Why are companies in Southeast Asia lagging on human rights?

Although the region remains beset by human rights issues such as forced labour, human trafficking and land rights violations, companies are not recognising the problem in their own businesses and are failing to disclose them in their sustainability reports.

Business in Southeast Asia is falling behind on global norms related to human rights, a new report on human rights disclosure in the Association of Southeast Asian Nations (Asean) has found.

According to the joint study by Singapore-based Asean CSR Network (ACN), Mahidol University’s Institute of Human Rights and Peace Studies and Article 30 released last week, an analysis of top 50 publicly listed firms from five countries—Malaysia, Thailand, Singapore, Indonesia and the Phillippines—reveals that companies are failing to report on human rights, which is one of the least disclosed topics, alongside biodiversity and the economic costs of climate change.

“The lagging human rights disclosure in Asean reflects a lack of specific guidelines and oversight from national and regional authorities. It also shows that, as a collective, companies in the region have been marginally responsive to the global business and human rights (BHR) push,” the report states.

What human rights should businesses protect? 

In 2011, the United Nations issued the UN Guiding Principles (UNGP) on Business and Human Rights, a comprehensive human rights framework that provides a people-centred approach to companies’ social and environmental impacts. The framework holds that governments have a duty to protect against human rights abuses, ensure effective remedies for victims and ensure companies respect human rights.

As part of their responsibility to protect human rights, businesses are required to disclose at least 21 points of information spanning issues related to fair wages, safe working conditions, health, land rights, workplace discrimination, sexual harassment as well as women and children’s rights to healthcare and education. 

According to the UNGP, companies are responsible for all human rights and cannot use corporate social responsibility programmes as a way to shirk their basic responsibility of improving the lives of their workers and communities.

Out of the 250 top-listed companies in Asean, 36 per cent made zero mention of human rights in their publicly available material, while only 15.6 per cent mentioned human trafficking as a focal issue despite growing media attention on human trafficking in the region, which is a global hotspot for the problem.

Almost all companies disclosed information on environmental protection, whereas less than 1 in 6 companies make mention of human trafficking. 

At a March human rights workshop held by the World Business Council for Sustainable Development, Thomas Thomas, chief executive officer of ACN, said that despite the huge human rights challenges in Asean, such as prevailing labour, land and human trafficking issues, disclosure on such topics is low.

“In the subject matter that comes up in sustainability reporting, you’ll find that everybody talks about environment, health and safety. But when it comes to the real, hard issues of human trafficking and forced labour, there is little or no mention at all,” he added.

During the discussion, a sustainability consultant from Singapore, who did not wish to be named, said: “In our work advising people on their sustainability reports, we find that human rights issues are not seen as material topics to companies in the region, especially in Singapore. Companies think that cases of forced or child labour is a non-issue in their business, and that’s where the conversation ends.”

Singapore is notably behind its neighbours Malaysia and Thailand in the domain of human rights disclosure, even though each of the countries’ stock exchange requires it be included in Environmental, Social and Governance (ESG) as a listing rule.

Thailand scored the highest among the five countries, with 94 per cent of its top-listed companies making a commitment to human rights.

Seven out of the top 10 performers in the region are also Thai firms, although the companies that came out with the highest disclosure score aligned to the United Nations Guiding Principles (UNGP) was Malaysia’s Sime Darby Plantation and Sime Darby Berhad. 

Sime Darby, which has been accused of human rights violations spanning land grabs in Liberia and the infringement of farmers’ rights in Indonesia in the past, has taken steps to clean up its act by working with human rights non-profit organisations in ensuring its policies and practices are aligned to the UNGP.

In 2018, Sime Darby collaborated with food and beverage giant Nestlé on a helpline that allows workers to report on working conditions, recruitment, safety and other labour issues. 

Sean Lees, business and human rights specialist at the United Nations Development Programme Asia Pacific, said that despite slow progress, the business and human rights agenda has taken off in Asean, particularly in Thailand, where the seafood industry nosedived after the media exposed labour abuses within the global seafood supply chain. 

“Thailand is also addressing key issues such as land rights, migrant worker violations and the treatment of human rights defenders,” he said. 

In 2015, international news outlet The Associated Press ran a multi-feature exposé that shone light on the abusive practices of the fishing industry in Southeast Asia, leading the Thai government to step up efforts to crack down on human trafficking and illegal fishing.

“It’s difficult to be clean in a dirty world in which some companies believe that they will lose business if they clean up their act. 

Thomas Thomas, chief executive officer of Asean CSR Network

Is there a business case for human rights? 

According to Lees, even though laws securing human rights exist in the region, the high lack of enforcement means that norms around such laws remain weak.

“Businesses have not been attuned to those values surrounding human rights or suffered exposure for not being aligned to them until relatively recently,” he said. 

“The governance in ESG is also not very strong in Southeast Asia. We have issues with regulatory frameworks so even where there are laws, there is low or no enforcement,” agreed Thomas, who cited corruption as a longstanding problem in Southeast Asia. 

“We cannot talk about improving the current situation unless we also address corruption,” he said.

Sumi Dhanarajan, associate director of Asia Pacific at Forum for the Future, added that “the corporate social responsbility (CSR)-type laws which have been introduced in Asia, wherein the only regulatory obligation is for companies to contribute a percentage of their profits towards community investment or social development, are not what we need to advance the business and human rights agenda.” 

According to Dhanarajan, what remains missing are laws that give victims access to remedy where their rights have been abused by business operations and those that obligate companies to assess and address their human rights impacts as part of their due diligence

“It’s difficult to be clean in a dirty world in which some companies believe that they will lose business if they clean up their act. There is this traditional mindset of washing away sins by classic philanthropy,” said Thomas, referring to how companies in the region rely on CSR to maintain a conscience while pursuing growth at all costs. “There’s always this argument that we need a business case. The business case is important for revenue, profits and productivity. But the moral case that asks if you are doing the right thing is also important.” 

He added that while Southeast Asia seems to be lagging on human rights disclosure, the study shows that there are many companies in the region that care about human issues, which is linked to good governance and environmental stewardship. 

“The challenge is to mainstream these values and way of working in Southeast Asia,” he said. 

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