ICAR Statement to Mazars and Shift Discussion Paper on “Developing Global Standards for the Reporting and Assurance of Company Alignment with the UNGPs”

The International Corporate Accountability Roundtable (ICAR) has developed the Statement below in response to a discussion paper by Mazars and Shift and released on May 1, 2013. The discussion paper elaborates a two-year project to develop a twin set of standards for auditing companies in line with the United Nations Guiding Principles on Business and Human Rights (“Guiding Principles”). The standards include:

1. Reporting Standard: A global and widely accepted standard for business to report on their implementation of appropriate risk management procedures, in line with the Guiding Principles; and
2. Assurance Standard: A global and widely accepted assurance standard to assess companies’ performance with regard to human rights risk management, designed around existing auditing standards.

As part of the Reporting Standard, the company would prepare a Human Rights Statement that provides an overview of its key human rights policies and processes throughout a given period and describes the extent to which these policies are in alignment with the Guiding Principles.

As part of the Assurance Standard, the company would engage a competent and independent human rights assurance provider to confirm the company’s Human Rights Statement is a fair representation of their internal practices. The assurance review would assess the existence, suitability and effectiveness of the policies and processes that make up the company’s human rights management system, as judged against the Guiding Principles.

ICAR believes that the Guiding Principles do not provide a set of clear, well-defined, and measurable standards that would be capable of establishing an effective system for auditing and comparing businesses’ implementation of commitments to respect human rights. Further, using the Guiding Principles in this manner may also have the unintended effect of diluting efforts of existing multi-stakeholder initiatives that already require independent monitoring and have clearer and stronger standards. Additionally, ICAR is concerned that lessons learned from previous third-party auditing regimes indicate the weakness of these systems in compelling companies to take effective action to implement even clear commitments.

ICAR believes that the Mazars and Shift proposal underestimates the complexity of using reporting and third-party auditing to regulate the implementation of the universe of human rights norms that are incorporated into the Guiding Principles.

Given these concerns, ICAR believes that, at minimum, the proposal must be improved to address the following:

• The Guiding Principles set the minimum agreed upon floor for companies to understand the components of their responsibility to respect human rights. The Guiding Principles should therefore not be read as an exhaustive standard, especially where existing sector-specific standards have been developed through multi-stakeholder processes and may be stronger and clearer in certain contexts;
• Companies should be required to fully disclose both policies and processes, including results of risk assessments and mitigation efforts, as part of their human rights due diligence to motivate effective action to respect human rights; and
• The selection process for assurance providers as well as the processes used by assurers in making their assessments should be publicly disclosed.