Any of our business? Human Rights and the UK private sector - Human Rights Joint Committee Contents

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 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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Prepared 16 December 2009