HR Leaders Forum
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Rights and Responsibilities: Creating Better Workplaces for all Australians
I would like to start by acknowledging the traditional owners of the land, the Gadigal people of the Eora Nation. I pay my special respects to elders – past, present and future – and to all the Aboriginal and Torres Strait Islander men and women.
It is my pleasure to speak to you today at this, the Human Resources Leaders Forum 2016, about a topic that has become a priority for the Australian Human Rights Commission: human rights in the workplace.
I understand that the link between business and human rights can at times appear tenuous. Because they have often been positioned as quite separate, I am frequently met with the view that business and human rights are irreconcilably different.
This view is nothing new. Forty-five years ago, one of the most influential economists of the 20th century, Milton Friedman, wrote in The New York Times that the one and only social responsibility of business is that it increase its profits.
This argument, which has been both endorsed and criticized laboriously over the last few decades, is at odds with any rights-based perspective of business. If profit generation were the sole responsibility of business, then human rights would indeed have little voice in this sphere.
But I think it is fairly obvious that today people expect, and demand, more of business than that they simply maximise their profits without coming to grief by some violation of law.
Consumers want and expect quality, safety, and value. Employees want more than a paycheck. They want the company to be a good corporate citizen, to engage with the community, to provide employees with a living wage, and to provide a safe, comfortable and fair workplace.
In recent years, much has been written about the positive and negative impact of business on human rights and how, why, and if, the corporate sector should be more engaged in both respecting and protecting rights. But is human rights compliance purely altruistic, or are there benefits for the businesses themselves?
The evidence and research support a strong business case for human rights. Human rights compliance not only assists with the identification of risk, but actively assists in eliminating it. Equally, human rights can provide an opportunity for enhancing business opportunities by providing a strategic advantage in emerging markets, as well as creating a strong workplace culture that makes it an attractive work environment. This can inspire staff loyalty and greater productivity and innovation, generate new business opportunities, and can be beneficial to recruitment.
The business case
I’d like to just give a couple of examples, which may be familiar with, of how business and human rights positively intersect.
Firstly, Uber. Now legal in NSW, Uber is seen by many as a revolutionary service that creates an entirely new market for taxi services. The business model is that when there is high demand for taxis, the price goes up. For example, if there is a football final and there are a lot of people who need to get there, the price will go up accordingly. When the demand is lower, the price goes down. You might remember that as people tried to get out of Sydney during the martin place siege, the taxi demand rose and the prices for Uber quadrupled. Within minutes social media mobilized, and Uber very quickly reacted and announced that they would transport everybody out of the city for free – with the company itself covering the costs to drivers. The company was agile, intelligent and they rethought their business model in an emergency, to put people’s safety first. This had a good reputational outcome for the company.
Another example involves a complaint we received some time ago from a young man who was HIV positive. He tried to get travel insurance to protect his income, and after going around to a number of insurance companies, he found that he wasn’t able to get any insurance because he had was HIV positive. He then came to the Commission with a formal complaint, claiming that this was discriminatory. We looked at the matter and we did what we usually do, we invited the insurance company to come into our offices and discuss their practices. They came in with goodwill, and said that they didn’t want to take the risk by providing the insurance. But when they went away and worked on their actuarial figures they started to relook at the business model. They came back to us a few months later and said that they thought that they would be able to increase the offerings to people with disability, or illness such as HIV, but might have to charge a little more on premiums. They agreed to give the young man an insurance policy that he was happy with, and they did.
What emerged from that was that the company, because of goodwill and word spreading through the LGBTI community, found that they significantly increased their business. They began to attract a much larger client base - not only people with HIV (or other people directly affected by the company’s more inclusive policy) but also people who wanted to support an organisation that supported people with disability and illnesses like HIV. The company’s reputation in having a more diverse and open approach meant that they greatly broadened their market.
This is an example of how we move from business risk to business opportunities. It is an important merging of the arguments – both from a human rights perspective, and as being very good for business.
Australian Human Rights Commission
Before looking at specific sectors, I should explain why the Australian Human Rights Commission has taken the strategic decision to focus on business and human rights.
At the Australian Human Rights Commission we are in a unique position to understand the role of business in human rights. We know from our investigation and conciliation service that the overwhelming majority of the public’s human rights concerns arise in the area of employment, and to a lesser extent, the delivery of goods and services in the private sector.
We also know that good workplaces are reasonably common in Australia. There are many workplaces around the country where people and processes combine to give a reasonable business result, satisfactory productivity, a high quality product or service, and a respectful work environment. But there are still many areas in which we fall short.
In the year 2013-2014, the Commission received 19,688 enquiries and 2,223 formal complaints about discrimination or breaches of human rights. The majority of these complaints involved businesses in their role as an employer or as a service provider.
For example, 80% of all complaints received under the Sex Discrimination Act were in relation to employment. Similarly, 62% of the complaints received under the Age Discrimination Act were in relation to employment and 37% under the Race Discrimination Act. Under the Disability Discrimination Act, 33% of all complaints received arose in relation to employment and 39% of disability complaints were made in the context of the delivery of goods and services.
Encouragingly, Australian businesses are coming to their own conclusions about their responsibilities, and quickly recognising that there are not just good legal and business reasons to respect and promote human rights in the workplace, it is also the right thing to do.
Age and the business case
Take for example, the benefits to the economy of the increased workforce participation of older people. In 2012, the Commission worked with Deloitte Access Economics to conduct primary research to measure the economic impact of employment participation rates of people over 55 years of age. The study found that an increase of 5% in paid employment for Australians over 55 years of age would have had a $48 billion impact on the national economy. Despite prevailing attitudes that tend to lead to the exclusion of older workers in the workforce, they have much to contribute at an individual level and to the economy as a whole. We need to be challenging assumptions about ‘oldness’ so that we begin to see it as something that can be quite powerful and beneficial to the economy.
Disability and the business case
There is similar research across other areas. If people with disability were better integrated into the workforce, national productivity would correspondingly rise. In 2011, the Australian Network on Disability commissioned Deloitte Access Economics to examine the economic benefits of increasing employment for people with disability. The economic modelling in the report suggests that closing the gap between labour market participation rates and unemployment rates for people with and without disabilities by one-third would result in a cumulative $43 billion increase in Australia’s GDP over the next decade.
Psychosocial disability, or mental illness, is an invisible form of disability that is much more prevalent than many people realise. Around 45% of Australians aged between 16 and 85 will experience a mental illness at some point in their life, while one in five Australian adults will experience a mental illness in any given year.
A worker may develop mental illness prior to employment or during employment. Most workers successfully manage their illness without it impacting on their work. Some may require workplace support for a short period of time, while a minority will require ongoing workplace strategies.
It is often presumed that a worker’s mental illness develops outside of the workplace. However, an ‘unhealthy’ work environment or a workplace incident can cause considerable stress and exacerbate, or contribute to, the development of mental illness.
Providing a healthy and safe workplace benefits all workers, including those with mental illness. It also makes good business sense:
• Stress-related workers’ compensation claims have doubled in recent years, costing over $10 billion each year
• A survey of over 5000 workers indicated that 25% of workers took time off each year for stress-related reasons
• Preliminary research shows that Australian businesses lose over $6.5 billion each year by failing to provide early intervention/treatment for employees with mental health conditions.
The cost of ignoring the problem is far greater than the cost of developing and implementing strategies to create a safe and healthy workplace.
Gender equality and the business case
Women’s participation in the workforce can also make a significant difference to economic growth. Goldman Sachs reported in 2009 that if the gaps between male and female employment and productivity could be closed, it would boost Australia’s gross domestic product (GDP) by 11%. More recently, in 2012 the Grattan Institute concluded that a 6% increase of women in the paid workforce would expand the Australian economy by about $25 billion a year.
The Commission has supported the Male Champions of Change initiative to step up on this issue within their organisations. Male Champions of Change are a group of Australia’s most influential and diverse male CEOs and Chairpersons aiming to use their individual and collective business influence to ensure that women’s representation in leadership is elevated on the national business agenda. It represents a new level of disclosure and accountability, which is essential for driving the internal commitment for change.
Male Champions of Change have also been active in addressing domestic violence as a workplace issue. When an employee is living with domestic and family violence, there are often very real costs and negative impacts that flow to the workplace. In the 2008/09 financial year, the cost of intimate partner violence to the Australian economy overall was estimated to be $13.6 billion. If no preventative action is taken, this cost is projected to rise to $15.6 billion annually by 2021.
Within the population of women who have experienced violence, or are currently experiencing violence, the Australian Bureau of Statistics estimates that between 55% and 70% are currently in the workforce – that is, approximately 800,000 women, or around one in six female workers. This means that a significant number of Australian workplaces will be impacted by women’s experiences of domestic and family violence.
Some common costs and impacts include:
• Decreased staff performance and productivity
• Increased absenteeism and staff turnover
• Negative impact on the organisation’s reputation and image.
The 2011 National Domestic Violence and the Workplace Survey found that nearly half (48%) of respondents who reported experiencing domestic and family violence said the violence had affected their ability to get to work. The main impact of violence was on work performance - 16% of victims and survivors reported being distracted, tired or unwell and 10% needed to take time off work. Further, women who experience domestic and family violence are more likely to have lower personal incomes, a disrupted work history, often have to change jobs at short notice and are very often employed in casual or part time work.
Cultural diversity and the business case
Cultural diversity is another area that makes the business case for human rights. A study conducted by the European Commission found that diversity initiatives benefit businesses by improving reputation, resulting in better ability to attract and retain top talent, and potentially improving creativity, productivity and competitive edge. 83% of the 495 businesses surveyed agreed that diversity initiatives have a positive impact on their business. The main reasons for this include the ability to:
• Resolve labour shortages, improve staff loyalty and retain high quality staff
• Enhance business reputation and image
• Improve innovation leading to new products and services, and also access to new markets.
LGBTI inclusiveness and the business case
There is also a strong business case for LGBTI workplace inclusion. The Williams Institute of the UCLA with Credit Suisse and IBM have recently completed a review of 36 research reports that looked at the impact of LGBT support policies on business outcomes. It concludes that LGBT supportive policies are positively linked to greater job commitment, improved workplace relations, increased job satisfaction, increased productivity, and improved health outcomes for employees.
The successful recruiting, retaining, developing, and advancing of LGBTI employees has been shown to increase effective competition for talent, minimise attrition costs, and facilitate wider access to allied consumer markets. Inclusive policies in the workplace can also reduce the adverse impact of stigma and discrimination on your employees, minimize labor costs associated with litigation, complaint resolution, absenteeism and staff turnover.
As you can see, the evidence supports the business case. The relationship of human rights and business operations is clear. And it is the reality of that relationship – and the implications of it – that lead to the development of the United Nations Guiding Principles on Business and Human Rights, which I’d like to turn to now.
The Guiding Principles
After years of debate and consultation led by Professor John Ruggie, the United Nations Special Representative for Business and Human Rights, there is now clarification at the international level about the responsibility of business through the United Nations Guiding Principles on Business and Human Rights.
The Principles have a three-pillar framework, - Protect, Respect, Remedy. Under the second pillar, the corporate responsibility to respect human rights, companies are expected not only to avoid causing or contributing to adverse human rights impacts, but also to address ‘human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.’
The Guiding Principles also provide that a business must provide access to a remedy when a breach of human rights occurs.
The Guiding Principles were endorsed unanimously by the United Nations Human Rights Council in 2011.
No legal obligations for companies have been created by the Guiding Principles, but they are now recognized as the authoritative global standard that brings a strong moral and ethical force to, at minimum, do no harm. Indeed, the specific focus on access to a remedy for breaches of human rights has created an environment where business is developing innovative and creative solutions to provide redress as well as implementing changes to work practices to better respect human rights.
Since the endorsement of the UN Guiding Principles – there has been a remarkable update from both governments and the private sector alike. We have also witnessed a number of trends that encourage ethical action.
Human rights in the Supply chain
Before I conclude, I’d like to briefly turn to the issue of human rights in the supply chain.
The impacts on human rights within the supply chain is an increasingly problematic area. Companies often have complex supply chains that may include suppliers with poor human rights records or weak labour and environmental standards. As potential purchasers of materials and products from the global marketplace, the businesses have a responsibility to ensure they do not contribute to, or inadvertently support, human rights abuses in their supply chains. These could include: child labour, slavery, trafficking, unfair wages or unacceptably poor working conditions. Human rights responsibilities and risks cannot be outsourced or evaded.
According to statistics from the United Nation's International Labour Organisation, which estimates 21 million people globally are trapped in forced labour, generating $208.5 billion in illegal profits in the farming, fishing, mining, construction and sex industries. Unfortunately this forced labour often lies along the supply chain, with multiple suppliers in many different countries involved in all stages of the final product. Where it is difficult or impossible for states to legislate, the moral burden on businesses escalates.
The Commission recently partnered with the Australian Centre for Corporate Social Responsibility and the UN Global Compact to examine supply chain practices. Our findings are detailed in the report: ‘Human rights in the supply chains - Promoting positive practice’ which was launched last December.
On the one hand, our report found that the greatest driver for change is a true conviction on the part of businesses that a commitment to human rights is ethical and important.
On the other, businesses have a significant cost incentive to collaborate. If actual or potential negative human rights impacts are not identified and managed, cost implications of supply chain disruptions, reputational damage or corrective action can be substantial.
This is an issue for companies whose supply chains are largely overseas, and therefore difficult to track and hold accountable, but it is also an issue in Australian workplaces themselves.
The release of the Australian Broadcasting Corporation’s Four Corners program in May 2015 alleged a number of fundamental rights violations on Australian soil. According to the program, incredibly high rates of the fresh product that we buy and eat on a daily basis have passed through the hands of workers who have been fundamentally exploited in Australia. The labour hire contractors exposed in the program prey upon vulnerable immigrant foreigners, many with very limited English. They are subjected to brutal working hours, degrading living conditions and a flagrant underpayment of wages. Female workers are particularly at risk, with women coming forward to make allegations of harassment and assault.
Nevertheless, consumers, shareholders, civil society organisations, governments and the international community are becoming increasingly informed. These actors are asking businesses to take responsibility to improve the labour practices of their suppliers, and to actively contribute to the wellbeing of people who are indirectly connected to them. This means that businesses stand to gain much in the way of branding and reputation. They also stand to build stronger relationships with stakeholders, including local communities, which can lead to a wealth of other potential benefits.
Conclusion
The next step for all of us is to move conversation away from ‘if’ business should be engaged with human rights, to ‘how’.
Whether a company operates domestically or internationally, human rights principles are unavoidable. As HR professionals, you can make an unequivocal contribution in championing human rights and assisting your organisation to become interconnected, productive and important leaders for the 21st century.
Hopefully the business case has been made clear and this is something you can take to your board, employers, employees, colleagues and stakeholders to start a conversation around how your business can be promoting human rights. For those who have already begun the conversation, I encourage you to continue to make human rights a priority in your workplace.
