07 April 2014
Ethical Corporation has found that FTSE 100 companies are on the right track with regards to human rights reporting in annual reports.
Changes to the UK Companies Act have made human rights reporting mandatory for UK listed companies, which specifically includes ‘policies in relation to these matters, the effectiveness of those policies and future direction of the business’, which needs to be to the extent necessary for an understanding of the company’s business.
The regulations took effect 1 October 2013 and 27 FTSE 100 companies have released annual reports which should comply.
Research has found that 24 out of the 27 (89%) early reporters included a statement of their commitment and awareness of human rights and 18 of them outline management responsibilities (67%). But only 6 (22%) gave an overview of the key human rights risks that their company faces, and included signposts to policies and processes. On average they covered the topic in fewer than 200 words.
With no formal guidance beyond that above, Carnstone LLP has outlined what a disclosure should include:
According to Ethical Corporation, human rights is a very broad topic, and a large corporation can affect people’s rights in many ways, including through their widest possible ‘sphere of influence’. Without a sensible view of the principal risks or issues, it is impossible for the reader to judge the adequacy or effectiveness of the company’s response – as required by the regulations.
Ethical Corporation adds that while it is a positive start, without better risk analysis and declaration, companies will struggle to know if they are truly on the right track.