How to achieve clarity on human rights reporting

31 July 2024

Human rights reporting plays a pivotal role in contemporary business, serving as a mechanism for companies to uphold their commitment to ethical practices and responsible operations. Regular reporting on human rights issues allows businesses to demonstrate their dedication to transparency, accountability, and sustainability.

A key aspect of human rights reporting involves establishing a transparent and auditable information trail. This is shown by the UN Guiding Principles Reporting Framework [1](UNGPRF) and Assurance Guidance, which emphasises the importance of a clear information trail to enable the assurance of human rights disclosures. These previously non-binding principles are being articulated in law, through the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Whilst these are EU directives their implications are far reaching and will affect companies outside of the European Union.

While every company will have key reporting topics of focus, there are common issues that affect all companies. These include:

Processes for collecting data.
Determining what information to disclose.
Ensuring that reporting is unbiased, accurate and complete.

By addressing these common issues companies can create a roadmap to give clarity to reporting topics and streamline the reporting and assurance process.

1. Create a central repository

It is easy to lose control over essential data due to the variety of data sources it can come from within a business. Therefore, setting up a central repository that is secure and has effective governance is key to effectively track uploaded data. When creating this repository, it is important to clearly code information and establish timelines for data collection. Having a dedicated team to guide this process is essential.

Furthermore, technology plays a crucial role in augmenting human rights reporting. Organisations can utilise technology to streamline data collection, analysis, and reporting processes. This includes using data management systems, automation tools, and online platforms to gather, analyse, and present human rights information effectively. By harnessing the power of technology, organisations can improve the accuracy, timeliness, and accessibility of their human rights reporting.

2. Disclose meaningful and relevant information

One area of contention can be around determining which information should be disclosed. According to the UN Guiding Principles on Business and Human Rights (UNGPs), companies should disclose information on human rights regardless of whether it reflects positively or negatively on the company. Disclosures that only present a positive picture without acknowledging challenges lack the necessary authenticity now expected. Reporting should provide stakeholders with insight into a company’s commitment to human rights, its challenges, and its efforts to improve.

3. Ensure fairness and balance

Consider how reporting appears to external stakeholders and regulators. Regulators are increasingly concerned about reports that lack substance and objectivity.

Under the Corporate Sustainability Reporting Directive (CSRD), there is a requirement to give a fair and balanced account of what human rights impacts a company faces and the measures in place to address those impacts. It is crucial to maintain honesty and authenticity in this reporting process, otherwise it may result in increased scrutiny on social media or regulatory follow-up. By providing a fair and balanced account of human rights impacts, you can retain control of the narrative.

4. Focus on accuracy and completeness

To ensure authenticity in human rights reporting, businesses must focus on two areas: accuracy and completeness. Independent assurance plays a vital role by examining not only what’s in the report, but also what may not be reported. An assurance provider will also assess the data collection process, its accuracy, and reliability. Engaging early with independent assurance providers means businesses can gain valuable advice on the process and understand whether their approach is likely to meet the standard of accuracy and completeness. 

To achieve clarity in human rights reporting, it is paramount to critically evaluate the impact of your company’s actions on human rights. Reporting is not there to conceal poor human rights performance but rather as a means to demonstrate to regulators that you are aware of the risks, the challenges of addressing them and that you are taking meaningful action. 

[1] An initiative developed by Shift and Mazars