7.5.5 The human rights impact

Regarding the second factor which forms part of the due diligence process proposed by Ruggie, i.e. the human rights impacts, the Report explains that: "A company should analyse potential and actual impacts arising from its own activities on groups such as employees, communities, and consumers."1It is recommended that a basic human rights due diligence process should include the following elements:2

- Integration. Leadership from the top is essential to embed respect for human rights throughout a company, including in key processes such as resource allocation, recruitment, procurement and the evaluation of employees and divisions. Also, training is essential to ensure consistency, as well as capacity to respond appropriately when unforeseen situations arise. Employees should be trained, empowered, and incentivised to fulfil their company s responsibility to respect human rights.

- Tracking and reporting performance. Regular updates of human rights impact and performance are crucial Adequate oversight should be instituted to ensure that the responsibility to respect is being met, for example by incorporating it into the control systems and assigning managerial or Board accountability. Confidential means to report non-compliance, such as hotlines, can also provide useful feedback on how the company s human rights programme functions.

The Ruggie framework insists that each of these components is essential, and that without them, a company cannot know and show that it is meeting its responsibility to respect rights. Where 'due diligence ' in human rights law mainly is used as a standard to test whether a State Party has applied adequate measures to protect individuals and to prevent human rights abuses, the Ruggie framework bases itself on the concept of due diligence as a process as it is known in the corporate due diligence practice. But the corporate due diligence investigations set out in the sections 7.2 and 7.3 were mostly event-driven, i.e. necessary in the event of an intended IPO, merger, acquisition or finance agreement. The Ruggie framework however, aims for an on-going process. It recommends that conduct ' broader periodic assessments be conducted in addition to the ad hoc assessments. Pondering on the four elements presented above leads to the supposition that they follow the same lines as corporate in-house programmes to avoid corruption.3 They also resemble the elements that form part of a corporate internal control & management information process such as the COSO framework, introduced in the US, and referred to by various corporate governance codes and acts.4 Using an internal control & management information process is essential for governing a large company. It is also necessary to generate reliable and complete information for the preparation of annual accounts, annual reports and sustainability reports. To include questions on corporate human rights performance in these types of corporate risk management programmes would not be a big step. In that respect, companies could use the guidance offered by frameworks developed for the HRIAs. They contain the relevant questions and provide assistance in measuring and understanding corporate human rights impacts. It would be practical to integrate an HRIA, because all risks and issues material to the company, would then become apparent in one oversight system, which makes it easier for management to deal with them. It could serve dual purpose: to manage the risks to the company and the risks to society.5