Putting an ethical sheen on business
Profit maximisation is the ultimate goal for all kinds of business as companies put their primary concerns on cost saving, marketing, branding and risk management. From time to time, the business has evolved its operation by not only focusing on lucrative gains, but also business ethics and governance in order to prolong its establishment.
A business must classify who could be its stakeholders, such as an employee, shareholder, its community, business partners or customers, and how it should treat them. It has become part of its policy as appears in its annual reports or website to build a sense of trust and credibility.
In a globalised world, Thai and foreign investors simply found a company and operate their business anywhere. Mobilisation of capital widens spaces of profit generation although strictly political and legal constraints remain in some countries.
Business competition will be more challenging and become the driver for business taking action on other fronts to attract those who have either a direct or indirect relationship with its business while its reputation stays prosperous. Putting the spotlight on human rights is one of them.
We have witnessed many cases from all over the world where an unethical business could be harmful and affect not only the end-users, but also a community as a whole.
Rights violations associated with the business such as labour rights, community rights, consumer rights, economic and social rights, reflect a lacks of effective risk management and awareness of the linkage between business and human rights that may result in loss of profit and reputation.
The global community has tried to address this problem by endorsing international guidelines for business and human rights.
The guidelines are aimed at enabling a company to understand how to conduct its business without adversely impacting people’s human rights, and seeking to prevent or mitigate instances of this that are directly linked to their operations by their business relationships, even if the company has not contributed to these undesirable impacts.
This requires the company to enhance its role by interpreting such an international legal framework and putting into effect.
Investors must realise that respecting human rights is crucial to securing sustainable development. Currently, the private sector has applied the concept of corporate social responsibility to communicate with stakeholders on how a business must be held accountable for, and proceed ethically with, its philanthropic activities and projects.
In order to identify, prevent, mitigate and account for how the company addresses issues that negatively impact human rights, there is a set of recommendations it should consider, which are as follows:
1. The company should recognise the international human rights standards that might be involved with its business operations. This gives it a guide for best practices and heightens awareness of the potential risks or harm that may be done.
2. The company should conduct due diligence to make sure human rights are protected by reviewing its own policies and practices.
It needs to assess whether its purchasing practices, employment practices, sourcing decisions and engagement with its suppliers creates an environment for exploitation and abuse of workers, or whether it enables responsible and ethical practices.
3. Supply chains are becoming more complex, and labour markets are increasingly global. That means more workers are getting jobs, but are also more vulnerable to abuse and exploitation.
These operations may face more obvious exposure to practices that are tantamount to modern-day slavery with examples of human rights abuses within their supply chains.
The business should ensure that risks within its supply chains are identified and managed by conducting internal audits and risk assessments of the organisation’s supply chains; proper training and awareness; updating policies, procedures and supplier contracts to include verifying suppliers’ compliance programmes; and onsite audits of highrisk suppliers.
4. The company should establish or participate in effective operational-level grievance mechanisms for individuals and communities who may be adversely affected.
The internal process helps by providing important feedback on the effectiveness of the business enterprise’s due diligence into human rights issues from those directly affected, and the appropriate remedy found early before such grievances escalate.
5. In order to foster greater integration of human rights issues into corporate sustainability, the company should disclose policies and practices relating to human rights, and how to embed this better understanding into global reporting standards.
Reporting on sustainability can also help an organisation to measure, understand and communicate its economic, environmental, social and governance performance, and then set goals and manage change more effectively.
6. To balance and create an inclusive society covering respect for human rights, the company should serve as a role model for others.
It requires a strong network to be a driving force in raising awareness and providing technical assistance to its targeted group to safeguard good business ethics.
7. The company should work in synergy with the National Human Rights Commission of Thailand (NHRCT) through consultation and mediation.
There are successful cases where companies have initiated dialogue and collaboration with this agency that has enabled them to obtain a social licence to operate in the community and create a happy workplace for their staff.
As more individuals and organs of society start to recognise the value of human rights, companies can no longer rely only on traditional business strategies.
They need to seek out new avenues and ways of moving forward to forge their reputation on the basis of good corporate ethics, social responsibility, governance and respect for human rights.
Nonarit Bisonyabut is a research fellow and Jirawat Suriyashotichyangkul is a researcher at the Thailand Development Research Institute (TDRI). Policy analyses from the TDRI appear in the Bangkok Post on alternate Wednesdays.
First published: Bangkok post April 12, 2017