Human rights violations may appear in companies’ annual reports

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NEW DELHI: It has reported that human rights violations by companies may form part of their annual reports as the ministry of corporate affairs is set to introduce norms that will require India Inc to formally recognise and comply with such rights towards all its stakeholders. A new set of guidelines being worked by the ministry of corporate affairs will require companies to put in writing before the government their respect for human rights and also report on measures that they have taken in support of that cause.

A proposal to this effect forms part of the business responsibility guidelines being prepared by the corporate affairs ministry. Human rights are a set of fundamental rights provided to every citizen and cannot be compromised upon. The broad guidelines on human rights which have been defined by the United Nations and followed by almost all countries, including India, contains various types of rights in the form of civil, political, economic, cultural and social.

Human rights violations are common in the unorganised sector even though recent cases have highlighted gross violation of such basic rights by large multinational corporations.

Recent instances of such violations have been reported in cases of Posco and Vedanta in areas of Orissa. Allegations, as levelled against them by the National Human Rights Commission, relate to their forceful land acquisition and illegal eviction of villagers from their proposed project area.

The new guidelines are an improvement over the corporate affairs ministry’s guidelines on corporate social responsibility issued in 2009.

While the norms will be kept voluntary, companies will have to provide reasons for not putting in place procedures which will guard against violation of human rights. “While respect for human rights should form part of a company’s governance structure, they will have to create structures which enable redressal of grievances,” said an official in the ministry of corporate affairs, requesting anonymity. The guidelines are expected to be shortly formalised by the ministry of corporate affairs.

Companies will have to explain reasons for their non-compliance, hence creating an indirect sanction. The government has adopted the strategy of “apply or explain”, which effectively means any nonconformity with the norms will have to be reported with reasons. These details will form part of the business responsibility statement, accompanying the company’s annual report.

Industry is apprehensive that the guideline could lead to a loss of face for companies. “Making a mention of violations can lead to a loss of goodwill for a company before its shareholders,” said an official with a key business chamber, requesting anonymity. He, however, said that the move could serve as a positive deterrence in the long run.

The environment ministry in the recent past has taken a strong stand against companies which have not been adhering to basic human rights of people living in areas of industrial projects.

Human rights violations are common in the unorganised sector even though recent cases have highlighted gross violation of such basic rights by large multinational corporations.

(Sourced from Economic Times)

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