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Ethical Corporation: By Invitation: Essay: Business and human rights – A personal account from the front line

EC Newsdesk 11 February 2008

Sir Geoffrey Chandler charts the rise of the business and human rights movement over the past two decades

(Sir Geoffrey Chandler is founder-chair, Amnesty International UK Business Group 1991-2001 and a former director of Shell International.)

The privatisation of the world economy which followed the ending of the Cold War made the corporate sector a more important international influence on human rights for good or ill than any other constituency. Its spreading supply chains touched directly the lives of millions. Its operations affected the social and physical environment wherever it worked. Directly or indirectly it influenced the political scene. Unlike the environmental movement, which had long recognised the importance of companies and engaged in dialogue with them, the human rights movement was very slow to react. Indeed companies and human rights NGOs viewed each other with mutual ignorance, prejudice, suspicion and hostility.

If we were to respond to the challenge of this new world, somehow someone had to cross this divide, finding a common language with which to engage in dialogue and create a mutual understanding.

Humble beginnings

In 1991, a small group of Amnesty members with business or industrial experience formed the Amnesty UK Business Group. We started with a clear, if generalised, purpose – to encourage companies to use their influence in support of human rights. We recognised that companies contribute much to the benefit of the world, that the best of them have their own principles and morality, and those who work in them are no more or less moral than ourselves. But if a company does harm in carrying out its business, if it fails to do the good within its legitimate power, then it will rightly be condemned. We wanted companies not only to avoid harm, but also to give positive support to human rights. 
 
We had to make a fundamental decision. Should we use what few resources we had in looking for company abuses? Or seek to influence company policies and practice so that support for human rights would be applicable across the entirety of their operations? We chose the latter.

We were initially naïve. We thought that we could blow the trumpet and that the walls of Jericho would fall. Letters to the chairmen of the 50 or 60 major UK transnational companies, asking if we could come and discuss human rights, received polite but negative responses: human rights – then seen by all as the civil and political rights which had led to Amnesty’s founding – were for governments, not for companies.

We learnt that letters alone didn’t work and that we had to sharpen our generalisations into specifics. In early 1994, a UK business delegation to China prompted us to clarify our target. This became explicit corporate commitment to human rights based on the Universal Declaration of Human Rights (UDHR) operationalising that commitment and subjecting it to independent audit.

This stirred some interest, but there was still total corporate reluctance to engage.

In 1995, Shell changed the world for itself and for us. Reputational disaster proved the stimulus. Shell’s experience in Nigeria and, later, BP’s in Colombia provided us with a platform and a breakthrough. We began with protest – a delegation to Shell Centre. The company asked our help and 1996 saw a long period of engagement as a result of which support for human rights was explicitly embedded in Shell’s Statement of General Business Principles and later, as a result of similar engagement, in BP’s business principles.

We could now approach other companies with not only the UDHR but also the example of two of the world’s most respected companies. And peer example we knew would make more impact than NGO preaching.

There were a number of arguments which shifted formerly entrenched positions: the demonstrable cost to reputation of getting it wrong, the applicability to companies of the UDHR, a document previously unknown to them, the argument that silence on human rights was not neutrality, and that we were asking companies not to criticise governments, but to support internationally agreed values, We had to win the argument of principle and then assist the development of policies. The “business case” – the cost to reputation – might be the way in, but it was important to remember that the business case is fundamentally amoral and cannot begin to cover the totality of a company’s operations.

We realised that with engagement needed to go other mutually reinforcing activities. We needed to create a climate of opinion by getting the issues into the public domain. We needed to use the “multipliers”: for example, we approached the business schools, almost exclusively followers of Milton Friedman, and argued for a broadening of their curriculum. We encouraged the involvement of consultancies and professional bodies. We did not abandon protest as a weapon. But while protest can raise issues, it takes engagement to win the argument.

A bridgehead into business

In 1997 we held the first ever public conference on business and human rights and used it to launch our publication “Human Rights Guidelines for Companies”. Other publications followed – a management guide, briefing for pension funds, a brief on Saudi Arabia and a geography of corporate risk. We continued our process of engagement, now beginning also to target the financial institutions.

We had created a bridgehead for human rights in the corporate world and gained credibility for Amnesty where it previously had none. What we had learnt was applicable in other countries, but while a few national Amnesty sections set up their own business groups, there was no co-ordinated international response to a challenge that required new thinking, new capabilities and new methods.

Nonetheless human rights were now on all agendas and initiatives proliferated – the Global Compact, the OECD Guidelines, the Sullivan Principles and many others. All raised the profile of the debate; but all were voluntary, none was applicable to the whole of business, none provided specificity on human rights or imposed accountability.

Most importantly, none provided sufficiently specific criteria by which the market, the most influential driver of corporate behaviour, could judge the comparative performance of companies on non-financial issues and so help to improve behaviour.

Politics rears its head

It was this gap that the initiative that became known as the UN Norms was intended to fill. Initially entitled “Guidelines”, it had the eminently sensible objective of distilling into meaningful principles for companies the vast array of UN treaties and instruments that could apply to corporate operations. In addition, this initiative consolidated the elision of meaning of the words ‘human rights’ from applying only to civil and political rights to covering a broader spectrum of corporate responsibilities – from labour conditions to the impact on the social, physical and political environment. But the compromises necessary to reach a finally agreed text led to a document which proved politically unviable.

Nonetheless the Norms did not die in vain: they led to the appointment of Professor John Ruggie as special representative of the UN secretary general for business and human rights. The first and most important part of his mandate echoed the Norms’ initial objective. This was “to identify and clarify standards of corporate responsibility and accountability with regard to human rights”. We were still on course for the necessary next step – the establishment of principles which would be applicable to all companies and which would be the foundation for any future regulatory framework.

Such principles would indeed be norms – what society expects. They would not be enforceable by law, but, applicable to all companies, widely publicised, and with the authority of the UN behind them, they would be enforceable by non-legal influences – market forces, public opinion, NGO scrutiny and pressure, and indeed pressure from a company’s own staff.

Ruggie’s impact

It is now seven years since the outset of the Norms. Professor Ruggie is approaching the end of the third year of his mandate. He has engaged in a remarkably open and meticulous exercise of research and consultation to lay the basis for recommendations. But the completion of his mandate is now being delayed, if not opposed, by human rights NGOs for reasons whose rationality is hard to discern.

They argue for more research into corporate abuse, although there is no variety of such abuse for which we do not already have enough evidence to devise preventative policies and principles. Their approach treats the corporate sector as an adversary rather than a stakeholder whose support, or at least absence of opposition, will be essential to any substantive step forwards.

The community of interest between responsible governments, good companies and NGOs in seeing this exercise bear fruit cannot be sufficiently emphasised. If for whatever reason a positive outcome is delayed, if we have no idea of how, by whom or by when the process will be continued, then it will be those whom NGOs exist to help who will be the losers.

The difference between today and ten years ago is striking. Some 100 major companies acknowledge the UDHR. Some 150 have explicit human rights policies. Over 3000 are committed to the Global Compact. But this is out of a total of transnational companies numbering tens of thousands. And smaller companies – the small and medium-sized enterprises – which have responsibilities identical in principle, if less in extent, run into millions.

Progress continues to be impeded by three obstacles – the corporate belief that money to shareholders is the purpose of the company, measuring success by financial criteria only; the belief of the human rights NGOs that their experience of dealing with states is adequate for dealing with the very different world of companies; and the laissez faire response of national governments to an international challenge.

Moving ahead

For the future there are two scenarios. The first is to continue as we are, with a number of fragmented initiatives, each useful in its own right, but the whole being infinitely less than the sum of the parts. It will mean a continuance of guerrilla warfare between NGOs and companies. It will mean a concentration on past abuse rather than the elimination of future abuse. And, where NGOs lack significant experience of the corporate world and fail to identify this activity at the top level of their own management, it will mean that their efforts to influence this most sophisticated and powerful of constituencies will be little better than a sideshow.

There is an alternative scenario. It means recognising that without the positive involvement of the corporate sector we cannot win for human rights. It means recognising that regardless of states, or the existence of states, companies have a responsibility for their impact on human rights as “primary” as that of governments.

It means ending the sterile controversy between voluntarism and mandatory measures. History tells us, from the abolition of the slave trade onwards, that voluntarism has never worked. And the law can never encompass the immense diversity of corporate activity. There are moreover weak or failed states where the law may not exist or its writ may not run.

That we need law is incontrovertible. The United States Alien Tort Claims Act serves a useful purpose; but it is high time it was replaced by legislation making parent companies responsible for the misdeeds of their subsidiaries where these are not adequately dealt with in the countries where they happen. We also need the law to ensure reporting of the totality of a company’s impacts. But the law, requiring in some aspects international treaties, lies way ahead and we need to exercise now what influence we can.

Some clarity please

We need a clear definition of corporate complicity, not necessarily legal complicity, but the moral complicity of a company operating in the context of human rights violations without itself having any human rights principles and a willingness to proclaim them.

Above all we need to spell out in clear accessible terms what the human rights responsibilities of companies are. The immediate need therefore is to ensure that the process started with the Norms and continuing with Professor Ruggie should achieve success. He is not there to produce a definitive solution – that will require support from the three stakeholders, companies and governments as well as NGOs, and authority from the UN. But at the least he needs support to carry the process through to a point that we can see an outline, a method and a time-frame in which the goal will be reached.

In a rational world we would already have a draft to demonstrate what we are talking about. But all are reluctant to produce something which looks like the Norms. But this is precisely what any relevant document will need to look like, though without their ambiguities of status and in a language more suited to their application in practice. It will need to talk of health and safety, a living wage, the right to organise, and support for civil and political rights. It should not confuse these with the responsibilities of the state.

This is an international challenge requiring an international response. It needs some radical re-thinking by the human rights NGOs which today have potential influence as never before.

We need to reflect organisationally the fact that “human rights” is now used to cover a broader spectrum of a company’s responsibilities and so makes the experience and capability of the traditional human rights NGOs too narrow for the challenge. We therefore need a coalition of those NGOs working on different aspects of corporate responsibility to expand and complement the specialist capability of those traditionally concerned with civil and political rights.

A call for resources

We need an international business group, replicating the experience of the UK Business Group, providing the breadth of experience currently lacking, giving visible leadership, devising strategy and making the process relevant to companies. It is, after all, companies, not NGOs or governments, which have to deliver.

As a doctor’s son, brought up with the Hippocratic Oath, I believe that principle should be the point of departure for all activities: that we should do right because it is right and not because economic interest dictates or the law compels. If we make this an issue solely of law and not of morality we will never win.

As someone who has spent nearly half his working life as an industrial manager I believe that leadership should come from within the corporate sector. There is indeed moral leadership within individual companies. But there is no collective leadership. Even the best companies, knowing themselves to be human and fallible, are reluctant to stand up and preach to others. And the corporate sector is ill-served on moral issues by its representative institutions such as the International Chamber of Commerce. The NGO movement therefore has an opportunity as never before to shape the future. It has yet to seize that opportunity. But that is the challenge.

The story is complex in its detail, but simple in its elements. It is about marrying the most effective economic force the world has so far known with the values of society. More broadly it is about creating a just and equitable world.

Sir Geoffrey Chandler is founder-chair, Amnesty International UK Business Group 1991-2001 and a former director of Shell International.

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