Does a 'materiality' approach miss the mark on human rights?
29/11/19 - Dr Matthew Mullen, Founder of Article 30
Article 30 founder explores whether human rights can be quantified as a material risk to companies
Materiality is an evolving practice that has quickly become a key pillar of corporate sustainability and social responsibility efforts. Nestlé states that ‘materiality is about identifying the issues that matter most to our business and our stakeholders’. So why is it now becoming increasingly common to see human rights surface as an issue on corporate materiality matrices?
The materiality process begins with stakeholder consultation, with internal and external stakeholders weighing in their priority issues. The company, having considered this feedback against factors such as costs, risks and opportunities presented, will decide on the central ideas which will become ‘material issues’.
As Unilever notes:
‘An issue is material to Unilever if it meets two conditions. Firstly, it impacts our business in terms of growth, cost, risk or trust. And secondly, it is important to our stakeholders – such as consumers, customers, employees, governments, investors, NGOs and suppliers’.
When something becomes a material issue, it becomes a programmatic and reporting priority for sustainability and beyond. The final stage of the process sees material issues plotted onto a materiality matrix, where their position and designation reflect their perceived nature, impact and importance.
A well-executed materiality matrix can serve as a lens through which to see ‘both backward-looking [and] forward-looking priorities at the same time’. So when human rights appear on a materiality matrix, is this a victory for the business and human rights movement? After all, if human rights are on the radar, they are quantifiably important and must be managed accordingly.
For human rights, though, materiality is a trap. Human rights are so much more than a material issue.
Measuring human rights against human rights
When human rights appear on a materiality matrix, they sit alongside issues like environmental protections, transparency, corruption, responsible governance, health and safety, gender, diversity and inclusion, community engagement, consumer protection, accountability, taxation, and so on. The problem is that these are all human rights issues.
Failing to see them as such mischaracterizes the entire scheme and field. Human rights are about confronting predatory or otherwise harmful conduct; establishing a culture of accountability and stakeholder agency across the full spectrum of issues that impact people’s lives, livelihoods, and well-being.
The business and human rights agenda encompasses any business-related activity that can adversely impact individuals, communities, and ecosystems. This is about comprehensively addressing salient risks and issues and enacting holistic efforts that rectify harm. These efforts must put rights-holders in a position to protect themselves, their interests and one another from destructive business-related conduct.
Transparency, environment, non-discrimination, health and safety, inclusion, and community, among others, are not issues that companies should be able to pick and choose from or manage as they please. These are human rights issues which companies have a responsibility to effectively manage and publicly report on, regardless of their quantified significance.
Materiality may be a game of making top-down decisions based on perceived priorities, but human rights are a very different game.
Alignment with the United Nations Guiding Principles on Business and Human Rights (UNGPs) has nothing to do with materiality; rather, it manifests as a clear commitment to the global business and human rights agenda; the identification of salient risks and issues; meaningful engagement, participation, and remediation protocols; establishing command over the company’s human rights related activities; feedback loops; cultures of accountability; and remediation mechanisms, all of which repositions stakeholders from bystanders into agents, capable of protecting themselves and others.
The second pitfall in materiality is the notion that human rights are a quantifiable matter. The notion of quantifying the real or perceived value of human rights within or around a company is fundamentally flawed.
Human rights do not exist to satisfy any one individual, group, company, industry or government. Human rights are about protecting the species; protecting humanity.
Whether executives, managers, shareholders or stakeholders feel that human rights are important does not diminish their inherent or intrinsic value. Nor does it diminish a company’s responsibilities under Pillar II or III of the UNGPs.
The letter and spirit of human rights do not fluctuate with the whims of markets, politics and personalities. Positioning and measuring human rights as a real or potential threat to business enterprises is the antithesis of a human rights-based approach and reflects regression rather than progress in the business and human rights movement.
At this early stage in the evolution of the field, the task of the day is to try different approaches while remaining vigilant about missteps and pitfalls. Materiality is one such pitfall. Course correction will not happen overnight. But it is important to take the first step, which is to transform human rights from a dot on a materiality matrix to an imperative that sits at the top of a business’s responsible conduct and sustainability efforts.
This is about completely changing the way in which businesses talk and walk all things corporate responsibility and sustainability. This is about adapting core business and management practices.
Human rights rarely fit within a ‘business as usual’ approach because they are not supposed to Rather, human rights are about changing the very nature of ‘business as usual’ so that stakeholders are in a position to confront predatory or harmful conduct.
It may take time to make this a reality, but shortcuts will not suffice, especially within the ever-evolving landscape of norms, expectations, politics, consumers, technologies, and challenges.
Dr Matthew Mullen is a founder of Article 30