Putting people before profit helps businesses tackle human rights abuse

21 May 2018 Consultancy.uk

As human rights violations continue to unfold globally, businesses have often been implicated in historic abuses. In order to avoid this, a new report suggests that companies must put human rights at the core of their business strategy, while also shifting the question of risk, to one where a business’s potentially abusive impact on the rights of people and their environment is centred, rather than the risks from consequences of such abuses on business outcomes.

Recent scandals implicating formerly trusted organisations, including Oxfam and Save the Children, have illustrated how any business can ultimately fail and betray the rights of the people it supposedly serves, while the Cambridge Analytica gate rumbles on having allegedly compromised the right to free and fair elections in several major Western democracies. This is nothing new, however. Concerns around human rights violations within businesses and their supply chains has simmered for decades; sweatshop labour, unsafe and unfair labour practices, and environmental degradation, are key concerns, with various levels of protections afforded by global best-practice and ethical frameworks aimed at limiting abuses. However, the oversight of companies regarding their supply chain partners often remains – while abuses continue to take place – in part driven by a fixation on reducing overheads at almost any cost.

A new report from Big Four firm KPMG considers how companies can put human rights at the core of their businesses, and overcome this problem. Rather than focusing on the consumer’s responsibility to “vote with your wallet”, as has been the traditional approach by various boycott and divestment campaigns, KPMG’s study focuses more on the supply side, suggesting that businesses themselves need to be more proactive in setting clear standards, auditing their supply chain partners for abuses, interrogating ‘too good to be true’ offers, and cutting suppliers or lobbying governments to improve standards, where there are clear violations.

Human rights impact on businesses

According to KPMG, signs are encouraging in this respect, with the consultancy suggesting that member firms have seen growing client demand for advisory support in this space. This includes Banarra (now KPMG Banarra), a world-leading human rights consultancy based in Australia, which joined KPMG in 2015. However, more can still be done.

For example, companies may also need to consider that protections afforded by governments fall short of international standards, with claims like ‘we follow the national law’ actually not sufficient to meet ethical standards – a recent analysis of apparel labour showing that in many countries pay is far short of living wage standards, while workers continue to see excessive exploitation, violating their basic dignities. New technologies are also creating new risks, with recent scandals showing the dangers and downsides of poor risk management in implementation.

High stakes

Aside from international standards, such as the UN Guiding Principles on Business and Human Rights, which mandates that corporates globally are responsible for the abuses of their supply chain partners, various jurisdictions have introduced legislation requiring companies to prevent abuses in their supply chains, such as the Modern Slavery Act in the UK. The former, while not legally binding, set basic standards of ethical behaviour, whether for labour or sustainability, even if there are higher costs associated with such mitigation. Issues persist however, with unfair competition from companies that flout the standards, creating an uneven and unfair playing field – often at the expense of workers’ rights and sustainable stewardship.

Improved reporting from multiple stakeholders mean companies face deepening scrutiny, including from investor and creditors, as well as a host of other interested parties, including the fourth estate, civil society, labour unions, employees and customers.

Richard Boele, Partner, KPMG Banarra and Head of KPMG’s Global Business and Human Rights Network said, “Further external stakeholder engagement is needed, for example, when companies are closing operations which could have significant consequences for host communities. By considering risks to people, the human rights lens can add significant value to the standard ERM process.”

Creating a human focused human rights culture

To meet global standards – assuming respect for human rights – companies need to take a broad approach to human rights. This includes company-wide human rights policies or statements, with awareness at board and executive level, to meet those standards in the company and with suppliers right down to the last worker. Depending on the type of organisation, work may require companies to lay down clear standards for their suppliers as well as audits, while on the financial side, lenders’ technical due diligence regarding the standards of the lender and its suppliers may be required.

At every level, companies need to engage in due diligence procedures to identify, prevent, mitigate and account for adverse human rights impacts. They would, furthermore, engage with stakeholders to understand which people are affected by the operation of the business, and how they are affected. Cultural impacts from such a business need to be considered, and tough choices – such as not engaging, intervening or lending – need to be taken seriously.

Asking hard questions

The report suggests that risk managers may need to shift their focus away from identifying risks to the businesses from human rights abuses, such as the bottom line, and instead focus on the risks the business poses to the people it affects. Such a change of perspective provides a simple check, and makes it much more difficult for companies to act unethically – it may also require different kinds of risk managers, ones able to consider the broad implications of the businesses operation, whether on people or their wider environment.

Risk management is only one part of the story however, with operational managers also required to have a deep understanding of human rights risks, with many on the front line having knowledge about the places where sometimes difficult questions need to be asked.

Adrian King, Global Head, Sustainability Services, KPMG International, said, "Risks to people lead to risks to the business. So companies need to have a clear view of both and to develop a common language and understanding that links human rights specialists with corporate risk managers."

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”