The Urgent Need For a Humanization of the Business Sector

“A business that makes nothing but money is a poor business.”1

The idea of human rights lies under a very simple and straightforward principle, a principle that everyone should be treated with dignity. Presently, we do recognize the paramount importance of human rights promotion and protection on a global scale and that commitment is de facto, bolstered by their enshrinement in international treaties and customary law.

Nonetheless, in what concerns the business area, the tendency has been to ignore the relationship between these two concepts or even to argue that they are totally disconnected and, for that reason, should not be lumped together. Even though we can observe that in the last decade the business mindset has started to change, the money factor continues to speak louder in comparison to human rights concerns. The undeniable truth is that business has always an impact on human rights. Therefore the question we should reflect on is if that impact is actually positive or negative.

Globalization transformed the scale of business. If we now consider companies as global organisms, we also have to take into account that their impact is equally global and this idea is visibly marked through the increased stakeholder’s interest with these problematics. Respecting human rights is not an ad hoc decision, it has to be seen as a continuous process and particularly as a vivid one, able to adapt and evolve according to the circumstances and changes in society. A simple manner to understand that business and human rights are deeply related is by analyzing the number of rights that can be violated in the context of business. Just as an example, we have, the right not to be subjected to forced labor, the right to form and join trade unions, the right to health or the right to just and favorable conditions of work. For all the reasons already mentioned and others that will be discussed further on, it is peremptory that businesses take into consideration “The Triple Bottom Line”. This framework is divided into three different components: social, concerning people, the environment, concerning the planet and, finally the financial meaning profit. Although the paradigm of business is currently facing some amendments, the question of profit still has a higher regard against the two other variants.

The emergence in the last years, of high-profile scandals involving major companies, with some of these scandals concerning, for example, ASOS and Marks & Spencer that were implicated in child labor or Nike for refusing watchdog audits to its supply chains, was a breakthrough into the dark side of the business. However, this also created the momentum for the discussion about the seriousness of these issues and the final appearance of initiatives committed to placing human rights on the business agenda. Nonetheless, the handicaps of these initiatives derive mainly from their voluntary basis, the absence of an effective monitoring mechanism, their restricted scope and also and no less important, the lack of a consensus about which standards should be applied to business.

With this in mind, the starting point should then be, to acknowledge the importance of reaching an agreement on the significance of embedding human rights in businesses practice. Additionally, companies should also understand that their responsibility is not only through the establishment of a grievance mechanism or the creation of a strategy on human rights. The whole mindset has to be renewed and that also means changing the obsolete way of doing business that historically has been solely based on the principle of reducing costs and maximizing profits without any morality or diligence.

 

 

The Materialization of the United Nations “Protect, Respect and Remedy” Framework

Albeit these less positive remarks about the business behaviors, it is also relevant to acknowledge that, in 2011 something very substantive happened, and that subsequently, that moment created an enabling atmosphere for change. This wave of the shift began in 2008 with the establishment of the United Nations “Protect, Respect and Remedy” Framework for business and human rights, which was the result of a series of research and multi-stakeholder consultations that had already started in 2005. In a very recent past, the UN Commission on Human Rights had already produced a set of “Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights”.2 Although, the failure on the adoption of this document

– mainly through the strong opposition of Business – it also resulted in the appointment of a Special Representative, Professor John Ruggie, with the mandate of clarifying the role of States in the area of Business and Human Rights and the standards of Corporate Responsibility. Within this favorable environment, where the relationship between business and human rights was finally getting prominent, in 2011 the Human Rights Council unanimously agreed on the UN Guiding Principles (UNGP’s) for the final implementation of the “Protect, Respect and Remedy” framework. The voluntary basis of this document, or in other words, the fact that it is non-binding for the Member States, also explains why it faced a universal approval. This framework relies on three pillars, firstly, the State duty to protect, second, the Corporate Responsibility to Respect and thirdly, the access to remedy.3 The first pillar implying a public commitment, the second one aimed at addressing and identifying the adverse impacts of business on human rights and finally, the third pillar concerning the possible responses when things go wrong, which can be translated in judicial and non-judicial mechanisms.

 

One of the main features of the UNGP’s is that it applies to all Member States and to all business enterprises, independently of their size, working sector or geographical position. This framework does not encompass new legal obligations for the States, instead, it draws upon the repercussions of existing legislation, comprising a “smart mix”4 of voluntary and mandatory provisions. The first pillar – deriving from international law – identifies the state as the first duty-bearer and reinforces that it has to protect the individuals within its territory or jurisdiction against human rights violations perpetrated by non-state actors. To fulfill its obligations, States have to “take appropriate steps to prevent, investigate, punish and redress private actors’ abuse”5, this means, for example, labor inspections or giving guidance for businesses. The second pillar affirms that besides States, also business enterprises have the responsibility to be committed to respect human rights whenever or wherever they are functioning. This principle is particularly important taking into account the major influence that businesses have in peoples’ everyday life. Apart from the responsibility of avoiding negative impacts on human rights, companies have also to minimize these possible impacts, which means establishing a code of conduct that should go beyond what is already required by law. The third pillar is crucial as an effective response to the occurrence of negative impacts on human rights and consequently, human rights violations. This third category implies the action and cooperation of both companies and States. States should ensure and facilitate access through judicial and non-judicial mechanisms and companies should provide grievance mechanisms to allow remediation.

 

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The multifaceted concept of Corporate Social Responsibility: Company’s Practices

The idea of CSR implies that business enterprises should not only be concerned with their own interests but moreover with society as a whole. Nonetheless, what we observe nowadays is the proliferation of the “race to the bottom” strategy. Businesses are moving their production to developing countries with the purpose of taking advantage of lower costs that will potentially increase their profits. This strategy ultimately results in damages to the environment, poor labor practices, and even factory closures. The unwillingness of States to develop more attractive taxation and regulatory regimes is another key cause for the use of this strategy. In light of this reality, the phenomena of the Corporate Social Responsibility (CSR) was materialized by focusing on three main areas: labor, environment, and society. CSR was created through the influence of international organizations, non-governmental organizations and civil society. They decided to point the finger at the companies that were perpetrating these human rights violations and demanded corporations to take a stand.

 

Corporate Social Responsibility is not a consensual topic. Some companies are still very reluctant to take action, arguing that CSR is an illegitimate waste of resources and that for that reason it goes against the main goal of businesses: maximize their profits. From another perspective, some companies were actually smarter and understood the paramount importance of CSR. Many leading businesses embraced CSR and transformed it in a key element of their brand identity. The growing awareness of businesses practices requires them to be socially responsible and to acknowledge that human rights abuses will most certainly tarnish their reputation. Besides this, is also important to reinforce the pertinence of the emotional added value of brands, “the value of a brand comes from its ability to gain an exclusive, positive and prominent meaning in the minds of a large number of consumers.”6

CSR only becomes problematic when companies decide to use it with merely marketing intentions or as a response to some public criticisms. CSR in principle should mean that companies go the extra mile, “…social responsibility begins where the law ends. A firm is not being responsible if it merely complies with the minimum requirements of the law, because this is what any good citizen would do.”7 In this respect, it is substantive to value the companies that are actually working under these beliefs. We can take the example of Telecom Italia that includes human rights due diligence as one of its core values. To identify and address impacts, Telecom Italia established an Enterprise Risk Management system. Another positive example is the Deutsche Telecom8 that defined in their human resources policies, a solid commitment to human rights, mainly through the concerns with fair pay and non-discrimination.

 

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Challenges and Opportunities for Business and Human Rights

The system of human rights protection plays on States the obligation to safeguard that protection but the current reality is that in a great number of cases, States are now powerless against corporations, which is clear when we acknowledge that some companies are wealthier than countries. Moreover, this imbalanced dynamic creates a governance gap that usually results in the phenomenon of the race to the bottom. This kind of practices challenges human rights by transforming their protection in some kind of luxury project and also by creating a type of competition between companies that basically implies lowering human rights standards. This blind run to meet profit maximizing is currently one of the major obstacles to business and human rights. As a way to counter this problem a lot of different measures can be considered, such as: hiring human rights experts to embed human rights in businesses daily operations, capacity building, and training workshops, enhance grievance mechanisms or even by establishing a more cooperative system. However, even if we combine all these measures together, that would still be insufficient. The time has come for a binding treaty on business and human rights, that can finally put an end to impunity, create solid preventive mechanisms and be able to properly support the victims of human rights violations from the corporate sector.

 

writer
Marta Rodrigues
researcher, Sustainable Development
UN Habitat

 

 

references:

  1. H. Ford quote cited in: E. Brachlianoff , A business that makes nothing but money is a poor business, [website], 2017. http://www.huffingtonpost.co.uk/estelle-brachlianoff-/a-business-that-makes-not_b_10958310.html, (accessed 13 December 2017).
  2.  S. Moyn The UN Protect-Respect-Remedy Framework for Business and Human Rights, [website], 2016, https://h2o.law.harvard.edu/text_blocks/29019, (accessed 14 December 207).
  3. OHCHR, ’Guiding Principles on Business and Human Rights: Implementing the ”Protect, Respect and Remedy” Framework’ (16 June 2011), http://www.ohchr.org/Documents/Publications/ GuidingPrinciplesBusiness HR_EN.pdf (accessed 9 October 2017)
  4.  Ibid.
  5. Ibid
  6. Voiculescu, and H. Yanacopulos, A. The Business of Human Rights: An Evolving Agenda for Corporate Responsibility, London, Zed Books, 2011, p. 31
  7. Quote cited in P. Schreck, The Business Case for Corporate Social Responsibility: Understanding and Measuring Economic Impacts of Corporate Social Performance, Contributions to Management Science, Physica-Verlag Heidelberg, 2009, p.11.
  8. CSR Europe, ‘Blueprint for Embedding Human Rights in Key Company Functions’ (March 2016), https://www.csreurope.org/sites/default/files/Blueprint%20%28Original%29.pdf, (accessed 12 December 2017), p.33
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