T12 – Supping With Mammon

Business must need but must never embrace human rights

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T12 intro video – audio transcript.

What are we to make of the explosion of interest in human rights among businesses in the past ten years or so?

That it has occurred is clear for all to see.  Most of us know about the Global Compact, described on its web site as the ‘world’s largest corporate citizenship and sustainability initiative’ with some 8,000 participants in 5,300 businesses across 130 countries in the world.   Its first principle is that ‘Businesses should support and respect the protection of internationally proclaimed human rights’ and its second that ‘Businesses should make sure that they are not complicit in human rights abuses’.   The Compact’s approach to human rights is explicitly informed by the content of the Universal Declaration of Human Rights.

But the Global Compact is only the start.  Since it was agreed on 26 July 2000 we have seen the following:

And then there are the older, established approaches that have flourished over the past ten years:

The subject is growing all the time.  There is now talk of an international agreement on the control of private military and security companies and a deepening of  corporate responsibility for the fast-emerging human right to water

The United  Nations As Well…

And all of this can be mentioned without referring to the king of the field, John Ruggie, professor of international affairs at Harvard University but – much more to the present point – since 2005 the UN Secretary-General Special Representative on Business and Human Rights.   Ruggie has proposed a framework for engagement which rests on three pillars: the state’s duty to protect human rights; the corporate responsibility to respect human rights; and the securing for victims better access to remedies (both judicial and non-judicial) for breaches of their human rights.

Professor Ruggie is currently consulting on 29 Draft Principles which he hopes will frame engagement in this area for the next many years.  Have a look at these principles.  (The Special Representative’s on-line forum will be open until the end of January – why not register and have your say?)

But How Can Human Rights Fit Here?

I was once asked to debate with a senior vice-president of a major company the merits of the the Universal Declaration of Human Rights.  His company had ‘signed up’ to the Declaration in the aftermath of allegations of serious abuses of human rights that had been levelled against contractors that had been working for them in a part of their commercial empire.  He was proud of his company’s commitment and wanted to push it further.

But what does it mean for a company ‘to sign up’ to the Declaration like this?  There is no mechanism for such an event.  A corporation is not a state and international human rights law is aimed squarely at states.  Glance at the rights set out in any of these documents and you see an assumption about state, not corporate (much less individual) action – not just liberty, expression and so on, but health, social security, education et al as well.

Duties are imposed on states to deliver human rights protection, in the words of Ruggie it is they who have ‘to protect’ and ‘to respect’ human rights and to provide remedies where they are breached.

Corporations are either the subjects of human rights law (able to avail of it against the state when things go wrong) or they can be instructed by state law to act in a way which protects and respects the human rights of others.

But they are not in themselves responsible for the human rights of anybody.

The UN system is based not only on human rights but on respect for national sovereignty – we saw that in common track three.  This is one further manifestation of that conundrum that perpetually dogs international human rights law, its co-equality with states, great and large ….

… And Weak And Small

Here is a further rub, a Catch – 22.

The weaker the state the greater its citizens need the international human rights that the state (through its weakness) is practicably incapable of delivering.  And such weak states are often exactly the places which, being resource-rich, have attracted multinational companies from more stable and prosperous parts of the world.

It is absurd to think of these states as capable of fulfilling their duties under international human rights law. Take another look at the international agreement on the control of private military and security companies.  It’s the saddest example of this I have come across – built on a fantasy of state power but without the slightest acknowledgement that it is precisely the absence of such power which is the reason the convention is needed in the first place – you want to yell at every page, ‘why the state can’t do this, that’s why there are private military, wake up!’.

These weak states are not equipped and/or inclined to provide for the human rights of their own people.

And they are not transformed for the better like some spinach-eating Popeye ruler by the arrival on their doorstep of powerful transnational entities hungry for what lies in, under or around their land.

More often it can drive them into corrupt free-fall.

Corporate concern for human rights has grown in this gap between the ideal of universal human rights and the incapacity of states to deliver them.  It is a creature of the systemic divide (states v people) that is at the heart of our international polity.

Why Bother?

Critics on the right and left unite in declaring that it is not the role of companies to fill this gap.

To the right, it is a vast distraction from the task of profit maximisation that is the corporation’s only real concern and purpose.  Such critics regard the very fact of the state as a concession and income tax as about as far as they are prepared to go by way of concession to ‘Big Brother’.  The rest is do-goodery, political correctness gone mad.  Companies have no business going about the place regulating the labour market, funding schools and building hospitals, or whatever it is.

The left sees in corporate social responsibility the latest capitalist trick to force our eye of the ball of capitalist intention, to distract us from its core task of alienation and oppression in the pursuit of profit.  Better to have the thing exposed than dressed up in these shabby ethical clothes which in any event do little that is tangible to improve lives in any long-term, sustained kind of way, lives that are brutally damaged by the capitalist world into which they are born (whatever swaddling clothes the capitalists might given them until they are old enough to be exploited).  My former colleague at LSE Ivan Manokha has written a very good book along these lines, The Political Economy of Human Rights Enforcement.

I think neither position works.

The first is too brutal about what capitalism entails, the second too blasé about any kind of alternative we might want credibly to set up in opposition to it.

Capitalism is not a thing-in-itself; it is a creature of humanity.  However much it might pretend to be thriving in a state-free state of nature, its existence depends entirely on state action, the police to protect property, the courts to enforce contracts, ultimately an army to keep the people away from the (very few) capitalist winners.   Capitalism cannot pick and choose what the state may and may not do.

It is the people through their representatives who can impose what they want.

Yes, democracy made capitalism possible – but nowadays democracy sets the terms of the debate.

And The Left?

Yes corporations do use human rights as a slogan, a brand to give an ethical content to their core (profit-making) business.  They talk this talk and yes they do not always do what they say. (Walk-the-walk is the cliché desperately trying to escape into the text at this juncture, and it has succeeded!).

I digress.  Back to the main point.

I say this to the left-sceptics:

  • Remember last week’s track on the value of hypocrisy ?  This is another example of where double standards can be used to good effect, forcing practice into line with web-site theory.
  • Large corporations are like governments in that they are made up of many disparate elements.  Some of which will be as keen on human rights as the most enthusiastic NGO. They need support in their battle with ‘the enemy within’ in order to establish a true commitment to human rights.  The last thing they need (the thing their corporate antagonists want most) is for human rights concessions by corporations to be written off from the start by human rights activists.
  • Can you imagine a world of capitalist power without any of this ethical self-control?  It is easy to see what kind of place that would be, and it would not be attractive from a human rights point of view.
  • But can you also equally imagine a non-capitalist world – the one you desire – in which such branding exercises are not necessary because the peoples of the world are well catered for by the simple fact that they now live in a non-capitalist society?  Harder?  Yes I thought so!

Back To Ruggie

I am with John Ruggie in what he is trying to do.  In fact I am near lost in admiration for his determination to tackle the hard conceptual as well as the soft ethical aspects of this tricky subject.

So what’s his answer?

Have a look again at the 29 Draft Principles.

In essence:

  • Run with the state duty to protect human rights as a foundational principle.  But try and get properly functioning countries to expand their human rights remit to cover the behaviour of home corporations when playing away from home, in less secure, more vulnerable places (weak states).
  • States should be especially vigilant when corporations from their countries are getting involved in conflict zones and should work with them carefully from the start on this, making sure the temptation to excess is not given in to through a seductive belief in impunity.
  • Businesses should agree to respect human rights and drill this respect right down through the company, so that everyone is on board and sees it as part of the corporate mission and not a luxury add-on.
  • Where a business finds itself operating in a weak state, so weak it cannot really stand up for the human rights of its citizens, then so far as their impact is concerned, corporations should act as though they were legally bound by international human rights law.  They should pretend to be states – albeit since they cannot do everything they must turn first to the most urgent necessities.
  • There should be a decent range of remedies available (judicial and non-judicial, including corporate) for people who think their human rights may have been violated by corporate engagement.

Last Thought

If we are all (reluctant) capitalists now, this is the kind of capitalist I’d prefer to be – a human rights capitalist – not a contradiction, just a new way of doing social democracy. Conor Gearty

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20 Responses to T12 – Supping With Mammon

  1. Richard Buck says:

    The seeming incompatibility of profit maximization with social concerns is a function of the way profit is viewed. Is it short term profit that will give me a bonus this year, or is it long-term profitability of the firm? This issue of course has been at the heart of the discussion about the collapse of financial institutions as the spark for the current world economic crisis. The cult of short term profitability in business has been around at least since the 1970.s. When executives no longer care about the survival of the firm in the long term, everything can be sacrificed for profit, including the environment and human rights. But concern for the continuing survival of the firm requires that economic, social, political and environmental consequences be factored into business decisions. For instance, human rights violations in a host country may lead to a revolution in the country that will result in the firm being kicked out. Profits suddenly drop to zero.

    Current discussions regarding the tying of bonuses to long-term profitability are a case in point. John Ruggle’s Guiding Principle No. 5 calls for building human rights into the laws, regulations and policies whereby States regulate firms. This is entirely compatible with requirements that company officers and directors act in the long-term benefit of the firm and its shareholders.

    Beyond State regulation of firms, the responsibility of corporate officers and directors to the long term benefit of the firm and its shareholders should be the ethical norm in the business community. One thinks of the pensioners who placed reliance in the continued value of bank shares. The corporate officers and directors of banks have completely neglected the welfare of these shareholders. In the global economy, one thing absolutely required for most businesses is a stable and physically safe operating environment. Governments that ignore or threaten human rights are not likely to be stable governments who promote long-term peace and stability. Surely, it is in the long-term interests of the western oil companies in Nigeria to see that human rights are sustained and that the people benefit from their payments ot the Nigerian government.

    National and treaty (such as EU) regulation of firms should have human rights requirements. But also there needs to be a culture of corporate governance that requires a long-term view of responsibility, including long-term corporate survival–from which human rights concerns should follow. I hope in the discussions that follow we will hear some ideas on how to create and sustain such a corporate culture.

  2. Ivan Manokha says:

    Conor,
    An excellent post! Just a couple of points concerning my arguments that you refer to.
    You argue, quite rightly, that “the left sees in corporate social responsibility the latest capitalist trick to force our eye of the ball of capitalist intention, to distract us from its core task of alienation and oppression in the pursuit of profit”. It is, unfortunately, indeed the case that a range of scholars see CSR as a deliberate project, a sort of conspiracy, on the part of those CEOs whose corporations engage in these activities, to somehow render capitalism more acceptable. In my book, however, I try hard not take this ‘conspiracy’ view, but to argue that the development of CSR – for whatever reason (and I do believe that many business executives do want to make some contribution and help some people in need sincerely and without any intention to trick us into accepting the existing order) – does provide global capitalism with a form of Gramsci’s moral and intellectual leadership and thereby does (unintentionally, most of the time) contribute to its reproduction.
    I suggest that states, international organizations, NGOs or corporations, through their various human rights projects and initiatives, often succeed in improving the situation of individuals or groups, rescue them from repression, torture or even murder. These initiatives are noble and must be pursued. However, I argue, such actions taken together have two consequences: the first, as already mentioned, is to provide global capitalism with Gramsci’s moral and intellectual leadership, thereby contributing to what Gramsci refers to as hegemonic ‘consent’; the second, is to channel protest and opposition in ways that are acceptable to the capitalist system, i.e. in terms of human rights of individuals, which necessarily represent a problem-solving demand (demands for rights within the existing order, and not for its transformation). These two aspects lead me to suggest that capital is now hegemonic in a Gramscian sense, and this hegemony is very strong not only because it has this moral aspect and because our contestation is channeled in ways that are compatible with its continuous supremacy, but also because its agents are difficult to identify and locate geographically. Who is to be challenged? The IMF? McDonald’s? The US administration? Transnational business class (but what is it?)?

    Ivan Manokha

    • Richard Buck says:

      Trying to find the cultural agents of global hegemonic capitalism seems a bit like trying to find the groups promoting and supporting terrorism, although I am not trying to suggest that global capitalism and terrorism are moral equivalents. But they have the similar characteristic of not being easy to pinpoint to a state or a geographic area, and both global capitalism and terrorism make the state less relevant. The concept of culture hegemony relates to a comment I made in our earlier discussion on labour unions and human rights. I wondered why the global economy places so little value on human beings as labourers and gives great deference to bond holders. The relative values of economic players are set by precepts within the hegemonic culture. While we are unlikely to replace capitalist hegemony with something else in the near future, we can work to change attitudes within the hegemonic culture. This brings us back to Ivan’s concluding quandary: how do you identify the target cultural agents? Where do you start?

      At this point I would like to offer one thought on approaching the problem with again an analogy to fighting terrorism. First, you examine all the remote data about the terrorist movement you can find. Second, you infiltrate the movement. Third, you attack the movement. In this case, of course, we are not trying to destroy global capitalism, but to change its culture. One weakness to this approach is that global capitalism is too amorphous. Maybe you start with a small number of companies and one or two business schools. Gramsci would no doubt argue that the small sparks we create will not coalesce into a forest fire unless we are in sync with the flow of history. We will have to let future commentators pass judgement on that.

  3. Favio Farinella says:

    Should we assume that business and human rights are opposite notions? Maybe yes, because profit is at odds with solidarity. In the eighties, the concept of ‘sustainable development’ was coined in order to reconcile both economy and environment, which by the way leads us to consider the parallelism between profit and solidarity. Should we think of a similar notion to match business and human rights?

    The business and human rights debate currently lacks an authoritative focal point. While praising the freer markets resulting from globalization for job creation and investment, it is also true that markets play a role in ensuring the political stability of weak states where they make business.
    Some current judicial developments try to establish the civil responsibility of transnational corporations that have run business under authoritarian regimes, in the basis that there is a mutual benefit between the criminal government and the company. The fact that corporations have benefited from the domestic authoritarian legislation and eventually, their activity have also helped the government to stay in power proves -according to that trend- their complicity in relation to human rights breaches perpetrated by agents of the criminal state.
    In order to face increasing claims and suits for their alleged complicity (along with that of the state) for the widespread and systematic breach of fundamental human rights, corporations decided to answer back by embarking on an soft law ‘ethic fashion’. The human rights paradigm runs the risk that corporations, instead of adopting a real human rights policy, prefer to sketch a human rights masquerade to show to the public opinion while covering their exclusively profit-oriented policies.

    I see no difference between the power of an individual millionaire who decides to make business under an authoritarian rule (and by doing this, helping the criminal regime to stay in power) and any transnational corporation which decides the same actions.
    However, international law provides a very different treatment for each of them. In the first case, the individual may be prosecuted as an accomplice by a national or international jurisdiction. International individual responsibility for gross violations of human rights has gone under a fruitful development starting at Nuremberg and lastly enshrined in the Rome Statute and the creation of the International Criminal Court. The Nuremberg trials condemned individuals -managers and directors of companies- who had acted in their private capacity for complicity in Nazi’s crimes. The Tribunals for the former-Yugoslavia and for Rwanda dealt with individuals who have acted in their private capacity for complicity and incitement to commit international crimes.
    As regards corporations liability -most surely-, they will never be prosecuted under the argument that corporations are not responsible under international law (only states are).
    In the end, no-one takes care of victims.

    This lack of accountability of corporations at the international level helps capitalism to go on running smoothly. But … maybe the tide is turning.
    As regards corporate civil liability, American judges paved the way to the debate. Human rights and the operations of transnational corporations have intersected through litigation filed pursuant to the US Alien Tort Statute. The importance of the ATS is that the American law is based on international customary law and principles governing the international law of human rights. Consequently, its scope of application is ‘extra-territorial’, whereas any other national judges who have legal capacity may apply the international law of human rights against alleged violators within their jurisdictions.
    A recent utilization of the Statute against transnational corporations for alleged complicity in human rights abuses associated with their foreign investment activities has proven controversial (for instance, the Khulumani v. Barclay National Bank; Presbyterian Church of Sudan v. Talisman Energy; or Bowoto v. Chevron Corp.). At the same time, other domestic jurisdictions have also dealt with transnational corporations and their individual member’s liability for international crimes with different success.

    Moreover, at the international level there is no development related to an ‘economic genocide’ notion. No leader is liable for deciding economic policies through which thousands will lose their jobs and/or will not be able to meet their basic needs. Capitalism (and capitalists both individuals and legal persons) are not judged.

    Again the main point seems to me to be the relationship between capitalism and human rights and between their main actors (corporations and states).
    There are reciprocal concessions between them. Capitalism allows the implementation of the principle of ‘sustainable development’ and also certain soft law progress as regards human rights ethics in business. On its side, human rights also makes concessions such as the UN guidelines for business and human rights which, for instance, provides for no ban on corporations to make business under regimes which manifestly violate human rights. (in fact, International Law has no principle that forbids transnational corporations to carry out business under non democratic regimes). There is not even a ‘democratic clause’ in the guidelines, by which corporations should refrain from continuing or starting new business in host states which have suffered an interruption of their democratic processes. (by the way, not a word related to ‘democracy’ in a document aimed at setting a foundation for business and human rights…) .

  4. Richard Buck says:

    We seem to agree that global capitalism is a mixed blessing for human rights. On the one hand corporations operating in foreign lands are trying to maximize profit and advocacy of human rights does not further that end. On the other hand, corporations tied to western democracies have an interest in at least appearing to foster human rights, and the very fact of involvement in international trade makes a country visible on the world stage. This visibility and an interest in being a magnet for foreign investment puts a damper on human rights abuse. At a minimum the country in question becomes a member of a world community which has a modicum of human rights concerns. As Conor has pointed out clearly, even the hypocrisy of paying lip service to human rights creates an opportunity for making attention to human rights a reality. The ubiquity of global business creates human rights opportunities that states or NGOs can not match–if the businesses have an interest in promoting human rights. If acceptance of human rights were spread as widely and as quickly as Coca Cola or McDonalds, what a great world it would be.

  5. Lee says:

    I think the crux of the problem is the people in corporate-land, the legal nature of the company, director’s duties, shareholder pressure, pensions and profit. We are never going to win over the business world with idealism, we need to engage with them on their terms: profitability. Respect for human rights needs to make commercial sense. The last 20 years saw a move towards better corporate governance not because better corporate governance is good and worthy but because institutional investors could see the commercial sense: the better the corporate governance regime the sounder their investment. Not doing enough, for example, for the human rights of your employees (in however remote a subsidiary) or the employees of a major supplier needs to have a commercial impact. At the moment exploitation is profitable so long as you manage any reputational damage.

    Companies are blamed for action or inaction with the focus being on the company as a decision making being – the decisions emanating from the corporate ether. Corporate decisions are not taken by artificial corporate creations detached from humanity; they are taken by real people. Remembering that people lie behind these companies is half of the battle in understanding why profit is put before doing good. The other half is the legal nature of the company.

    Warning: I am about to employ some sweeping stereotypes. Work in the City (I did for several years) and you will have more colleagues able to quote from the films Wall Street and Boiler Room than who know what the UDHR is. They generally come from affluent backgrounds and take their holidays in comfortable places. They are not bad people but it is very hard to have any understanding of what it means to be exceptionally poor, or unable to read, or have no access to healthcare, or insufficient food, or no access to clean water when you have never experienced it or seen it, but for a 30 minute television documentary which you discuss over lunch and all agree looks terrible. There is a lack of exposure and understanding.

    This kind of thinking is accentuated by the nature of a company and what is and is not profitable. Exploitation is profitable and corporate decision makers are legally bound to make (long-term) profit. The pre-Companies Act 2006 common law required that directors act in good faith in the interests of their company. The new CA06 provisions require a director to “act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole”. Success is taken to be a long term increase in the value of the company, albeit that the CA06 stipulates that in deciding how to promote the success of the company, directors are required to have regard to matters including their employees, the environment, the community in which they operate and maintaining the reputation of high standards in business conduct. These additional items present very low hurdles which in practice can be easily overcome.

    So, what to do? Changing the mentality of the decision makers is an obvious starting point but may be impossible. The work of civil society groups and the good souls within CSR departments is important in drawing the consequences of the company’s action or inaction to the attention of decision makers. The real change will occur when doing that bit more for the communities in which companies operate abroad has a positive financial value beyond the reputational consideration. Respecting human rights must be profitable, or to put it inversely, failing to respect human rights must incur detriment: reduction of share value and dividends, breach of directors’ duties, stressing financial covenants and harming credit ratings. We need to move from telling companies that they “should have in place policies and processes…” (Ruggie) to clear, predictable financial penalties.

    I would love to see a profit cap on companies which directly extract or purchase natural resources from the developing world or which benefit from its cheap labour. Regardless of the deal struck with the host government, profit above a certain level would be directed back into the community which has been exploited. A body established in the mould of the Competition Commission could administer the system, blocking deals and fining companies the excess profit. I would love to see different criminal and civil tests for those in the financial industry, reflecting that just because innovation is much more commonplace than in, for example, medicine, “risky” financial structuring is no more acceptable. I would love to see a tougher capital adequacy regime. I would love to see legislation piercing the corporate veil, allowing the UK ultimate holding company to be liable to civil action where an independently operating wholly owned foreign subsidiary (which passes all profit upwards) has wronged abroad. I would love to see directors’ duties to include responsibility for such matters. I would love to see a mud-slinging corporate universal periodic review where corporates can review and expose each other’s human rights records within a public, government led forum.

    But none of this is going to be easy because regulation isn’t universal and if we make being profitable too difficult companies will move elsewhere. A balance must always be struck in the interests of keeping our companies here, where there is some regulation and so that we may benefit from the revenue. Additionally, the balance must not stifle economic growth or else human rights will again suffer.

    So we must carry on with our baby steps whilst making sure that whatever these steps are, they harm share value, financial ratios and dividends more directly than through reputational harm. Harm the underlying financials and you’ll get the institutional investors on side. Their power to change corporate behaviour is huge but they are very much numbers people – they guard our pensions and insurance policies and so they invest their pots of cash in profitable companies, not worthy companies. Nobody will get to retirement age and thank their pension fund manager for making worthy but financially unsuccessful investments with their lifetime’s pension contributions.

    Finally, Ruggie. It’s good to have a first step but I find the principles lacking in specifics and lacking in challenge for UK corporates or the UK government. I have referred to companies “doing that bit more” in respect of the human rights rather than the infringement language used by Ruggie. A company can infringe human rights in many ways (obstructing access to or polluting water, employing children, through their security methods in conflict zones and so on) but restricting ourselves to the language of infringement is damaging. Consider the example of an extractive company, paying its employees slightly above the national average wage in an area which wouldn’t have seen employment otherwise, paying the host government an agreed fee, careful about its environmental impact and having funded a school or two. Talking about infringement (which may not be present) misses the point that the company is making a potentially huge profit elsewhere without making the social changes in the host country which it is empowered to do: empowered through taking that country’s natural resources. A redistribution from the profits of the extractive company is needed, with detailed studies of good and bad examples used to set the financial levels and broader requirements of diversification of expenditure (education, water, healthcare, agriculture etc) and transparency.

  6. Alex says:

    I most definitely agree with the concept of a business being responsible for ensuring it’s not treading on the human rights of those people they have direct interaction with and impact upon. I don’t however agree with them being responsible to the states they are interacting with as a whole; in my opinion that’s the remit of the state, charities and NGOs. To have them involved any more risks the further politicisation of business, which in my opinion already wildly oversteps the mark with the current state of lobbying. The state and business have completely different objectives and obligations and to have them in an ever more intertwined relationship isn’t going to make for a happy marriage; best to leave them to what they were respectively designed to do.

    Of course there should be some baseline, and businesses which choose to go above and beyond this should be rewarded with tax breaks etc. in their nation of origin, but to expect them to do a government’s job for them is both unfair and highly unlikely to present us with the results which are being sought out.

    • Lee says:

      I’m not expecting companies to do anything which they aren’t already comfortable doing as part of their CSR work. I’m asking that they be made to do more of it and that more of their profit is pushed in that direction. Where companies are uncomfortable investing back in the countries themselves (and positive investment would take precedence as job creation is crucial), there are plenty of civil society groups which could use the money. The FCO takes this approach where it has money to spend overseas but no effective capacity to put it to good use. Maintain the status quo and you are continuing the freedom of outsiders to remove natural resources and use labour with minimal benefit for the people of a country which you are forever consigning to an under-developed status. Looking to the government has not proved the answer due to their poor negotiating position and corruption.

      You suggest that businesses should be left to what they are designed to do. I am not comfortable with the idea that there is an inherent complete concept of what a business is or what it is designed to do. Of course, businesses are designed to make profit but this is constrained in whatever manner the law stipulates. We mould business behaviour by applying a range of restrictions in the interests of society: I gave you the corporate governance regime above but consider also taxation, employment laws and directors’ duties where a company’s solvency is in question. Many aspects of these laws require businesses to fulfil a role which in a parallel universe could have fallen on the government.

  7. Craig Valters says:

    Conor, your point about democracy brings me back again to the way in which our representative democracy (and that’s just talking about the UK) actually functions. I’ve mentioned this before, so I’ll keep it short: it functions for the minority not the majority. I feel this is relevant here – as we are all aware that big business and the media have a huge influence over any government who comes into power. There could of course be limited positives in this, if we accept that that a large corporations profit is an advantage overall to general citizens – although it hardly feels ‘democratic’, even if they are dealing with our elected representatives.

    The extent of corporate involvement in ‘representative’ governments needs scrutiny. I believe that human rights can be a platform for this, both in terms of the double standards you mention Conor and the excellent work of John Ruggie, hopefully setting norms that will permeate through to corporations successfully in the future.

    But again, I wish to point out some very large barriers to this. The reality is that we have the mix of a ‘representative’ elitist government, self-interested media and huge corporate power. This leads to all manner of actions from the state which panders to such influences. Trapped by such powers, it feels difficult to envisage human rights taking grip of the corporate world in the way many of us would like to envisage.

    The media is an important area if corporations are to feel pressure to adhere to human rights. But, of course, they are largely dominated by one man. An example of counter-intuitive reporting: there was unprecedented anger in the public against the Iraq War and rightly so. Many people thought they were being sold a pack of lies and they were right, as subsequent documents have shown. Out of the 247 (the figure may be slightly off) publications owned by Rupert Murdoch, 247 editors supported the war. The point being that the growth of a large human rights movement, if it were to be a challenge to assumed corporate profit making maxims (which it should/does), will be constantly pushed back by the opposing media…however, to backtrack a little, I’m thinking back to our discussions regarding the use of the internet – it certainly be a positive and important factor in such a movement, and in challenging the form of media I mention.

    A good example of corporate politics is the bank bailout: even if we assume that they had to be bailed out any reasoned citizen would think perhaps the taxpayer would like some of that money back – albeit through a system of careful taxation – perhaps this money could have strengthened our education system or the NHS. But it’s not even on the agenda.
    Not the same as the UK system I know, but I’ve been reading some of the Wikileaks regarding Shell in Nigeria, something Richard mentioned. I wonder if they do really have an interest in the human rights? This (being from Wikileaks) of course not being necessarily all factual but troubling nonetheless:

    http://www.guardian.co.uk/business/2010/dec/08/wikileaks-cables-shell-nigeria-spying

    Apologies for this being obviously rushed and coming so late in the discussions!

    • Lee says:

      Craig, I like your approach of CSR-human rights-democracy at home, rather than the usual focus of CSR relating to UK corporate behaviour overseas. The lack of mainstream media diversity combined with significant influence over the population on single issues or at elections is something which is often overlooked in CSR debates. Alex makes a linked point above about corporate lobbying.

      Off topic but I’d like to respond to the suggestion that the taxpayer won’t be getting back its bank bailout money. The media is keen on using phrases like “bank bailout”, “liquidity and recapitalisation scheme” and “bank emergency loans” but without explanation. Some go as far as to mention the government is an “investor” or that it has used “guarantees” but again without explanation. I don’t disagree that the government is in a significantly worse financial position than it would have been but for the recession and bailout and that some of the amount spent on banks will never be recovered. However, a large amount will for three reasons: (i) Loans will be (and are being, possibly at the expense of lending to businesses) repaid with interest. (ii) A large amount of the “debt” is in guarantees which serve to underpin and give confidence to the system and which feature negatively on the government balance sheet. It is not expected that these will ever be called and they will eventually fall away. (iii) The government has taken very large stakes in some banks. It will take many years but these banks will re-build, become profitable and the government will be left with something very valuable with which to fund education and the NHS. It doesn’t serve the Robert Peston-led doom and gloom media to highlight these bits.

  8. To my mind, this area isn’t ripe for legal codification as yet. There is too much disagreement on the extent to which companies should be bound by human rights law (while I would hope that most people agree they should be bound by HR principles, how and to what extent haven’t been decided yet). Giving them greater HR liabilities would require a complete rethinking of the way human rights law works. While this should happen in the medium-long term, in the meantime I think greater public and international scrutiny may be the better option. Groups such as UK Uncut show that individuals are interested in companies fulfilling moral obligations as well as legal ones. The Guardian/Trafigura incident also shows there is media interest. The intensification of this interest, as well as more of a focus on human rights moral obligations, can do nothing but help. In the same was that until recently the FCO Human Rights report showed up abuses that the UK couldn’t intervene in directly, a similar government report on UK companies operating abroad could also help influence the behaviour of those companies (although this is somewhat idealistic given the current government).

  9. Alan D.P. Brady says:

    I think you’ve hit on some very stimulating ideas here Conor. I think that part of the issue here is the limitation of law as a tool for ensuring certain practices and the manner in which it ordinarily operates.
    For most of its history, the set of social practices that we describe as ‘the law’ has been directed towards individuals. The modern corporation is a pervasive and powerful force which the law is still in some ways getting used to. The question I want to pose is ‘how can the law ensure human rights compliance by such companies?’
    HLA Hart’s idea of both an internal and an external aspect of rules is instructive. The basic idea, expounded in ‘The Concept of Law’ is that people obey rules for two reasons: either because of some external force putting pressure on them (the state, the community etc) or some internal force. The internal aspect is essentially that part of the human mind that obeys the law because it is the right thing to do, not because of fear of punishment.
    Most law is obeyed most of the time: much of human society is essentially self-policing. Most of us don’t kill our neighbours when they annoy us, we don’t physically attack our family members and we don’t take other people’s property. A Hartian analysis would indicate that at least some of this restraint is occasioned by an internal sense of right and wrong, not by any external force.
    Which brings me back to the company. If the company is solely a vehicle for profit maximisation, then there can only ever be an external element to any rule placed upon it. Similarly, if this is the case, then the CSR movement is merely a marketing ploy, as has already been mentioned. If we take this view, then we are treating the company as an atavistic sociopath. A cursory review of some of the worst excesses of corporate wrongdoing might give support to this premise. However, I think that there is quite a bit of difficulty with it.
    Despite the convenient fiction of separate legal personality, companies do not operate as a single self-interested entity. They will have an internal constitution which sets out certain goals and principles; ultimately those goals and principles will have to be carried out by the people who work for the company. Those people, being human beings, are as susceptible to the internal aspect of rules as anyone else. It is the internal constitution and the individuals within the company that are responsibility for ensuring corporate compliance with the law.
    Which brings me to human rights law. Human rights norms are notoriously abstract and require a large degree of interpretation. Their malleability, while a great strength in some ways, causes quite a few difficulties, many of which have been discussed here. With this in mind, I think we can say two things about corporate observation of human rights:
    1. Expecting concrete observance of broad human rights principles requires more detailed elaboration of what that entails in specific situtations. In most domestic settings these issues are beaten out in the constitutional courts. However, there is no reason that specific statutory guidelines cannot be given, and I think such things could be very useful for the corporate sector.
    2. The internal aspect of rules is essential to ensuring meaningful observance of human rights rules. If we focus on the internal aspect within the company, then something can be gained beyond the more cynical CSR blather. The constitution of a company can easily be required to observe certain standards. More complex, is the motivation of those human agents who carry out the company’s actions. General appeals to their better nature are a useful starting point, but could easily be supplemented with codes of conduct and guidelines which would allow the human agents to develop the internal aspect of rules in a way which would guide their conduct. Legal protection for those to take a pro-human rights stance in opposition to the corporate culture is also essential here.
    This may seem a very simplistic approach; however, as has been noted, the company (along with all the other foundations of capitalism) is a legal construct. Like any legal construct, it can be adapted and changed to suit societies’ needs. Much harder to adapt and change is the individual human conscience. However, since the realisation of so much of our law seems to rely on the internal motivations of individuals, I think it sensible to consider developing a similar approach to human rights observance by companies.

  10. Zoe Fiander says:

    This is a fascinating area, wish I’d had chance to respond to this track earlier!

    Some points in response to Alan but overlapping with much of the discussion here.

    Internal aspect of rules and incentives for companies to engage with human rights, in relation to the ‘smokescreen’ view – first, a question. Does it actually matter *why* a company has chosen to concern itself with human rights/promote CSR, as long as it has in fact done so?

    Second, I disagree with elements of Alan’s suggestion that if “the company is solely a vehicle for profit maximisation, then there can only ever be an external element to any rule placed upon it. Similarly, if this is the case, then the CSR movement is merely a marketing ploy, as has already been mentioned. If we take this view, then we are treating the company as an atavistic sociopath.” (& therefore we should appeal to the individual human nature of its directors/those who shape its principles)

    I disagree with this view partly because I think it is dangerous to conflate corporate motives with individual human motives (the consciences of the directors etc). Please forgive me for not explaining why -would be v long and not particularly relevant to the track!

    The other reason I disagree with this view is that I think profit maximisation is a perfectly legitimate ‘motive’ of a company, though it’s not the holy grail that the right would like to paint it as. Company – motivated by profit, yes, but there’s nothing necessarily good or bad about this unless you see profit as a good or bad thing in of itself (and that’s a whole other debate). A company’s only a sociopath in acting to maximise profit if it could have been otherwise. Irrespective of its organisational values, a company operates first for profit – if it has shareholders, profit almost becomes a duty.

    I don’t think a company can ever really observe rules because it feels that is the right thing to do (as above, I don’t think a company – the legal person – has any conscience to speak of). So I would disagree that there can ever be a true internal aspect in a company’s compliance with rules in the way that Hart defined it. But I don’t see why response to incentives cannot be just as effective in promoting compliance/support for human rights. If a company’s ultimate goal is profit maximisation, why is it a problem if human rights make the appeal to it in that way? I think it would be wrong to present it as a simple situation where the law is the stick used to keep companies in line – very often there is an incentive to comply, and the threat and the incentive work synergistically. In this way an appeal to a corporate motive (profit) can be an effective proxy for the internal aspect of rule acceptance.

    Will try and come back and add more on how this could be done in practice with human rights – please do disagree with me that it should be! 😉

  11. Craig Valters says:

    Firstly, thanks for your thoughts Lee. As you mention, the ability of the media to have significant influence over the population on single issues (indeed to create a mindset that its these single-issues that count, not the whole lot) is significant. This is something which needs to be challenged by advocacy campaigns, I would suppose online.

    Your thoughts on the banks are interesting. I think it’s very difficult to actually get genuine information on what actually happened/will happen with the money that has been given, particularly in the context of different media angles on it, so I appreciate what you say. I do think, however, that whatever stake we now have in the banks, I would be surprised to see the cash go directly back into the NHS (for example) at a later point – particularly if the Coalition – although I assume we are talking about much longer timeframes than I hope this government lasts – have anything to do with it, considering their Thatcherite agenda.

    I wonder what your (and everybody else’s) thoughts are on the Robin Hood Tax?

    http://robinhoodtax.org/

    Frankly, I don’t know enough about the perceived negative impact of it, but from what I read it makes perfect sense. The key argument against it tends to be that ‘its not going to happen’, which is obviously isn’t a good enough argument in itself.

    Here, for example, is something it proposes:

    “A Financial Transaction Tax (FTT)
    A tiny tax of about 0.05% on transactions like stocks, bonds, foreign currency and derivatives. Could raise £250 billion a year globally, or £20 billion in the UK alone. Well-tested, cheap to implement and hard to avoid.”

    Would it really drive businesses/banks out of the UK? It would be interesting to hear people’s thoughts. Such measures could also help impose a more general idea in the public mindset that huge profits (particularly in the context of the banking bailout) are not something that provide corporations with the opportunity to be charitable, but the obligation to contribute back into the society the wealth derived from.

    • I’m broadly in favour of the Robin Hood tax, although from what I understand the main concern over it is the risk of driving large businesses abroad. It would take an economist to know at what level the tax would need to be set to generate maximum revenue (i.e. high enough to make money, but low enough to prevent companies withdrawing). Large companies have moved before, i.e. the Irish boom, but the risks of this will probably have changed in today’s financially unstable global climate.

    • Paul Bernal says:

      The ‘Robin Hood Tax’ is a variant of the Tobin Tax – something conceived originally as a way of putting grit into the wheels of the financial system, to slow it down and reduce volatility and hence the profits available to malicious (or just plain selfish) speculators. Putting the proceeds of the tax to ‘good’ uses was almost an afterthought, though in practice it might be able to make significant contributions. The problem is that it would be almost impossible to institute and unless very well written and enforced quite simple to avoid – by exactly the same kinds of ‘creative’ uses of financial instruments that helped bring about the recent problems. Indeed, the existence of such a tax might even encourage exactly the wrong kind of behaviour, as accountants, lawyers and financiers stretch all their brains to come up with ‘innovative’ ways to reduce their tax burdens….

      …having said that, if there was the political will, I’m sure it could be done – but where is that political will coming from? I can’t see a government (or even and opposition) anywhere in the planet which shows any real sign of it, and the real problem with this kind of tax is that it doesn’t just need one government to go for it, it needs a critical mass of ‘big’ governments all to commit to it at once. My heart says ‘yes’, my head says it won’t happen….

  12. Craig Valters says:

    On a separate note, Conor, I’d like to pick up something you emphasize (through Ruggie):

    “States should be especially vigilant when corporations from their countries are getting involved in conflict zones and should work with them carefully from the start on this, making sure the temptation to excess is not given in to through a seductive belief in impunity.”

    This, undoubtedly, is where ‘naming and shaming’ is crucial. For corporations, image can be everything. The work of organisations such as Global Witness is key here. Part of the difficulty, is that organisation can hide behind complexities. This is well explained by an article on the Guardian here, in relation to electronic parts coming from Eastern Congo:

    http://www.guardian.co.uk/commentisfree/2010/dec/12/christmas-congo-electronic-companies

    Here is a telling excerpt: “What lies between my laptop in London and the mines in the three eastern provinces of Congo is an immensely complex entanglement of economics and politics. Think of how kite strings can get tangled and take hours, even days, to unravel and you have the right metaphorical image. This is globalisation in which supply chains crisscross continents, passing from company to company, and at every stage every player has an interest in obfuscation: either blatantly on the ground in Congo, where huge quantities of this million dollar trade are illegal; or closer to home with the polite refusal to engage, the citing of commercial confidentiality.”

    This highlights how immense the task is. Globalisation has given corporations unbelievable opportunities to extract resources cheaply from countries that do not have the political structure or strong network of civil society to stop it.

    This isn’t just a matter of double standards, because there obviously isn’t enough regulation to resolve all these issues. The problem, when you look into these things (something I’ve had to research about recently), is that corporate and government complicity in such things are endless and difficult to untangle. As Joanna Macrae (an excellent writer on humanitarianism) states, ‘…its worth remembering the strong link between international commercial and political interests on the global north and its relationship with violence in the south’. This issue needs to be addressed on a number of levels (not just human rights) in order to resolve this. In order for such countries to develop effectively, they will need adequate control of their own resources – something which by and large would not be in the economic interest of powerful states – thus its not surprising to see Western corporations acting with relative impunity.

  13. Paul Bernal says:

    Sorry to be so late on this – I’ve been out of internet access for a week or so – and for having to just write off the cuff as a result. For me, however, as someone who has been (and to an extent still is) a chartered accountant who has worked with and for ‘big corporate interests’, this is one of the most important and most interesting areas in the whole field of human rights. I agree with a lot of both Alan and Zoe’s posts (even where they disagree with each other!). The raison d’etre of a company with shareholders is generally to enrich the shareholders – but I don’t think this should be seen as something essentially good or evil, just part of their nature. Where it becomes interesting – and where there’s an area to explore – is that this idea of enriching the shareholders doesn’t necessarily require that enrichment to be instant. That’s one of the places where human rights can come into the equation – what ‘we’ need to do is to make compliance (and even support) for human rights something that is ultimately beneficial for the companies involved, and hence something that companies actively go for in a positive way. If a company knows that being ‘good’ is more likely to make them long term profits, then they might have a motivation to do the right thing. That can work in a couple of different ways. Firstly, through the customers – if a ‘good’ company gets more customers (or retains more customers) than a ‘bad’ company, then more companies will be ‘good’. Secondly, through the law and taxes – if a ‘good’ company gets more favourable treatment, then there’s an incentive to be ‘good’.

    For me, it’s as simple (and as difficult) as that. We need to become more ‘active’ customers, and ‘our’ governments need to set conditions that support ‘good’ rather than ‘bad’ behaviour. Now of course that sounds very simple, but the reality is much more complex – and it begs the question of what is seen as ‘good’ and ‘bad’. The biggest key for me, however, is that we must look long term, and must set our systems to encourage long termism and discourage ‘quick buck’ approaches. It’s the desire for instant profits that breaks the whole system down. If a company doesn’t need a long term relationship with either customers or governments, it doesn’t need to pay nearly so much attention to ‘being good’. If we can find a way to do this – and there are certainly possible mechanisms with taxation and so forth that can begin to do it – then we can start to give more power and influence to the ‘little people’, which is a key part of the whole process.

  14. Lee says:

    I struggle to see a route to achieving the aspirations which many responses share. Looking at the international bill of rights (which Ruggie uses together with the ILO core conventions) I can hear CEOs saying
    “…but we’ve had no input into the drafting of these”
    “…these apply to states, you can’t expect us to do that – the language doesn’t make sense”
    “…how can you impose this on us when you can’t agree what it means amongst yourselves – look at all the reservations and declarations – look at how you all breach it”

    The hard work will come when a government attempts to implement Ruggie’s call to encourage businesses to respect human rights. At this stage companies will have a chance to engage on the substance and ask of governments (and Ruggie) the difficult questions of what some of these human rights are (to a level of certainty that can entail criminal and civil responsibility), which should and should not apply to companies and how they should apply.

    Also, Conor, you mention in the video above that you advise companies on human rights law. I’d be grateful if you could add a little (to the extent you are able) in your response about their approach/concerns at present. They will be concerned about elements of English law which operate so as to protect human rights. To what extent are they also interested in the obligations on states under international human rights instruments and drawing analogies to their businesses?

  15. Carol Coulter says:

    Of course it would be stupid to argue against those involved in business from trying to import human rights standards into what they do.

    However, the image of a long spoon does come to mind.

    I know of one prominent international business figure who funds many worthy human rights bodies and activities, and I am glad he does. However, I also know the same individual is vehemently opposed to trade unions, at least in his operations in this country. For me, the right to organise is a fundamental human right.

    This does bring me to something I think I touched on before – what is the best guarantor of human rights? It’s not conventions or documents or even successful court cases (though they help), or well-intentioned individuals in large commercial organisations who improve those organisations’ practices. It is social movements involving those whose rights are at stake. That’s where the struggle for human rights came from, and without which it cannot live. If we don’t have strong social movements, including though of course not limited to, trade unions, human rights certainly will not survive.

    And I am suspicious of those who, on the one hand, advocate economic policies that destroy livelihoods and whole communities, and indeed, whole economies in the developing world, while on the other they stride the world stage as advocates for human rights.