Businesses that are incompatible with human rights should not exist

Meet Nazrin Huseinzade, Sustainability Lawyer at KPMG, as she gives us her view on sustainability opportunities and challenges that lie ahead.

What does sustainability transformation mean to you?

To me, the change lies in how we understand the role of a company as a member of society. In an ideal world, sustainability should usher in a significant shift in our perspective, away from the belief that maximizing profits for shareholders leads to the maximization of societal well-being.

How do you help companies meet the challenges of combining business with human rights?

Historically, the governments have served as both the sole guarantors of human rights and the most likely perpetrators of human rights abuses. This perspective is rapidly changing, with evolving sustainability legislation in the EU that implicitly imposes obligations on businesses that were traditionally the sole purview of states.

That said, there are specific areas within the realm of human rights where businesses have a solid understanding of their role, and that is in implementation of national and international labour standards. This includes aspects such as health and safety, working hours, freedom of association and collective bargaining and much more.

My current objective is to leverage these familiar areas and illustrate to businesses how their operations may inadvertently contribute to or cause violations of other human rights, extending beyond labour standards to economic, social, civil and political rights.

Throughout these conversations, businesses understand that human rights within value chains can be effectively managed, akin to any other risk management process. The distinction lies in the fact that the risks considered are not threats to the business itself but rather potential risks to society at large. At the end of the day, a business that is incompatible with human rights is a business that should not exist.

What commonalties in different client’s challenges do you see?

Lacking in self-reflection: A common way for companies to measure social sustainability, at least in their supply chain, is through audits which are characterized by a unilateral top-down policing approach. Unfortunately, companies still pay little heed to how their own purchasing practices (i.e., chasing the lowest price, irregular orders, short lead times, no guarantee of continued sourcing, unpredictable and fluctuating orders) can create an environment where upholding basic human and labor requirements is virtually impossible.

Overwhelmed by legislation and uncertain where to begin: Companies, particularly those with extensive value chains, are potentially causing, contributing, or are linked to so many adverse impacts that many struggle to find a starting point. Coupled with the influx of new sustainability regulations, this leads to "paralysis by analysis," as companies hesitate to take the first step for fear of making a misstep.

Limited sustainability integration: Yet another common problem is that sustainability is not appropriately embedded across all roles within the organizations. Ownership of sustainability-related issues primarily resides in HQ's sustainability, purchasing, and HR departments, leaving the key decision-makers within finance, legal and sales departments detached.

Regarding sustainability, what do you believe organizations should prioritize and emphasize more, and where should they consider reducing their efforts?

Understandably, the Corporate Sustainability Reporting Directive, CSRD, has occupied businesses with the reimagining their sustainability reporting. Nevertheless, I would advise company leaders not to lose sight of the broader context. Reporting requirements serve as a catalyst, nudging companies to actively instigate changes in their approach to sustainability. While accurate and transparent communication, such as reporting, is a crucial aspect of sustainability efforts, it should not overshadow the overarching objective: taking substantive actions.

Where do you feel you make the difference in your role?

Guiding companies in sustainability can feel like swimming against a strong current. Unlike what is typically expected of consultants, my advice doesn't prioritize cost-cutting or deliver immediate financial benefits - often it's the opposite. Therefore, being heard requires persuasion and conviction. If I can plant the seed of a different perspective when discussing the significance of sustainability with senior management at companies, not only for legal compliance, but also for the long-term success of the business, I know that we at KPMG make the difference.