Business

When Business Meets Human Rights

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corporate social responsibility, corporate responsibility, corporate accountability, UN Forum on Business and Human Rights, global inequality news, corporate environmental concerns, Corporate Social Responsibility (CSR) movement, non-judicial grievance mechanisms, corporate accountability

© Dabarti CGI

December 05, 2017 00:30 EDT
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Most companies are still coming to grips with what their corporate responsibilities mean in practice when it comes to human rights.

As November drew to a close, the Palais des Nations, the UN headquarters in Geneva, prepared to shake off the seasonal gloom by welcoming once again the UN Forum on Business and Human Rights. Since its establishment in 2012, the forum has been a bubbling platform for experience sharing in the implementation of the UN Guiding Principles on Business and Human Rights (GPs), the global standard for preventing and addressing adverse impacts on human rights connected to business activity. In 2016 alone, more than 2,000 participants from 140 countries flocked to Geneva, confirming the forum’s appeal to civil society representatives but also an increasing interest from the private sector — accounting, respectively, for the 30% and 24% of the participating stakeholders.

This year’s edition (the sixth) focused on the theme of “Realizing Access to Effective Remedy,” a topic that has received less sustained attention than the role of states and corporations in protecting and respecting human rights. No later than in 2015, a report from the Economist Intelligence Unit attested that most of the surveyed companies were still coming to grips with what their responsibilities mean in practice. Much has been done in this respect. One example concerns human rights due diligence in supply chains. In this respect, international institutions and companies alike have sought to understand the challenges and develop new good practices. For instance, following allegations of forced labor in Thai fishing industry, Nestlé has adopted an action plan aiming to ensure better monitoring of its Thai suppliers.

Underpinning the emergence of this evolving normative framework is the recognition that companies can cause adverse impacts on a wide set of rights, including civil, political and socioeconomic ones. International law, however, is not the only discourse that has cast its reach to the responsibilities of corporations.

CHOOSE YOUR LANGUAGE

Attempts to regulate and tame corporate power are as old as the emergence of the “modern” corporation and the antitrust movements of the late 19th century. Also longstanding is the recognition in international circles that business operations may result in harmful human rights impacts. Already in the 1970s, UN bodies and other international institutions ventured at steering efforts to regulate the activities of national and multinational corporations with respect to human rights.

In many ways, however, the current debate perceives and represents itself as being a novelty of the post-Washington Consensus era, when the US and Western Europe went awash with allegations of corporate malfeasance. Financial scandals and human rights abuses came into public scrutiny through the reports and campaigns by nongovernmental organizations, prompting many companies to embrace social and environmental concerns in an effort to recoup credibility. This in turn resulted in the standards, codes of conduct and accountability mechanisms that are often associated with the Corporate Social Responsibility (CSR) movement. Individual companies, industry associations, standard setting and certification bodies, nongovernmental organizations and international financial institutions all adopted their own standards and procedures.

The United Nations was quick to pick up the new trend. By the end of the 1990s, it launched several initiatives, notably, the Kimberley Process and the United Nations Global Compact, featuring the typical CSR blend of voluntarism, peer-review and inclusiveness to non-state actors. These initiatives, however, have come to host negative practices, such as company free riding in the context of the Global Compact. Another negative trend has to do with reporting. According to the website of this institution, more than 7,000 out of about 12,000 signatory companies have incurred delisting due to their failure to abide by the reporting policy under the initiative.

Further involvement in the CSR wave came with the work of John Ruggie as the special representative of the secretary general. His seminal report, Protect, Respect and Remedy: A Framework for Business and Human Rights, stood on the premise that “the root cause of the business and human rights predicament today lies in the governance gaps created by globalization — between the scope and impact of economic forces and actors, and the capacity of societies to manage their adverse consequences.” These governance gaps provide the “permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation.” It was also clear that, in line with the CSR discourse, business would have a voice in setting the normative agenda affecting itself. As Ruggie put it, “There is no single silver bullet solution to the institutional misalignments in the business and human rights domain. Instead, all social actors — States, businesses, and civil society — must learn to do many things differently.” By 2011, the Protect, Respect and Remedy Framework translated into the GPs.

The framework and the GPs are addressed to both states and enterprises and are divided into the following three pillars: state’s duty to protect human rights against abuses committed by third parties; corporate responsibility to respect human rights; and the need to ensure access to remedies, judicial or non-judicial, for affected stakeholders. The aim to reconcile competing stakeholder claims underpinned the process, beginning with the multi-stakeholder consultations stage and all the way to implementation of the GPs.

But pragmatism was also a primary aim. Further and beyond their quality as normative outcomes, the framework and GPs seek uptake from the actors other than states that affect human rights and are expected to take responsibility for their actions. This is why, along with a common understanding of existing standards, the GPs define independent but complementary responsibilities for non-state actors that may affect or be affected by the GPs.

Thus, under Pillar II, the GPs require not only that business enterprises avoid infringing the human rights of others, but also that they show how they do this. Monitoring and reporting, particularly with respect to supply chain management, have therefore come to the forefront for companies, which have just started facing the many challenges in this respect. Among them, the recent Economist Intelligence Unit’s No More Excuses study cites the complexity of supply chains, the frequently changing supplier-base and the distance between the company and its suppliers.

In many ways then, the genius of the GPs was that they fit into the CSR movement well enough to tap into its momentum and its key publics, while at the same time leaving room for the notion of business responsibility to evolve in a normative framework different from that of the classical CSR instruments. Not coincidentally, the GPs have become the cradle of a business and human rights (BHR) agenda that is building its own self-representation as a drift away from the CSR movement.

The juncture between the two discourses would be in a focus on responsibility as accountability. According to Anita Ramasastry, a member of the United Nations Working Group on Business and Human Rights, it would be something of a newcomer’s mistake to take BHR and CSR as being the same discourse. BHR is a distinct field interested in “measuring company actions in light of key universal human rights concepts not simply voluntary codes or principles.” The reason, carries on Ramasastry, is that “BHR focuses on victims or impacted communities and articulates their concerns in terms of a broad swathe of treaty-based rights in an effort to provide a clear basis for remedies and justice.”

So, as it turned six, this year’s forum seemed indeed to be hitting the nail on the head. It does not mean that the time is indeed ripe for unpacking Pillar III. Doing so, however, is not only a matter of principle rather than strategy, but also a priority for BHR to claim its yet-nascent status as the key discourse of the current attempts of harnessing corporate power.

THE REMEDY RESERVOIR

Talking about governance gaps, access to remedies is surely where there is no shortage of them. Seeking remedy through judicial recourse has been a proverbial source of frustration for affected people, activists and academics alike. Holding companies to account is often hard in host states, while bringing claims in a corporation’s home state is at best legally and logistically difficult with the “j-word” (jurisdiction) always in the way. Recently, this feeling of frustration has yet again emerged with the United States’ Supreme Court decision of June 19, 2017, to prevent Ecuadorian villagers from trying to collect on an $8.65 billion pollution judgment issued against the oil company by a court in Ecuador.

In this judicial remedy-deficient landscape, the GPs made again a proof of stolid pragmatism. While judicial mechanisms should be at the core of ensuring access to remedy, the GPs emphasize the role of non-judicial mechanisms in complementing and supplementing these judicial mechanisms.

In fact, non-judicial grievance mechanisms (NJGMs) are a universe of its own, and one that is in rapid expansion. They include the accountability mechanisms of international financial institutions (IFIs); intergovernmental mechanisms attached to human rights treaty bodies; Organization for Economic Co-operation and Development (OECD) national contact points; regional bodies; national human rights institutions; multi-stakeholder initiatives; and company level or operational grievance mechanisms. No doubt, one of the major tasks ahead for the BHR movement is mapping and comparing these mechanisms.

The Office of the High Commissioner of Human Rights (OHCHR), for instance, in the context of the Accountability and Remedy Project (ARP) launched in 2014, has recently completed the second phase of its study focused on state-based non-judicial mechanisms (NJGMs). The just released paper of November 2017 found that NJGMs were used in 113 out of 431 business and human rights cases reported to the Business and Human Rights Resource Centre between January 2014 and mid-2017.

One point to bring back home is that comparative analysis of different remedy mechanisms is a tool of much untapped potential. A comparison of the surveyed mechanisms suggested a certain amount of replication and peer learning from jurisdiction to jurisdiction in terms of the design of mechanisms that are active in specific regulatory fields, such as labor law, environmental law and consumer law. These mechanisms were also those that seemed to provide relatively strong remedies.

Comparative analysis is relevant in other ways as well. One is the further unpacking of the GPs. In this sense, experiences collected on the ground have proved useful to complete the effectiveness criteria that the GPs establish for non-judicial grievance mechanisms. For instance, it has been stressed that effectiveness of the mechanism (rather than its outcomes, which is still another issue) depends on such factors as mechanism leverage; strategic relationship management; approaches to power imbalances; processes for gathering and verifying evidence; mechanism resources; and local-level engagement. 

Comparative analysis has also a role to play in spotting emerging trends in the universe of NJGMs. For instance, company-created mechanisms are typically viewed as early-warning, prevention-oriented and dialogue-based complaint and resolution processes for a wide range of (often low-level) adverse impacts. Recent studies, however, have pointed out the emergence of a very different kind of mechanism, which would provide a largely fixed remedy for a specific set of serious human rights violations and which would be more adjudicative than dialogue-based.

When considering the one thousand flowers approach to remedies of the GPs, it is also important to place on each specific mechanism the expectations that it can actually bear. For instance, many non-judicial grievance mechanisms — such as the OECD national contact points, industry-wide complaints processes and the compliance and ombudsman procedures of international financial institutions — often lack adequate investigation, determination or enforcement powers or are inaccessible or simply unknown to rights-holders. They might therefore not be the appropriate avenue for addressing human rights abuses in remote zones of weak governance.

The 2017 Report of the Compliance Advisory Ombudsman of the International Financial Corporation offers some interesting insights on this point. According to the published data, the period 2016-2017 witnessed a drop off in new complaint cases, as opposed to the spike in new cases that reached the mechanism in 2015. Assessing what to expect from a given mechanism in actual practice is therefore a crucial component toward a better grasp of access to remedies for business-related harm.

BE MINDFUL OF REPETITION

Only four years into the post GPs era, a new chapter opened up in the business and human rights agenda with the launch of negotiations to develop a treaty on business and human rights. The process, which is under the lead of the UN Human Rights Council’s Open-Ended Intergovernmental Working Group, represents a significant moment in understanding potential common elements shared by states in the definition of the responsibilities on corporations.

At the same time, it is not redundant to raise a warning flag about fragmentation. This is not a new risk, to be sure, but it might be a fatal one for the value added of the treaty, particularly with respect to the issue of access to effective remedy. As Surya Deva, the Chairperson of the United Nations Working Group on Business and Human Rights, has recently stressed, it is important that “the proposed binding instrument builds on the guidance provided by the Office of the United Nations High Commissioner for Human Rights to improve accountability and access to remedy for victims of business-related human rights abuses.”

With this caveat in mind, there is room to believe that a future treaty on business and human rights may bring progress with respect to access to effective remedy by removing barriers to justice. In the meantime, law firms are becoming increasingly eager to offer their services to business with respect to the issue of remedies. This suggests that business (lawyering being not the least one) may start seeing the pastures of access to remedies as green enough for them to get interest and eventually ripe new benefits.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Photo Credit: Dabarti CGI / Shutterstock.com

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