There are seven key problem drivers that contribute to corporate short-termism within EU publicly traded companies. A possible future EU action in the area of company law and corporate governance should pursue the objective of fostering more sustainable corporate governance and contributing to more accountability for companies’ sustainable value creation (European Commission-commissioned study)

Week of 10 August 2020

Technology business models and the rapidly evolving landscape of the technology sector create conditions enabling tech companies to adversely impact human rights. Companies, their investors and policymakers must conduct human rights due diligence, increase transparency and consider the wide-reaching human rights impacts of tech products and services throughout their lifecycle (OHCHR B-Tech Project)

The UN Office of the High Commissioner for Human Rights (OHCHR) has launched a new guidance paper on the responsibility of companies to respect human rights in the tech sector, Addressing Business Model Related Human Rights Risks: A B-Tech Foundational Paper. OHCHR’s Business and Human Rights in Technology Project (the “B-Tech” project) aims to “provide an authoritative and broadly accepted roadmap for applying the UN Guiding Principles on Business and Human Rights (UNGPs) to the development and use of digital technologies.” This paper was developed as the first of a series of foundational papers “to launch and frame discussions among diverse stakeholders as part of a global process to produce guidance, tools and practical recommendations to advance implementation of the UN Guiding Principles in the technology sector”; later papers in the series will be released via the B-Tech project portal.

This paper was drafted with insights from diverse stakeholders at an expert meeting hosted in February 2020 and is also informed by the Business Model Red Flags resource developed by Shift as part of its Valuing Respect Project.

Below are some of the key findings, as well as initial recommendations for technology companies, investors and states:

    1. Technology company business models, and the commercial underpinnings of 21st century technological advances, are being increasingly criticised for creating or exacerbating negative impacts on a range of human rights.” For example, algorithmic search functions may “promote content that contributes to online and offline human rights harms and grave human rights abuses, including genocide”; short-term home rental platforms may lead to higher rents in some neighborhoods and displace low-income people; contracted gig-economy workers often lack the employment protections of full-time employees; and facial recognition and surveillance technologies can be intentionally or unintentionally provided to governments and law enforcement to conduct surveillance of human rights defenders, migrants, ethnic minorities and other vulnerable groups. At the same time, business leaders are facing calls by consumers, policymakers and advocates to rapidly address the adverse impacts of their products and services.
    3. 2. Technology companies must conduct human rights due diligence to assess human rights risks throughout their own operations, their value chains, and their relationships with business partners and end users. Per the B-Tech report, [t]his includes addressing situations in which business model-driven practices and technology design decisions create or exacerbate human rights risks” and requires input from a variety of stakeholders beyond traditional ethics and compliance functions, such as “boards of directors, executives, entrepreneurs, and founders that have an influence on company strategy.”
    5. 3. Tech sector investors likewise “have a responsibility to respect human rights consistent with the UNGPs. This means that they should integrate human rights considerations in all stages of investing, including in how they inform and influence investee’s business model choices.” For example, given the high level of influence that venture capital investors and private equity firms have at the earliest stages of business model design, “it is critically important for these investors to consider human rights standards and risks when evaluating a technology company’s business model – as well as products, management, and operating history – prior to investing and on an ongoing basis once invested.” According to the report, investors are an important point of focus in order to “shift[] the behaviors of actors that own or manage the vast amounts of capital in the technology sector.”
    7. 4. States should do more to hold tech companies accountable for their human rights impacts, including by creating and enforcing transparency measures and applying a “smart mix”: “reward companies that take reasonable steps to avoid or mitigate human rights risks that flow from their business models; hold companies to account that do not; and support enterprises and entrepreneurs pursuing alternative business models that carry fewer and less severe human rights risks.”
    9. 5. As technology rapidly evolves, tech companies often seek to outpace competitors by developing new or better products and services and rolling them out quickly. In this context, a “shared understanding among all stakeholders of how different technology business models might lead to human rights harms, how this plays out in reality and what is being done, or can be done, to avoid harms will create a strong foundation for multi-stakeholder dialogue and co-creating paths to improve business practices and protect human rights.