Human Rights and the Future of Compliance with Dunstan Allison-Hope

Transcription

David Stearns:
Welcome to BSR Insights. I'm your host, David Stearns. I'm joined today by Dunstan Allison-Hope, Vice President for Human Rights at BSR, where he leads our work at the intersection of technology and human rights. Dunstan has a wealth of experience working on a diverse range of issues including human rights due diligence, privacy and freedom of expression, sustainability reporting and strategy, and stakeholder engagement. So thank you for joining us today, Dunstan. As you know, we're entering an important new era of alignment, harmonization, and regulation of reporting in the world of just and sustainable business. And BSR has written that the field of just and sustainable business is entering this new era where actions that previously were voluntary are becoming mandatory. I'm curious to just start by asking you, what is exciting to you about this important moment? What excites you and what should business leaders who are active on these topics feel excited about?

Dunstan Allison-Hope:
So thank you for the kind introduction, David, and looking forward to this conversation, and I'm really glad you framed that question with the term excitement, because I am indeed entering this new era of just and sustainable business in the spirit of joy and enthusiasm and energy is something I'm very much looking forward to. The field of just and sustainable business has historically been somewhat fragmented and disconnected, sometimes lacking in clear direction, and that's natural. We've had to almost start from scratch and innovate and learn as we go. But we are, as you say, entering a new era. And this seems to me to be a new era where the stars are aligning around some increasingly high quality soft law standards and increasingly high quality hard law standards. So by soft law standards, I mean the voluntary standards that companies should adhere to, we have, for example, the International Sustainability Standards Board, we have the Global Reporting Initiative standards.

They're increasingly high quality, they're increasingly complementary with each other, and they're increasingly well-connected. By hard law, I mean new laws and regulations that companies have to comply with. So things like the European Union Corporate Sustainability Reporting Directive, the upcoming Corporate Sustainability Due Diligence Directive that incorporate into law and reference some really important standards of business conduct that have previously been voluntary. I'm especially pleased and especially excited about the fact that the UN Guiding Principles on Business and Human Rights, the UNGPs, have been integrated into both the soft law standards that I mentioned and the hard law standards. And for me, that really makes it clear that impacts on people, not just impacts on business are a primary consideration.

David Stearns:
So thank you for that, Dunstan. And I think that's a great segue into one of the first questions I was hoping to explore with you. You've written that we need to think a little bit differently about compliance, which is often cast in a disparaging light that compliance is a just good enough approach and that thinking about it that way might be misguided in light of some of these new laws you've talked about, the EU Corporate Sustainability Reporting Directive, the EU Corporate Sustainability Due Diligence Directive and the EE Digital Services Act. Can you talk a little bit about why you think compliance is important and why it actually deserves its moment in the sun?

Dunstan Allison-Hope:
Yeah. You're right. Historically it has been very tempting to use the term compliance disparagingly, and people still do. Phrase like, "That is mere compliance. We need to move beyond compliance," are very regularly used. And the reason I think my framing has changed on this is we're talking about compliance with increasingly good laws and regulations. We have laws coming into place that are going to make mandatory things that we want to see. Compliance with laws are going to mean increasing standards of business conduct. So compliance is something we want to see, and I think it's easy to fall into the trap of assuming that compliance just happens. Once something's the law, businesses just comply and we move on. When in fact there are lots of different ways to comply with the law. There are lots of different choices that are made along the way, and there's going to be a cohort of people whose job it is inside companies to ensure compliance with the law.

That job is going to be hard and the people undertaking those roles are going to have a big influence over whether those laws actually achieve the impacts we want to see. So I think we should be celebrating, championing the roles of those people that are pursuing compliance and have a good dialogue about how that compliance is pursued, such that we achieve the desired outcomes we want to see. So in other words, compliance means adhering to standards of business conduct that we want to see. These are good laws, so let's be enthusiastic about how we seek to comply with them.

David Stearns:
That's a great segue into the next question I have, which looks a little bit deeper at the EU Sustainability Reporting Standards with regard to reporting on material impacts, risks and opportunities. You've talked about companies applying the spirit of the law versus the letter of the law. Can you talk about the difference between those two things and some of the issues posed by the double materiality requirements in the ESRS?

Dunstan Allison-Hope:
Yes. So I'll start with the spirit of the law and the letter of the law, which is I think a really important distinction that we should keep front of mind as professionals in the field of just and sustainable business as we go about seeking to achieve compliance. So the spirit of the law essentially refers to the intent behind the law. What is the law seeking to achieve? What are the outcomes we want to see? The letter of the law refers to the specific wording of the law, what the law actually says. The letter of the law establishes certainty and predictability. And both of those two things, the spirit of the law and the letter of the law are good things. However, they're not necessarily automatic.

And I think we as professionals in the field of just and sustainable business who have I think more of the spotlight, more of the influence than we've had before, should be thinking about how to pursue the spirit of the law. So in all of the choices that we have about how we pursue compliance, how are we seeking to achieve the intent behind the law? What are the impacts that we're achieving as a result of compliance? So we can move on to double materiality in a moment, but across all of these different laws, I think seeking to keep one's eye on the spirit of the law is going to be essential.

David Stearns:
So in light of this new regime of regulations and laws and the various pieces that companies will now be asked to comply with, both from the spirit of the law and the letter of the law. I guess one question would be, in your estimation, collectively do these rules, are they up to the task considering the urgency with which we need to move to create the more just and sustainable world? We see the impacts of climate change. We see the turmoil around human rights issues and other issues that companies are dealing with. Are these rules up to the task?

Dunstan Allison-Hope:
So they are better than what we used to have, so that's a good thing. However, I would see them as necessary but not sufficient. So having said lots of positive things about the pursuit of compliance, compliance itself is not sufficient. So we also want to live in a world where those in the just and sustainable business field, taking ambitious approaches to whatever it is we want to achieve. So whether it's establishing climate targets and implementing them in a rapid manner, whether it is taking approaches to human rights that put impacts on people at the front and center of decision-making, we need that culture that goes beyond what compliance would imply. So I'm positive about compliance. It is necessary. It is going to have a positive impact on our field, however, it is not in itself sufficient.

And I think another thing to look out for, and this is a practical consideration for companies, is that laws and regulations will bring into play different functions inside companies. So regulatory, compliance, legal teams, auditing teams are going to take on new and important roles when it comes to just and sustainable business. That might actually free up the sustainability teams, the human rights teams, to focus on that high level of ambition and not spend all of their time dealing with the dotted i's and cross t's of compliance. And so that's perhaps another thing to think about is that laws and regulations will free up human rights and sustainability teams to take on some of the big issues that you rightly raise.

David Stearns:
So you just touched a little bit on some of the different functions and skillsets and areas of expertise within companies who are dealing with this. And I think it's a great jumping off point to talk about another thing which I know that you're excited about, which is this collision between human rights due diligence and materiality reporting. As you've written the new EU Sustainability Reporting Standards have sent a signal that a whole value chain approach to due diligence based on the UN Guiding Principles for Business and Human Rights should be fully embedded into materiality assessments. I'd love to hear a little bit about your perspectives on why this conversion of materiality and due diligence is noteworthy and what it means for sustainability reporting?

Dunstan Allison-Hope:
So you referenced the EU Sustainability Reporting Standards, ESRS. Those are the standards that companies will need to use to comply with the EU Corporate Sustainability Reporting Directive, the CSRD. So what follows is about ESRS. There is a sentence in ESRS that is my favorite sentence in all of the recent laws and standards that are coming into force for just and sustainable business. And that sentence reads as follows, "The materiality assessment is informed by the due diligence process defined in the international instruments of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. It makes it clear that materiality assessments should be informed by due diligence based on UNGPs." That is a really big shift. It goes further than that and actually sets out the requirement that materiality assessments use prioritization criteria that have historically been used in the human rights field.

So scope, in other words, the number of people who might be impacted scale the gravity or significance of the impact and remediability, whether the impact can be undone. It also brings into force those criteria. I think that is going to result in high quality materiality assessments and high quality sustainability reports. But it does, as you mentioned, bring together two, what have often been connected, but perhaps two separate professions. And I would encourage materiality professionals, those whose history is in undertaking materiality assessments, producing sustainability reports to immerse themselves in the history and methodology of human rights due diligence. What can they learn from the last 10, 15 years of human rights due diligence that can improve the quality of materiality assessments? And I would encourage human rights due diligence professionals to immerse themselves in the history and methodology of materiality assessments so that they can maximize the impact that they have on materiality assessments and reporting. I think both those two communities, those who've been in the materiality reporting world, those who've been in the human rights world have a lot to offer and will be stronger together.

David Stearns:
Thanks for that. And I think I would be remiss if I didn't also give you an opportunity to comment a little bit more specifically on human rights specifically given your interest and focus in that area. Following up on your previous comment, how should companies address human rights in their materiality reporting specifically? Is this something that they should handle as a separate topic or should human rights be integrated into sustainability reporting more broadly? What's the best approach to that in your view?

Dunstan Allison-Hope:
Yeah. I would distinguish reporting on the one hand from materiality on the other hand. So when it comes to reporting, yes, a company might have a separate human rights section in a sustainability report, it might even publish a separate standalone human rights report. Both of those two approaches are fine, provided it's connected to a broader suite of disclosures. Sometimes there are audiences that really want to understand human rights impact that would be interested in that segmented approach. However, when it comes to materiality, sometimes companies have human rights listed as a separate issue in a materiality assessment. And what I would say is, please, please, please do not do that. Human rights are very broad and there are lots of human rights that stand alone, that merit their own assessment. So privacy, non-discrimination, bodily security, freedom of expression, just in for favorable conditions of work, access to science and culture, all of these stand alone as issues that should be assessed as part of a materiality assessment and just combining them all together into one amalgamated human rights issue, I think doesn't make sense to me.

David Stearns:
That was really helpful, Dunstan. I appreciate that. We started with a question about what excites you about these changes. I'd like to conclude with something that's a little bit more forward-looking, what's around the corner for sustainability practitioners, for human rights practitioners? What's on the horizon that they should be thinking about?

Dunstan Allison-Hope:
Yeah. So there are two things that come to mind. So first of all, as we've been talking about, we are at this moment in time where soft law standards and hard law standards are becoming clearer, and we in the field are spending a lot of time interpreting them and understanding what they mean for our day-to-day work. For the next five years or so, we're going to have to go through the hard work of putting those standards into practice. We're going to, as I mentioned earlier on, need to keep a focus on the spirit of the law as well as the letter of the law and make sure that we put impact at the front and center of everything that we do. And we're going to learn a lot as we do that. It's one thing to say that these things should happen in principle. It's another thing to do it in practice.

And that leads me to the second point, which is I think there is a lot to learn from practitioners inside companies trying to do this in the real world, in real life. So in five years time, you might want to ask the question, what have we learned from this? What laws, policies, standards could be established in the future? What existing laws, policies and standards could be evolved to build upon, to reflect, to benefit from the lessons we are about to learn about how to do all this in practice? I mentioned earlier on about how the criteria that we've been using in human rights assessments are being embedded into materiality. That's never been done before. What do we learn from that process? How can future laws and regulations be better written to reflect the lessons that we're about to learn? That's the other thing I would keep my eye on for the next five years.

David Stearns:
Well, thank you for that, Dunstan. And you work with companies every single day, so anything else that you'd like to add? Do you feel a sense of hope that we'll get this right, or what's your sense?

Dunstan Allison-Hope:
I would leave us with one final thought. So I entered this field 25 years ago, in fact, longer than that, depending on how you count, and there weren't really any standards to speak of. And we had to start with a blank sheet of paper, and we had to be entrepreneurial, and we had to figure things out as we went along. And so we had this entrepreneurial spirit and innovation, and we necessarily had to do that. And today we're in a very different place. We have increasingly well-established standards, and those standards need to be applied in a really disciplined, robust way.

However, I would hate for that to take away from the spirit of innovation, of trying things differently, of entrepreneurship. So my final thought is to ask us, how can we do those two things at the same time? How can we implement standards in a way that is robust, credible, achieves the letter of the law as well as the spirit of the law? How can we do that, but also innovate, also try new things, also see if there are better ways of achieving the outcomes we want to achieve? I'll leave you with that thought.

David Stearns:
That is a great note to end on. Thank you so much for your time, Dunstan. We really appreciate it.

Dunstan Allison-Hope:
My pleasure.

David Stearns:
Thanks for listening. For more in-depth insights and guidance from BSR, please check out our website at bsr.org and be sure to follow us on LinkedIn.