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?"

Investors and human rights risk

How is the investment community -- especially institutional investors -- dealing with human rights risks in investment portfolios? What do they need most in order to pursue this agenda?

Most attention in the 'business and human rights' field is on the operations and supply chains of firms of various sorts. Until recent years there has been somewhat less attention to the all-important entities in the financial sector that invest in (or indeed insure) corporate activity.

Such actors are capable, in principle, of exerting very considerable influence over the behaviours of fundee businesses -- that is, preventive and remedial conduct in relation to human rights impacts of business activities. Indeed if there is to be some notable transformative shift corporate social (and enviro) impact it is perhaps more likely to come from what investors do or require than from other stakeholders (governments/regulators, or consumer/citizens -- accepting these groups shape each others' conduct).

Today was the deadline for submissions to the UN 'Principles for Responsible Investment' consultation on a framework (here) for shaping and guiding how investors implement respect for human rights into their pre-investment, portfolio management / screening / engagement, and exit processes.

My own submission covered a range of issues on which investors -- who of course vary significantly as a broad class -- will continue to need further practical guidance, including stuff tailored to the very different types of finance and investment entities and products.

• Some of that guidance must be drawn from / shared by responsible financial sector actors themselves as they implement, learn from and refine their practices on human rights risk. For example, it is remarkably difficult to find publicly available model examples of instructions on screening investees for human rights risks, although these do exist, and investors can resort to tools such as Parametric's one on forced labour (using the MSCI basis).
• Among other things, my submission suggests PRI and others can do more work to develop practical examples, model provisions, case studies, hypotheticals. The consultation paper reads as a very conceptual piece but the aim is to inform and equip investment sector actors: the more practical examples (from / for different investor types) the better.
• The aim is also to persuade investment sector actors. People in corporate responsibility talk a lot about the 'business case' for respecting human rights (in addition to the principled basis for doing so). We see expansive claims that conducting human rights due diligence (HRDD) is an effective proxy for generic commercial and business disruption risks. The PRI paper likewise says that HRDD will "often pick up issues that, left unaddressed, would go on to become financially material..." and that "assessing a company’s human rights due diligence process can therefore also be a good way to assess its overall governance and potential future financial risk..." This is potentially persuasive. But where is the evidence, the examples, the compelling 'business case'? This 'risk proxy' argument needs more meat to engage effectively with financiers and investors as a discerning and analytical group of people.

There is one issue I think will continue to trouble investors and their advisors, and which the 'business and human rights' field (scholars, activists, etc) has not itself perhaps quite come to terms with. This is the perennial vagueness -- or is it constructive ambiguity -- around terms such as 'adverse human rights impact' or 'negative human rights outcome'. The PRI paper talks of investors avoiding activities that 'remove or reduce someone's ability to enjoy a human right'. I can get my head around this -- but I am a law professor. This language strikes me as incredibly broad in ways that is potentially unhelpful for those trying to make investment decisions. Many things one does can impact rights or reduce enjoyment thereof yet not necessarily provide a coherent basis for responsibility let alone liability. I do wonder whether the credibility (for want of a better word) of the business and human rights project is undermined by these sorts of open-ended potentially very wide-ranging terms: how are investors to work with them?

Jo

For some primer resources on investors and human rights, see Investors for Human Rights and this guidance for institutional investors (on the OECD scheme). A range of more specific guidance exists, e.g. within Australia's superannuation sector, or on particular human rights risks (e.g. modern slavery).

'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.

  

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... !?

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.

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.

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...

Business and human rights: hasten slowly?

Does the emerging field of business and human rights (BHR) risk developing a credibility problem?

The overall BHR challenge is in some ways the opposite of any credibility problem -- it is rather an awareness, uptake and implementation problem.

But it is arguable that from a strategic perspective, building that awareness and responsiveness to BHR issues and principles (by business and finance, as well as governments, civil society, and consumers) is best served by guarding against over-expansive claims in the name of BHR.

An Australian report this week illustrates both the potential and current limitations of efforts to promote business respect for human rights standards.

The report (here) is the latest by 'No Business in Abuse' to look at the responsibilities of a parent transnational corporation (and its creditor financial institutions) where one of its company's operations include running controversial offshore detention centres for the Australian government pursuant to that government's strategy to control irregular migration.

The report highlights the scope, faced with such issues, for advocacy actions that might influence corporate compliance with human rights standards, directly and through prompting creditors and others with commercial leverage to influence the company's conduct. The report shows how this scope exists regardless of whether one can yet be categorically clear about any binding legal obligations on companies.

But (at the risk of sounding churlish on what is important and persuasive work), the report also to me illustrates a credibility risk for BHR advocacy.

It makes two calls, the first of which is so far beyond the company's power to achieve that it undermines the force of the report. The company is called on to do something it has absolutely no legal or other power to do (release detainees into humane conditions in Australia).*

Is it petty or too provocative to say that the field of BHR will have evolved when such recommendations are more realistic?

On this note, this week's The Guardian also carried a story (here) on this company and issue and report, but also referenced a Stanford University legal opinion. I have not read it, but its claim that the company's employees may be involved in 'crimes against humanity' in these detention centers is (in legal terms) a massive over-reach. That grave international crime requires a systematic attack on a civilian population -- however bad conditions might be in those centers, the business of detention can hardly be described as an 'attack'.

Advocacy efforts need alarm bells rung, but alarmist analysis arguably does not achieve the principal aim -- to influence corporate conduct and so improve human rights protection. The company quite understandably was able reasonably to reject the Stanford analysis...

BHR advocacy needs to call out problematic business behaviours, but also offer practical and achievable alternative actions for business actors.

Jo

* I note that the recommendation goes on to suggest (as an alternative to Australian relocation), relocation to some setting with equivalent humane conditions. 

Rio Olympics 2016: Business and Human Rights

We are approaching the Games of the XXXI Olympiad in Rio de Janiero.

Global sporting events raise important business & human rights issues.

Mega sporting events involve contracting and procurement on a vast scale, along with financing, insuring and other commercial dimensions to preparing and hosting the games.

Global organisations such as the IOC (Olympics) and FIFA (football) wield considerable potential power of a positive sort in terms of how their procurement and contracting (etc.,) activities could incentivise supplier and service-provider conduct that is objectively pro-social, or at least basically human rights compliant.

John Morrison at the Institute for Human Rights and Business has led work on mega sporting events and human rights -- see this dedicated site.

For one report critical of the human rights impacts of the games, see 'The Exclusion Games' (report here, and short video here).

I found it very difficult to find, on the IOC's own site, a simple and clear statement on human rights impacts (including as to relationships with commercial partners and providers).

There is of course the IOC's famous Charter, but that is not the same thing.

On this issue, you may have seen the recent launch by FIFA of a report it commissioned by business & human rights expert John Ruggie into human rights issues in FIFA's own conduct. This of course comes ahead of the somewhat controversial football World Cup in the Gulf...

JF

Human rights, business and end users

We focus on social impact integrity in corporate supply chains, but what about corporate 'responsibility' for the downstream end-use made of a product or service?

I use the term 'responsibility' very broadly -- mostly in relation to 'liability' in the court of public / consumer / market opinion, rather than in any legal sense.

One manifestation of the shifting expectations of business in society is that some brand-conscious firms are paying far more attention to the use to which their products are put, in human rights impact terms. This is in addition to the more familiar concept of the attention to the human rights footprint of the 'upstream' supply chain through which they source components and ingredients for their products.

The sensitivities on this issue vary greatly by sector and firm and context -- this is true of corporate human rights impact generally.

One sector of interest is the pharmaceutical sector in relation to the supply of drugs capable of being used in state-administered lethal injections pursuant to a death penalty order.

Last week global pharma giant Pfizer became the last major firm to announce that it was taking steps to ensure that its products would not be procured for use in lethal injections (at least in the US).

This fell from concerns about the morality, if not the legality, of administering cocktails of drugs that did not always ensure a relatively swift and painless execution.

I blogged on this long-building issue some four years ago in relation to an EU-based firm exporting to the US: see here.

The more interesting question is whether this growing 'end-user due diligence' is capable of wider analogy to other products, or is specific to this issue...

Jo

Private sector engagement: the new lazy?

Is there a chronic laziness among those who work on getting business more involved in pressing social issues?

Have we gone from largely neglecting the private sector as a development, peace and human rights actor (my 2015 book Regulating Business for Peace) to an opposite extreme, where one just adds 'engage business' and the agenda will take care of itself?

Moreover, in swinging to this position of often unreal, under-explored and under-theorised expectations, is there a tendency to avoid issues just when they become their most 'pointy' and practical?

What exactly is meant when we implore policymakers, civil society and others to 'engage' with business in meeting the sustainable development and corporate responsibility (etc) agenda?

The immediate prompt for this first blog for 2016 was my reaction to reviewing a draft article on engaging business in the prevention of mass atrocities. Like so many other participants in debates on the changing role and expectations of business in society, the author fell down (in my view) by glossing over things just as they become their most practical and important.

In that author's case, it was a repetitive, unhelpful and ultimately lazy tendency to exhort the private sector to 'contribute' to peacebuilding and conflict prevention -- but without spelling out what activities and approaches that might involve in practice (much less in specific contexts).

Now its all very well and good to invite constructive engagement by business actors (and encourage policymakers to facilitate this).

But what does it mean for a business to 'contribute' to the SDGs, to peace-making or peacebuilding, to human rights protection and promotion? What does it involve, what should they be doing more or less of, or do differently, with whom, and how? Where does the context matter so much that one cannot talk of 'engagement' or 'contribution' without couching it in the specifics of settings whose dynamics differ so much?

In a 2014 blog post I delivered a similar rant, suggesting (with apologies to EM Forster) that it is not enough to repeat the magic spell of 'engagement' as if by saying 'only connect' we will witness the flowering and flourishing of innovative, meaningful schemes and initiatives whereby business actors fulfil the roles now increasingly expected or hoped of them in relation to the sustainable development agenda.

That earlier rant is here.

Private sector engagement, partnerships for development etc are very hard. We seem afraid to be honest, as if merely repeating the exhortations to partner will do the trick. A less lazy approach that offers some concrete ideas rather than fluffy 'contributions' will help underpin the rhetoric with some more credible analysis -- and action.

Jo

Climate change, business and human rights

The Paris climate talks are underway. What does this mean for the 'business and human rights' field?

Does presenting climate issues as human rights issues necessarily increase the urgency, likelihood or comprehensiveness of corporate and financial activity and proactivity?

One assumption of advocacy in the BHR field is that framing the social responsibilities of business by reference to recognized, established human rights standards lends a certain urgency, persuasiveness, or imperative to businesses to act.

The assumption is that describing business conduct as having a human rights impact or potential human rights dimension brings some special galvanising force to the equation that other approaches do not.

(It is also thought that overlaying gives more virtuous businesses a stable framework of standards against which to plan their efforts to create social value and reduce negative enviro, social and governance impacts. Of course, business responsibilities are not just framed in rights terms for strategic reasons, but for reasons of principle: business activities can violate or at least impair, but also protect or enhance, various fundamental rights).

There are very sound reasons for believing that, in strategic terms, addressing the societal role and impact of business and financial activity in the lexicon and vocabulary of human rights may have some profound and positive effects.

But is it obvious and undeniable that this is so?

Are there some ways in which deploying human rights concepts and language might undermine the goal of more rights-aware, rights-based, rights-compliant business and finance?

For instance, could framing business-oriented campaigns in human rights terms sometimes lead to a defensive, litigatory mindset rather than a problem-solving, cooperative one? Could labeling something a 'Business and Human Rights' issue make some politicians and others less likely to champion it, for example in more conservative polities, than labeling something a 'responsible business issue' (the same norms still apply)?

I just do not think it is self-evident that invoking human rights on an issue necessarily makes everyone stop and say 'Oh OK, well in that case, lets all fix this!'

I do not think it is necessarily the case in relation to the nexus of business, human rights and climate change.

As the Paris talks proceed, this post simply refers to a guest blog I wrote this week where I developed these thoughts: here.

Jo

Corporates and human rights: 'knowing and showing'

The corporate responsibility movement (within and beyond firms and funds) has in recent years reflected at some length on the utility of public reporting on human rights impacts.

In an ideal and informed market, a firm's commercial value should partly depend on its social values.

How does externally-oriented reporting loop back to internal changes in strategy? How does one move socio-enviro impact issues from the periphery to the boardroom? How do those charged with improving social impact get themselves seen, on the inside, as important value-enhancers -- rather than being 'relegated' to the public relations / communications department?

Where it is not required by regulation, what is the commercial ('business case') for reporting to the public on existing or emerging human rights and social impact problems?

For many firms, there is something of a 'damned if you do / damned if you don't' dilemma here.

The obvious recent example is the reaction to Unilever's proactive approach to the human rights impacts relating to its operations and supply chains.

Unilever's CEO is a world leader in this respect. Yet not all market analysts approve of him airing, as it were, the 'dirty laundry' of adverse human rights impacts that the firm's internal processes find existing in the supply chain.

Whatever the legal-litigation and other considerations, from a corporate strategy (both brand protection / promotion, and general risk management) perspective, there is a strong argument to be made that those firms which make proactive efforts to 'know and show' the shifting map of their social (and enviro) impact are more likely to identify and pre-empt commercial and 'non-financial' risks, reinforce brand integrity, and so on.

What will it take for this strong argument to become (as Australians say) a 'no-brainer' -- beyond argument?

Achieving supply-chain integrity in social impact terms is very hard, especially for global multi-goods firms.

Firms that are honest about the complexity of these issues and display good faith efforts to address them may find customers, consumers, suppliers, investors, insurers and others far more forgiving than those which adopt, in effect, an 'ignorance is bliss' approach.

Ignorance is risk. Transparency is in -- this vague but undeniable norm of some sort, from Beijing to Brussels. Shielding is ever-harder, and a bad look.

One question is what it will take for these issues to level out such that other firms do not look at the reaction to Unilever's reporting and decide to keep their heads down. What incentive structures can shift the game so that there is only a 'damned if you don't' position?

Last week I heard John Morrison talk of the incentives (regulatory, market, consumer, corporate governance and other) required for moving these issues into the 'pre-competitive' space. That is, taking them out of play in terms of what firms see as the competitiveness downsides of greater proactivity and transparency on human rights impacts.

This blog is going through some transition as I settle into a new academic role.

A previous post reflects on these issues: here.

In the meantime, I can do no better on this topic than to promote Rachel Wilshaw's recent piece for a well-known Oxfam-related blog, on the Unilever report : see here.

Jo

Rana Plaza: business, human rights and regulation

Where are energies best placed in closing the 'governance gap' on preventing and remedying human rights violations related to business activity?

This week came news from Bangladesh of murder charges brought against the owner of Rana Plaza (and some government officials) relating to the 2013 garment factory disaster, which claimed over 1,100 workers' lives.

Since such smaller, local businesses often supply global brands, the disaster gave some momentum to debates on the responsibilities of big brands for ensuring compliance with basic human rights, health and safety standards in their supply chains.

Such debates often ask 'who has responsibility' as if there must be one single actor accountable -- factory owners, local regulators in the production state, regulators in the retail state, brands and buyers (and their financiers), or consumers in more developed countries.

The boring answer is that a just and comprehensive and effective global system on business and human rights must inevitably involve a patchwork of differentiated but related roles and responsibilities.

(The standards against which these responsibilities can be gauged are fairly clear now, certainly in the global garment industry.)

The reasons for poor compliance vary; so must the strategies for promoting systemic practices of continuous improvement.

Unsatisfying as it sounds, a 'smart mix' of regulatory mechanisms and techniques will be required.

These must be grounded in public law, but also engage business actors in positive ways that go with the grain of commercial realities and seek to leverage a range of incentives beyond simple top-down legal commands.

In this context, events such as the Rana charges this week reveal, to my mind, at least three points:

1. Human rights need strong national laws: relying on industry self-regulation of labour standards in global supply-chains is not enough.

2. Global legal schemes for 'business and human rights' will only be as strong as the capacity and will of local authorities to uphold standards.

3. Consumers can be 'regulators' of business human rights compliance, and meeting minimum standards does not necessarily inflate costs.

The third point is a reminder that there is no necessary trade-off between being a responsible business and being a competitive one.

In an ideal world, and perhaps in the world to come (in some sectors, in some places), being a responsible business will be integral to being a competitive one.

If that is to transpire, for all the regulatory power in the world and for all the importance of having mandatory standards, there is no power quite like the power of the market to change business behaviour in society.

This puts the 'regulatory' onus on consumers, ultimately, in relation to human rights issues in retail supply chains.

That is not the same as saying 'let the market decide' without regulatory interventions. It is to recognise that the most powerful incentive for smaller business owners such as Mr Rana and family is a commercial one: comply or fail.

Jo

For previous posts on Business and Human Rights, see here.

Business and human rights: reporting and measuring

Better corporate measurement and reporting on social impact will probably promote better performance -- but not necessarily.

Many in business are overwhelmed by the proliferating plethora (had to try that...) of guidelines and reporting frameworks, standards and metrics for sustainable and responsible business.

In a previous post (here) I've noted the compliance fatigue and other problems that result from this phenomena.

In theory, firms that measure and report on their human rights or other social, environmental and governance impacts thereby also become more attuned to these in strategic and operational terms, 'mainstreaming' them into their business practices and decisions. 

(In parallel, many of these issues around social and environmental impact -- triple bottom line, non-financial due diligence, or whatever one wishes to call it -- are coming in from the periphery to the core of commercial considerations.)

However, it is not necessarily the case that more reporting, more measuring, etc., equips corporate decision-makers to be better at seeking out more socially beneficial or enviro-friendly ways of operating. Nor do they necessarily improve transparency and accountability (even if they force firms, or parts of firms, to engage with the ways in which they affect people and the planet, and give watchdogs something to audit). 

The effect of widespread uptake and implementation of reporting frameworks might be profound in shifting business cultures. But the effect is not automatic. It depends. In particular, not all firms have good feedback loops: externally-facing reporting will not necessarily change management mindsets.

Creating these frameworks, indices, matrices should not be an end in itself, therefore.

There is scope for more research on links between corporate responsibility reporting and business practices, and related frameworks for the finance sector -- whose practices hold so much influence over corporate practices in turn.

The prompt for this post is my briefing paper, published last week for Chatham House, on trends in the field of 'business and human rights'. See here.

Also published last week was the very promising first detailed guidance for corporates on reporting on efforts to implement the 2011 UN Guiding Principles on Business and Human Rights. See here.

Finally, last week but one saw the publication of this brief guidance to corporates on due diligence in relation to human rights issues. See here.

All this is good, provided the business and human rights 'community' does not deceive itself that more publications, more guidelines, more frameworks will necessarily, of themselves, make the difference.

Jo

What role for business in tackling inequality?

'Africa Rising' advocates boast that the sub-Saharan Africa region hosts six of the world's fastest-growing economies. Yet it also holds six of the world's most unequal societies in income terms, according to the African Development Bank.

This week Oxfam released a report on the growing wealth and/or income gap around the world.

This is ahead of the annual Davos gathering.

If the inequality gap raises serious social policy (and even security) issues for governments to respond to, what is a responsible role for the private sector on this issue?

That is, what role should organised businesses play in addressing structural income inequality in African economies, beyond their duties as taxpayer and employer? Would shifting the focus onto business (and re-framing inequality as a corporate responsibility issue) wrongly detract from the proper locus of responsibility?

That lies in the complex social contract between citizen and state. Corporates should be neither excluded nor exempt in such a debate.

I wrote on this (... here ...) almost exactly a year ago -- also ahead of Davos, also about inequality, and also unsure where exactly 'responsible business' meets 'redistributive fiscal policy'.

There have since the last Davos been many reports on how Africa's fast (average) GDP growth rates have not reduced income inequality and may have only exacerbated it (see, for example, this report and this IMF Policy Paper, both from a year ago).

However, among all the policy prescriptions and advocacy points, few offer insights into what it is business could be doing more of, or less of, other than the obvious issues (where foreign firms are concerned) around tax evasion or avoidance.

Income inequality raises serious longer-term business growth and investment strategy issues in Africa, since it affects the pace, quality and sustainability of growth (for example, of new urban middle classes)*.

This 'bottom line' element suggests that business leaders will continue to give the issue attention. In weaker governed states in Africa, that could in theory (if somewhat counter-intuitively) extend to corporate taxpayers helping to increase the capacity of their host governments to levy and distribute fair and viable corporate taxes more efficiently.

For many African economies, it is arguable that growth rather than income inequality is the priority: without the tax income from sustainable, broad-based growth these economies will struggle with distributive policies. The current focus on 'inclusive growth' need not be a simplistic 'growth and redistribution' model, which posits citizens as passive recipients; if its ideals are realised, inclusive growth is economic empowerment not wholly based on state provision of income. Firms can contribute to this through their hiring and procurement policies. 

Jo

* Oxford Analytica, 7 November 2014

Compliance fatigue and sustaining sustainability

Is the proliferation of disclosure and reporting schemes capable of undermining efforts for more sustainable, responsible business?

Now, it is very hard to refute the merits of the 'disclosure revolution' on environmental, social, and governance (ESG) issues that has come in recent times at least to major Western listed firms.

The merits are fairly obvious. The more we and the market know, the better we can ascribe meaning to a firm's value proposition. The more a firm knows about its own ESG impact (through committing itself to data collection, analysis and disclosure), the better it can address potential disruptions and problems in its operations or supply-chain. Do well while doing good, etc.

The same goes for the proliferation of voluntary, hybrid or other multi-stakeholder, quasi-regulatory schemes for addressing issues ranging from a firm's impact on local insecurity to transparency around revenues paid to host governments.

In this light, the recent announcement by Unilever of a new human rights reporting and assurance framework is good news, and consistent with the due diligence elements of the UN 2011 Guiding Principles on Business and Human Rights.

One would hardly want to curb the energy and enthusiasm evident around institutionalising the responsible business agenda within corporate systems and cultures. Yet it was that announcement that prompts this week's post. Because there seem to be so many schemes and initiatives and regulations and conferences that I imagine the landscape now is becoming somewhat bewildering even to a well-meaning executive within a major publicly-listed firm.

(A related issue is the proliferation of single-issue charity, aid and advocacy groups: that industry now talks about engaging with business but might require some rather hard-headed business strategies to reduce the over-heads and donor fatigue associated with organisational proliferation, and focus instead on delivering social value 'at scale'. But hush -- the same could be said of proliferating blogs...!).

I cannot put a finger on it, but do think there's an issue with this flowering of schemes and initiatives, in terms of strategic considerations relevant to the business sustainability / responsibility agenda, such as the resources and attention-span and goodwill of corporate decision-makers.

Instead of carrying on further, I refer to a post from pre-Christmas 2012 (here), on proliferation and fatigue related to the many initiatives on responsible and sustainable business.

See too this recent piece in The Gaurdian on how over 2,500 different metrics are in use for measuring and reporting supply chain sustainability.

It is true that reporting on 'non-financial' issues can serve a commercial and risk-management purpose and is increasingly being incorporated into core business strategies; it is true that leading firms think beyond compliance to how the sustainability agenda can be an opportunity to create both social and commercial value; it is true that there is a counter-trend to this proliferation, where broader concepts such as 'materiality' are being deployed rather than  endless multi-indicator checklists and indices. It is true that the field is evolving and emerging, and this flowering of schemes and requirements may settle into something more sustainable and manageable without becoming complacent or quieted.

Yet this proliferation phenomenon is relevant (or is perceived as relevant) to compliance burden and cost, and so to the competitiveness of responsible business and finance (see here, a past post on regulation and values amid perceived strategic competition for access to markets and resources).

Now I believe there is no necessary trade-off between being responsible and being competitive when investing in developing regions. Indeed in time one might only be competitive through being responsible (and being seen that way).

Nevertheless the perception remains in those places inside firms and funds where it matters.

Those interested in promoting sustainable and socially responsible business practices ought to reflect more, I think, on whether the proliferation of schemes and reporting processes is confusing 'the means' with 'the ends' in ways that do not advance the end goals. 

Jo

See too this past post reflecting on who the audience is for corporate sustainability communications.

Sustaining sustainability: bottom lines, full circles

'Can we expect corporations to solve global problems?'

This fortnight's post relates to a panel with this title that I attended at this week's 'Global Horizons' conference hosted by Oxford Analytica.*

As they say, 'one had to be there' ... not surprisingly the panel covered a lot of ground, some of it requiring fundamental questions about the real or ideal nature of society, its well-being, and its governance. And 'how', 'why' and 'in what direction' those issues and expectations may be shifting.

The combination of Africa's serious developmental / governmental deficits and investment interest in its contemporary growth story make it a primary forum for exploring these questions (or at any rate I think so -- hence this blog!).

So anyway this post is not a report, nor attempts really to address the question (or how it was framed). It only reflects on two of the various things that struck me on the panel. These relate to the 'who' issues around sustaining sustainability.

Who: firms

First is how so many debates on business and society or corporate responsibility or the public-private divide are approached in a very limited and limiting way, by reference to 'the private sector' only as large, listed, branded Western multinational business corporations.

This is a very narrow perspective. Effective analysis of and strategies for sustainable and responsible business cannot be lazy. They must consider how incentives, inclinations and other factors vary considerably depending on sector, nationality, size, corporate form, etc. There is no one 'private sector'. Someone raised this with the panel, thankfully; it is something of a bugbear of mine, noted indeed in the very first post of this blog (2011).

Who: governments

Second, the panel question did not mention government but implicitly of course it is not asking 'what can / should corporations do about global problems', it is asking 'what can/should they do relative to governments' (or indeed relative to people acting as [free] agents, consumers and citizens in society without waiting for either governmental or business actions).

Many commentators on this topic perhaps understandably focus on what business should do and not do. True, much of what matters and can be done in sustainability terms does not require or need to wait for government. Yet there are still too many debates one goes to side-step the question of government, the governance of responsibility, the division of roles on promoting sustainability.

The panel did not (like this blog) have an Africa focus. Africa was covered in other discussion groups, on the theme of its rising consumers. Notionally, such market forces -- not state regulation -- are or will be the most sustainable drivers of business sustainability and corporate responsibility. Yet there is a risk here: trends in this area, combined with new expectations that business will directly contribute to the development agenda, are good for articulating the nature of corporations' responsibilities or abilities, but can tend in the process to obscure those of government.

Policies and politics can be a big part of the 'global problems' we're talking about. These debates tend to focus on corporate responsibility whereas inherent in the issue is delineating that by reference to the relative spheres of responsibility and action belonging to governments. (We should also ask how influence across business-government lines can shape where those lines are drawn and in whose favour).

In Africa at least, this focus on government's duties and the governance of responsibility is as important as being pragmatic and imaginative about unexplored roles for business to improve the provision and protection of public goods (see this recent post, here). Moreover, we must acknowledge how much harder it is to get business, government and civil society working together on 'global problems': it is not just a case of saying 'only connect' (I ranted about this point here).

If the optimists' case proves true (enviro, social and governance issues become fundamental business principles fully integrated into valuation and value-definition) then with a redefined 'bottom line' we will have come full circle to Milton Friedman's controversial thesis that the social responsibility of business is simply to continue to succeed.

The focus would then again be more balanced on the responsibilities of governments and indeed consumers-citizens: expecting corporations not to deepen global problems, supporting enterprising ways to solve those problems, but understanding that these are too big and complex for any one arm of society to solve alone.

Jo

ps - The panel also dwelt on how the question of business responsibility for public goods is increasingly inseparable from debates about proper forms and levels of taxation. I mention this just to free-kick an earlier post on this issue in Africa: here.

* Oxford Analytica was my previous employer.

Business and disaster response

The role of for-profit entities in humanitarian response situations raises a range of policy questions.

Much of this part of the world goes on summer holiday at this time, amid a range of confronting stories of humanitarian crisis, from Syria to South Sudan. One question is the private sector's role in preventing and responding to disasters.

This brief post offers some reading on the issue. The literature on this took off, in large part, following the 'Boxing Day' Tsunami of December 2004, given in particular the role of global logistics firms in responding to the disaster. The critical literature has a somewhat longer vintage.

The thrust of Naomi Klein's 'Shock Doctrine' (2007) is that a malevolent but mainstream strain of 'disaster capitalism' thrives on such situations.

Compare, from the same year, Binder and Witte's assessment of key trends and policy implications  in relation to business engagement in humanitarian relief.

Here now is a major report on the topic, published this month by ODI researchers.

If you prefer, see this UN news service summary of the research (here). The summary is right, I think, to focus on the pervading legacy of distrust of the private sector by humanitarian agencies and staff. It is also right to note that the search for sustainable, innovative relationships is hampered by the tendency to nominate the wrong people to front up to the private sector or aid agency (as the case may be): humanitarian groups send their fundraising officials to talk with business, while corporates assign the role to public relations officers.

If short on time, here is an op-ed media article by one of the ODI researchers.

The research tends to make insufficient distinctions between acute humanitarian emergency situations, and (longer / slower-burning) periods of post-conflict or post-disaster recovery. Many of its examples relate to situations of chronic under-development, poverty, marginalisation or vulnerability that do not amount to humanitarian emergencies. The ethical, commercial and other considerations of for-profit engagement are not the same for such settings, clearly.

Distinguishing between forms of involvement also matters: firms that respond to natural or man-made disasters (and the line between those is often blurred) may be doing so as donors, partners, contracted service-providers, pro-bono service-providers, and/or out of considerations of strategic self-interest that are not necessarily inappropriate.

Jo

Africa, 'rising powers' and responsible investment

'The private sector' covers a huge variety of actors. Debate on responsible business, and on engaging business in development, can tend to gloss over this.

The vast majority of stuff written on these topics clearly has in mind only large Western listed companies, yet seldom clearly states this focus-choice, and even then treats such entities as a fairly coherent class. 

There is not enough attention to how different industry and finance sectors have very different incentives, regulatory levers, risk-appetites (etc) in terms of responsible and/or conflict-sensitive business conduct. Within sectors too there is typically significant variation among in how different firms deal with these issues, including variation among firms of the same 'nationality': there is too little good research that demonstrates how this is so (Luke Patey's Sudans oil sector work 2005+ is an example / exception).

Likewise, as argued previously -- and despite the first-glance attractiveness of the proposition -- there is insufficient empirical basis for the assertion that listed OECD-country firms generally have a superior enviro, social and governance footprint in developing countries than Chinese and other firms.

Evidence-based arguments on such things are vital to wider strategic debates about leveling the regulatory / responsible business playing field among foreign investors in Africa. Awareness of the varying capabilities, propensities, motives etc of different business sectors and firms is a good place to start in the advocacy, design, implementation and monitoring of responsible business mechanisms.

This week I'm at a DFID-sponsored workshop of a longer-term project on mega-projects, 'new powers' (BRICS) and conflict prevention in Africa. One of the (academic) questions I think that our research must engage with is the relevance of investors' national origin, ownership (state or private), form of incorporation, etc., to their varying amenability to regulatory overtures intended to mitigate conflict risk and other social harms.

This is a link (here) to a recent paper making the somewhat contrary point, too: that from Africa's perspective it matters not whether investors are Norwegian or Nigerian, Chinese or Canadian. What matters is their capacity and inclination in fact to contribute, within what can reasonably be expected of them, to inclusive, peaceable and sustainable development.

Also this week are two similar events in London on country and corporate uptake of the UN Guiding Principles on Business and Human Rights, adopted three years ago this month. One event looks at 'due diligence' requirements. The other I'm attending and looks at the contribution of multilateral schemes to compliance with such standards in conflict-affected or at-risk areas (see #bizconflict).

Like some of the re-emerging debate on the necessity for, desirability and feasibility of an attempted negotiated treaty on (the state duty on) business's human rights responsibility, such events in the past have often (to my mind) featured well-meaning advocates who tend to speak of 'business' or 'the private sector' as some alien out-there but coherent social force rather than a dizzying array of commercial actors and interests which happen not to be governmental or non-profit. Hence the sense that advocacy and regulatory design could account more cleverly for variation by sector and other criteria.

Such events also naturally focus on Western listed privately-owned firms. But they thereby risk omitting those state-owned (and other) firms from 'rising powers' whose activities are of high significance to development in sub-Saharan Africa. When attention at such events does turn to the latter, the assumption is that Chinese and other firms have poorer records on relevant social impact and development indicators. Again, this assumption lacks a solid empirical basis.

The first step to influencing responsible business activity is to understand 'business' and how it is operating in fact -- wherever it is from.

Jo