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Home • Insights • Business & Human Rights • Responsible Business Practices: why it matters and what it looks like

Responsible Business Practices: why it matters and what it looks like

By Colleen Theron, Ardea International
3 Sep 2019

About the author

Tri -qualified lawyer, CEO of Ardea International, Lecturer, author, public speaker, passionate about people reaching their potential

What is considered 'responsible business practice? Is it different to Corporate Social Responsibility (CSR)?

I was invited to speak at the Retail seminar of the Autumn Fair  on Monday.  The Fair is held annually in Birmingham at the NEC. When I walked into the hall marked ‘Fashion’,   I felt as though I had been placed  in shopping heaven- jewellery, handbags, shoes, accessories. Taking a deep breath I reminded myself of the pledge to try and stop the ‘fast shopping’ and before buying  to ask where things are made.  I didn’t have to go that far as  I was in fact not entitled to buy anything -I was not a shop owner or could not meet the required threshold numbers for each order.

I did find myself at the South African stand where a number of entrepreneurs were displaying  (and selling) their jewellery, body butters and some other home designed goods. It was encouraging to have conversations with the woman business owners about their interest in knowing more about sustainability and ethical practices. Approaching some of the other stores, I asked about their business practices and mentioned that I could help develop key policies, only to be met with blank stares and total disinterest.  The reaction surprised me and left me wondering where the statistics around ethical consumerism were developed.  Is it indeed only ‘ big business’ or ‘brands’  that are concerned about being responsible? And what do we mean by ‘big business’ and what is responsible business?

What is responsible business? 

There is no set definition of ‘responsible business’ . It can mean a lot of different things, but perhaps the most recognised phrase is CSR or corporate social responsibility. The definition by the World Council for Sustainable Development is useful ‘ Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’ [1]

There are many reasons why business of all sizes should be making strides to become more responsible or sustainable. I set these out in my presentation, but a summary of some of the reasons are:

  • The mega trends affecting the globe – such as big data, resource pressures, generational shift in expectations of business and loss of faith in capitalism
  • Climate change
  • The growth in mandatory reporting legislation and the trend to require companies to demonstrate their human rights due diligence
  • The growth in voluntary frameworks that are setting standards for both governments and companies, such as the SDGs and the UNGPs
  • the expectation of millennials who will make up 75 % of the workforce by 202. A recent Deloitte survey  reported that 80% of millennials believe business success should be measured by more than business performance, they should make a positive impact on society
  • the extent of modern slavery, with over 45. 8 million slaves globally, of which the ILO estimates over 21 million are in forced labour
  • the rise in legal liability claims against parent companies for causing pollution or impacting negatively on human rights
  • Investor interest.
  • 2019 Edelman Trust Barometer found that 1 in 5 people believed the current system did not work for them .

There are enough reports that will demonstrate that  those companies that implement a responsible business framework add value to their business. They are able to ensure legal compliance and reduce the risk of fines or  legal liability, manage their reputation better, demonstrating excellence to investors.

What are key responsible business standards?

 

There are many different views that will be expressed on this, but in my experience the following  6 things are key to ensure that any change is incorporation.

  • Organisations must meet legal compliance requirements . This is often overlooked as companies talk about ‘best practice’ without understanding and managing compliance in the first instance.
  • CEO/ Top management is key
  • Defining strategy and ambition
  • Engagement with shareholders
  • Supply chain management
  • Monitoring effectiveness
  • Supporting transparency in supply chains.

It is getting harder for business to hide !

How business can embed responsible business practices ?

Once again there has been a lot of reports and publications written in the past 10 years but here are my top 10 tips:

  1. Know the law!
  2. Find out what gaps exist
  3. Consider relevant guidance
  4. Create a cross disciplinary group in the company
  5. Integrate ethics and compliance
  6. Develop policies
  7. Develop due diligence procedures
  8. Engage with
  9. Monitor effectiveness
  10. Train!
 How can Ardea help?

Ardea International specialises in helping business develop a responsible business approach. We develop policies and due diligence procedures to underpin these policies. We help manage legal compliance and stakeholder engagement and we train employees on these issues. If you would like to know more, get in touch with me at colleen.theron@ardeainternational.com

[1] http://www.orbuk.org.uk/responsible_business.php

 

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