Reporting Trends and Insights: Are Companies Taking a Principled Approach or Are They Cherry Picking?

This article is one in a series designed to highlight trends and key insights from corporate human rights disclosures found in the UNGP Reporting Database.

In the next few weeks, Shift will also publish a research report analyzing the maturity of human rights reporting for 74 top global companies included in the Reporting Database. The trends highlighted below are drawn from that upcoming report.

After a year of mapping companies’ human rights reporting against the expectations of the UNGP Reporting Framework, Shift’s research and analysis reveals that the majority of companies reviewed 1) don’t clearly define the focus of their reporting, and 2) don’t make salient human rights issues the focus of their reporting.

Why does this matter?

Companies should define the focus of their human rights reporting in order to meet the basic expectation of clarity. Which human rights issues are of particular importance for the company, among the myriad human rights issues that exist?

Despite this being a foundational expectation, over half of companies reviewed by Shift provide no clarification about which human rights are most relevant to their operations and value chains, simply listing certain rights without any apparent rationale. This should leave any reader concerned that the company has no clear idea where its greatest potential impacts on people lie and therefore may well not be managing those risks.

Why should companies care about identifying their salient human rights issues?

Only eight percent of companies reviewed explicitly identify their salient human rights issues – that is, the human rights at risk of the most severe negative impacts through the company’s activities and business relationships.

Identifying the company’s salient human rights issues is the first step of human rights due diligence under the UN Guiding Principles. Indeed, the ‘salience lens’ focuses the company’s attention and resources on finding information that is necessary for its own ability to manage human rights risks – especially the most severe risks – and related risks to the business. This takes companies away from reporting for the sake of reporting.

In other words, using salience means that reporting changes from being a resource drain on companies – an exercise in chasing down data for an external communications exercise – to being an investment in putting in place processes that enable the company to manage key risks to people and to the business.

What is the difference between salience and materiality?

Materiality definitions vary, with different audiences and criteria, which then dictate the selection of issues on which the company will focus its disclosure. Whether they address a shareholder audience or other stakeholders too, materiality assessments are generally designed to assess risk to the business. But by failing to start from an assessment of where risks to people are greatest, they in fact often miss risks to the business as well.

In contrast, salience always puts the focus on the human rights at risk of the most severe negative impact. This offers a consistent and principled means of identifying what should be the focus of both reporting and action. And it provides a stronger basis for anticipating human rights-related business risks.

Tips for better disclosure

  • Focus your reporting on the greatest risks to people: articulate the company’s salient human rights issues and how they were determined, and explain what the company is doing to manage those issues. To learn more about the process to identify salient human rights issues, click here. You can also consult Part B of the UNGP Reporting Framework.
  • For companies that are not yet ready to share their salient human rights issues: at a minimum, try to set out clearly what you consider to be the most relevant human rights issues for the company and why, and explain what you are doing to manage those issues. It is possible to organize your human rights reporting in a clear and practical way, even if you are not yet using the salience lens to report.

Stay tuned for more reporting trends and insights from the UNGP Reporting Database. The fourth article of this series will take a sector specific perspective and look at trends and insights from the palm oil industry.