Global Policy Forum

By Rory Sullivan

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.

From the Universal Declaration to the 2003 Norms

First of all, 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.)

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.

How far are companies responsible?

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.

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).

The views expressed in this article are those of the author and are not necessarily the views of Insight Investment.