Non-legal obligations and their implications
Chapter 7 considers non-legal obligations and standards relating to corporations’ social and environmental impacts. Generally, these come in the form of international frameworks or multi-stakeholder initiatives. Like corporations’ legal obligations, multi-stakeholder initiatives are essential for preventing and addressing business’ adverse impacts on human rights. Chapter 7 sets out some of the most important multi-stakeholder initiatives relating to business and human rights, arranged by industry. These include: the UN Guiding Principles, the UN Global Compact, the OECD Guidelines for Multinational Enterprises, the Extractive Industries Transparency Initiative, the Voluntary Principles on Security and Human Rights, and the Equator Principles, among others. This chapter then addresses the topic of reputational risk management and its potential to be either enhanced or jeopardised by a company’s participation or non-participation (respectively) in relevant multi-stakeholder initiatives. Lastly, Chapter 7 discusses the significant financial costs of a company’s failure to address its adverse impacts on human rights. In addition to the financial costs arising from a loss of reputation, these include the costs to rectify damage, operational costs to a business, and compensation to affected victims.