With the UK Companies Act (2006) regulations obliging companies to report on Human Rights, Carnstone’s first look demonstrates decidedly mixed progress.

Recent changes to the UK Companies Act (2006) oblige UK listed companies to disclose information on human rights, specifically “… policies in relation to these matters, the effectiveness of those policies and future direction of the business.”  They also state that this should be “to the extent necessary for an understanding of the … company’s business.” 

So how are companies doing? 

The new regulations took effect from 1st October 2013, and to date 27 FTSE100 companies have released 2013 Annual Reports which should comply. 

With no formal guidance beyond that above, Carnstone takes the view that a disclosure should include: 

  1. A statement of commitment and awareness of human rights and relevant frameworks
  2. Outline of management responsibilities for human rights
  3. An overview of the key human rights risks or issues that the business faces
  4. Signposts to key policies and processes developed in response, along with a view of their effectiveness. 

We found that 24 out of the 27 (89%) early reporters included a statement of their commitment and awareness of human rights and 18 of them outline management responsibilities (67%).  But only 6 (22%) gave an overview of the key human rights risks that their company faces, and included signposts to policies and processes.  On average they covered the topic in fewer than 200 words. 

Why does this matter?  Human Rights is a very broad topic, and a large corporation can affect people’s rights in many ways, including through their widest possible ‘sphere of influence’.  Without a sensible view of the principal risks or issues it is impossible for the reader to judge the adequacy or effectiveness of the company’s response – as required by the regulations. 

Carnstone has produced a practical handbook to implementing the UN Guiding Principles on Human Rights ('On the Rights Track') which communicates human rights standards in an engaging format and shares insightful case studies highlighting significant human rights issues by industry. 

So it’s a positive start from the FTSE100, with a good showing of intent.  But without better risk analysis and declaration, readers will struggle to know if they are truly on the right track.

For more information, please contact Simon.Hodgson@carnstone.com 

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