Why do companies often treat the notion of human rights like it is a dirty word?

SDG 16 is a broad and ambitious one. It sets its target as a broad promotion of human rights, peace and building societies that respect and uphold individual rights. The rights to social and economic development, equal access to justice, and protection of the vulnerable and marginalized are explicitly mentioned as focus points.

It is common to pin the realization of goals like this on the governments and the public side, but in the reality, we live in today, the private sector has immense power to bring peace and justice to the world. Unfortunately, the private sector is responsible for a vast amount of injustice, violence, and harm and abuse of those who are most vulnerable and marginalized.

Corporate social responsibility vs. human rights

Twisting the narrative

“As Upton Sinclair said, ‘It is difficult to get a man to understand something when his salary depends on not understanding it.’ The result can be an entire society twisted to serve the interest of its most powerful group.”

- Gautam Mukunda

One of the age-old games of tug of war between the private sector and human rights entities is the question of voluntary and mandatory obligations. This has resulted in an odd situation where many corporations have acted as if human rights violations are something entirely else when their own operations make the violations happen. As if human rights were a dirty word. Why is that, exactly?

Arguing about who is responsible for human rights violations, especially in supply chains of businesses, sometimes seems absurd. Especially if you come back to the root of modern human rights law. Human rights are derived from human dignity and are the responsibility of every organ of society. 

An article from the beginning of the 2000s by Ronen Shamir makes an argument on how businesses knowingly attempt to shape the practice of corporate responsibility in the direction where it is seen as voluntary and not as an obligation. Shaping the scope of corporate responsibility by pushing the use of terms like sustainability and CSR, instead of human rights, is a significant part of shifting the narrative. It can feel like using the term human rights can automatically put the corporate sector in the spotlight as a perpetrator. 

In Shamir’s article, the author attempts to demonstrate this pursuit to shift the narrative by reviewing cases where victims have tried to bring human rights responsibility to corporations in the US through the Alien Torts Claims Act (ATCA). Shamir demonstrates how corporations try to avoid legalizing their social duties and human rights responsibilities and keep CSR as something they get to define for themselves.

The article is not supposed to be a doctrinal study of ATCA cases. It uses the cases as concrete examples of how the business sector dodges binding responsibility and instead sets voluntary CSR standards to fill the void. ATCA is one of those rare national laws that have been harnessed to bring corporations to court to face charges on human rights violations that have occurred in states other than where the court is set. These cases are rare since they force the legal teams of those multinational companies to argue, publicly and on record, why human rights responsibilities should not bind them.

Multinational corporations can play legal systems against each other and escape jurisdiction through their ability to operate in states with the weakest governmental control. Many impoverished states, where the business sector is unlikely to face responsibility for human rights violations, are so dependent on any foreign investment that it is undesirable for them even to attempt to control business operations’ responsibility. Child labor, safety regulations, and environmental standards fall through the cracks without oversight. 

The desperate need to attract foreign investment can easily leave poorer states in a place where they do not have the choice to police human rights violations that multinational corporations are involved in. This would drive away the investments to states with weaker governance. 

Corporate actions are sometimes actively at cross purposes with states’ obligations on human rights and the environment. There have been agreements between the host countries’ governments and companies that have included promises to ‘freeze’ existing regulations for the duration of projects, which can last up to fifty years. States can find themselves accused of breaking their investment treaties in international arbitration for attempting to enforce higher protection of human rights, like different labor protections because companies were promised that the regulations remain the same. 

Disputes like these are often handled in secrecy, and there is little room for a human rights point of view. They are often treated as commercial disputes. The state’s duty to protect human rights can then be infringed by the business sector’s reluctance to accept strengthened social and environmental standards. This is even though the UN’s Committee on Economic, Social and Cultural Rights has stated that states need to take into account their human rights obligations when negotiating with international financial institutions. 

Many states are powerless in front of business entities and have no choice or incentive to turn down investments. Resources are often too scarce to effectively implement or monitor work-related basic rights. 

Globalization has led to a situation where corporations can go around shopping for the weakest labor law protection and the cheapest, unlivable, but lawful wages.

In theory, it should not matter what mechanisms are available to protect human rights in a given situation. Suppose people in control of corporate operations truly want their companies to be good corporate citizens. In that case, they should want to apply the best possible realization of the rights of everyone in their sphere of influence, and they should hire experts with proper substance knowledge. Often, these matters are left to corporate lawyers to ensure that the minimum requirements of the latest complex standardizations are met on paper. Box-ticking is shifting attention away from real-life conditions.

The most recent turn of events in this direction is the evolution of different corporate responsibility laws. There is much variance with the enforceability of those laws, but they are a positive new direction. If it is impossible to push through a binding international instrument for business and human rights, then states can pick up the slack and enact laws with the same result. 

Regional corporate responsibility laws can be drawn to make them applicable to the entire value chain. This way, business entities could be brought to court to face responsibility for human rights violations that have happened in states that do not necessarily have enforceable human rights protection mechanisms.