Human Rights and Business: The Corporate Accountability Paradox

April 22, 2017

Imagine if, one day, your local water supply suddenly started turning an acidic yellow colour. This is currently the case in the rivers near Zambia’s Copperbelt region. Fish are dying and the people are suffering. In 2015, toxic contamination from the London-based mining giant Vedanta Resources’ copper refinery reached such severe levels that the people living close to the mine became severely ill and their crops wilted. Yet, Vedanta claimed that it took the wellbeing of surrounding communities and the environment very seriously. In 2016, 1,800 community members brought their lawsuit to the English High Court, citing personal injury and loss of livelihood, because they feared that they would not get a fair hearing within the Zambian legal system. The court case is still ongoing.

 

Despite the preconception that states are the main instigators of human rights violations, companies have long been accused of similar abuses, whether they be acting alone or complicit in state action. In fact, from the early days of slavery and the global slave trade, companies have encouraged and profited from abuses of human rights. During the Industrial Trials in the aftermath of World War II, I.G. Farben (a predecessor to Bayer, the multinational pharmaceutical company) was found guilty of providing goods, including the notorious chemical Zyklon B, to Nazi Germany, thereby facilitating war crimes and crimes against humanity. In 2003, the Truth and Reconciliation Commission for South Africa found that corporations working with the Apartheid government directly profited from destabilising the country by bank-rolling the military-industrial complex and exploiting cheap labour.

 

Globalisation has increased multinational corporations’ global reach to the point that they often have more power and resources than many small countries. In fact, 40 of the top 100 economies (comparing Gross Domestic Product (GDP) and company revenue) are corporations.  This gives them the freedom to choose where it would be most advantageous for them to set up business, based on factors such as labour costs or a lenient legal framework. It is therefore unsurprising that the locations corporations choose to operate  in are in developing countries, where human rights protections may not always be enforced.

 

Rana Plaza factory collapse in 2013

 

Some such states may welcome any foreign investment to protect their own economic interests, possibly to the detriment of the human rights of their citizens. The bigger the corporation, the longer, more complex, and more international the supply chains become, which can lead to human rights abuses of which the parent company may not even be aware. The collapse of the Rana Plaza factory in Bangladesh in 2013 was one such example of supply-chain mismanagement. In the aftermath, global fashion labels like Primark and Zara were amongst retailers who were condemned by the public for not doing enough to ensure proper workplace safety amongst their subcontractors.

 

These stories of brutality, along with a multitude of interacting socio-economic and legal factors, have brought to the fore the need to regulate corporate responsibility from an international justice perspective. Many countries and supranational bodies, like the United Nations (UN) and the European Union (EU), have thus joined the effort to try to ensure corporate accountability for human rights abuses and environmental destruction.

 

Businesses have also begun to recognise how important it is to respect human rights in order to mitigate any potential negative consequences. The business case for human rights is grounded in the ideas of minimising legal and financial risks, avoiding unpleasant publicity scandals that could undermine brand reputation, and attracting ethical investors. International pressure has forced many companies to openly address the issue of human rights, with global conglomerates like Johnson & Johnson publishing policy statements claiming “As a corporation, [we have] a responsibility to respect these rights, and especially those of the more than one billion people we touch with our products and services each day, including our employees and the people who support our businesses.”

 

The paradox arises when actually trying to hold these corporations accountable. Human rights law and corporate law are traditionally seen as very unusual bedfellows.  Under the Rome Statute of the International Criminal Court, corporations can only be held accountable for human rights abuses which constitute international crimes, with states having the ultimate obligation to protect human rights. Isolated atrocities conducted by corporations fall outside the Court’s remit. Instead, the corporation’s actions must be part of a wider context of abuse to be subject of the Court’s jurisdiction and to be prosecuted.

 

Accountability is therefore stifled by the pervasive idea that businesses and human rights operate in parallel worlds, despite cases such as those discussed above showing that this notion is clearly false. This binary interpretation of international law impedes any substantive legal developments and, though the idea of a binding international treaty on business and human rights has been hotly debated both in academia and at the UN, progress has remained at a glacial pace.

 

Nevertheless, non-binding agreements have gone some way towards promoting corporate accountability at an international level. The UN Guiding Principles on Business and Human Rights advocates for businesses to respect human rights and to offer remedies for harm done, while understanding that the responsibility to protect ultimately still lies with states. It has allowed countries like the United Kingdom, Colombia, and Denmark to implement National Action Plans on business and human rights. However, harsh criticism has been levied at these Guiding Principles by NGOs and civil society for their apparently soft approach towards businesses, as they only give recommendations rather than impose obligations to implement human rights due diligence practices and advocate a weak stance on victims’ reparations.

 

At a national level, many Western countries have developed accountancy mechanisms to tackle any corporate human rights abuses by introducing into statute the need to conduct proper due diligence in overseas subsidiaries. The most recent of these is the French corporate duty of diligence law, signed into law in February 2017. The law applies to the largest French companies, their subsidiaries, and their subcontractors. It will force companies to publish annual reports on their adverse impact on the people and the planet.

 

In the UK, there is also cross-party support for an overhaul of the state’s approach to corporate accountability, as outlined in the publication of a report on human rights and business in March 2017. MPs and peers from the House of Lords expressed concern over the effect Brexit may have on human rights and called for the government to remedy the lack of access to justice that many victims of corporate human rights abuses face.

 

At an industry level, a variety of voluntary codes exist to enable companies across the sectors to show their commitment to human rights. These attempts are not without criticism either, with many arguing that their approach is ineffective in combating atrocities and fails to provide effective restitution for victims.

 

Indeed, despite this surge of accountancy through legal and voluntary codes, abuses persist. Since 2010, 120 environmental activists in Honduras have died defending their indigenous lands against extractive industries; Apple’s subsidiaries were linked to child labour in the Democratic Republic of Congo in 2016; and in March 2017, it was alleged that Coca-Cola has been profiting from garbage collection by Mexican children. However, the recent interest in business and human rights accountability does at least create a space for victims, civil society, states, and businesses to develop innovative approaches to tackling the business-human rights paradox.

 

 

 

The many examples given in this article illustrate that corporate human rights abuses take place on almost every continent and are indeed a global problem that require a global solution. While recent years have seen some real progress in the complex world of human rights and business, many battles remain to be fought. With the Trump administration announcing its withdrawal from voluntary codes like the Extractive Industries Trade Initiative in March 2017, hopes of a cohesive approach could be undermined, making cooperation and vigilance more important than ever.

 

 

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