist, whether this is due to the nature of the business operations or operating contexts. The reporting should cover topics and indicators concerning how enterprises identify and address adverse impacts on human rights. Independent verification of human rights reporting can strengthen its content and credibility. Sector-specific indicators can provide helpful additional detail.”

Reference points in other initiatives

These references are intended to help users identify which provisions from other initiatives would be relevant as part of the answer to this question. They are not a substitute for the guidance above.
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.1.6, B.2.4 D. Performance: Company Human Rights Practices: D.1.1, D.3.1.a 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: Criterion: Social Reporting Question: Quantitative Data Criterion: Risk Management Measures
FTSE ESG	For specific salient human rights issues identified: Social Supply Chain: Strategy & Practice – Results of supplier monitoring/auditing Health & Safety: Strategy & Practice – Performance monitoring and management Where marketing of Breast Milk Substitutes is a salient human rights issue: Customer Responsibility: Quantitative, Sector Specific and Performance – Verification and reporting on marketing of Breast Milk Substitutes
GNI	Where freedom of expression and/or privacy are salient human rights issues: Implementation Guidelines: 2. Responsible Company Decision Making – Integration into Business Operations: Procedures
GRI	For specific salient human rights issues identified: G4-DMAc
ICMM	For specific salient human rights issues identified: Subject Matter 4: The company’s performance during the given reporting period for each (or a selection) of the identified material SD risks and opportunities. ICMM Requirement: Publicly available definitions used by the company to report quantitative and qualitative performance.
IR	Content Element 4F: Performance
KTC	Where forced labour and human trafficking are salient human rights issues: 5.2 Worker Voice 5.3 Grievance Mechanism 6.0 Monitoring 7.1 Corrective Action Plan
OECD	Where supply or use of minerals from conflict-affected and high-risk areas is a salient human rights issue: OECD-3 and OECD-4
UNGC	For specific salient human rights issues identified: Criterion 5 and specifically: – System to monitor the effectiveness of human rights policies and implementation with quantitative and qualitative metrics, including in the supply chain (BRE3 + ARE3) Criterion 8 and specifically: – System to track and measure performance based on standardized performance metrics – Dialogues with the representative organization of workers to regularly review progress made and jointly identify priorities for the future – Audits or other steps to monitor and improve the working conditions of companies in the supply chain, in line with principles of international labour standards
VPSHR	Where security and human rights is a salient human rights issue: 13. Company procedure to review progress on implementing the Voluntary Principles at local facilities.

Assurance indicators

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

The company has relevant qualitative and/or quantitative indicators that it uses to assess how effectively it is addressing actual and potential human rights impacts, and which:
- are capable of providing valid insights into how effectively the company is addressing human rights impacts
- are capable of being reliably measured or assessed
- are placed in context where this is necessary to interpret how effectively the company is addressing its human rights impacts
- include indicators that reflect stakeholder perceptions

TIER TWO ASSURANCE

There is evidence that the company uses its indicators to track the effectiveness of its efforts to address actual and potential human rights impacts.
The company has data-collection processes or other relevant practices in place to track whether its efforts to address actual and potential human rights impacts are effective in practice, and which:
- are capable of assessing whether potential impacts on human rights have been prevented or mitigated
- are capable of assessing whether actual impacts on human rights have been effectively remedied
- are designed to take account of the perspectives of stakeholders who are or may be impacted
- enable the company to learn lessons that can help it better prevent, mitigate and remedy impacts in the future

TIER THREE ASSURANCE

There is evidence that the indicators, data-collection processes or other practices through which the company tracks the effectiveness of its efforts to address actual and potential human rights impacts:
- have, in practice, incorporated perspectives from stakeholders, including from potentially affected stakeholders or their legitimate representatives
- have provided insights into the effectiveness of the company’s efforts to address actual and potential human rights impacts

Supporting questions

C5.1 — What specific examples from the reporting period illustrate if each salient issue is being managed effectively?

Objective

To provide concrete evidence, from within the reporting period, of how the reporting company’s efforts to address each salient issue have progressed in practice, including the extent to which its policies, processes and practices are achieving the intended outcomes in terms of respect for human rights.

Supporting guidance

The reporting company’s answer to this question should differ from its answers to questions 3.1 and 3.2, which seek information on trends, patterns or examples of the existence of impacts that relate to each salient issue (both actual and potential impacts). The focus here is on examples of the results achieved from the company’s efforts to address those impacts. In other words, the response should convey ways in which the reporting company’s efforts to reduce the likelihood or severity of impacts on human rights, through its human rights due diligence, have had the desired effect.

It is naturally difficult to demonstrate that an impact would have occurred were it not for the company’s efforts. Moreover, the absence of an impact does not, on its own, show that it is being well managed, as the result may be due to luck or other factors. It may be easier to provide evidence of a reduction in the frequency or severity of an impact linked to the company’s activities or business relationships, and to demonstrate correlations to the company’s own efforts to achieve that outcome.

For example, audits of suppliers may indicate that the occurrence of child labour or the use of contract workers who lack benefits or unionization rights has significantly reduced, with a reasonable basis to believe that capacity-building or other work by the company has contributed to that fact. Statistical data may show a reduction in employee injuries, or fact-finding work by respected experts or by the company jointly with local communities may show reduced impacts on health and livelihoods from water extraction or pollution. Again, it will be important to show that there is a credible connection to the company’s own efforts to manage those risks.

The expectation of this question is not that the reporting company should, or could, claim direct cause and effect between its own efforts to manage each salient issue and a particular outcome. In some instances, cause and effect will be credible. In many others, it will never be possible to prove such a direct relationship, and improvements may initially be uncertain. Reporting that includes such information, while recognizing that it is tentative or limited to a correlation, has its own value in demonstrating how the company is tracking and thoughtfully analysing results.

There may also be instances in which the approaches on which the company was relying to manage a salient issue have not worked in practice, or have not yet revealed positive results. In other words, the trend has been a negative one, despite the company’s efforts or due to developments beyond its control. For example, where democratic freedoms are curtailed or violent conflict increases in a particular operating environment, this may also lead to increased human rights impacts in connection with the company’s own operations. The trend in the impacts may be reported under question 3.1 and efforts to address it under question 4.3, while noting the reasons for the lack of progress to date in response to this question.

Relevant information

Relevant information for the company’s answer could include:

Data based on indicators designed to assess risks or impacts related to the salient issues (e.g., the number of incidents of sexual harassment identified, the number of instances where internet user data was passed to governments and on what basis, the number of employee deaths or injuries);

Findings from surveys or other feedback mechanisms (e.g., a survey of employees (properly conducted) in relation to their working conditions, an independent report from local community leaders reporting satisfaction with resettlement processes);

Independent research documenting reductions in human rights impacts in an area where the company has been actively working for progress;

Accounts from relevant, independent stakeholders about the effective management of a salient issue.

The UN Guiding Principles

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…”