Memorandum submitted by Sir Geoffrey Chandler
This enquiry relates to the potential for action
within the United Kingdom. Since, however, corporate activity
today is predominantly international and the incidence of abuse
occurs chiefly in supply chains or extractive operations in the
developing world, I hope that it may be helpful to the Committee
to provide an overview of the international situation within which
the UK is placed. The challenge cannot be met at a national level
alone.
The fundamental challenge we face is how to
influence the behaviour of companies not only so that they should
do no harm, but also that they should give positive support to
human rights through the manner in which they conduct the totality
of their operations.
1) The globalisation of the world economy
has made the corporate sector a more important influence on human
rights for good or ill than almost any other constituency. Through
its spreading supply chains it touches directly the lives of millions.
Its operations affect the social and physical environment wherever
it works. Directly or indirectly it influences the political scene.
Human rights abuses by companies have been well documented, though
redress remains inadequate; far less has been done to engage companies'
positive support on behalf of human rights. Without the latter
we have no hope of reaching our objectives for human rights or
indeed of attaining the Millennium Development Goals.
2) In the past 12 years human rights
have become part of the corporate agenda. A growing number of
companies include the Universal Declaration of Human Rights or
an explicit commitment to human rights in their business principles
(see www.business-humanrights).
Many initiatives, most notably the UN Global Compact, the OECD
Guidelines for Multinational Enterprises and the Voluntary Principles
on Security and Human Rights, call for the observance of human
rights by companies.
3) However, the companies which accept responsibility
for their human rights impact, although growing in number and
including some of the largest in the world, remain a small proportion
of the whole and are those whose reputation and brand name are
susceptible to the pressure of public opinion.
4) The various initiatives cited in 2) above
are voluntary, are limited in their reach into the corporate world,
and fail to touch a large number of companies, such as major state-owned
companies and the small and medium-sized companies which are the
biggest employers of labour and therefore of crucial importance
to labour conditions. Most importantly, none of these initiatives
influence the market by providing authoritative non-financial
criteria by which all stakeholders can judge comparative non-financial
performance and so ultimately influence share price. So long as
the market—the most significant driver of corporate behaviour—measures
comparative performance solely on financial criteria we will not
win; and responsible companies, with reputational exposure enforcing
greater care for human rights, will find themselves undercut by
the less scrupulous on an uneven playing field. (The oil industry
in Sudan provides an example of this).
5) For too long the debate has been dominated
by conflict between the proponents of voluntarism (the companies)
and the proponents of the law (the non-governmental organisations
(NGOs)). But history tells us, from the abolition of the slave
trade onwards, that voluntarism has never worked. And the law
can never encompass the protean diversity of corporate activity
and its international mobility. There are moreover weak or failed
states where the law may not exist or its writ not run.
6) That we need law is incontrovertible.
International human rights law needs to be interpreted into national
legislation and made applicable to companies. We require legislation
which makes parent companies responsible for abuses committed
by their subsidiaries where these are not adequately dealt with
in the countries where they happen. The United States 18th century
Alien Tort Claims Act serves such a purpose, though with difficulty,
and to deal with international business requires international
treaties which inevitably lie well in the future. Closer to our
grasp is legislation at national level to ensure reporting of
companies' non-financial impacts on a comparable basis, something
that the recent reform of UK company law failed to do.
7) "Complicity"—corporate
involvement in the violation of human rights by others, for example
governments—presents a more complex picture. Direct complicity,
for example with genocide or slavery which transgress international
human rights law, should be legally actionable. This is likely
to be rare. More common is moral complicity—the silent and
apparently acquiescent presence of a company in a country where
human rights are flagrantly abused and to whose government that
company provides economic support. This can only be dealt with
by a company's adopting principles in accord with the UDHR which
empower its managers to speak out in defence of international
human rights which transcend domestic law.
8) The most significant gap today is the
absence of such clear human rights principles, based on the International
Bill of Rights, made applicable to and operationable by companies.
It is this that the failed Norms initiative attempted to tackle
and which is now the most important part of the renewed mandate
of the Special Representative of the UN Secretary General for
business and human rights (SRSG), Professor John Ruggie. Authoritative
principles, backed by the UN, would provide criteria available
to all stakeholders, including the market, by which the full spectrum
of corporate behaviour could be judged. Such principles would
not be enforceable, but they would be more than voluntary: they
would be normative in that they reflected the views of international
society. We know from the experience of the initiatives cited
in 2) above that "soft law", as the lawyers describe
such principles, can be effective. If they are to make an impact,
we need principles set out in language applicable to the managers
who will ultimately have to act on them and intelligible to all
stakeholders—for example, the right to a living wage and
the right to organise, not a generalised call for respect of human
rights.
9) At the end of the day a framework of
law alone will not make for a responsible corporate world any
more than it can make a moral individual. And so long as there
is financial advantage in ignoring the human rights of individuals
and societies, the irresponsible may find it cheaper to pay the
cost, for example of environmental pollution, rather than invest
in its avoidance. It is only when principles become the point
of departure for corporate activity that we will have won, when
companies do what is right because it is right.
10) There is no magic bullet, as the SRSG
pointed out in his first mandate's final report. But the promulgation
of authoritative normative principles is a next step whose necessity
has long been evident and which constitute the essential under-pinning
for an ultimately better regulated framework. This is within our
grasp through the implementation of the SRSG's mandate, but this
requires better support than it has had up to now to reach its
completion. I hope that the UK Government, which was the main
instrument in keeping the process going after the fiasco of the
Norms, will play its part in seeing it through to conclusion.
It is an international challenge which can only be met internationally.
Sir Geoffrey Chandler
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