Human rights due diligence aligns with ESG

Human rights due diligence aligns with ESG

Commercial real estate operations can intersect with abuse and exploitation
Wednesday, October 19, 2022

A new primer on human rights due diligence urges commercial real estate operators to consider how contracting, purchasing and leasing can intersect with abuse, exploitation and discrimination. The guidance — from the Building Owners and Managers Association (BOMA) of Canada in collaboration with the business and human rights (BHR) legal specialist, Josh Scheinert — examines the industry’s exposure to legal and reputational risk across its immense web of employees, clients, suppliers, contractors and service providers, and advises how to strengthen accountability and transparency in business procedures.

“No property owner wants its building built by victims of human trafficking. No property manager wants to procure supplies manufactured with forced labour. No owner/manager wants its property being the site of human rights abuses,” Scheinert and BOMA Canada president and chief executive officer Benjamin Shinewald reiterate in their introduction to the newly released guide, Human Rights & Commercial Real Estate.

Real estate’s reliance on global supply chains and its diverse range of activities in development, investment and building management/operations nevertheless present a vast breadth of opportunity for one of those scenarios to occur. The guide cites some examples, including a 2019 case where a cleaning contractor in southern Ontario was found to be controlling and exploiting workers trafficked from Mexico and several incidences of security guards behaving unlawfully while working on commercial properties.

BHR frameworks respond to a growing body of existing and expected legislation, as well as companies’ environmental, social and governance (ESG) directives and general societal demand for ethical conduct. The key concepts are set out in the United Nations guiding principles (UNGP) and the Organization for Economic Cooperation and Development (OECD) guidelines for multinational enterprises, stating that businesses have a responsibility to respect human rights and that individuals or groups must have access to a remedy if their rights have been violated.

That flows through to expectations that human rights abuses should not arise from direct business activities, nor be tolerated or overlooked in business relationships. To meet that standard and demonstrate good faith, companies are advised to have a human rights policy, a process for analyzing and addressing potential contraventions, and a grievance mechanism.

The United Kingdom, France, Australia and California are among the jurisdictions to have enacted legislation that requires businesses to monitor for and disengage from human rights abuses in their supply chains, and the Canadian government has signalled its intentions to pass a similar law. Additionally, there are import restrictions on goods produced with child labour or tainted with other human rights violations and the threat of civil litigation.

The guide breaks down concerns for building owners, property managers conducting business within Canada and property managers with a global portfolio, suggesting some basic questions to garner a more informed profile of the contracted workforce, tenant base and sources of procured goods. It also outlines some strategies for preventing human rights abuses — including contractual obligation for vendor and suppliers, lease instruments and third-party audits — along with a template for the human rights due diligence process.

Prospective adopters of BHR frameworks are warned upfront that it will take time and resources to thoroughly scrutinize the supply chain and perhaps reassess some traditional business practices and relationships. It’s recommended that companies establish a committee or taskforce to lead the work, consult with stakeholders and be committed to responding to what the process reveals.

“Human rights due diligence is not a check-box exercise to be performed as a matter of course and cannot be designed as such. Businesses must be prepared to adapt if it’s determined a potential activity poses a human rights risk,” the guide advises.

Scheinert and Shinewald suggest the payback can be measured in risk mitigation and in opening up the opportunities that come when people are better positioned to live peaceably, work safely, contribute economically and prosper.

“Engaging with BHR concerns is first and foremost about showing leadership on core moral issues,” they maintain. “Compliance with BHR obligations requires time, effort and money. However, BOMA members can take great pride in the result, including operating businesses that take a stand for what is right — contributing to fairer and more just workplaces and societies; and safeguarding the rights of those upon whom the success of our businesses is built.”


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