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The world’s largest companies are neglecting their human rights responsibilities, study finds

A study by the University of Aberdeen has found that the majority of the 500 largest businesses in the world are neglecting their human rights responsibilities, a new international research has found.

The study’s goal was to evaluate the current level of disclosures and the underlying factors influencing them, was carried out by researchers at the University of Aberdeen Business School in partnership with the University of Hamburg, the University of Oldenburg in Germany, and Syracuse University in the United States.

The team analysed both the scope and quality of disclosures made by firms across a 13-point criteria, which included measures such as adopting a human rights policy, implementing grievance mechanisms and reporting on universal standards indicators.

On average businesses met only 4 out of the 13 points, with just 28% providing a publicly available human rights policy or statement and only a third (34%) declaring their commitment to the United Nations Guiding Principles on Business and Human Rights.

The study, which has been published by Critical Perspectives on Accounting, also found there are considerable geographic differences, with higher scoring businesses predominantly based in Australia and Europe.

However, 26% of organisations scored zero points, most of which are based in China and the United States. On a sectoral basis, 26% of businesses in the financial sector scored zero points, as did almost 18% in the energy sector.

Dr Naser Makarem is a researcher and lecturer in accounting at the University of Aberdeen Business School: “Businesses face more pressure than ever before to show respect for human rights in their daily activities, both as a result of a rise in critical consumers but also the number of legislative acts that require them to act and report on their human rights engagement.

“However, some may shy away from publicly disclosing human rights issues either because of their complexity and sensitivity or because they are unwilling to allocate the necessary resources.

“Many businesses may also decide not to address the issue because they still perceive the term ‘human rights’ as too abstract and having negative connotations, or because they consider states to bear sole responsibility for guaranteeing human rights.

“What our research shows is that this power asymmetry between large enterprises and individual states, which tips in favour of the former, has allowed businesses to neglect their human rights responsibility.

“Current forms of national mandatory regulation do not appear to achieve the desired impact on high-quality corporate human rights disclosure,” added Dr Makarem. “This suggests that a more targeted and concrete reporting requirement, as well as better enforcement, is necessary to improve corporate human rights disclosures.”

The research also revealed that corporate visibility, sector sensitivity in terms of higher litigation risk and institutional pressure in the form of guidelines or codes of conduct are more positively associated with disclosure levels.

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