Are Human Rights Any Business of Business? Corporate Behaviour from a Human Rights Perspective By Karin Lukas, Ludwig Boltzmann Institute of Human Rights, Austria |
Introduction In the last few decades, we have witnessed a shift in economic and political power from states to corporate institutions. One indicator of this trend is the sheer amount of capital that corporations generate: Microsoft makes more money than the 31 Least Developed Countries together [1] . A study by Anderson/Cavanagh [2] found that 51 corporations are “among the top 100 largest economies in the world, while only 49 are countries.” [3] Before “Corporate Social Responsibility” became corporate jargon, the opinion on the relationship between human rights and business activities was that human rights are no business of business. What were the arguments for this position? Muchlinski names two:
Meanwhile, the attitude that human rights are no business of business has changed due to the growing pressure by NGOs and the consumer public following human rights violations by corporations. Several corporations see themselves as responsible members of society and have started to meet the demands of “corporate social responsibility”(CSR). In the following chapters, I will outline the most recent developments in this regard, which will also give answers to the arguments made by Muchlinski. Corporate Social Responsibility (CSR) From a business perspective, corporate social responsibility can be understood as a “strategic and long-term management concept that should meet actual problems in society by advancing new solutions.” [5] There is no generally accepted definition of CSR, but there is agreement that the overall objective [word missing here -- objective/goal?] of CSR is its contribution to ”sustainable development.” [6] According to this concept, economic and social goals are seen as complementary and not as antagonistic. Two recent reports by SustAinability [7] and the World Bank Group [8] assess the status quo of CSR, and both reach similar results: A growing number of enterprises are heading in the right direction, acknowledging external stakeholders and launching more CSR activities in important areas of business activity. First, “good practice” examples, including cooperation with NGOs and trade unions, have emerged. There is also growing public awareness and importance placed on CSR activities. On the other hand, most CSR measures remain isolated activities that do not influence the core business of the corporation and are not part of a long-term strategy. Thus, even leading CSR corporations tend to show conflicting behaviour, for example by establishing CSR activities in the area of employee non-discrimination while at the same time lobbying for lower social and environmental standards. In addition, most initiatives are not linked with each other or with global initiatives, which prevents them from having a substantial impact. Another problem with the CSR concept is its implementation: very few corporations allow independent verification of their CSR activities and attempts to create uniform reporting standards on these activities are only beginning to emerge. CSR Reporting and Verification of CSR activities First, it must be noted that there are no generally accepted standards for voluntary social and human rights reporting. Without standards that oblige corporations to address human rights issues, it is up to the corporations themselves to decide how they will address these issues-- a slightly unsystematic method. This impression is confirmed by an analysis of reports of Talisman, Premier Oil and BP and their activities in Sudan that reveals a tendency to palliate these activities. [9] Furthermore, the reports could not be objectively verified. It is not sufficient to be able to verify the accuracy of facts and data; the methods and tools used to gain these facts and data must be verifiable as well. Corporations seem, prima facie, not very well qualified to spell out their human rights obligations, especially when those obligations are in contradiction with the incentive to make profits, as was the case with Talisman, Premier Oil and BP in Sudan. Thus, CSR seems to reach its limits [what does this mean?]. So far, only very few corporations have been able to combine CSR with market gains, and there is still little exchange between national policy and CSR activities. Connected with these limitations is a growing scepticism of the truthfulness of CSR activities. Corporations have to increase their efforts for transparency and independent verification of their activities by involving external stakeholders. Increasing influence of CSR national and international policies and standards seems necessary and inevitable, especially in the area of human rights.
Human Rights and Corporate Behaviour
1. The indirect human rights responsibility of corporations arising from the human rights obligations of the home states All UN member states have made legally binding commitments to respect, protect and fulfil human rights. This includes the protection of human rights from potential (violations that may happen) or factual violations (that have already taken place) by private actors. [10] This duty to protect vis-à-vis private actors is stipulated explicitly in the Convention on the Elimination of All Forms of Discrimination against Women, in the Convention on the Rights of the Child, and in the Convention on the Elimination of All Forms of Racial Discrimination. [11] A state that has legally bound itself to uphold human rights is also obliged to hold corporations in violation of human rights accountable for their behaviour. However, some states where companies operate (so-called host states) are not able [12] or willing to hold corporations accountable. [13] Examples of this unwillingness have attracted considerable public attention, such as the human rights violations of the government of Nigeria and the Shell corporation in the Niger delta, [14] or those of Myanmar and Unocal in the course of natural gas extraction. [15] In situations where host states are unable or unwilling to uphold human rights, there is a so-called “accountability gap” which has to be met with implementable standards of either direct or indirect corporate human rights responsibility. Due to this accountability gap, courts in the home states of corporations have started to accept claims of human rights violations committed by corporations. Most of these cases are pending in US and UK courts. In addition, in a few countries such as the US, Australia and the UK, bills have been drafted to outline corporate responsibility through legislation. In the UK, a “Corporate Responsibility Bill” was drafted in 2003. This bill stipulates that business activities must be in accordance with international human rights standards and responsibilities; this must be verifiable in annual reports. The bill furthermore foresees a liability of the directors if the business operations have “any significant adverse social, environmental and economic impacts” which arise from:
The bill’s scope extends to all businesses that generate profits above an annual turnover of 5 million pounds that operate or are registered in the UK. Thus, very importantly, the bill applies also to business operations abroad if the company is registered in the UK. Similar bills have been drafted in the US and Australia. Even though it is unlikely that any of these bills will become binding legislation in the near future, these documents express a growing willingness[ to hold businesses accountable and are an important precedent in that regard. 2. Is there a direct human rights responsibility of corporations in international law that makes private businesses accountable for human rights violations? Currently, such a direct responsibility only exists as ”soft law,” which is not legally binding upon corporations and thus, corporations cannot be sanctioned if they violate these norms. Examples include the OECD Guidelines for Multinational Enterprises [16] and the ILO Tripartite Declaration on Multinational Enterprises and Social Policy. [17] The OECD Guidelines primarily regulate commercial matters but also include provisions on workers rights and environmental issues. To observe compliance with the Guidelines, “National Contact Points” (NCP) have been set up to facilitate, and if possible, provide solutions in response to complaints. However the NCP can only make non-binding recommendations to the parties. The ILO Tripartite Declaration is, not surprisingly, much more detailed on workers rights issues and contains provisions on the right to organize and form trade unions, on the principle of non-discrimination in the workplace, etc. The Declaration has an observatory body as well: the Committee on Multinational Enterprises. This Committee receives state reports and may also make recommendations on disputes arising from the differing interpretations of the Declaration. Although the impact of both instruments is limited due to the lack of sanction mechanisms, their potential to change the business environment towards more ethical conduct would be enhanced if these instruments were more widely known and if these guidelines were used by the OECD states as preconditions for certain activities, such as procurement and credit acquisition. A third possibility exists: the possibility to make voluntary provisions of corporate responsibility (similar to “human rights clauses”) binding by integrating them into civil contracts or international conventions. This has already been realised in international environmental law. The Convention on Civil Liability for Oil Pollution Damage provides that the owner of a ship (natural or legal person) may be liable for environmental damage caused by the ship’s operations . [18] There are similar provisions in the UN Convention on the Law of the Sea. [19] During the drafting process of these Conventions, interestingly, no state or business argued for “privatization of responsibility”or that state responsibility is weakened . [20] A growing number of voices in international political and legal discourse see a shift of power in the international arena from states to corporations, a change in power relations that the law must acknowledge. The state, they argue, has lost its monopoly of power, and thus it can and must share some of its human rights responsibility with private actors. [21] This discussion is reflected by recent developments in international law to establish the human rights responsibility of non-state actors. One of the most important examples is the International Criminal Court (ICC): the Rome Statute recognizes the human rights responsibility of non-state actors for grave human rights violations. [22] Another milestone in developing the direct human rights responsibility of corporations was the creation of the “Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights” [23] by the UN Sub-Commission on the Promotion and Protection of Human Rights. [24] According to this instrument, the primary human rights responsibility rests with states; but there are specific areas in which a complementary human rights responsibility exists for businesses. These areas are:
Regarding the general complementary human rights responsibility of businesses, the commentary [25] of the UN Sub-Commission to the Norms clearly states that business have a responsibility to:
Regarding the implementation of the Norms, the document remains a bit vague, stating that: the Norms should be integrated in internal business operations; [26] internal evaluations on the impact of the Norms on those internal business operations should be made; external monitoring (by the UN or other institutions) should take place, and reparations via national and international courts are envisaged. This section of the Draft Norms leaves some open questions that require further in-depth discussion, such as of the issue of “complicity” (of businesses operating in states in human rights violations) and the “sphere of influence” of company activities that might establish their human rights responsibility. In answering these questions, reference can be made, for example, to international comparative criminal law [27] and jurisprudence relating to the US Alien Tort Claims Act. Concerning the monitoring and implementation of the Norms, the international discussion will surely take some time. However, networks like the International Business Leaders Forum noted that the draft Norms are a meaningful basis for further dialogue and development of “good practice” and “benchmarking” activities on human rights practices by businesses. Despite the criticism that the Norms received, especially in the business community, they can be viewed as an ”authoritative guide ” [28] to corporate social responsibility and are an important step to clarify the human rights responsibilities of businesses. In a very clear and precise manner, the Norms summarize key human rights areas of business responsibility (non-discrimination, the right to security, and the promotion of economic, social and cultural Rights) in a field that where there are many standards, interpretations and perspectives. The written statements to the Norms by relevant actors such as the European Union, the International Labour Organization, the US government, and other states, point demonstrate that the furtherance of ”corporate accountability” through direct state responsibility is widely supported; however, the question of direct corporate human rights responsibility (as the draft Norms stipulate, for example) is largely contested and leaves many open questions. However, the work of the UN Sub-Commission should be used and developed further to address these questions. Against the background of these developments, the heated debate on voluntary versus binding CSR norms goes on. As obvious as the lines of division seem to be (businesses pro voluntary, NGOs pro binding) there are good reasons for businesses to argue for binding regulations as well, for the following reasons: [29]
These development show that today, corporations are not only obliged to their shareholders. A direct responsibility of businesses for human rights violations can no longer be excluded categorically. [30] As this paper demonstrates, there are already areas of international law where the legal liability of legal persons and private entities exist. Conclusion On the international level, human rights are gradually being integrated into existing CSR concepts and initiatives. There is a growing conviction that human rights must be an integral part of socially responsible corporate behaviour. This paper has attempted to provide some initial insight into the very dynamic and complex balancing act businesses in the area of human rights in the context of corporate social responsibility. As of today, there are only “patchwork” mechanisms to hold businesses accountable for human rights. However, the international trend is moving towards standardisation and clarification of the human rights responsibility of businesses. This responsibility can be seen from three different perspectives: (1) from the point of view of a direct state responsibility for human rights conformity of businesses; (2) from the point of view of a direct human rights responsibility of the businesses themselves; and (3) from the perspective of voluntary business activities (CSR in the “classical sense”) to respect and promote human rights. All three approaches are being developed on the national and international level. The development of a direct business responsibility is the most contested but also the most encompassing approach. It is important to keep in mind that provisions of a general nature such as the UN Norms have to be applied flexibly on a case by case basis. For example, corporations that exploit natural resources have different human rights responsibilities than corporations that hire – through subcontractors - women workers to produce textiles in a working environment where trade unions are forbidden and the salaries are below ILO standards. However, one fact should be kept in mind: states still account for the majority of human rights violations; even in cases of human rights violations of corporations (such as Shell in Nigeria and BP in Colombia), states have been heavily involved in violations. Here, it must be stressed that the establishment of human rights responsibilities of businesses does not mean that states may in turn dispense with their responsibilities. A “trade-off” of responsibilities is unacceptable. But more urgently then ever, answers must be found to meet the challenges of a globalization process where non-state actors have gained economic and political power and have caused and contributed to human rights violations. The analyses of the World Bank Group and SustAinability show that it is necessary to link CSR with policy guidelines to enhance their impact, coherence and conformity with human rights standards. States and politicians, as well as NGOs and consumers, have an important task to fulfil.
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References: Anderson/Cavanagh, The Top 200: The Rise of Global Corporate Power (2000). Carolin F. Hillemans (2003), UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, German Law Journal, Vol. 04, No. 10, S. 1065. Green Paper of the European Commission, 2002 International Council on Human Rights, Beyond Voluntarism. Human Rights and the Developing International Legal Obligations of Companies (2002) Menno Kamminga, Corporate Obligations under International Law (2004 Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, U.N. Doc. E/CN.4/Sub.2/2003/12/Rev.2 (2003). Peter Muchlinski (2001), Human rights and multinationals: is there a problem? Sarah Joseph, Taming the Leviathans: Multinational Enterprises and Human Rights (1999) Siehe Gagnon/Macklin/Simons (2003), Deconstructing Engagement SustAinability, Gearing Up (2004), an Assessment mandated by the UN Global Compact Walter Saurer, CSR – Corporate Social Responsibility, in: Global View, Heft II/2004 Weissbrodt/Kruger; Businesses as Non-State Actors (in Alston (ed.) Non-State Actors and Human Rights, p.318, fn 15, Oxford 2005 World Bank, Company Codes of Conduct and International Standards: An Analytical Comparison, Part I and II (2003).
[1] Financial Times, 2001 [2] Anderson/Cavanagh, The Top 200: The Rise of Global Corporate Power (2000) [3] Cited from: Weissbrodt/Kruger; Businesses as Non-State Actors (in Alston (ed.) Non-State Actors and Hman Rights, p.318, fn 15, Oxford 2005). [4] Peter Muchlinski (2001), Human rights and multinationals: is there a problem? [5] Walter Saurer, CSR – Corporate Social Responsibility, in: Global View, Heft II/2004, S. 7. [6] See Green Paper of the European Commission, 2002. [7] SustAinability, Gearing Up (2004), an Assessment mandated by the UN Global Compact. [8] World Bank, Company Codes of Conduct and International Standards: An Analytical Comparison, Part I and II (2003). [9] Siehe Gagnon/Macklin/Simons (2003), Deconstructing Engagement, p. 100. [10] See, Committee on Economic, Social and Cultural Rights, General Comment No. 14 , para. 42: ”While only States are parties to the Covenant and thus ultimately accountable for compliance with it, all members of society - individuals, including health professionals, families, local communities, intergovernmental and non-governmental organizations, civil society organizations, as well as the private business sector - have responsibilities regarding the realization of the right to health. State parties should therefore provide an environment which facilitates the discharge of these responsibilities.” [11] See Sarah Joseph, Taming the Leviathans: Multinational Enterprises and Human Rights (1999), p. 175. All above mentionned conventions available at: http://www.ohchr.org/english/law/ [12] “Some states lack effective control over all or certain parts of the country, or are unable to regulate companies effectively because of other legal or political obstacles. In these situations international standards have started to, and must further develop, criteria that define the direct responsibility of companies under human rights law.” See International Commission of Jurists, Response to the UN Draft Norms, p. 43. [13] Sara Joseph, p. 176f., Menno Kamminga, Corporate Obligations under International Law (2004), p. 3. International Commission of Jurists, Response to the UN Draft Norms, p. 43. [14] Wiwa versus Royal Duth Petroleum Company. [15] Doe versus Unocal. [16] The Guidelines can be downloaded from http://www.oecd.org/dataoecd/56/36/1922428.pdf.
[17]
The Declaration can be downloaded from http://www.logos- [18] Art III of the Convention. [19] Art 137(1) of the Convention. [20] See Menno Kamminga, Corporate Obligations under International Law (2004), p. 3. [21] Joseph, p. 186, Kamminga, p. 3, Muchlinski, p. 40, International Commission of Jurists, supra. [22] During the drafting process of the Rome Statute establishing the ICC, discussions arose regarding the extension of human rights responsibilities not only to natural but also to legal persons; however, this proposal did not gain majority support and was not included in the statute. [23] Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, U.N. Doc. E/CN.4/Sub.2/2003/12/Rev.2 (2003). [24] The Sub-Commission is a sub-body of the UN Human Rights Commission. [25] Commentary on the Norms, UN Doc E/CN.4/Sub.2/2003/38/Rev.2 (2003) [26] Draft Norms, paras 15-18. [27] See Gagnon/Macklin/Simons, p. 126f. [28] Carolin F. Hillemans (2003), UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, German Law Journal, Vol. 04, No. 10, S. 1065.
[29]
See International Council on Human Rights, Beyond Voluntarism. Human Rights and the Developing International Legal Obligations of Companies (2002), p.20. The paper can be downloaded at [30] In the same vein, the Statement of the International Commission of Jurists (ICJ) to the Draft Norms states: “It is sometimes contended that human rights only bind states and not non-state actors and can therefore not be imposed on private companies. There are, however, no legal or conceptual arguments that prevent companies [from] having direct responsibilities for human rights violations. It is clear that states may decide at an international level to recognise rights and duties of non-state actors. The Universal Declaration of Human Rights itself affirms the duty of everyone, not only states, to uphold human rights; international humanitarian law binds armed opposition groups; non-state actors can commit crimes under international law, such as slavery, crimes against humanity, genocide or war crimes – to name but the most obvious examples…” (Excerpt of ICJ’s opinion to the Draft Norms, p. 43).
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