Doing well by doing right?

This report explores the potentials and limitations of a business case for respecting human rights. It should be stressed from the outset that this in no way serves to justify a narrowly economistic approach. Human rights should be respected whether or not benefits outweigh costs. Nevertheless, it is not implausible to expect that companies will show greater respect for human rights, if there are sound economic arguments to do so.

Against this backdrop, this report interrogates the empirical foundation of the claim that business can be “doing well by doing right”. The report draws on three sources of data.

First, it is based on an extensive review of the academic literature on corporate social responsibility (CSR) and adjacent fields such as business ethics, management studies, organisational psychology and consumer research. Unlike the human rights field, which has paid little attention to its own nexus with economics, hundreds of empirical studies have since the 1970s investigated the relationship between CSR, or corporate social performance, and corporate financial performance. For an exploration into a potential business case for human rights, this vast body of work offers a useful point of departure; but it obviously raises the question of whether conclusions pertaining to CSR are applicable to human rights – a question that is discussed throughout the report.

As the second source of data, the report uses of great number of opinion polls and surveys by private firms. These are valuable for capturing the shifting attitudes of corporate executives, consumers, investors and employees, but also provide up-to-date data to assess the relevance of research findings.

Third, the report draws on interviews with the staff in charge of human rights initiatives at three of the companies that the Danish Institute for Human Rights is currently working with: Nestlé, L’Oréal and RB. These companies operate in the market segment for fast-moving consumer goods, which has been chosen, as it – due to its visibility and proximity to consumers – is the most likely to be affected by rising stakeholder expectations. Also, the companies were selected, as they have adopted proactive approaches to human rights, which makes them interesting cases for exploring if, and in what ways, they experience “returns on investment”. In addition, an interview was conducted with a representative of AIM Progress, a global initiative supported and sponsored by AIM – the European Brands Association, with the purpose of enabling and promoting responsible sourcing practices and sustainable supply chains in fast-moving consumer goods. These interviews revolved, among other things, around the drivers of human rights engagements, the feasibility of a business case and its key components, and any perceived gaps and limitations.