Business and Human Rights

History, Law and Policy - Bridging the Accountability Gap

Nadia Bernaz

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317233848
• Edition: 1
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

Business corporations can and do violate human rights all over the world, and they are often not held to account. Emblematic cases and situations such as the state of the Niger Delta and the collapse of the Rana Plaza factory are examples of corporate human rights abuses which are not adequately prevented and remedied. Business and human rights as a field seeks to enhance the accountability of business – companies and businesspeople – in the human rights area, or, to phrase it differently, to bridge the accountability gap. Bridging the accountability gap is to be understood as both setting standards and holding corporations and businesspeople to account if violations occur.

Adopting a legal perspective, this book presents the ways in which this dual undertaking has been and could be further carried out in the future, and evaluates the extent to which the various initiatives in the field bridge the corporate accountability gap. It looks at the historical background of the field of business and human rights, and examines salient periods, events and cases. The book then goes on to explore the relevance of international human rights law and international criminal law for global business. International soft law and policy initiatives which have blossomed in recent years are evaluated along with private modes of regulation. The book also examines how domestic law, especially the domestic law of multinational companies' home countries, can be used to prevent and redress corporate related human rights violations.

1
Introduction

The impact of business on human rights

Business creates wealth and well-being. By providing jobs, companies ensure that millions of people on all continents remain out of poverty and secure better lives for themselves, fulfilling their right to food, their right to health and their children’s right to education. Simply put, the positive impact of business on human rights cannot and should not be ignored. Business and human rights, however, is primarily about the negative impact of business on the enjoyment of human rights. This is not because business is evil; rather, it is because human rights, as a field of study, tends to focus on violations. The typical human rights abuser is the state and it is on this premise that international human rights law has developed after the Second World War. Business and human rights challenges this by looking primarily into human rights violations by non-state actors: private companies.¹

Business can negatively impact human rights in a variety of ways. The impact can be both internal, affecting people within the company, and external, affecting individuals or communities not directly working for the company. Internal human rights violations include the possible consequences of poor health and safety policies on the right to health. They also include violations of freedom of association when workers are prevented from unionising or discouraged from doing so; violations of the right to privacy when personal information about staff or customers is disclosed or sold; or violations of the right not to be discriminated against when women or people belonging to a specific ethnic or religious group, or caste, are systematically kept in low-ranking jobs or not hired at all. Human rights violations of an external nature are even wider in scope. They range from violations of the right to health and the right to water in instances of land grabbing and pollution to violations of the right not to be subjected to inhuman or degrading treatment when a private security company hired to guard facilities ends up mistreating people living in the area; violations of the right of indigenous peoples not to be subjected to forced assimilation or destruction of their culture when a community is displaced to make room for a mining or other industrial project; and violations of the right to liberty when a bank provides a loan to a criminal regime, giving the government the means to track opponents and imprison them; specifically in conflict zones, violations of the right to life sometimes amounting to war crimes or crimes against humanity, such as when a company manager provides a military officer with vehicles which allow the officer and his unit to get to a village where they kill and rape civilians. In short, the business and human rights field looks into violations of the whole spectrum of human rights, civil and political, as well as economic, social and cultural rights.

‘Business and human rights’ has grown from a catchy phrase into a scholarly field over the past two decades. It is a field populated by international human rights, corporate, criminal and tort lawyers and business as well as development scholars. Business and human rights encompasses issues ranging from health and safety in Chinese factories, indigenous communities’ consent to mining projects in Latin America, consumer protection in France and the status of migrant workers in Dubai to questions of corporate and financial complicity in extrajudicial killings and even the commission of war crimes and crimes against humanity. Business and human rights may refer to changes a company can introduce to minimise its adverse impact on human lives – those of their staff, customers and the wider community – but also to rules a state can introduce to regulate business operations and ensure human rights are respected at all times. Business and human rights is also about corporate and individual liability before courts of law. In sum, it is a diverse field, which is understood differently depending on one’s background and field of research and work.

Importantly, business and human rights is a field of study of sometimes insoluble dilemmas. It is about reconciling global and local businesses’ constant pressure to succeed and grow with a rich and at times conflicting set of rights. In practice, this means that for a government, a company, an NGO or a group of employees, engaging with business and human rights is not a straightforward process. It requires an understanding of the various stakeholders’ positions, the specificities of the company and the industry, the applicable legal framework and the cultural and political contexts. In other words, a business and human rights policy can rarely be limited to creating a checklist. It is necessarily more complex and consequently can lead to frustrations. Although human rights impact assessments are increasingly conducted, human rights protection requires more than ticking boxes. As one corporate participant at a Global Compact Network UK event in June 2014 candidly put it, ‘human rights and drilling are not the same thing’. In order to comprehend intricate business and human rights issues, one needs to familiarise oneself with the wider picture.

With this in mind, this book offers a panorama of the field of business and human rights, and the debates associated with it. It is primarily located within the discipline of law, and approaches issues raised by business and human rights from a legal perspective, both international and domestic. It gives an overview of the relevant legal framework and points to remaining challenges and unsolved questions. It also includes historical highlights which provide the background against which business and human rights has developed.

Business and human rights, corporate social responsibility and related concepts

Business and human rights as a field of study is about how business may negatively impact human rights and the various ways in which such violations can be prevented and addressed, including how business can be held accountable. Corporate social responsibility (CSR) is a related field of study. It rests on the idea that business has responsibilities beyond profit maximisation and towards society at large.² It often consists in encouraging companies to adopt and share best practices and it includes notions such as corporate philanthropy.³ CSR is also about creating value. Hence, the scope of CSR is wider than the scope of business and rights. The point of business and human rights is not to create value but to prevent business from violating human rights or being complicit in violations primarily committed by others, usually governments. Business and human rights is more modest in scope than CSR and has less ambitious goals. Moreover, because it is not based on ethical considerations or ‘values’, but on identified human rights norms, it is arguably easier to circumscribe, though there is some disagreement on this point.⁴

Although CSR concerns were apparent in the business literature in the United States as early as the 1930s and 1940s, CSR as a field really dates back to the 1950s.⁵ In his seminal 1953 book Social Responsibilities of the Businessman, Howard Bowen – said to be the ‘Father of Corporate Social Responsibility’⁶ – wrote:

The day of plunder, human exploitation, and financial chicanery by private businessmen has largely passed. And the day when profit maximization was the sole criterion of business success is rapidly fading. We are entering an era when private business will be judged solely in terms of its demonstrable contribution to the general welfare.⁷

Nobel Prize winner Milton Friedman rejected these ideas and famously argued in 1962 that in a free economy

there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud.⁸

Some still embrace Friedman’s ideas. Elaine Sternberg argued in 2000 that ‘using business resources for non-business purposes is tantamount to theft’,⁹ while for David Henderson, businesses should not even try to accommodate society’s expectations.¹⁰

Although it has its critics, CSR is now more widely accepted than ever, and among Western-based multinational corporations, CSR policies seem to be the norm rather than the exception, as discussed in Chapter 8.¹¹ Related concepts, such as ‘sustainability’, ‘corporate citizenship’ and the ‘social licence to operate’, have also emerged. Sustainability, ‘[i]n its current form (…) is more or less synonymous with CSR, and in certain contexts (…) now appears to be the preferred label for efforts to address the business and society interface’.¹² Corporate citizenship ‘is centered around the idea or metaphor of the corporation as a good neighbor or virtuous citizen’.¹³ The notion of the social licence to operate

is often used to refer to the idea that businesses should voluntarily comply with societal expectations in order to preserve their ability (or ‘license’) to direct their own affairs. In cases in which firms fail to comply with societal expectations, this freedom (or ‘license’) may be suspended or revoked. In other words, failure to voluntarily comply with societal expectations may result in firms being forced through regulatory and/or legal means to do so.¹⁴

Other related concepts include ‘conscious capitalism’, ‘shared value capitalism’ and the ‘triple bottom line’. Conscious capitalism is a phrase coined by Whole Foods cofounder and co-CEO John Mackey. Conscious capitalism rests on four tenets. First, the point of companies cannot only be about making money; they need a ‘higher purpose’.¹⁵ Second, all stakeholders must be satisfied: investors and other stakeholders alike.¹⁶ Stakeholders ‘include all the people who impact and are impacted by a business’.¹⁷ These can be ‘inner-circle stakeholders’¹⁸ such as customers, team members, investors, suppliers, communities and even the environment; or ‘outer-circle stake-holders’ such as ‘competitors, activists, critics, unions, the media and government’.¹⁹ Third, conscious companies require conscious leadership,²⁰ and fourth, they need conscious cultures and management.²¹

Harvard professor Michael Porter coined the phrase ‘shared value capitalism’ in 2006 in an article published in the Harvard Business Review.²² The principle of shared value, it is argued,

involves creating economic value in a way that also creates value for society by addressing its needs and challenges. (…) Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center.²³

Shared value capitalism differs from conscious capitalism in that it focuses on creating economic value for society, but does not prominently feature human values.²⁴ Both concepts, however, can be said to belong to the CSR (or sustainability) family, their ‘claims of distinctiveness notwithstanding’.²⁵

The triple bottom line is a concept first developed in 1997 by businessman John Elkington. He championed the i...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Acknowledgements
• 1 Introduction
• PART I Historical highlights: limited accountability
• PART II International law and policy: limitations and progress
• PART III Domestic law and policy: embedding human rights in business practice
• Index