The Human Rights Responsibilities of International Business
A statement by
Timothy E. Deal
Senior Vice President, Washington
United States Council for International Business
To the Frank Hawkins Kenan Institute of Private Enterprise Seminar
“Are Human Rights the Business of Business?”
Washington, DC
December 10, 2003
I would like to thank the Kenan Institute and Susan Aaronson, in particular, for inviting me to participate in the opening panel of this conference regarding the human rights responsibilities of international business. It’s a timely topic, and I welcome the opportunity to provide a business community perspective on this important question.
The U.S. Council for International Business has taken a leading role in advancing corporate responsibility, which we define as “… a commitment by a company to manage its roles in society – as producer, employer, marketer, customer, and citizen – in a responsible and sustainable manner.” In that regard, strategies related to production and marketing of goods and services, business ethics, environmental practices, treatment of employees, human rights, and community engagement are all inherent to a comprehensive approach to corporate responsibility.
Today, companies today face multiple challenges that go beyond the traditional objectives of running a profitable business, serving shareholder interests, meeting the needs of consumers and providing a fair wage and good working conditions for employees. The demands on business have intensified because the very process of globalization has heightened expectations of what companies can and should do to contribute to social progress. At issue here are the place business should occupy in society and the respective roles of business and government in the management of globalization.
What I would like to do today is, first, offer some perspective on what business believes is the most effective way it can help to promote human, social, and labor rights in the countries where it operates. In that regard, I will stress the preferability of voluntary initiatives over mandated obligations. That will lead quite naturally into a discussion of what we regard as the wrong way to promote those rights, as exemplified by the recent proposal of a lower body of the UN, which has called for the adoption of “norms” on the responsibilities of multinational enterprises. We see such efforts both as misguided and harmful.
Voluntary Initiatives Make Good Sense
Multinational enterprises generally follow modern human resources and health, safety, and environmental management practices. This is simply good business. Such practices provide realistic, flexible solutions to the range of issues that companies encounter around the world.
Most multinational companies have long acknowledged their responsibility for good business practice in environmental management, health and safety, employee relations, and child labor.
The internal policies, guidelines, and practices of these companies are consistent with, and often exceed, international multilateral guidelines. They are designed to: (1) maintain or improve the competitiveness of companies over time and in highly diverse parts of the world; and (2) ensure that companies comply with the laws in all countries where they operate.
Internal policies, standards, and practices are certified by a variety of means consistent with a company’s history, culture, goals, location, and industry. These policies include communications with employees, shareholders, and, in many cases, various stakeholders in the broader community. These internal codes may be supplemented by national or international business codes and manuals of best practices, a few of which I shall refer to shortly.
Turning more specifically to the theme of this conference, I want to make clear at the outset that business is committed to operating in a responsible and sustainable manner, including by respecting the human rights and civil liberties of employees, customers, suppliers, and the communities in which they operate. Business is also committed to helping advance human rights in those countries where those rights are denied by policy and practice.
In addition to the many international treaties that have been negotiated between governments, business has worked actively with governments and international organizations in developing voluntary codes that call for positive human rights practices by companies and other organizations. Examples include the OECD Guidelines for Multinational Enterprises (1976), the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (1977), the Caux Principles for Business (1994), the U.S. Model Business Principles (1996), the Global Sullivan Principles (1999), the UN Global Compact (2000), and the U.S.-UK Voluntary Principles on Security and Human Rights (2000). These voluntary codes and guidelines are designed to supplement, not replace, the implementation and enforcement of national laws and regulations to protect human rights and civil liberties.
Where I suspect I will part company with some of the other panelists is over the nature of the commitments companies may make to promote human rights. In that regard, we in the business community believe that the best way to ensure a greater business contribution to social progress is not through prescriptive codes and regulations imposed from the outside. Rather, we favor voluntary business initiatives, both formal and informal, that can play an important role in bridging cultural diversity within companies and building awareness of societal values and concerns. In the final analysis, this is primarily a matter of peer pressure and persuasion rather than prescription.
UN Norms for Multinational Enterprises: a Misguided Proposal
Last August, the Sub-Commission of the UN Commission on Human Rights approved a draft code of conduct for companies entitled “UN Norms on the Responsibilities of Transnational
Corporations and Other Business Enterprises with Regard to Human Rights.” There has been much publicity about these “norms”, much of it inaccurate. Therefore I will spend some time today explaining why business strongly opposes the proposed code, which we see as a telling example of good intentions gone astray.
Contrary to the impression given by most news reports, the action by the panel does not impart any governmental or UN support for the draft code. The 53 member-states on the UN Commission on Human Rights have not reviewed the draft and will have their first opportunity to do so at the next Commission meeting in March 2004.
As developed by the working group chaired by Professor David Weissbrodt of the University of Minnesota, the draft is a “non-voluntary” set of obligations that would transfer responsibility for protecting human rights from national governments to companies. While the draft refers to the code as “norms,” that term is misapplied in this context since the code does not contain legally binding requirements.
If enacted, companies would be required to ensure “that their activities do not contribute directly or indirectly to human abuses, and that they do not directly or indirectly benefit from abuses of which they knew or ought to have known.” The draft includes specific obligations related to equal opportunity and non-discrimination, personal security, worker rights, national sovereignty, consumer protection, and environmental protection. Implementation procedures in the draft code would require companies to:
Ø Incorporate the draft norms into an internal code of conduct;
Ø Apply the norms throughout the company’s entire supply chain;
Ø Agree to periodic monitoring by national, international, governmental and non-governmental mechanisms;
Ø Conduct periodic evaluations of the company’s impacts on human rights; and
Ø Pay reparations to anyone affected by failures to comply with the norms.
The draft code also calls for the creation of a panel of experts to receive and investigate complaints against companies.
Let’s face it. The “norms” are a radical innovation. They purport to make private business enterprises liable for “human rights violations.” This is a revolutionary step since at the present time only states have human rights obligations under international law. Only a state can violate international human rights.
The “norms” also seek to subject businesses, multinational corporations in particular, to the UN systems designed for monitoring state compliance with human rights treaties. In effect,
the “norms” try to place state obligations for human rights onto one particular set of private actors – private business enterprises – in order to hold them liable for alleged human rights violations.
While multinational corporations are the principal focus of the “norms”, they cover all businesses and business actors, including “…managers, members of corporate boards, or directors and other executives – and persons working for them.” Any they apply to “any business entity,” whether it is a corporation or an individual entrepreneur, or an international or domestic enterprise.
Yet, private organizations, including business, do not have the democratic mandate or authority to assume what are and should remain government responsibilities and functions. The establishment of a legal framework for protecting human rights and ensuring enforcement is a task for national governments, not multinational companies. Attempting to shift that responsibility to companies would place them in the impossible situation of being held accountable for actions outside the company’s control.
Moreover, the “norms” extend far beyond issues of basic human rights and cover a wide range of political, social, and economic rights that are appropriately decided by national governments. It would be highly inappropriate to, in effect, privatize the policing of those rights by making companies the enforcing agent.
The draft “norms” create a legal no man’s land. They do not distinguish between binding and non-binding human rights obligations. The draft code is presented as a set of “norms” when in fact many of the instruments it is drawn from are not themselves legally binding and those that are heavily qualify the rights they are supposed to address. By calling them “non-voluntary” and then using legal language where there is no legal obligation, the draft blurs the line between voluntary and legal actions, and makes corporate compliance virtually impossible.
The draft norms would create significant conflicting requirements for companies and few, if any, could remain in compliance with existing national laws should the draft “norms” be adopted. As one example, companies would be required to ensure that their actions do not indirectly
contribute to human rights abuses. Since tax payments support all governments, companies would be required to stop tax payments to any government that is suspected of past or future human rights abuses. Based on the definitions of human rights used in the draft code, the United States, for example, would have to be included in that list of countries not in compliance with the code for allowing prison inmates to work.
Also, to the extent that the draft “norms” present potential legal and practical burdens on companies operating in developing countries with poor human rights records, they would create a deterrent to foreign investment there. Rather than improving human rights in such countries, the draft code would virtually eliminate the very investment that is the best hope for economic development and improved human rights.
The obligations that the “norms” impose on private businesses are much more extensive than those placed on states by the various UN human rights treaties. Moreover, the intrusiveness of their monitoring and implementation provisions far exceeds those imposed on states by UN treaties.
Conclusion
In conclusion, I want to reiterate the business community’s strong commitment to the promotion of human rights in the workplace both at home and abroad. We strongly believe that voluntary initiatives are the best way to achieve those objectives. Mandatory codes such as the Sub-Commission’s draft “norms” are a step in the wrong direction in that they would pass on to companies the responsibilities of sovereign governments. In the final analysis, business should continue to develop its own rapid response to public demands in such areas as human rights by incorporating best practices into their day-to-day operations and their longer term strategic planning.
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