Business and Human Rights: legacy and trajectory

Is there an unstoppable meta-trend towards greater corporate responsibility and accountability for human rights impacts?

In my Masters course on 'Business and Human Rights' (BHR, currently afoot), I offer students a timeline of BHR. This begins with colonisation (where private listed companies sometimes led) up to the current Geneva UN negotiation towards a BHR treaty. I ask them, among other things, the question above.

The most significant positive event on the timeline, without doubt, is the unanimous endorsement in 2011 by state members of the UN Human Rights Council of the Guiding Principles on Business and Human Rights, based on a related 2008 Framework of differentiated responsibilities. This was a remarkable achievement given the difficulties of erecting a global normative framework and narrative for business responsibility, and decades of toxic, divisive ideological debate in UN forums on the issue. 

Professor John Ruggie, who led the process that produced the Principles, has sadly died.

Of the many tributes and comments circulating among BHR scholars and others, these two below best capture, to my mind, the significance of Ruggie's achievement in 2011, especially given the legacy of inaction and division before 2005-2011. In particular, the significance of his work lay in the consciousness that there is no silver bullet for closing the 'governance gap' between corporate impact and corporate responsibility: a mix of measures is needed, drawing on the inputs and incentives of various actors within this regulatory ecosystem, but without obscuring that states are the ultimate duty-bearers, their national legal systems the foundation of regulatory action.

We all mourn and will miss him.

Comment 1 (Muchlinski)

A great reformer has passed. John understood what should be done and, so importantly, what could be done. As a result we have moved forward hugely in the field of business and human rights. I am old enough to remember times when talk of business having human rights obligations would be treated with polite disdain. That changed in the 1990s leading to the first international iteration of business responsibility for human rights in the UN Global Compact, of which John was one of the leading architects. Then came the impasse over the UN Norms. John was called upon by Kofi Annan to unblock the situation. He started from first principles and concrete evidence based assessments of what should, and could, be done. He was motivated by an understanding of how different methods can be used together to move forward change – formal regulation, civil society pressure and self-regulation. He has been criticised for not going far enough. That’s not the point. He got us further than anyone might have hoped in 2005. We have much to learn from his wisdom and genuine moral commitment. Thank you, John, for an outstanding lifetime of scholarship and public service.

Comment 2 (Orentlicher)

I can’t imagine a world in which those working on business and human rights are unable to turn to John for guidance. After seeing news of his passing, I re-read e-mail exchanges from the early period of his work as [UN Special Representative on BHR], and was reminded how astonishingly different this space was when he began his mandate—which is to say, I was reminded anew of how profoundly he transformed it. In an e-mail from November 2005, John aptly captured the prevailing state of play when he described a then-recent extractive industries consultation, noting “it proved impossible to have a serious discussion about standards because for the NGOs that meant the Norms and for business the Norms meant warfare.” From this starting point (and ongoing necessary debates notwithstanding), John managed to forge a remarkable measure of consensus around a brilliant core of actionable insights—standards that provided a foundation for the immense work that remained/remains to be done.

Business and Human Rights: the Future

How powerful is a 'human rights' framing in terms of the overall 'responsible business' agenda?

Next year will be a decade since the rare unanimous endorsement by the UN Human Rights Council of the UN Guiding Principles on Business and Human Rights (UNGPs / BHR).

The UN Working Group on BHR has set up an open consultation to take stock of the impact and implementation of the UNGPs and -- in very UN-speak -- chart a 'roadmap' for the UNGPs over the next decade to 2030.

Much could be written about the UNGPs including on the extent or otherwise of their uptake over the last decade.

For one thing -- as some previous posts have hinted at, and as my next post will cover -- they really do not appear to have gained particular traction in terms of the search by governments, Big Tech, civil society and others for suitable and legitimate frameworks for the governance of responsible AI and other new technologies.

Here I will limit my observations to one impression from the consultation concept note. I wonder whether this puts too great an expectation on the transformative, emancipatory, or remedial power of 'human rights' as a vector for governance and change.

The concept note mentions the UNGPs in the context of 'sustainable development and stability' (notably climate change), rising inequalities and pervasive corruption; rapid technological change... widespread fragility, conflict and violence...'. It includes a call to embed the UNGPs more concretely in climate change and sustainability debates. It is one thing to draw attention to complex inter-linkages (e.g. the UNGPs with the SDGs), but it may be another to envisage that human rights-based approaches and arguments ought to be at the heart of the range of issues raised in the note. For one thing, business may be daunted enough by the scope of the UNGPs agenda even narrowly framed, and wary of 'responsibility creep'.

Others have written on the secular decline of 'human rights' as a powerful framework for socio-political action (e.g. Hopgood 2013, Posner 2014; Moyn 2010+; compare e.g. Sikkink 2018).

Yet one doesn't have to subscribe to the 'end-times / twilight of human rights' school to recognise that while there are obvious intersections with issues such as climate change or corporate taxation, it remains far from obvious that simply re-framing those debates in human rights terms suddenly gives them far greater urgency, appeal, traction ... it is not obvious that business (or government) actors suddenly sit up just because a familiar claim is suddenly made in human rights terms, and the contrary can be true ... 

For my part, an 'ambitious roadmap' for the UNGPs must proceed, at least in part, from a recognition that framing an issue in terms of human rights -- especially individual rights claims against the state, or business -- is not necessarily conceptually persuasive nor a panacea in advocacy / strategy terms.

In a previous (2018) post I was deliberately provocative in asking if BHR had 'lost its way': here.

There among other things I wrote this, and reading the 2020 concept note I have the same reaction, really, and will put this out there:

"Yet the question arises whether we should be a bit more strategic about what is likely to gain traction as a BHR issue, and about how widely we frame BHR, and about what we think corporations and other enterprises really have a meaningful responsibility for.

... Just how useful and effective is the 'human rights' paradigm / lexicon in shifting business (and state) behaviour around social impact? However tempting it is to invoke it in support of all manner of worthy societal campaigns, is it really that effective?"

'Due Diligence' and Human Rights Risk

Whether or not there truly is a 'new social contract' between business and society, the trend towards grounding 'business and human rights' principles in national-level legislation continues to strengthen.

This week came news that over 20 significant companies and business organisations issued a joint statement welcoming the European Commission's April announcement that it is committed to exploring the introduction of mandatory corporate human rights (and environmental) due diligence laws.

There have been various calls for such laws, and some EU member countries have introduced or are exploring them.

No doubt this supportive, engaged stance by business actors is partly driven by the desire by leading firms both to cement their advantage and for a more level playing field: larger established firms (especially brand-sensitive ones) can only benefit requiring competitors or putative competitors to adhere to and invest in the same enviro, social and governance (ESG) standards as the incumbent players do. There are other incentives and drivers, not least the need for firms to incorporate systems to respond to the increasing orientation of institutional and other investors (e.g. see here). Some firms are also supportive out of a sense of inevitability: such laws are inevitable, we may as well have pan-EU coherence rather than a patchwork of national legislation. Some firms accept research that ties ESG performance with protecting or even increasing a firm's value.

Yet one question I ask my 'business and human rights' Masters students online this week is whether it matters, ultimately, if business / investor support for or engagement in legislative schemes is motivated by 'instrumental' (rather than 'intrinsic' value) considerations or purposes.

I ask this since a critical perspective might be that legislated 'due diligence' requirements (and perhaps more so mere reporting requirements that only imply undertaking internal due diligence processes) do not necessarily transform internal corporate management culture. At least, we remain unsure about the conditions under which this internalisation of values might take place, while such schemes can risk becoming process-oriented rather than preventive and problem-solving in nature.

There will be a robust debate about how such laws deal with penalties, and with remedy for affected groups -- but my ever-practical students are probably right in seeing support for such a regime as a very positive development.

Jo

See for example this blog series on mandatory human rights due diligence, and here for the recent comprehensive study in part underpinning the Commission's approach.

  

Regulatory culture: punish or persuade?

How do we design 21st century regulatory schemes for responsible business? Regulatory culture must shift, not just corporate culture.

How do we design viable, principled but pragmatic regulatory systems that engage with business in pursuit of goals but are legitimate and trusted by all societal stakeholders?

In particular, what mix of 'enforcement' and 'guidance' is appropriate and effective on the part of the regulator?

The prompt for this post is the interim report on the EPBC Act, Australia's principal federal legislative scheme for environmental protection.

I study 'business and human rights' (social impact) but this emerging field has not done enough to learn from the bitter experience of the conservation and environmental movements and the history of regulation there. (The social and environmental are/ought not so easily be distinguished).

The EPBC Act review has various lessons of interest in my field (e.g. on recent reporting schemes on 'modern slavery' in supply chains), from federal/state coordination to questions about the adequacy and quality and availability of reported data. But what stands out are the lessons in the review about designing enforcement aspects of regulatory schemes where corporate activity may impact on public wellbeing and public interests.

The review condemns federal regulators for settling into a regulatory 'culture' of not using available enforcement powers, and for their over-reliance on a 'collaborative approach to compliance and enforcement' that is 'too weak'.

Last year in a related post on the Royal Commission report into the banking sector I noted the same pattern:

"The lesson is that regulators -- even where they have these powers -- appear reluctant to use them, and so err on the side of 'engagement' where sometimes demonstrative penalty seems more appropriate..."

There are many merits (as I wrote in that 2019 piece) to a regulatory approach that is judicious about the use of enforcement powers, and that privileges cooperative approaches that guides and educates and harnesses companies' own resources (etc) in pursuit of the public policy goal. Moreover, the regulator's dilemma is always 'when to punish and when to persuade'.

But the credible threat of non-negligible punishment may be vital to any strategy of dialogue and engagement. Moreover, enforcement is a form of 'guidance'. Theorists who promoted dialogic and collaborative problem-solving engagement made clear how such regulatory strategies to explain and foster compliance were defensible, but only where the regulated entities know the consequences of non-compliance or perfunctory compliance. A credible pattern of using punitive powers and a reputation for fair but decisive use of enforcement powers is, in this theory, inseparable from the other more 'cuddly' bits about cooperation. Australian regulators have only embraced the latter.

Parking inspectors and fines come to mind. I used to remind my eager 'business and human rights' students -- believers in regulatory capability -- that the Oxford city council has more parking inspectors than the staff at the UN HQ office in New York coordinating the [voluntary] UN Global Compact with business (not an inspector / enforcement entity). The interim review of the EPBC Act shows that since 2010 the total fines issued for breaching environmental approvals is less than the annual amount of traffic fines levied in a typical small local government area in Australia ...

From environmental impact to responsible banking to modern slavery in supply chains, public trust in the regulation of responsible business may require that 21st century regulatory models have some supposedly old-fashioned 'sticks', and use these to incentivise compliance and engagement. This doesn't require that EPBC-type regulators have the blunt 'revenue-raising' approach that parking inspectors do: there is more to regulation than this. 

Schemes like the EPBC Act have a wider purpose as part of efforts to shift behaviours towards socially responsible ones. But the judicious use of enforcement powers clearly has a place in such a scheme.

JF

Here is the related post on regulatory culture.

Law and regulation in (and of) crisis

What lessons on the governance of corporate responsibility fall from states' varied COVID responses?

COVID has prompted various reflections on how law is used (and abused) during crises*.

This blog-site focuses on the regulation of responsible business conduct, but this post reflects on more general, higher-order questions about the nature of any regulatory undertaking. (I would like to think my 2015 book was doing the same!).

What strikes me most about the COVID-law-regulation nexus is not the patterns we can see about how powerful state and corporate actors 'never waste a crisis' to pursue all manner of agendas calculated to entrench, advance or indeed obscure that power. Many colleagues'* response to the COVID crisis is, in effect, plead at this time for adherence to legal frameworks e.g. for global cooperation. This is perhaps a plea for law's 'regulatory relevance' (Findlay 2017), yet too often insufficiently couched in analysis of how law is used to regulate crisis -- but selectively or in service of non-inclusive agendas.

This brings me to what strikes me most about law and regulation w.r.t COVID.

This is the huge diversity in the regulatory postures or responses of national governments to what is, after all, a pan-global phenomenon, a pandemic of a virus that itself is non-diverse in that it is essentially the same virus everywhere. (The extent to which those responses rely on law-based rather than other forms of regulation is a separate issue).

Haines has written (2019) on how and why regulation does / does not change in the face of crisis. (She happened, incidentally, to be writing on responses to a factory fire tragedy -- a 'regulation of responsible business' issue).

Her concept of 'regulatory character' is related to what strikes me most about regulation + COVID: how legitimate and effective regulation (and related institutions) is typically not simply about the right technical models and frameworks and standards. It is about underlying economic, social and political idiosyncracies. These shape how regulation actually looks and works. Cultural context shapes regulatory design and response. It is 'responsive' at least in that sense (although, as above, power dynamics shape regulation too, of course!).

Some states have regulated COVID social distancing fairly lightly (e.g. without deploying criminal penalties). In those cases, some of those governments have regulated lightly apparently confident that they can rely and draw upon something relative intangible in the national 'character' about voluntary compliance, cooperation, self-regulation, social cohesion and responsibility -- without necessitating sanctions and penalties.

If I am right, these societal characteristics provide what I might call a regulatory 'resource'. This means the regulator's toolbox (including in crisis) does not just comprise various models and approaches with various merits, trade-offs, etc. It also potentially comprises the repository of societal compliance (etc.) characteristics and inclinations. These must be decisive not only in whether any regulatory intervention gains traction or purchase, but also in how one designs the regulatory response (here, to crisis) in the first place.

Elsewhere (e.g. here) I have reflected -- in the context of regulating responsible business conduct -- that existence and degree of a critical mass of ethically-minded consumers is a principal regulatory 'resource' for regulatory design. Indeed without it, it may not matter how sophisticated (etc.) the regulatory regime otherwise appears.

COVID strikes me that I was potentially onto something. That's all! Scholars of responsible business and its regulation ought perhaps pay more attention to regulatory 'character' and cultural context, including -- in strategy terms -- to better identify the nature and extent of regulatory 'resource' that proposed governance models might seek to take advantage.

JF

* = see here (for example) some short essays by ANU Law colleagues on (international) law and the COVID crisis.

[This is the first post after a 6-month hiatus].

Responsible AI: governing market failure

If society seeks or needs responsible development and use of AI technologies, how is this best achieved?

This month the Australian government published its analysis of public submissions on its April 2019 proposed 'Ethical AI Principles', and published a revised set of principles: here. 

In my April submission (in this repository) among other things I put three points, which I summarise here as I believe they remain 'live':

1. A national conversation

The first point was about processes, such as the public enquiry, of arriving at and promoting such lists of principles (whatever their content). This process or that of the Australian Human Rights Commission are no substitute for a genuine, scaled national conversation, indeed a global one. As I submitted, that conversation is not about 'what should our ethical AI principles look like' but (if AI is truly as transformative as we think) about the more fundamental question 'how should we live [and what role do we want and not want for technology in that attempt at flourishing]'.

2. The missing governance piece

The second point was to ask how the listed principles are intended to take or be given effect, which is a question not of ‘principles for ethical AI’ but of ‘the governance of principles for ethical AI’. Every major government and tech company has or is producing such lists. What are the mechanisms by which, in various contexts, we think they are best given effect? Since they are 'ethical' principles, I hesitate to say 'how are they complied with' and 'what are the consequences of non-compliance'. Which leads to my third point.

3. Ethics vs law / regulation

The third point was to suggest that the real question (in seeking submissions) ought not to be whether the 8 listed principles in the Australian framework are the ‘right’ or best or most complete ethical principles. Some ethical AI frameworks have more (e.g. Future of Life's 23), some have less (e.g. the OECD's 5, or Google's 7). The prior question ought to be whether responsible AI development and use is best approached as a question of ethics rather than as a question of law and regulation.

I reflected on this third issue in a previous post (here): there is a very live law and regulation aspect here (as useful as ethics-based approaches are, and complementary to law).

This month's revised approach notes:

• "The framework may need to be supplemented with regulations, depending on the risks for different AI applications. New regulations should only be implemented if there are clear regulatory gaps and a failure of the market to address those gaps."

This is, on one view, a remarkable proposition, if not an outright abdication of governmental responsibility for promoting responsible AI. 

It is a proposition, unless I am mistaken, that in relation to AI -- which the Australian framework process explicitly states is so fast-evolving, so profoundly transformative, so pervasive -- posits that:

(a) law and regulation is only a 'supplement' to ethics-based approaches; and

(b) the market [whatever that means!] should be left to address 'compliance' with ethical principles, and the people's elected law-making bodies should only have a role where gaps [whatever that means!] are 'clear' .

For one thing, by the time we diagnose that there has been a market failure to encourage or enforce responsible AI development and use, it will be rather too late to start asking law-makers to get out their legislative drafting pens and address 'gaps'.

Lawyers and law-makers can stand down: we are not needed here, or now. Australia, that sophisticated regulatory state, has decided that the market -- which of course has proven soooo socially responsible hitherto -- can regulate this issue just fine.

Jo 

Business, human rights and responsible innovation

We are increasingly governed and influenced by algorithms and predictive analysis.

The use by governments and businesses of artificial intelligence / machine learning (AI/ML) platforms can impact on human rights in myriad ways.

We have moved from debating whether governments need to regulate AI's potential discriminatory (etc.) effects, to questions of how best to do so in a legitimate, effective and coherent way: enabling innovation while protecting fundamental values and interests.

The nexus of 'new tech' and 'human rights' is presented as an emerging issue. Yet the rate of change and the implications of AI (etc.) across so many aspects of life suggest that it is only a regulatory consciousness that is still 'emerging'. All else is well underway.

Yes, we are far from the shallows now (as Lady Gaga / Bradley Cooper sing in A Star is Born (2018)): we are well in the deep waters now of how best to regulate for responsible innovation. And those deep waters are fast-moving ones, far faster than most regulatory and legal systems have moved.

This post relates to my hasty and under-cooked submission last week to the Australian Human Rights Commission / WEF 'White Paper' on 'AI and Human Rights: Leadership and Governance', itself related to a wider consultation (2018, ongoing).

One point made in that submission was a reflection on big tech firms' approach to the regulatory question. (This post is confined to that reflection -- the responsible innovation regulatory agenda is a far bigger and more complex one.)

The Commission's reports detail how influential CEOs -- from Microsoft to Amazon to Facebook -- are all now calling for or conceding the need for governmental regulatory frameworks on ethical AI / social impact / human rights (and these are not all the same thing, as my submission notes!).

These CEOs thus recognise the shift to the 'how' question, and are partly behind that shift, calling for regulation. Salesforce's CEO said at Davos last year that the role of governments and regulators was to come in and "point to True North".

Now most commentators have welcomed this. Like the Commission, they add this CEO's call to the chorus ('at least they are not resisting regulation' and 'business is inviting government to lead and steer'. A good thing).

Yet is it only me who finds something hugely troubling about this statement?

It is this. Is big tech so lacking in moral substance that it needs government to point out 'True North' (a set of general principles to guide AI design and use)? 'True North' is by definition universal and fairly easy to establish. Non-discrimination, user privacy, access to review and reasons for adverse decisions. These were basic societal values last time I looked at western democracies. They do not require governmental steer or compass reading for business. Get on with it, already.

Governments must lead the responsible innovation agenda, not least because their own use of AI is a key issue. Yet on the Salesforce CEO's statement, if industry cannot arrive at these values of its own accord, we truly are far from the shallows. As Lady Gaga sings, how will we remember ourselves this way -- before AI made life unrecognisable? 

Jo

Ps -- see an earlier blog here on 'big data' and human rights, and this one from November last year putting some of these themes into a short poem... !?

Corporate culture: capital vs social capital

Australia is this week absorbing the final report of the Royal Commission into 'misconduct in the banking, superannuation and financial services industry'.

What is at the heart of the disregard shown by retail banks and finance houses for regulation aimed at protecting consumers from the excesses of the pursuit of profit motive?

As ANU's John Braithwaite has said, a core dilemma of regulation is "when to punish and when to persuade" (1992+).

Command and control-style punishment and sanctions are not the only way to regulate. There are many reasons for non-compliance, suggesting that regulators sometimes need to preference dialogue and engagement over knee-jerk automatic punishment. There is a strong case to be made for regulatory designs and institutional approaches that privilege engagement, persuasion, education, capacity-building. Braithwaite's 'responsive regulation' theory would suggest that regulators hold punitive powers in reserve while making overtures to regulatees and seeing how they respond to non-punitive approaches. The regulator then adjusts its own approach. This will be perceived, the theory goes, as more fair and so legitimate. Entities will internalise the regulatory goal, compliance will improve and the regulator can let compliant entities essentially self-regulate, and indeed exceed what is required in pursuit of the social goal underlying the regulation.

What is a lesson from the Royal Commission?

It is that this approach, as influential as it has been, needs to be revisited. Or at least the theory needs to be fully implemented if it is to work. Not surprising, that.

The lesson is that regulators -- even where they have these powers -- appear reluctant to use them, and so err on the side of 'engagement' where sometimes demonstrative penalty seems more appropriate. The issue is whether the regulated entities are responding to signals to change. If they are not, another more intrusive approach is warranted from the regulator.

Standing back, the key word is in the first sentence above: motive.

Incentives matter: we can talk all we want about 'values not just value' and 'engendering a shift in corporate culture'. But when all is said and done, market actors respond to incentives, and clear, credible and consistent signals and actions from regulators about the consequences of non-compliance.

And those consequences sometimes need to be severe.

As Commissioner Hayne wrote, "misconduct will be deterred only if entities believe that misconduct will be detected, denounced and justly punished..." It is not deterred -- for such profitable entities -- by requiring those found to have done wrong to "do no more than pay compensation." It is certainly not deterred by the issue of infringement notices in the hope that the market or consumers will respond to those incidents by withdrawing or conditioning their custom or financing.

Responsive regulation remains a highly appealing theory, if properly implemented. It is bound to fail -- as Braithwaite and his disciples have always said -- if only partially implemented. If all the cuddly dialogic bits are followed, but not the hard and punitive bits. Regulators can and should talk to their regulatees about how to improve compliance. But they are not mere consultants to business. They are regulators. Braithwaite would insist that the regulatee must know that the regulator can escalate things, where fair and appropriate and where there is no response to overtures to comply. They must know and see that the regulator can make life very difficult.

As Braithwaite once wrote, dialogue, engagement and capacity building must take place "in the shadow of the axe".

Australian regulators need to have the axe, even if they need to be smart and fair about when to keep it in the background and pursue a more engaged approach.

This is true from banking conduct in the retail sector, to emerging models on supply chain reporting in the context of modern slavery, on which see earlier posts on this blog.

Jo

Business and Human Rights in Verse: Poem 3

This is the 3rd in a mini-series of attempts to approach themes of 'Business and Human Rights' in verse. The 1st was 'Big Data' and the 2nd 'Supply Chain' (see previous two posts).

‘Dance the Guns to Silence’: some Business and Human Rights in verse

Dr Jolyon Ford

Associate Professor of Law, Australian National University

                                                                                                                                                November 2018

III.

Extractive

They came at night. It matters not,

What they did exactly, it does not matter.

Let us not try say what they took or did:

The gun will serve the highest bidder.

Across the valley the rotors’ throb

Tells us he comes to see the mines.

Beneath the ridge the scarred land drops

To where we sit and wait in lines.

The low hills crouch, they have given up.

The land is beaten down.

It too has learned this will only stop

When all sign of struggle is gone.

There is no dawn that brings them home,

No song of comfort sung.

They exist only if we remember them,

When all is said, and all is done.

From the camp we hear the shift bells ring,

This is not a place for dreaming.

You will not hear our voices sing,

But nor will you hear the screaming.

In this rich earth, a richer dust concealed,

Though we dig, it is not for truth.

Grass in the breeze where the scar has healed,

Mocks their futile defiant youth.

Some system did all this for gain,

And made our rivers burn.

It took our very soil away

And so our soul in turn.

And so here now we that remain

Mine the seams of lessons never learned,

Listen to the scoured land in its pain,

Wait without hope for their ghosts’ return.

                                                                                                                                 

Cambridge MA, 31 Oct. 2018

Business and Human Rights in Verse: Poem 2

This is the second of three attempts to approach 'business and human rights' slightly differently (for a law academic), in verse. The first attempt (previous post) was 'Big Data'. The third attempt (next week's post) is 'Extractive'.

‘Dance the Guns to Silence’: some Business and Human Rights in verse

Dr Jolyon Ford

Associate Professor of Law, Australian National University

November 2018

                                                                                                                                  

II.

Supply Chain

In these rooms where dull heat squats,

We sprawl and watch the shared screen flicker

Scenes from your world, worlds apart:

Track the thin truth that ties us together.

Do you ever just lie awake at night

And feel the ways our lives are close?

What becomes of the traces of our sweat,

In that bright world the camera shows?

What scent of humanity lingers there,

(It is a small world, after all)?

Persistent and intimate, perhaps we share

A story or secret, something small.

Bits of you come to us in waves,

Lying here watching the things you do.

Yet traces of me linger in your days,

Woven in the things we make for you.

I wake unrested and wait to wash,

We cannot leave this place.

Too tired to care where all this goes,

To think of blame, or of consequence.

You are still out there somewhere, doing

Whatever it is People do with Life.

The myriad things that fill your days

Tease our dreams through hot still nights.

The thread that weaves us does not bind,

The link does not connect;

The traces of me in space and time,

The little hope that’s left.

Stains in the hidden lining remain,

Shame too abstract to make a mark.

Something too faint to keep you awake,

Weeps unheard in this squalid dark.

The folly of our tele-dream:

To think we thought you somehow near.

For your Things we gave our self-esteem,

For such a small world, truly far.

                                                                                                     Singapore, 13 October 2018

Is the ethical consumer a myth?

Can informed, motivated ethical consumers act as human rights 'regulators'?

What design assumptions underpin models for regulating business human rights risk through mandated reporting?

Last week Australia's house of representatives debated the Modern Slavery Bill 2018, which would require larger Australia firms to report annually on steps taken to ensure their operations and supply chains are not tainted by human trafficking and forced labour.

The government's model would not include statutory consequences or penalties for non-compliance (non-reporting). Based as it is on s. 54 of the UK's 2015 Modern Slavery Act, the model is premised on the idea that businesses that do not report 'will be penalised by the market and consumers and severely tarnish their reputations' (Minister's 2nd reading speech, Sept. 2018).

The model is defensible in principle and regulatory theory, as I've blogged (etc.) elsewhere.

Yet as the Senate's August report noted (Recommendation 3.97), we need to 'test the proposition that reputational risk is a sufficient motivator' for widespread and meaningful reporting, and for continuous improvement in related internal due diligence practices.

A research agenda exists here since it is not obvious that consumers are likely to be effective at policing compliance with human rights performance by corporations. (Investors, insurers and other market actors may play this role more effectively, but that's not the issue in this post).

In addition to the fact that not all industry sectors face reputational risk in the same degrees or ways, we know from existing scholarship that it is not obvious (i.e. the empirical evidence is thin) that consumers will behave more ethically if they only have more information about the provenance and socio-enviro conditions under which things are extracted or made.

That is, the ethical consumer may be a 'myth' (e.g. Devinney et al 2010; Carrington et al 2010). There is an attitude-behaviour gap (Boulstridge and Carrigan 2000): even consumers who say, when surveyed, that ethical considerations matter to them do not necessarily change their consumption behaviours. Nor do they become activist consumers holding firms to account.

If so, we need to explore regulatory models premised on the idea that an informed, motivated mass consumer public will effectively hold corporate actors to account on statutory disclosure of human rights risk.

Jo

See too this previous post on modern slavery, on consumers as regulators (influencing behaviour of commercial actors): here.

Law and power, law as power

The potential and limits of law and legal analysis are questions about social, economic and political power.

My current Masters (LLM) students are in Week 6 of their fully online 'Business and Human Rights' course. We are currently discussing barriers to accessing an effective remedy for alleged business-sourced human rights violations. Much of this discussion revolves around transnational torts litigation, and the doctrinal + practical barriers to claimant groups.

In the discussions we have canvassed criminal law 'remedies' and I referred students to a news item about allegations against a French cement giant for its subsidiary's conduct in war-torn Syria (here). In one commentary on that news, the author says: 

"Human rights cases are rarely a question of law alone, they are about power."

This is an apposite for all students of 'Business and Human Rights' (BHR, and we are all students thereof!).

BHR scholars repeatedly self-profess that theirs is a  'cross-disciplinary' field that is nevertheless dominated by legal scholars. The field's maturation will require a far more systematic and contextualised engagement with the political economy and power dynamics of everything from transnational litigation to supply chain transparency.

Law can be powerful, even emancipatory; but power differentials and dynamics that constrain and distort this transformative potential need greater and more context-specific analysis by all of us working in this field.

Jo 

Has 'Business & Human Rights' lost its way?

Does 'business and human rights' risk becoming about everything, and so nothing?

What comprises the BHR 'field' is not neat and defined. It is evolving, as is the multi-faceted (but still gap-riddled) regulatory 'ecosystem' that governs business-human rights responsibility and remedy.

This lack of neatness, this open-endedness, is on one view both inevitable and desirable. We should not and probably cannot seek to be prescriptive about what 'counts' as a BHR issue.

Yet the question arises whether we should be a bit more strategic about what is likely to gain traction as a BHR issue, and about how widely we frame BHR, and about what we think corporations and other enterprises really have a meaningful responsibility for.

This post is prompted by a claim this week (here), related to litigation to this effect, that Unilever is somehow responsible for remedying the terrible human suffering of former employees resulting from post-election ethno-political violence in Kenya on the basis that some of the victims of this very complex, nation-wide violence were Unilever employees.

If by 'remedy' in BHR we really mean situations such as this, arguably BHR advocacy is over-reaching. If a demonstrably progressive firm like Unilever is accused of merely 'illusory' support for the UN Guiding Principles, how are we to foster meaningful engagement with other firms?

There are serious questions to be asked about how subsidiary corporate structures hamper access to forums for seeking effective remedy. Still, the underlying claim (that Unilever is responsible for compensating employee victims of violence that shook a whole country) has little basis in tort law, let alone human rights law. Championing this sort of speculative litigation (of all the BHR issues one could profile) shows a mindset that thinks the BHR phenomenon is far better established, far-reaching and powerful than it is. Ambition is fine; over-reach can just expose how under-developed things really are.

Just how useful and effective is the 'human rights' paradigm / lexicon in shifting business (and state) behaviour around social impact? However tempting it is to invoke it in support of all manner of worthy societal campaigns, is it really that effective?

BHR is about the many things potentially involved in preventing, minimising and remedying business-related human rights abuses (as well as encouraging and appropriately enrolling business in positive efforts at greater rights fulfilment and enjoyment). A central challenge in all this is to engage the attention of business and finance sector actors, informing and advising as well as accusing and chastising.

BHR is not just about the UN Guiding Principles or a narrow legalistic framing around the jurisprudence of international human rights law. Yet if websites or email updates on BHR become about listing all sorts of things that happen to involve companies, we have lost some powerful opportunity.

If BHR becomes about pretty much everything -- precarious work contract patterns; climate change and its governance; tax evasion and avoidance; corruption; mass political violence in east Africa -- it risks undermining itself. It risks alienating or confusing business audiences -- or being dismissed by them. It risks losing a vital connection with a credible, universal set of normative guarantees (human rights).

A related challenge is to remember that while BHR is somewhat in fashion in the field of human rights, it is still (tiringly and never-endingly) the state which must answer for the vast majority of human rights problems.

Jo

See an earlier articulation of some of the possible coherence challenges of the BHR field (2015, pp 6-7), here. See also this sceptical blog-post on linking the BHR phenomenon to climate change activism, here.

Data, big business and human rights

Data protection and privacy is among the most important and high-profile issues where 'business' and 'human rights' intersect.

Are some media-tech firms so large and influential that their social impact cannot be regulated? Or is the issue more about a sufficient constituency of public consumer-citizen demand for proper regulation?

This week saw news reports that Facebook may have 'improperly shared' the data of 87 million users with political consultancy Cambridge Analytica, linked to the Trump presidential campaign.

In this post I simply paste below a paragraph from a forthcoming paper I have written on how these sorts of issues and crises are treated in popular culture. Hollywood may no longer be a credible barometer or bearer of moral messaging, and nor has it yet produced the definitive movie of our age in relation to our lives online. Still, from 1995's The Net to 2015's Ex­_Machina we do see some reflection of (Western) societies' anxieties and trajectories in relation to the commodification of data and privacy issues.

This is what the paragraph says:

"... One critic describes Ex­_Machina as one examination of ‘how corporations have been freed from all forms of social responsibility in the digital age’ (Allen 2016*). That is an overstatement, but Allen does observe that in movies of this sort the issue is not so much corporate access to one’s private life as the role that individual consumers (out of apathy, convenience, ignorance, trust or other factors) play in enabling corporations to ‘take on a life of their own’ and accumulate so much potential influence over private data. The significance of this movie (or more accurately this type of movie -- it was not a blockbuster) might lie in what it tells us about the mix of regulation vs. consumer preferences in this and other areas of corporate ethics and responsibility. After all, if informed consumers are not motivated to press home data-related human rights concerns in any concerted way, what are the prospects for influencing, expanding and sustaining corporate self-regulation or industry or state regulation to protect those same concerns?"

How does this relate to current debate on Facebook's data management?

Consumers do need to know and understand issues before they can be a constituency of demand for better regulatory interventions.

But social media and other technologies may be so convenient and/or seductive that if the balance of regulation on data privacy ends up not favouring the individual, it may not be that we are all the blameless victims of some elaborate corporate strategy to undermine human rights.

It may be that we have done this to ourselves.

Jo

* Allen, A., (2016) ‘How the ‘Evil Corporation’ Became a Pop-Culture Trope’ The Atlantic, 25 April 2016.

Regulating the Future: 'private sector, public role'

One ought not get too categorical about distinguishing the public and private sectors when thinking about the wider 'sustainability' and 'social impact' agendas.

This blog's name plays off the differences we apprehend between public and private actors and activity, from principles (e.g. differing legitimacy levels as between corporations and public authorities) to drivers (e.g. differing incentives and audiences) to practicalities (e.g. different tools and techniques even where the ends are common).

But in many socio-enviro responsibility & sustainability contexts, the public-private distinction may be difficult to make. Or it may be not useful to dwell on, where it blinds us to the significant governance contributions of private actors towards what are ultimately public goals.

Past posts have dwelt on this, but this one (the first for 2018) is prompted by three recent things that I see as connected in relation to this enduring public-private debate.

The first is my delight this week in meeting my new PhD student here at ANU, who will study the financial sector as a significant source of influence on the human rights impact of business more generally. (See recently in this regard the Thun Group of Banks view on one aspect of this, here).

Who is a 'regulator' and what counts as 'regulation', and what are appropriate and effective contributions that those policing bottlenecks in the economy -- such as financiers and insurers -- can play in furthering regulatory objectives? How does formal Regulation (with a big R) or other policy interventions (regulation with a small r?) leverage these contributions?

The second is that I recently returned from a sustainable development symposium at the University of Indiana, Bloomington on balancing freedom vs security in the regulation of cybersecurity. Given that (mostly privately owned) tech firms dominate much activity in cyberspace, they will surely play an outsize role in the governance of that space relative to public authorities.

With this influence comes elevated levels of responsibility on the part of private actors (and expectations of increased accountability about how that power and influence is used).

Which brings me to the third prompt for this post: a Twitter thread from @KateAronoff about a meeting (to which the media were not invited) between Canadian Prime Minister Justin Trudeau and Amazon CEO Jeff Bizos, described by a CBC journalist as a 'bilateral' meeting. Now technically it is bilateral if two parties are involved. But Aronoff's point was to get us to pause and consider the implications of a world where the language of diplomacy is seamlessly used in this way. Normally, only heads of state have bilateral meetings... but then Amazon does 'run' a large part of the world in net terms.

 

Surveys suggest many consumers/citizens trust (private) big brand firms and business leaders more than they trust public institutions and elected political leaders. Trust is a key component of regulatory legitimacy and effectiveness. Yet as we design societal impact regulatory models for the globalised (and virtual) economy, and make use of -- or just acknowledge as real -- private governance contributions, we need to think about the authority and legitimacy and other qualities that only public institutions ultimately have.

Jo

@fordthought

Regulating modern slavery in supply chains

What viable but principled regulatory model is best suited to regulating business supply-chains to ensure that they do not tolerate or promote forced labour, human trafficking, etc ('modern slavery')?

Does legislation that requires corporate reporting on measures taken within one's supply-chain to address these risks -- but which does not imposes statutory consequences for not complying -- have a place here?

Many activists argue 'Not'.

I would disagree. One can be highly motivated about addressing modern slavery in business supply-chains, yet support legislative models that others dismiss as 'undemanding'.

Australia is proposing a legislative model on this issue, drawing on s. 54 of the UK's 2015 Modern Slavery Act. The consultation on the proposed approach closed last week. (See the Consultation Paper here).

Last week I made a lengthy submission to that consultation.

Here is the gist...:

• If the aim is to foster business engagement in preventing and solving the underlying problems, a model that give businesses space to address its operations and supply chains (which they know better than any regulator could), that is not prescriptive about reporting, and that does not impose penalties for non-compliance is defensible ... 

... but only ....

• If the model clearly signals to business that more demanding / intrusive regulation is conditionally being held in reserve for a period, and will be implemented if the uptake by business is merely perfunctory and the reporting patterns do not indicate proper engagement in due diligence and other processes to identify, prevent, resolve and remedy human rights risks...

The current proposed model does not include penalties for non-compliance with the reporting requirement. Yet it makes no overt or explicit signal to business that there may be more demanding legislation in future if business uptake and response is weak.

This is from the intro to that submission, making the above points:

"... The point of all this is not the adoption of ‘tough’ regulatory postures for their own sake (even if these were politically viable): instead the point is to find ways to incentivise and support Australian entities to systematically identify and to prevent or address the underlying human rights risks...

... many features [of the proposed legislation] which this submission supports (such as refraining from any statutory consequences for non-reporting) are ultimately only justifiable, or likely to be received as legitimate by civil society, on a certain condition. This is that there ought to be a clear, signalled government message to business that government ... is prepared in future to consider more intrusive, demanding legislative measures if it is found that the proposed approach is not engendering meaningful engagement with the problem..."

JF

See previous posts on 'modern slavery' and its regulation (in Australia and generally), most recently here.

Responsible business in a Trump era (III)

Just how compelling is the 'business case' for firms and funds to adopt and implement human rights policies?

Here I mean planning, self-assessment and reporting policies and systems that are explicitly framed in human rights terms -- not the wider idea of a 'business case' for being socially responsible.

Among the outgoing Obama administration's last actions in December 2016 was to shepherd in a US 'National Action Plan' on 'Business and Human Rights' (BHR).

The evidence so far shows clearly that a Trump-led US federal government will not lead, in policy, messaging and regulatory terms, in the BHR area. Indeed it will evidently not do so on the responsible or even sustainable business agendas more broadly.

If that is so, it may nevertheless happen that in the US and beyond, big business and the financial and insurance worlds drive parts of this broad agenda itself, not waiting for a national government lead.*

With important caveats, I have recently blogged on this possibility.** These blog-posts were offered in the search for a 'silver lining', from a BHR perspective, to Trump's election. Of course European governments + the EU (and others) might lead in America's stead. But the US matters.

If it happens that business does not wait for such a lead, it may be because there is a perceived 'business case' for it (even if part of that case is just longer-term anticipation by business of a degree of reversion in regulatory trends in a post-Trump presidency).

The 'business case' concept in the BHR field derives from the wider corporate accountability / responsibility field. It is a familiar feature of the CSR field, in particular. 

'Business case' is of course shorthand for the idea that whatever the ethical, moral or legal reasons for mitigating a business's social, enviro and governance impact, it makes good commercial sense, especially in the longer term, to embrace this agenda.

We need to be cautious about a 'business case' at the broad level: business sectors and sub-sectors -- and individual firms within these -- may have very different incentive structures (etc.) in responding to or anticipating social impact issues. The 'business case' concept is a more sound one when describing how those incentives etc might be approached in particular contexts, making a case each time.

For years the CSR and then emerging BHR fields spent considerable energy on articulating a general 'business case'. Yet in recent years BHR advocacy has sometimes appeared to proceed on the basis not only that the business case for acting on human rights risks is self-evident, but that it is or will go further and become an important driver of uptake by business of the BHR implementation agenda.

The thrust of the current post is to suggest that the Trump era will now put to the test claims made in recent years about the strength and obviousness and appeal of the business case for self-starting action on human rights risk.

Put another way (and partly for provocation's sake), it is easy to assert the existence of an obvious business case for business to be pro-active about addressing human rights impacts, but we need to be careful about assuming that this has some sort of self-executing logic to it.

At very least, it seems unlikely that all aspects of BHR will advance at equal pace and degree. Parts of some sectors in business may go with some aspects of the BHR agenda (eg 'modern slavery' in supply chains), while not on others; we may see uptake on some measures (eg human rights due diligence in larger listed firms and financial houses), but little movement in areas such as access to remedy.

Of course many would argue that because human rights are universal non-negotiable normative imperatives, emphasising the commercial advantages of investing in a human rights-consistent business is a wrong starting-place to 'motivate and justify' corporate engagement in human rights implementation.*** This is partly the thrust of a recent Harvard Business Review article entitled 'We shouldn't always need a business case to do the right thing'.

I think there is unarguably a business case for some kinds and sizes of firms to take the BHR agenda seriously. Demonstrating empirically that such action protects or creates commercial value is more difficult.

Jo

* This comment relates to the federal government: the same reactionary approach to promoting sustainable and responsible business conduct is not necessarily true of state-level governments in the US, some of them major economies in their own right, such as California.
** My previous posts on 'responsible business in a Trump era' are here (February 2017) and here (November 2016).

*** See Posner and Baumann-Pauly, 'Making the Business Case for Human Rights', in Baumann-Pauly and Nolan 2016, section 1.2.

Responsible business in a Trump era (II)

How might the Trump era affect trends in responsible business (and its regulation)?

I am hesitant to give Trump more social media air-time than he already gets*, but the question is of broad relevance if indeed we're entering an era in which the state-business nexus has some particular features.

One of the things us regulation scholars navel-gaze about is the relative significance of public versus private forms of governance, and the scope for innovative hybrids of these in pursuit of both societal and commercial goals.

Last November, around his inauguration, I blogged on what Trump & co might mean for the responsible business agenda, in particular in relation to my own interest in policy and regulatory initiatives around that: here.

(At around the time, at least one other blogger also wrote on this topic: see here.)

In that post I speculated whether business might lead, and civil society be reinvigorated, where a new administration distances itself from promoting responsible and sustainable business practices:

"... a reluctant or recalcitrant or reclusive government [on this agenda] might indeed stimulate all sorts of unexpected enlightened activity ... often led by business and investors. This may include a greater convergence of the BHR agenda with core commercial ideas about value-creation, productivity, competitiveness and so on..."

I wrote that because I saw a possible silver lining on what otherwise was a rather gloomy outlook for this agenda at least within the US.

I still think it holds merit.

This is a long lead-up to saying that my attention was drawn to this blog-post on how corporate responsibility may in fact be mainstreamed in a Trump era, without necessarily waiting on government to lead (or the US government to lead, in a global context).

I do accept rejoinders such as those of Mark Taylor @lawsofrule that see the many possible downsides here.

Sub-question

Of course there's a sub-set of questions here: Trump will matter to the US context in terms of responsible business conduct, but the sub-question is 'Does the US context matter globally?' The world's largest and most diverse economy does not necessarily lead on innovation in responsible business or regulation or policy innovation around this.

Still, the premise of this post is that what happens in the US, and in US corporate life and cultures, matters for its own sake and will continue to matter globally.

At the global governance level, there is an argument to be made that any Trump-related leadership gap on issues affecting the responsible business agenda globally (including climate change) might be taken up by Beijing. (See here for a related comment on the potential for Trump isolationism to create leadership opportunities for Beijing).

On this blog's themes, it is so facile still to persist in assuming on responsible business issues that 'Western company or regulatory state = good', and 'Chinese state or firm = bad'. One still sees a lot of this lazy assumption, eg in the China-in-Africa debate. This ignores some interesting practice and policy-making from China, some of which may support a thesis that despite the weak underlying domestic media / civil society context, it is not inconceivable that leadership on some of these issues will come from a non-OECD country and its corporates.

Jo

Twitter: @fordthought

* Of course Trump alleges a media conspiracy to distort or not report certain issues or views...

Trumping the responsible business agenda

What would a Trump presidency mean for the responsible and sustainable business agenda? 

Even as we question the limits of expert analysis, it keeps pouring in following Donald Trump's remarkable US presidential election victory, coming as it did with Republican capture of both legislative houses.

Well, here is my small contribution (on the issue that I follow).

Overall I think that it is hard to envisage a Trump administration pushing for governmental and regulatory action on the overall sustainability agenda, and on promoting corporate responsibility and accountability.

For instance, a Business and Human Rights 'National Action Plan' is not something one would imagine near the top of any policy agenda.

Yet there are two related points that might be made:

1. Overstating government

Perhaps we sometimes overstate the relative significance of formal institutional regulatory and policy initiatives to the furtherance of this agenda, or at least to preventing, solving and remedying adverse human rights impacts of business activity where these are a risk or reality.

In this sense, this election result may not derail or detain that agenda as significantly as one might suppose. Human rights promotion, level playing fields for responsible firms, remedial avenues, etc cannot be left to non-governmental actors. But governments cannot do everything. Without promoting an abdication of governmental roles and responsibilities, in the Business and Human Rights / corporate sustainability / responsible business field it may be that we have all focused too heavily on what governments ought to do, relative to alternate or parallel strategies to transform fundamental market and consumer incentives, mindsets, behaviours and patterns in ways that might engender faster and more profound change.

...

2. Under-estimating business

Perhaps we can (or must...) see this outcome as an opportunity to explore further the many vital and vitalised vectors and avenues for corporate, civic and consumer actions (and coalitions thereof) that do not necessarily rely on government to lead or steer.

Indeed the existence of a reluctant or recalcitrant or reclusive government on this score might indeed stimulate all sorts of unexpected enlightened activity in this sphere, often led by business and investors. This may include a greater convergence of the BHR agenda with core commercial ideas about value-creation, productivity, competitiveness and so on.

...

In short, it is not necessarily all bad news.

(There is also the question of whether / how any deceleration and adjustment on global and regional free trade agendas might affect that emerging body of work on the intersections between trade and investment regimes, corporations, and human rights.)

Jo

More generally ...

Its been nearly two months since my last blog-post -- a reflection of just how much information and analysis is 'out there', a volume and pace that does not necessarily make for better-quality decisions.

I can only use the fact of this time-lapse as a metaphor for a point made in some earlier posts about the proliferation of initiatives and normative and reporting frameworks relating to sustainable, responsible and accountable business in society (here is an example).

This flurry of activity is hard to criticise, yet should not be an end in itself, can lead to new indirect definitions of 'compliance' in business & human rights terms, and does not necessarily help us solve the underlying problems.