When we were asked to partner with CIMA and AIPCA to develop ‘Business and Human Rights: Evolution and Acceptance’ - guidance on business and human rights for management accountants, we were thrilled.
With an eye on stability, growth and profitability of a firm, management accountants play an instrumental role in a company and have the potential to be one of the ‘game changers’ within it, when it comes to integrating business and human rights.
Why do I say that? Well, if they can get human rights and what it means to embed it within their daily activities, surely there will be positive ripple effects throughout the organisation?
Management accountants are the financial stewards of any organisation. They manage risk, reduce operating and production costs, and advise on the financial implications and consequences of all business decisions, among other things. They are always strategic and forward-looking in outlook. These are some of the essential core skills required when assessing the impact of a business, financial or otherwise.
If they are able to understand the human cost of doing business - interpret and account for it as a financial cost – internalise it into the cost of doing business – and communicate such information to the management board and other key teams, surely such improved awareness will enable businesses to understand key areas of vulnerability (viewed from both a human and business perspective) and put in place effective measures to address any identified problems?
I’m sure you think that all sounds a bit lofty; easier said than done...!
Breaking it down into manageable actions, let’s consider what embedding human rights means for a management accountant on a daily basis.
Take insurance policies; something that all financial accountants will take out to protect the company from all manner of eventualities.
Going forward, and with a human rights lens applied, an accountant could look out for any clauses in contracts that may intersect with any of the company’s identified salient human rights. If the wording is vague, he or she could request that specific clauses safeguarding the organisation’s activities, actions or relationships with respect to human rights are included. Strengthening wording throughout the contract to ensure that the business is covered regarding any potential violation of human rights, is another way to integrate human rights concerns within an insurance policy.
Then there is the allocation of funding, a key aspect of an accountant’s role. With heightened awareness of how the business may impact human rights, an accountant would be able to understand budget requests for important activities such as stakeholder engagement, human rights impact assessments or remediation programmes, to name a few. However, more importantly, they will be able to keep track of expenditure with greater knowledge of the intended purpose and be able to discuss solutions with relevant teams, ensuring that any agreed approaches are not only cost-effective but also adequately address the needs of the affected stakeholders.
These are just two examples; the guidance offers 10 key steps (and even more sub-steps!) for management accountants to consider. However, in order for integration of human rights within a business to be effectively diffused, this will require good collaborative working within and between business functions. Management accountants will be expected to work with colleagues from other departments, such as, Corporate Reporting / Corporate Responsibility or Human Resources etc.
For example, management accountants and the Corporate Reporting team could jointly develop human rights-related Key Performance Indicators and agree on the company’s management-reporting system addressing non-financial issues, such as human rights. This would be prudent in light of the forthcoming EU Directive on the disclosure of non-financial and diversity information and the existing requirements under the Modern Slavery Act 2015 and Transparency in Supply Chains Act.
In summary, human rights is a cross-cutting issue that manifests in a many guises within a company and intersects with various business functions, albeit in different ways; management accountants are not immune.
What needs to happen now is an ‘infusion of human rights considerations’ within their role. This means, a reconsideration of how each activity may adversely impact the human rights of the company’s affected stakeholders, and following such reconsideration, adapting internal processes and changing behaviours, accordingly.
By Désirée Abrahams, written in her capacity as Head of Insight and Capacity at Global Compact Network UK. She is co-author of Business and Human Rights: Evolution and Acceptance