Preventing Corporate Human Rights Abuse: It’s Time for Government Action

| April 2014
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This post appeared originally on CSRwire. Reprinted with kind permission.

It is inspiring to read on CSRwire and elsewhere about the steps that companies are taking to embed human rights in their operations – to avoid participating in human rights abuses and to positively contribute to development in the communities in which they invest.

Human Rights Still Not the Norm

Yet, each time we celebrate a bold move of a company, we do so precisely because embedding human rights in business practice is just that: a bold move, and still far from the norm. A recent poll by Ethical Corporation revealed a sobering fact: “75% of Companies Still Haven’t Embedded Sustainability as Part of Their Employee Culture.”

Since the UN Guiding Principles on Business & Human Rights (UNGPs) were launched in 2011, much attention has been trained on what the human rights due diligence it prescribes entails in practice and across different sectors and business contexts. The time has come for state actions to move into the spotlight.

No matter how compelling the business case for human rights – consumer and investor pressure, greater transparency leading to higher reputational and financial risks for Protect-Respect-Remedynon-compliant companies, better human rights due diligence tools and guidance that make “not knowing” an untenable excuse for inaction – a glance at the News Box on the homepage of the Business & Human Rights Resource Centre on any given day makes clear corporate human rights abuses continue to happen with alarming regularity, and impunity.

In a recent article, “Can Private Politics Effectively Replace Government Regulation?” author Brayden King, Associate Professor at the Kellogg School of Management, replies,“ Our research findings suggest that the answer is often no.”

The Project of National Action Plans

One global effort to compel states to meet their responsibilities is centered on the project of developing National Action Plans for implementing the UNGPs, which I’ll refer to as NAPs. This project has become central to the agenda of the UN Working Group on Business and Human Rights, the successor body to the UN mandate that produced the UNGPs – it will be the subject of the Working Group’s annual report to the UN Human Rights Council this year.

The action items of NAPs are cued by the UNGPs themselves. Target elements span hard law and policy, and include, but are not limited to:

  • Writing regulations and passing laws that make corporate human rights due diligence (as prescribed by the corporate responsibility pillar) a precondition for government procurement contracts, export credit licenses, and stock exchange listing;
  • The inclusion of human rights obligations of investors in bilateral investment treaties and in the investor-state dispute resolution clauses of those treaties;
  • Communicating the expectation to business – for example, by making it a practice for diplomatic staff in embassies and consulates around the world to raise human rights with executives from businesses headquartered in their home country;
  • Making sure the process of developing NAPs, and monitoring them, crosses all government functions, and is human rights compliant – meaning transparent, and inclusive, ensuring that the voices of labor, NGOs and affected communities are heard and accounted for;
  • Providing clear goals, success criteria, and timelines for meeting those goals;
  • Giving special attention to conflict zones and vulnerable groups, including women and indigenous peoples;
  • Providing victims of abuses involving companies headquartered within their borders access to their courts when there are no other viable options for seeking justice.

These action points are directed primarily at scale-money-worldNorth America, Europe, and other countries that are home states of companies operating internationally. No one wants a reproduction of colonialism or to deter the strengthening of these institutions in every country.

Yet, the current realities within much of the developing world felt most acutely in conflict and post-conflict societies make these actions essential.

EU Takes the Lead

The first movers to create NAPs have been governments in Europe, pushed by a 2011 European Commission communication that called upon EU member states to put NAPs in place by the end of 2012. Last September, the U.K. was the first to release its plan, followed by the Netherlands in December. We can expect to see NAPs coming from Denmark, Finland, Italy, Norway and Spain this spring, with France, Poland and Switzerland appearing in the second half of 2014.

While momentum is conspicuously concentrated in Europe, there are stirrings around the subject in other parts of the world, including in several developing countries. In April 2013, the Indonesia-based non-profit Human Rights Resource Centre launched a baseline study covering business and human rights for each country in the ASEAN (Association of Southeast Asian Nations) region. This was an important first step in developing NAPs within the region.

In Colombia, the government has developed a national policy on human rights that includes a chapter on business and human rights. In the Philippines, where the effort to develop a National Action Plan on human rights faltered, the Commission on Human Rights, has opted for a gradual approach: it has begun a three-year process of collaborative learning among government agencies, business and civil society as a way of building momentum and creating champions for a NAP.

Governance Gaps

As a global undertaking, the NAPs project provides a critical opportunity for developing countries to address their own governance gaps. Christian Frutiger of Nestlé concurs, adding a compelling reason for business:

“It is. . .crucial that in countries of weak governance and high human rights risks the local legislative frameworks, judicial systems, including law enforcement, are strengthened. . . . This creates a level playing field for business.”

To address this challenge, the UN Working Group selected a research team led by the Centre for Applied Legal Studies (CALS) at Witswatersrand University in Johannesburg and the Asia Business and Rule of Law at Programme at Singapore Management University (SMU) to undertake research and consultation in Africa and Asia on NAPs. Building from the developing country perspective researchers will develop a template and implementation guide on NAPs to support this effort worldwide.

At an Open Consultation on NAPs in Geneva last month organized by the Working Group, participants suggested ways to make the process of creating and implementing NAPs in developing countries feasible in light of resource and capacity constraints.

This requires government-to-government dialogue and technical assistance, which is already part of the U.K. and Netherlands plans, funding for international civil society to help build capacity, and identifying appropriate entry points in existing developing state’s policies. One option I proposed at the Consultation, where I spoke on behalf of the CALS/SMU team, is for countries to incorporate business and human rights into their existing National Development Plan, which is often required by donors.

The Business Case

Penn State University law school professor Larry Catá Backer is wary of the project of developing NAPs in part for fear that it will undermine the UNGPs by “creating a hierarchy among the three pillars.” While this may be true, it is not something we need to fear. Robust NAPs that make mandatory the second pillar is precisely what the project ought to be all about: closing the governance gaps that permit companies to be complicit in human rights abuses abroad and providing clear rules of the road for business.

Human rights advocates are not the only ones demanding clarity. As Nestlé’s Frutiger points out, “It is very important that National Action Plans give clear guidance on what the government expects of companies and how they should conduct their due diligence.”

From the earliest days of the business and human rights movement, there has been a tension between corporate self-regulation and government regulation. Multi-stakeholder initiatives (MSIs) have been one response to the inadequacies of both, and over time they have been strengthened; witness the now 150- corporate member binding Bangladesh Accord on Fire and Building Safety, developed with women-factory-workers-Indiaunprecedented speed (and the blessing and involvement of labor) in the wake of the tragedy of the Rana Plaza factory collapse in Bangladesh last year.

Yet, even a small up-tick on the government regulatory dial can bring about the biggest changes – and without a spike in the crisis to spur action.

The US Dodd-Frank Consumer Protection Act of 2010 Section 1502 provision on conflict minerals is a case in point. The provision’s requirement that companies disclose their use of conflict minerals by the end of May this year, has forced listed companies to take steps to avoid contributing to the problem, which they had all but ignored prior to the passage of the law.

Even as their lobbyists and attorneys are challenging the law in Washington for being too burdensome, companies are known to be complying with it by putting the required tracking and reporting systems in place.

In January this year, Intel announced it was now producing the first ever conflict free product. Apple soon followed with the announcement that “all active, identified tantalum smelters in our supply chain were verified as conflict-free by third-party auditors” – a move that was lauded by Greenpeace. And Dodd-Frank’s influence doesn’t stop with U.S. companies: it has also set the standard for Europe which has been under pressure by civil society groups and lawmakers there to design its own conflict minerals rule.

In her new book, The Evolution of a Corporate Idealist, Christine Bader poignantly describes the many challenges corporate champions of sustainability face in doing their jobs. Often no less formidable than implementing due diligence in a conflict zone is the task of getting one’s own colleagues and departments on board. In this context, projects like NAPs, if done right, can be a corporate sustainability officer’s key ally.

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Category: Blog, Development, Inequality, and Poverty, Global Economy, Trade, and Finance

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