Intersection of ESG and Human Rights: How ESG frameworks address human rights issues and promote ethical practices

By Dede WOBIL

In the global push towards sustainable development, Environmental, Social, and Governance (ESG) frameworks have emerged as vital tools for businesses aiming to align with ethical, social, and environmental responsibilities. With growing economic prospects and complex social dynamics in Ghana, ESG can be crucial in addressing critical human rights issues.

As organizations and businesses in Ghana integrate ESG principles into their operational strategies, they not only ensure compliance with global sustainability trends but also contribute to addressing local human rights challenges.

This article examines the intersection of ESG and human rights, focusing on how ESG frameworks help organizations in Ghana tackle human rights issues and promote ethical business practices.

Understanding human rights issues in Ghana

What are human rights?

Human rights are the fundamental rights and freedoms that belong to every person from birth until death. They apply regardless of where you are from, what you believe, or how you live.

Why is it essential for businesses to respect human rights?

Businesses have a responsibility to respect human rights because they have the power to impact the lives of millions of people through their operations. Businesses that respect human rights can help to create a more just and equitable world.

What are labor standards?

Labor standards are the minimum requirements for employment, such as minimum wages, maximum working hours, and safety and health standards. They are designed to protect workers from exploitation and ensure that they are treated fairly and with dignity.

The reason why is it essential for businesses to respect labor standards?

Businesses need to respect labor standards for several reasons, including:

• • To meet legal requirements: Labour standards are typically enshrined in law, so businesses that fail to respect them may be liable for legal action.
  • To protect workers: Labour standards help to protect workers from exploitation and abuse. By respecting labor standards, businesses can help to create a more just and equitable workplace.
  • To attract and retain employees: Workers are more likely to be attracted to and stay with businesses that respect labor standards. Employees know they will be treated fairly and with dignity at these businesses.
  • To improve productivity and performance: Businesses that respect labor standards tend to have more productive and engaged employees. This is because employees are more motivated to work hard when they know that they are being treated fairly and with respect.

Ghana, recognized for its democratic stability and growing economy, still faces significant human rights challenges that are deeply embedded in its socio-economic landscape. Some of the most prevalent human rights issues include:

1. Labor rights violations: Ghana’s economy relies heavily on industries such as agriculture, mining, and informal trade. In sectors like cocoa farming and gold mining, reports of child labor, exploitative working conditions, and inadequate wages persist. Many workers in informal sectors lack social protections, such as healthcare and fair compensation.
2. Gender inequality and discrimination: Despite advancements in gender equality, women in Ghana continue to face discrimination in the workplace, lower wages compared to their male counterparts, and limited access to leadership positions. This issue is further exacerbated in rural areas where cultural norms often restrict women’s rights.
3. Environmental exploitation: Ghana is grappling with environmental degradation, especially in relation to illegal mining (locally known as “galamsey”) and deforestation, which impact the rights of local communities. Environmental destruction often leads to health problems, displacement of local populations, and the erosion of livelihoods.
4. Supply chain exploitation: Companies operating in Ghana, particularly multinationals, often have complex supply chains that are vulnerable to human rights violations such as forced labor, child labor, and poor working conditions. These issues are prevalent in industries like textiles, agriculture, and manufacturing.

Given these human rights challenges, organizations must adopt frameworks that promote ethical practices, safeguard worker rights, and mitigate social and environmental harms. ESG frameworks provide a robust tool for addressing these issues.

The role of ESG in addressing human rights issues in Ghana

Environmental, Social, and Governance (ESG) frameworks offer businesses a structured approach to identifying, addressing, and reporting on human rights issues, both within their operations and across their supply chains. Each component of the ESG framework plays a critical role in promoting human rights in Ghanaian organizations.

The Social (S) Component: Protecting labour rights and promoting social equality

The “Social” pillar of ESG focuses on how companies interact with employees, communities, and broader society. In Ghana, this pillar is particularly relevant for addressing labor rights violations, gender inequality, and supply chain exploitation.

• Labour standards: ESG frameworks require organizations to comply with international labor standards, such as those set out by the Labour Act and the International Labour Organization (ILO), and implement fair wage practices, reasonable working hours, and safe working conditions. Businesses that adhere to these principles can help combat the widespread issues of child labor, forced labor, and unfair wages in sectors like agriculture and mining.
• Supply chain due diligence: ESG mandates that companies conduct regular audits of their supply chains to ensure that human rights abuses are not occurring at any level. By implementing transparent sourcing practices and working closely with suppliers to meet ethical standards, Ghanaian businesses can reduce the risk of exploitation in industries such as cocoa, textiles, and artisanal mining.
• Gender equality and inclusion: ESG encourages businesses to promote gender diversity and equality in the workplace. This involves addressing wage gaps, ensuring equal access to leadership roles, and providing safe and inclusive working environments for women. Implementing policies that support parental leave, flexible working conditions, and anti-discrimination measures can empower women in the workforce and reduce inequalities.

The Environmental (E) Component: Safeguarding community rights and natural resources

The “Environmental” pillar of ESG is particularly relevant where industries such as mining, agriculture, and forestry have significant environmental and social impacts. Environmental protection is not just about reducing carbon footprints. It also intersects with human rights by ensuring that communities are not adversely affected by environmental degradation.

• Preventing environmental exploitation: Businesses must ensure that their activities do not harm local ecosystems or deprive communities of essential resources like clean water, fertile land, and air quality. ESG frameworks encourage adopting sustainable practices such as responsible mining, sustainable agriculture, and reforestation initiatives. By addressing these issues, companies help protect the health and livelihoods of local communities, respecting their rights to a healthy environment.
• Consultation with affected communities: ESG requires that companies engaging in activities that impact the environment and local communities consult with those communities and obtain their consent before proceeding. This is especially critical in Ghana. Companies must ensure that local populations or communities are adequately informed, compensated, and involved in decisions that affect their land and livelihoods.

The Governance (G) Component: Ensuring accountability and transparency

Governance, the third pillar of ESG, plays a critical role in ensuring that businesses are held accountable for their actions concerning human rights and ethical practices. Strong governance structures are necessary to implement, monitor, and report on ESG initiatives effectively.

• Corporate accountability: ESG frameworks encourage businesses to establish clear human rights protection, diversity, and ethical governance policies. This can be achieved by developing robust internal policies that prevent corruption, discrimination, and rights abuses. Governance structures should include oversight by boards and executives, with human rights issues integrated into risk management processes.
• Transparency and reporting: One of the core principles of ESG is transparency. Companies in Ghana are increasingly expected to publicly report on their ESG performance, including how they address human rights concerns. Transparent reporting allows stakeholders, investors, consumers, regulators, and communities to hold companies accountable for their actions and ensure they meet global human rights standards.
• Stakeholder engagement: ESG frameworks also emphasize the importance of stakeholder engagement, which involves businesses actively involving employees, local communities, civil society organizations, and government authorities in discussions around ethical practices and human rights. This engagement is essential for ensuring that business activities are aligned with the expectations and needs of those directly impacted by corporate operations.

How ESG implementation benefits businesses in Ghana

The successful integration of ESG principles into business strategies not only addresses human rights issues but also yields substantial benefits for companies in Ghana. These include:

• Enhanced reputation: Companies that commit to human rights and ethical practices build stronger brand reputations locally and internationally. This can translate to increased customer loyalty, higher sales, and better relationships with regulators and communities.
• Investor attraction: ESG-compliant businesses are increasingly attractive to investors, particularly those seeking to invest in responsible and sustainable ventures. Investors are drawn to companies that are committed to upholding human rights and robust governance practices.
• Risk mitigation: By addressing human rights issues early on through ESG frameworks, businesses reduce the risk of legal disputes, regulatory penalties, and reputational damage. This helps safeguard long-term profitability and operational stability.

Conclusion

The intersection of ESG and human rights is critical for businesses as it provides a structured approach to addressing human rights challenges while promoting ethical and sustainable business practices. By adopting ESG frameworks, companies can tackle issues such as labor rights violations, environmental degradation, and supply chain exploitation while enhancing their competitiveness and attracting investment.

As the global economy continues to prioritize sustainability and ethical governance, businesses that embrace ESG will contribute to social progress, position themselves for long-term success, and positively impact the world.

>>>the writer is a Trainee Associate at SUSTINERI ATTORNEYS PRUC (www.sustineriattorneys.com). Dede is specialising in Natural Resources including Mining, Oil & Gas, and Energy, Sustainability covering ESG, Climate Change, and Renewables, as well as Dispute Resolution. She welcomes views on this article via [email protected]

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