Business and human rights
Multinational enterprises are increasingly aware of the need to respect fundamental rights, and not only for legal and ethical reasons; there are also sound commercial arguments in favour of respecting them.
Although this is not a new debate, the light in which the interaction between business and human rights is considered has changed a great deal in recent years. When the Universal Declaration of Human Rights was signed in 1948, the most important consideration was the action of nation-states; they were and to a certain extent remain the major parties that ensure businesses respect human rights on their territory. But as globalisation takes hold, international organisations such as the World Bank, the International Monetary Fund and the World Trade Organisation have become more important, and can either directly or indirectly establish regulations that influence the way in which businesses view their obligation to respect human rights. For example, the World Trade Organisation has fostered increased protection for intellectual property rights, which sometimes prevents millions of sick people in developing countries from having access to effective treatment, as in the case of patents for AIDS medication.
Meanwhile, multinational enterprises are particularly important due to their increasingly rapid rate of international expansion and the trend towards greater fragmentation of their global supply chains due to subcontracting, strategic alliances and direct foreign investment. They often invest in countries where the level of protection of human rights is lower than in their own. In countries where there are dictatorships, with lax environmental and health regulations, or where the basic rights of children, workers, women or minorities are not protected. In the absence of legal restrictions, companies may be tempted to violate basic rights if doing so leads to greater profits. But fundamental rights must take priority over the maximisation of business profits; these rights must be respected at all times and everywhere, without exception.
In this situation, should governments be able to punish human rights violations committed by their own companies, even if they occur beyond their borders? Should multinational enterprises take greater responsibility for respect for human rights at all stages in their global supply chains, including when ultimate legal liability falls upon another company? Can we trust the free market and businesses to self-regulate, or do we need to create a new international regulatory framework to remedy the flaws in the market that may lead to human rights violations?
Can we trust the free market and businesses to self-regulate, or do we need to create a new international regulatory framework to remedy the flaws in the market that may lead to human rights violations?
In a debate organised jointly by the Fundación Carolina and the Universal Forum of Cultures Foundation, which took place at the Cervantes Institute in Madrid on 14 January 2010, Mary Robinson and Adela Cortina analysed the recent changes in the relationship between business and human rights. Mary Robinson currently chairs the Ethical Globalization Initiative. She has been president of Ireland (1990-1997) and the United Nations high commissioner for human rights (1997-2002). Adela Cortina is the Chair of Ethics at the University of Valencia and director of the Fundación Etnor.
Robinson and Cortina focused much of their speeches on assessing the ongoing international initiatives aimed not only at ensuring that multinational enterprises respect fundamental rights, but also that they make a larger contribution to them being respected by their suppliers and clients, and by the governments in the countries where they work. They declared themselves to be optimistic, and constructive rather than critical, and highlighted the importance of the United Nations Global Compact, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and appointment of a special representative of the United Nations secretary general for businesses and human rights.
Invitation to the multinationals
First, the United Nations Global Compact was created in 2000 as an invitation to multinational enterprises to voluntarily make a commitment to ten basic principles of conduct in four main areas: human rights, labour, the environment and anti-corruption. Businesses participating undertake to implement the organisational changes necessary to ensure that these principles are respected in all the company's work, in both its country of origin and in its network of subsidiary companies in other countries. They also undertake to publish a description of the actions taken in support of the principles of the Global Compact in their annual report. The prime example of its success is the fact that more than five thousand businesses in over a hundred different countries have joined. The Global Compact provides practical recommendations and organises seminars and lectures to exchange experiences, through both the United Nations and its support from more than seventy local networks all over the world. Indeed, one of the institutions organising the debate, the Universal Forum of Cultures Foundation, hosts the Spanish contact point for the Global Compact in Barcelona.
Meanwhile, the OECD Guidelines for multinational enterprises consist of a series of non-binding recommendations for good business practice, and are very similar to the Global Compact, although in some ways they are complementary rather than overlapping initiatives. The Guidelines have been approved by almost all the OECD countries, and several OECD non-member countries have subsequently adhered to them or are in the middle of the adhesion process. Their value lies in the fact that they are the only multilaterally approved guidelines, which reflect the shared opinions of the main governments on good corporate behaviour, and on what standards businesses are expected to comply with anywhere in the world.
Unlike the Global Compact, the application of the guidelines is not dependent on the companies' approval. The companies therefore have a more passive role, although they are also the main recipients of the recommendations. As in the case of the Global Compact, the guidelines are not merely limited to protecting human rights, but also cover other areas such as the environment, the fight against corruption, competition and tax issues.
They date back to the late 1970s, but have been revised in recent years and equipped with new support tools. Countries adhering to the guidelines must establish a national contact point to promote them, and work constructively with trade unions and companies to foster their adoption. Mary Robinson encouraged governments to reinforce these national contact points and those working closest with them, in view of the good results obtained with this system so far, which is also very similar to the local networks in the Global Compact.
The level of responsibility of enterprises is lower than that of governments, because while enterprises have to respect laws, governments do not only have to respect but also to protect their population from other individuals or businesses violating their rights.
Protect, respect and remedy
Both speakers also highlighted the work done by special representative of the United Nations for business and human rights. The Harvard professor John Ruggie has held the post since it was created in 2005, and has been the driving force behind a framework for action that was unanimously approved by the United Nations Human Rights Council in 2008. This framework of action is of a more general nature, and perfectly compatible with the Global Compact and the OECD Guidelines. Its lines of action are grouped into three basic areas: protect, respect and remedy. First, national States must effectively comply with their obligation to protect their citizens from human rights abuses committed by companies. Second, multinational enterprises must respect human rights and act diligently to prevent them from being violated. Third, victims' access to effective remedy must be improved, by reinforcing the judicial and extrajudicial mechanisms for sanctioning human rights violations. In this framework, it is clear that the level of responsibility of enterprises is lower than that of governments, because while enterprises have to respect laws, governments do not only have to respect but also to protect their population from other individuals or businesses violating their rights. However, Cortina and Robinson highlighted the fact that businesses must also make an effort to help human rights to be respected. In other words, they must not only respect them, but also help to protect fundamental rights in the countries where they do business.
Robinson used three recent cases to illustrate how multinational enterprises can successfully contribute to respect for human rights in the world. First, she mentioned the case of Google, which a few months ago denounced the Chinese government for violating press freedom and decided to withdraw from the country. For Robinson, this is a good example of how “the corporate world is accepting its responsibility, even more than governments,” which are generally reluctant to raise the issue of human rights in China.
Her second example was the case of Gap, in which a few years ago, several NGOs denounced the use of child labour by companies manufacturing its textile products in Bangladesh and Thailand. The company initially suffered from strong criticism and major damage to its reputation, which was intensified by the incident's international media impact. However, according to Robinson, Gap's reaction was exemplary and meant that not only was the error remedied, but its corporate image and its internal risk management procedures were improved. The company acknowledged the problem and apologised. It explained that it was unaware of these conditions, as the child labour in question was working for small companies that supplied its suppliers. Instead of denying the problem, the company sought social support, was transparent and considered various alternatives. Finally, it decided not to end its relationship with the small workshops that were using child labour, but instead to monitor them more closely, visit them and provide them with training courses. These small-scale local enterprises were not even aware of the issue, but Gap's monitoring and technical support enabled them to remedy their bad practices, and they became businesses that respected fundamental rights. Instead of transferring production to another country, and destroying jobs in poor countries, Gap improved its impact on the local community.
The third example was the case of ABB, a Swiss company that was creating infrastructure for large electricity plants in Sudan, and which a few years ago began to receive criticism from human rights groups including Human Rights Watch and Amnesty International, which accused it of making profits from the conflict in Darfur and asked it to withdraw from the country. The company consulted the organisations that condemned its activities and other experts, asked them for advice, and they collectively came to the conclusion that it was better not to leave the country, because that would have had particularly negative effects on the poorer areas, which would have been left without access to electricity. Furthermore, ABB not only undertook to respect the Global Compact, but also to promote the creation of a local contact group, which a number of Sudanese enterprises joined that had never previously considered the issue of corporate responsibility.
Adela Cortina highlighted the fact that if they operate ethically, multinational enterprises – as well as being a positive force for developing countries as a source of investment, jobs and technology transfer – “can break the vicious circle of corruption and bad practices, and start the virtuous circle of good practices”.
In this respect, Cortina highlighted the fact that if they operate ethically, multinational enterprises – as well as being a positive force for developing countries as a source of investment, jobs and technology transfer – “can break the vicious circle of corruption and bad practices, and start the virtuous circle of good practices (...) enterprises that arrive in a country with no human rights legislation can try and use their influence to help to make the Government establish the legislation.” She also used the recent example of the natural catastrophe in Haiti, in that she argued that although no enterprise was responsible, companies should not take advantage of the situation to do business, but instead should do as much as possible to help and limit themselves to a reasonable profit, with the utmost transparency when rendering their accounts.
A growing awareness
In overall terms, the speakers advocated constructive approaches towards multinational enterprises, going beyond criticism and seeking solutions, because multinationals are often willing to adopt them. It is necessary to work constructively with multinational enterprises, because they are increasingly aware of the need to respect fundamental rights not only for legal and ethical reasons, but also for reasons of mutual benefit; because businesses have realised that there are strong commercial grounds for respecting these best practices for human rights.
Businesses must diligently assume their responsibility, by implementing control mechanisms across their entire global supply chain; they must include human rights in their strategies with policies, assessments and specific plans. Initiatives like the Global Compact and the OECD Guidelines are useful in this respect. Similarly, it is also necessary to reinforce both judicial and extrajudicial international mechanisms to sanction possible violations of fundamental rights, and as mentioned above, this is one of the key areas where the Special Representative of the United Nations for business and human rights is working.
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