The Business Case of Inclusivity
Despite the economic benefits that come with inclusive business practices and a supportive working culture, workers still face ongoing deprivation of opportunities, unfair treatment and violations of their human rights related to business activities due to their identity and beliefs. Creating an equitable working environment promotes collaboration and leads to higher levels of employee engagement, productivity, and creativity. Different experiences provide multi-sided perspectives, which are crucial drivers of innovation, problem-solving abilities, and organizational resilience.[1] Additionally, aligning with evolving societal and employee expectations, as reflected in the universal value system of human rights, enhances a brand's reputation, loyalty and competitiveness, and reduces employee turnover and absenteeism.
According to a McKinsey & Company report from 2019 of over 1000 companies in 15 countries including Germany and India, companies in the top quartile of gender and ethnic diversity were 36% more likely to outperform financially than competitors in the bottom quartile.[2]
Representative Participation
To benefit from a diverse workforce, a supportive working culture and greater flexibility e.g. for those balancing work with family responsibilities, is required [3]. Meaningful stakeholder engagement should be integrated into decision-making processes by including diverse members of management, and consulting and empowering worker representatives, NGOs, and indirectly affected individuals.
Corporate Responsibility to Vulnerable Groups
Beyond the economic and profitability rationales of diversity, there are moral and regulatory risk-based due diligence obligations.
For example, female workers are more likely to face obstacles to the equal fulfilment of their rights at the workplace through discrimination in the form of unequal pay or lack of acknowledgement of their input, and sexual violence due to the social construction of gender stereotypes, prejudices and expected roles.[4]
Similarly, migrant workers in India are vulnerable due to their lack of legal and social security.[5] Recognising the potential impact on such specific socio-economically vulnerable groups and on the construction and perpetuation of social ordering principles and power relations [6] – be it (binary) gender norms, social status, disabilities or other categories – businesses have the responsibility to enforce minimum human rights and equality standards also beyond their own business entity.
Accordingly, the human rights of marginalised workers must be particularly respected and protected in core business practices, including employee recruitment, supply chain management, and risk assessment.
Giving Individuals a Voice
The concerns of individual rights-holders must be at the centre of human rights responsibilities and remedial action. To mitigate existing barriers to stakeholder engagement, the UN Guiding Principles on Business and Human Rights (UNGPs) encourage companies to establish non-judicial grievance mechanisms that give workers a platform to raise their concerns in a forum they prefer. The German Supply Chain Act (LkSG), among other laws, also mandates companies falling under its scope to ensure access to a grievance procedure across the supply chain.
By establishing an inclusive and effective grievance mechanism, companies empower workers to play an active role in driving positive transformations [7], rather than passively relying on corporate benevolence. However, existing inequalities can create additional barriers to access such mechanisms. Therefore, a fair, accessible, and needs-based set-up of the framework conditions is necessary, e.g., through training and technical support to communicate with sensitised persons.
This valuable feedback can help to identify and remedy structural limitations at the management level, mitigate the potential impact of business activities on vulnerable groups, and contribute to a continuous reduction of inequalities.
Conclusion
Promoting inclusivity and diversity is a building block for long-term business success, due diligence compliance, and reducing inequalities in line with the Sustainable Development Goals (SDGs). Embracing diverse perspectives drives innovation, boosts productivity, and enhances brand reputation.
The integration of an inclusive perspective into corporate commitments is imperative for driving this positive change. This means giving continuously equal consideration to diverse interests in all decisions through representative and individual participation, creating tailored structures – including an effective procedure to raise concerns – and critically examining existing ones.
Recognising the potential of a grievance mechanism across the supply chain to be a changemaker, the Indo-German Chamber of Commerce in cooperation with Alliance for Integrity has developed an Inter-Company Grievance Mechanism for the Indo-German Business Community. FairVoice, developed in line with German regulations, connects companies and their suppliers to one all-encompassing complaints and whistleblowing mechanism. Click here to know more.
[1] Vijay Eswaran, The business case for diversity in the workplace is now overwhelming, World Economic Forum, 29.04.2019, last accessed: 30.06.2023, 14:04.
[2] Vivian Hunt/Sara Prince/Sundiatu Dixon-Fyle/Kevin Dolan, Diversity wins – How inclusion matters, McKinsey & Company, May 2020, p 11.
[3] Robin J. Ely/David A. Thomas, Getting Serious About Diversity: Enough Already with the Business Case – It’s time for a new way of thinking, Harvard Business Review, Nov-Dec 2020.
[4] UN Committee on Economic, Social and Cultural Rights (CESCR) General Comment No 20, Non-Discrimination in Economic, Social and Cultural Rights (art. 2, para. 2), E/C.12/GC/20, para 20.
[5] Asma Khan/H. Arokkiaraj, Challenges of reverse migration in India: a comparative study of internal and international migrant workers in the post-COVID economy, Comparative Migration Studies, 2021.
[6] Carolin Heinzel, Das Konzept der Nachhaltigkeit auf dem Pfad des Feminismus?, Verfassungsblog, 16.06.2023, last accessed: 30.06.2023, 14:20.
[7] Chiara Civera/Simone de Colle/Cecilia Casalegno, Stakeholder engagement through empowerment: The case of coffee farmers, Business Ethics European Review, 2019.