John Ruggie & Shift comment on UK Financial Reporting Council's guidance for company reporting on human rights
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[PDF] John Ruggie and Shift comments to Financial Reporting Council's Exposure Draft: Guidance on the Strategic Report
Shift together with its Chair, Professor John Ruggie, welcomes the UK Government’s plan to implement the UN Guiding Principles on Business and Human Rights and, in this context, its amendments to the UK Companies Act to clarify “that company directors will include human rights issues in their annual reports”. We further welcome the FRC’s draft guidance to companies on implementation of these regulations, and the opportunity to provide comments on that draft. This document sets out a number of proposed amendments to the guidance to enhance its alignment with the UN Guiding Principles on Business and Human Rights.
Author: John Ruggie, Professor at Harvard Univ., former UN Special Representative for business & human rights
I was...pleased to see that the Financial Reporting Council (“FRC”) has issued draft guidance to help companies implement the strategic report requirements under the revised UK Companies Act....[T]he inclusion of human rights will be new for many companies. I would therefore respectfully urge that the final FRC guidance give clear and practical guidance to companies in this regard. In particular, I would encourage the drafters to:  avoid introducing the concept of materiality with regard to human rights reporting: this does not feature in the underlying legislation and risks encouraging narrow and short-term assessments of the relevance of human rights reporting; and  indicate to companies how the UN Guiding Principles can assist them in understanding how best to frame their reporting on human rights. Doing so would help meet the FRC’s very legitimate aim of achieving more concise and relevant reporting, without resort to a purely valuation-based definition of materiality.
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