Ease of doing business not matched by civic freedoms: Managing risk goes beyond an assessment of regulation and property rights

Author: Mauricio Lazala, in the Financial Times (UK), Published on: 28 November 2017

This month El Salvador, Thailand, India and Uzbekistan were recognised among the year’s top 10 improvers in the World Bank’s Ease of Doing Business rankings.Among other things, this signals simpler regulation and stronger protection of property rights. But greater ease of doing business doesn’t make it risk-free. Abuses of civic freedoms can threaten a company’s ability to manage risk by restricting and distorting information about its operations.Some of the top improvers in the World Bank ranking are host to big challenges for businesses seeking to operate responsibly...These are also countries in which people and organisations speaking up against business are increasingly harassed, silenced and threatened...Businesses manage human rights risks by understanding where in their supply chains and operations abuses can take place and then taking steps to mitigate risk.Governments have begun to require companies to take action. The Modern Slavery Act in the UK and the new French “due diligence” law are two examples. But complex and long global supply chains make genuine due diligence difficult. This is particularly true of emerging markets where information is not readily available and audits have shortcomings. So, companies look to workers and communities — and the local organisations and activists that support them — for reliable information. Sometimes there are uncomfortable conversations with critics: striking workers raising concerns on health and safety in factories, for example, or a local community protesting a development that will block its access to a hospital. But there is no better — or quicker — way for a company to get the local knowledge and expertise it needs to understand how its business affects people. It is also the best barometer companies have to measure the increasingly essential “social licence to operate”. So, what can businesses do?... First, they can ensure they are not encouraging the repression of critical voices... Second, companies can embed dialogue with workers and communities into their business... Third, companies should challenge the erosion of civic freedoms. Businesses don’t operate in a vacuum; even the most ambitious action to make sure defenders are protected and listened to in a company’s operations will fall short if companies do not look to the environment they are operating in, and the chilling effect attacks and restrictions have.

Read the full post here

Related companies: adidas Hanesbrands Marks & Spencer