Posted on 5-4-2003

Companies & Human Rights
by Rory Sullivan, 2 April 2004

The issue of how far companies should be required to protect and promote
human rights has been the subject of much recent discussion. Yet it is
surprising that the question of whether or not companies have human rights
obligations at all remains contested in some quarters.

The arguments that have been advanced against the extension of human
rights obligations to companies are: (a) on principle, companies should
not have such obligations; (b) there are no compelling business reasons to
accept such obligations; and (c) the human rights obligations of companies
remain poorly defined.

These arguments do not stand up to closer scrutiny.

The reality is that companies have long been expected to observe socially
responsible standards of behaviour. The 1948 Universal Declaration of
Human Rights (UDHR) is addressed both to governments and to “other organs
of society”. Furthermore, many companies have accepted - through the
adoption of corporate and industry-based codes of conduct - that they have
social responsibilities. For example, over 40 companies have made explicit
policy commitments to the UDHR and/or to the protection and promotion of
human rights. (See Business and Human Rights Resource Centre.) The broader
economic benefits that accrue from the protection of human rights are
widely recognised

Secondly, the business arguments for the protection and promotion of human
rights are increasingly well understood. The direct business benefits can
include enhanced corporate reputation, improved ability to attract and
retain high quality employees, reduced risk of litigation, and the ability
to access new markets. In addition, the broader economic benefits that
accrue from the protection of human rights (such as social stability and
freedom of expression) are widely recognised as critical to the long-term
success of business.

While the business-case arguments should be unassailable, predictably
enough not all companies take the same care to protect human rights.
However, growing pressures for regulation and the threat of litigation in
both the US and the UK are likely to force even the most reluctant
companies to take measures to effectively manage their human rights risks.

Thirdly, the publication by the United Nations Sub-Commission on the
Promotion and Protection of Human Rights of its Norms on the
Responsibilities of Transnational Corporations and Other Business
Enterprises with Regard to Human Rights (2003) has fundamentally changed
the terms of the debate. While it is likely that debate will continue over
the interpretation of specific clauses, the Norms provide a comprehensive
road map for companies to define their human rights responsibilities.

The endorsement of the Norms by leading NGOs such as Amnesty International
means that there is a broad consensus emerging around the human rights
responsibilities of companies.

There is a further dimension to these discussions, namely the question of
how far companies should be responsible for the protection and promotion
of human rights. Here too, there is a growing degree of clarity. In broad
terms, there are three levels of responsibility:

1. Where a company has direct control – that is, its own operations and
activities - and can be held responsible for the realisation of human
rights. This relates to issues such as labour standards; expectations that
the company will not use, procure or offer goods that have been produced
using forced or bonded labour or the worst forms of child labour; the
treatment of indigenous peoples; and security arrangements.

2. Where a company can exert influence over a situation and thus can
contribute to the realisation of human rights by or in conjunction with
others. This relates particularly to supply chains and relationships
between the company and its suppliers, customers, subcontractors and
business partners (for example, in joint ventures). In these situations
companies can usually require these parties to meet certain standards -
including human rights standards.

Companies can contribute to the protection and promotion of human rights
through their commitment to the UDHR

3. Where a company can contribute to the creation of an enabling
environment for the realisation of human rights. While the main
contribution of companies tends to be through the provision of economic
benefits – that is, overcoming economic barriers to the realisation of
human rights – the responsibility does not end there. Companies can also
contribute to the protection and promotion of human rights through their
public commitment to the UDHR, through making statements of concern
regarding human rights violations, and through supporting rights-based
development activities.

Consensus and tools

Many of the arguments against the extension of human rights obligations to
companies are challenged by practice and by policy development. While all
stakeholders recognise and emphasise that the primary responsibility is
that of governments, there is a growing consensus that companies do have
responsibilities for the protection and promotion of human rights.

There is also an increasing body of practical tools and information that
can be used by companies to assist them in addressing their human rights
obligations. Particularly useful in this regard are the materials that
have been published by companies in the extractive industries: for
example, by Shell, BP and Rio Tinto.

Rory Sullivan is Director, Investor Responsibility with Insight
Investment, UK. He is the editor of the book Business and Human Rights:
Dilemmas and Solutions (Greenleaf Publishing, 2003).