Companies ignore the human rights of some governments so they can acquire cheap labour
Ethics arrive in business schools
New standards governing the operation of multinational companies do not go far enough to protect human rights if the framework is adopted in its current form, according to leading rights groups. Proposals drawn up by Harvard professor John Ruggie, the United Nations (UN) special representative for business and human rights, are being set up as global benchmarks.
"The point is to help devise universally acceptable rules for businesses, whether they are transnational or national, large or small, to better manage their adverse impacts on people and communities," says Dr Ruggie.
A list of standards for businesses have been drawn up to protect workers, local communities and the environment. The system is meant to work by assessing the risk of abuses, and setting up grievance mechanisms.
"The international community has become increasingly concerned with large scale impact of businesses in the mining industry, the oil industry, and the operation of sweatshops, so the UN has set out to develop a consensus around viable rules for better corporate practices," he says.
'Weak formulation'
The guidelines have received widespread government backing, they have been broadly welcomed by business, and the UN's Human Rights Council is expected to adopt them, in June. However, pressure groups such as Human Rights Watch have suggested that, as they stand, they are inadequate."By better managing their conflicts with workers and communities, corporations will be more sustainable in the long run” Professor John Ruggie
UN special representative
The guide encourages companies to protect employees, local communities and the environment, and to end corporate abuses, especially in low-cost sweatshops, the oil industry and in extractive industries.Audrey Gaughran, of the human rights organisation Amnesty International, points out that the UN Committee on Economic, Social and Cultural Rights has already enshrined what Professor Ruggie is suggesting. "For corporations to comply with their international obligations in relation to article 12, parties have to respect the enjoyment of the right to health in other countries, and to prevent third parties from violating the right in other countries, if they are able to influence these third parties by way of legal or political means, in accordance with the Charter of the United Nations and applicable international law," she says.
By contrast, Professor Ruggie's draft proposals say:
"States should encourage business enterprises domiciled in their territory and/or jurisdiction to respect human rights throughout their global operations, including those conducted by their subsidiaries and other related legal entities." Ms Gaughran insists this is a much weaker formulation. "The first requires concrete action," she says, "The second requires nothing specific and would be interpreted by many as requiring nothing at all."
Social sustainability
Some observers say the proposals are just a way to tame capitalism and while Professor Ruggie says that is not a bad description, he believes it is taming it it for its own sustainability. "This is really about the social sustainability of enterprises. By better managing their conflicts with workers and communities, corporations will be more sustainable in the long run."The guiding principles have not been adopted yet. They are available for public discussion until the end of January. "At the end of the month I will collect all of the comments which have been made, reflect on them, revise the final text, and then admit it for approval," he says.
"From the world of business we have had an excellent response.Just like a law against murder does not absolutely prevent murder, it can certainly reduce the number of cases” Professor John Ruggie
UN special representative
Professor Ruggie points out that he is not talking about companies that operate in countries such as Denmark, but those that operate in higher risk environments."Such companies are increasingly paying a high cost if they get it wrong, and they are quite willing to participate in various pilot projects to try to get it right," he says."Oil and gas companies are increasingly finding that their big risk factor is not financing, nor technical risk, it is what they call stakeholder risk - a push-back from communities in which they operate - whether it is indigenous or whatever, and they are looking for tools to manage these non-technical risks," he says.He recalls one anecdote at a speech given by a senior person in one of the international oil companies:"No petroleum or mining engineer would dream of drilling a hole in the ground without doing extensive seismic analysis - now they have to learn how to do social seismic analysis because that is where their problems are coming from."
Cost of failure
Some companies are already road-testing the proposals. "We are conducting a number of pilot projects in five countries, including Russia and China and Colombia," Professor Ruggie says.People are often made to work in hazardous conditions without proper protective clothing "Our team members visit these places to see if they are working as they are supposed to be and that their reports correspond to reality on the ground." There can be dire consequences if companies forget their duty to fundamental human rights."People can die. It happens all the time. It happens too frequently," Professor Ruggie says.
"To take an example that everyone knows about - Shell in Nigeria. Ken Saro-Wiwa and a number of his colleagues were executed by the military for issues that were related to demonstrations against Shell," he recalls.
"Demonstrations had gone on for many years because of gas flaring and pollution of the rivers, and it escalated to such an extent that the military was called in and they trumped up charges against the Ogoni and executed them.
"I am positive that everybody in the UK government at the time and everybody in Shell today wish things had gone differently."These guidelines can certainly reduce the number of incidents, but just like a law against murder does not absolutely prevent murder, it can certainly reduce the number of cases."
However, Audrey Gaughran feels that the guidelines will be undermined because "both company structure and globalised company operations facilitate corporate evasion of state jurisdiction".She maintains that the legal framework has not kept pace with the realities of globalisation. "While economic interests have been able to make the law work for them, those most affected by their operations have often seen the law and protection of the law recede in the face of corporate power," she says."The need to attract foreign investment, and provisions in trade and investment agreements have all squeezed any protection the law can provide for people affected by corporate operations - particularly in developing countries."
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