CEO letter:

Human rights and business during times of industrial revolution

Kirsten (KP) Patterson

Lost track of which industrial revolution we are up to? According to the World Economic Forum it’s the fourth. They define the fourth industrial revolution as building on the digital revolution, representing new ways in which technology becomes embedded within societies and even the human body.

Every industrial revolution has significantly impacted on our communities and changed the face of work and labour. Each shift has had global impacts on capital allocation and economic prosperity. Worryingly, however, another theme from each revolution is how our systems and regulators have struggled to keep up with abuse and/or unintended consequences.

At first glance the links between the first industrial revolution and the challenges of today seem tenuous. However, looking back at the first industrial revolution and the move to factories and machines, there are some salient lessons we would do well to
heed in today’s era of digital and data disruption.

Although the first industrial revolution began in 1760, it wasn’t until 1802 that legislation was first introduced to address child labour conditions and health and safety requirements. It wasn’t until 1833 that legislation was passed prohibiting children under the age of nine from working in the factories. Health and safety and the ‘duty of care’ to workers wasn’t established in common law until 1837.
Far too late for the thousands of children and other workers killed, maimed, or suffering from occupational diseases.

Although the challenges of the fourth industrial revolution are not life or death, our regulators are similarly struggling to keep ahead of business use and the impact on the protection of individuals, whether it’s cryptocurrencies, ethics
in AI, geonome editing, or even the
human right to privacy.

As Klaus Schwab, Founder and Executive Chairman, World Economic Forum has expressed: “We must develop a comprehensive and globally shared view of how technology is affecting our lives and reshaping our economic, social, cultural, and human environments. There has never been a time of greater promise, or greater peril.”

‘Data is the new oil’ is one of the
new mantras, but just as the oil of yesterday was found to have impacts
on the environment requiring protection, the data of today is linked to people
and to communities.

Article 12 of the United Nations Universal Declaration of Human Rights adopted in 1948 makes interesting reading in today’s social media world: “No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.”

The results from our Director Sentiment Survey at the end of 2017
was that data governance and the use
of data analytics to drive performance and strategic opportunities had only been discussed by 50 per cent of boards in
the past 12 months. Early analysis from
the 2018 survey shows this has lifted
to 56 per cent.

The world is in a period of exponential change. It will require directors who engage in innovative thinking, agility – 
and sound risk management. It will require leaders who are visionary, who can look to the developments that are occurring overseas and translate them back to their meaning back home.

New Zealand faces the challenge of being a small and relatively isolated economy that is dependent on global markets. The digital environment is creating a global playing field where this disruption can move between borders easily, threatening established business models.

Interestingly, the arguments against increased regulation of the revolution have also changed little in almost 200 years.
In 1844 Lord Shaftesbury spoke in the UK House of Commons in support of limiting children’s maximum working hours to 10 per day. He commented that with all that had been written and said on the subject, he could discover no more than four arguments urged by opponents against the measure:

1. That the passing of a 10 hours’ bill would cause a diminution of produce.

2. That there would take place a reduction, in the same proportion,
of the value of the fixed capital employed in the trade.

3. That a diminution of wages would ensue, to the great injury of the workmen.

4. A rise of price, and consequent
    peril of foreign competition.

Business has always been the early adopter of technology and the early guardian of its use and impact. Just as health and safety is now a core governance responsibility, data and privacy are our governance challenges
of today.

The 2018 Edelman Trust Barometer asked consumers what they felt was the top trust-building mandate for business – the answer may surprise you:

The expectation that you will protect my privacy and keep my data safe.

We’ve all heard about Cambridge Analytica and the approximately US$40 billion impact on Facebook value over
data privacy concerns. Maybe we shouldn’t be surprised about the
Edelman results after all.

Although he was paraphrasing others, Winston Churchill perhaps summarised it best – “Those that fail to learn from history are doomed to repeat it.”

Kirsten (KP)

2018 October/November BoardRoom