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

Memorandum submitted by Fund for Peace

  There has been a movement in the human rights community for legislative remedies to force companies to uphold human rights standards as well as increased litigation against companies accused of human rights violations. Enforcement of human rights is best achieved through a focus on the desired outcome, rather than on mechanisms. At the end of the day, the international community should be most concerned with ensuring that the greatest number of people enjoy the protection of their human rights. These human rights include not only political and civil rights, but access to those things that make life possible, like water, food, employment, health and other needed services, and a healthy environment.

  Protection of human rights is, of course, the first responsibility of governments. Most cases against companies accused of complicity in human rights abuses occur in countries where the government either lacks the political will or the ability to protect its own citizens' rights, or where the government is itself a perpetrator of abuses. In these instances, while governments are culpable, companies—guilty or not—may become the focus of protest particularly when communities have no recourse against their own governments while companies operating in the area are visible and accessible.

  If companies are indeed complicit in human rights abuses, they should be held accountable. Legislation and litigation focused on corporations run the risk, however, of taking attention away from the governments whose duty it is to protect their citizens. In some cases, the governments responsible for the abuses escape censure and even benefit by having the corporation take the rap for crimes the government committed and possibly continues to commit. Rule of law and good governance should start with government; corporations then have a duty to adhere to local law and community standards.

  In impoverished communities, people may be less concerned whether it is the government or a corporation that is building infrastructure or providing services. Their immediate interest, understandably, is to have potable water, food for their families, and educational and economic opportunities for themselves and their children. Sometimes, in the most challenging environments around the world, multinational corporations, including many British companies, provide the only hope of attaining such human and social benefits.

  The most important foundation for the protection of human rights is a binding social contract between a government and its citizens. This social contract is created when the people and companies pay taxes to the government, which in return delivers services, including not only infrastructure, but security and social services for livelihood and prosperity. If companies assume this role, which may be necessary in some areas to obtain the social license to operate, then a company has to consider carefully how it can do this without possible negatively affecting the current or future social contract between the government and its citizens. Laws that are not well thought out could force companies into this position without allowing them the flexibility to consider ways to not only provide services but help build government capacity and positively impact the potential for a stronger social contract between the government and its citizens.

  Furthermore, it is not yet clear how companies can best contribute to the protection of human rights. It is not likely that we will ever be able to develop universally accepted international standards that are achievable in all instances. Careful analysis is necessary to understand the needs and capacities of local communities and the performance of host governments. Laws forcing companies to apply a pre-determined standard to address the wide range of human rights concerns that may exist could force companies to make choices that are not in the long-term sustainable interest of the communities.

  The Fund for Peace is not against legislation that could protect human rights and improve the behavior of corporations across the board. Indeed, drafted properly we would support such legislation. However, we have not yet seen legislation with practicable application to companies operating in extremely varied and complex environments that would lead to overall improvements in human rights. Sanctions, for example, must be "smart"—that is, designed to target perpetrators and not hurt innocent people or organizations. In fact, if negative unintended consequences are not anticipated, legislation could end up forcing companies with the best practices out of an area to be replaced by companies that have not adopted voluntary codes of conduct, developed and implemented policies on human rights, undertaken appropriate social and environmental audits, or made responsible investments in communities. Companies have, in fact, been forced to leave areas through various means already, as in the Sudan, which many recognize to have yielded a worse result for the impacted communities.

  Moreover, most of the innovative and successful programs we have witnessed over the last decade come from companies pro-actively adopting strategies that enable them to operate more safely and sustainably in areas that lack public services and the rule of law. While it is true that some change has come about from the valued efforts of international NGOs in calling attention to companies that were failing to meet their ethical obligations, a lot of change has also come in response to necessities on the ground.

  We recognize a positive trend in corporations' understanding of social, economic and political complexities and an increase in their positive impact on human rights abroad, particularly in the extractive industry. British companies are among those who have played and continue to play a leading role in defining the responsibilities of companies and how to achieve them. There are still many challenges to face, and no one has all the answers. In the protection of human rights and the appropriate role of corporations, we believe there is much room for development and innovation. We believe companies are increasingly undertaking responsibility voluntarily and for their own reasons, and that sustained engagement with business—not compulsory legislation in a one-size-fits-all approach—is the way to move forward. The role of business in the promotion of sustainable human rights and better governance is an important one. In most instances, it is far more effective to make them partners in this enterprise than to resort to mandatory legal requirements that could result in unintended negative consequences.

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Prepared 16 December 2009