Building a Better Business and Human Rights Framework for the Next Decade
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Author: Eric Biel, for the American Leadership Initiative
The development of the U.N. Guiding Principles[1] on Business and Human Rights in 2011 followed on a series of highly publicized cases, starting with the 1984 disaster at the Union Carbide plant in Bhopal, India, where corporations acted with clear disregard for the rights of workers, indigenous communities, and political dissidents and human rights defenders.
The Guiding Principles established a new framework for defining the roles of states and businesses in protecting and respecting human rights.[2] While broadly supported, the Guiding Principles also stirred a debate among business, government, and civil society about the appropriate role of so-called “voluntary” guidance vis-à-vis “binding” regulation. More recently, however, the overly rigid delineation of “voluntary” versus “binding” measures has broken down – often for good reason.
This is important because recent years have also witnessed the rise of new business and human rights challenges. Some of these do not relate to bad business practices, with less focus on “naming and shaming” corporate actors than on calling for their intervention in the wake of fundamental failures by government.
Such calls have renewed the discussion about the reach of corporate roles and responsibilities. This also presents a new opportunity to better define the path forward for the next decade and beyond – including concerning the respective roles of, and relationship between, government and business in advancing respect for human rights and the rule of law.
An Opportunity for the Biden Administration
The first months of the Biden Administration provide considerable reason for optimism about the Administration’s commitment to reverse the past four years of little or no concern for human rights. A renewed focus on working with business, labor, and civil society organizations to build greater respect for human rights is already seen in the shared commitment to support democratic institutions. A series of new developments, together with the election of an Administration focused on human rights, provides an opportunity to rethink the role of business regarding human rights.
For the human rights agenda to be successful, it must rest on a clear understanding that to advance rights globally, government must partner with business. Government must both press business and, at the same time, work in partnership with companies, as well as organized labor and civil society, to build a culture of responsible business conduct based on a mix of regulatory and other measures.
This understanding is driven, in part, by lessons learned from previous missed opportunities – including by some who now have returned to senior government positions. For example, the overly cautious approach taken by the Obama Administration in 2015-2016 in crafting the first National Action Plan on Responsible Business Conduct[3] resulted in a document issued at the end of that Administration that was a useful compendium of initiatives undertaken but lacked a coherent framework and avoided tackling key challenges – including the need for stronger regulatory and enforcement measures in several areas.
That disappointment, and more importantly the huge governance gaps and backsliding of the past four years, reveal the need for a much bolder approach tied to the Biden Administration’s “Build Back Better” framework. This includes enforceable provisions to address a range of labor rights challenges both at home and abroad, new measures to press technology firms to respect the rights of workers, communities, and those who utilize their products and services, and ensuring that government resources – including purchasing power through procurement practices – are deployed to benefit marginalized communities and reduce longstanding racial and other inequities.
Developing an integrated “whole of government” business and human rights strategy, under the auspices of the National Security Council can send an important signal to stakeholders at home and abroad, and advance human rights in many parts of the world.
A Time for Building a Stronger Business and Human Rights Agenda
Why is 2021 a critical juncture for the Biden Administration to drive this effort forward in more dynamic and impactful ways? This year witnesses the confluence of at least five important developments:
1. The experiences of the past year and impacts of the Covid pandemic, where huge gaps in the responses of governments, businesses, and international institutions – particularly to the impact on vulnerable workers in developing countries -- have bolstered calls for new approaches to protect human rights;
2. The existential human rights crisis in Xinjiang, where China’s genocidal ethnic cleansing of Uyghurs and other Turkic ethnic minorities compels a new type of response from governments and businesses alike;
3. Important progress on initiatives to redefine the role of the state in requiring certain activities by business, notably in the European Union through the push toward mandatory human rights due diligence legislation;
4. A new examination of the overarching business and human rights framework embedded in the international standards of the U.N. Guiding Principles for Business and Human Rights, which are also in need of a refresh after a decade of experience; and
5. The dawn of a new U.S. Administration – with opportunities for the Biden team to develop and implement a more robust approach to business and human rights.
Some, like the human rights crisis in Xinjiang, call for a new understanding of the role of governments in pressing business to do more to address its human rights impacts, including through heightened enforcement and regulation. The business and human rights discussion in this context focuses on continued examples of corporate irresponsibility and direct involvement, or at least complicity, in human rights abuses.
Others, however, are about building a stronger, mutually beneficial relationship between government and business to enable more effective responses to challenges not caused by corporations, such as Covid. This is based on the recognition that whatever the faults of business in certain circumstances, the paramount responsibility to protect human rights still remains with governments, which too often have failed to do so either through their own malfeasance – or at least indifference or ineffectiveness due to “governance gaps”.
Finally, a third set involves decisions for companies on how to engage without any clearly defined responsibility to do so – but where their authority and voice may be critical in the wake of government failures to protect the rights of individuals and communities. In these instances, there is growing recognition – even if it is perhaps grudging on the part of some – that business has the power and authority to be a leading force for good. The responses by corporate leaders to the voting restrictions in Georgia, Texas, and elsewhere and other threats to democratic institutions and the rule of law are an example of business leadership in the wake of government failures.
Drawing Lessons from a Year of Global Pandemic
The experiences of the past year and the impacts of the Covid pandemic have bolstered the case for new forms of engagement among governments, business, labor, and civil society organizations against the backdrop of clear failures to protect the most vulnerable. In the global apparel sector, for example, the confusion that reigned as factories shuttered in the early weeks of the pandemic reflected not only a lack of policy coordination but also the absence of clear standards – with some exceptions – concerning the responsibilities of business.
Within weeks of the mass layoffs of apparel workers at production facilities across South and East Asia, Central America, and elsewhere, evidence mounted that many buyers had failed to honor contractual obligations and otherwise engage in what have come to be known as “responsible purchasing practices.”[4]
Yet aside from the ability of labor and civil society groups to highlight their malfeasance and seek to hold those companies publicly accountable, there was little recourse for the affected suppliers and, most importantly, their already highly-vulnerable workers. Meanwhile, the lack of an adequate social safety net in many of the leading producing countries provided just the latest evidence of failings on the part of governments and international institutions to provide adequate safeguards.
Now, nearly a year later, efforts are still in progress to develop a coordinated response to the crisis that devastated vast parts of the industry and its workforce. Beyond those efforts to push international bodies and national governments to do more to help finance economic recovery, the pandemic reinforced the importance of holding companies to the highest labor standards and clarifying their role in protecting workers at the “bottom” of their supply chains.5
Formulating a Business Response to Gross Human Rights Abuses
The documented role of certain corporations in aiding and abetting genocide was central to the actions undertaken after World War Two designed to craft new standards for business responsibility. Now, three quarters of a century later, China’s assault on the Uyghurs and other ethnic minorities in the Xinjiang region presents a new test for governments and companies alike.
Governments, through import bans and other sanctions targeted at those perpetrating the abuses in Xinjiang, must take the lead in responding to this human rights crisis.
At the same time, companies have a duty to respond that extends beyond the standards reflected in the Guiding Principles for respecting human rights.
Traditional due diligence approaches to monitoring for labor rights violations in supply chains have proven challenging in this situation, given the scope of the state-sanctioned abuses.6 And the nature of those supply chains has meant that responsibility extends well beyond the borders of that region – requiring the tracing back of goods that may be produced in final form thousands of miles from Xinjiang, and of the origins of workers employed in factories in other parts of China.
All of this presents daunting new challenges for business and regulators alike, but also creates fundamental opportunities for significant improvements in companies’ understanding of complex global supply chains – and for reevaluating how and from where buyers source their products.
Developing New Tools to Foster Corporate Accountability
The move in the European Union to adopt legislation on “mandatory human rights due diligence” reflects both an important development in advancing greater corporate accountability and a recognition that business perspectives on “voluntary” versus binding” measures have evolved considerably in recent years.
Reflexive reactions to “mandatory” measures are giving way, at least on the part of leading businesses, to recognition of the value of greater certainty, consistency, and efforts already undertaken that warrant a leveling of the playing field. To be sure, important fault lines remain – particularly concerning provisions advancing civil liability for corporate wrongdoing.
But the EU due diligence language now under review, and efforts at the national level in Germany and elsewhere, have helped move the conversation beyond the UN Guiding Principles, demonstrate a further breaking down of the already outdated and unhelpful “voluntary” versus “binding” dichotomy.
Whether this will extend geographically to the United States, or other jurisdictions where some businesses and politicians are more likely to oppose anything they see as new regulation, remains to be seen. Still, the model coming out of Europe reflects important progress in strengthening corporate accountability in a relatively short period of time.
These new developments, together with the 10-year re-examination of the UN Guiding Principles, provide a unique opportunity for the Biden Administration, working with business, labor, and civil society, to map out a new framework for business and human rights for the next decade and beyond.
[1] https://www.ohchr.org/documents/issues/business/A.HRC.17.31.pdf
[2] https://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf
[3] https://2009-2017.state.gov/documents/organization/265918.pdf
[4] https://www.workersrights.org/issues/covid-19/tracker/
[5] See, for example, the comments of Fair Labor Association President & CEO Sharon Waxman as part of the Business and Human Rights Resource Centre’s “Just Recovery” blog series, https://www.business-humanrights.org/en/blog/resilient-workers-in-fragile-supply-chains-fla-call-for-international-action/
[6] As the Fair Labor Association put it on December 23, 2020: “The situation in Xinjiang presents unique human rights and labor violations that defy conventional due diligence norms. Given the high risk of forced labor, the overwhelming evidence of human rights abuses, and the multiple layers of government sanctions, the FLA is prohibiting sourcing and production (including direct and indirect sourcing of raw materials, inputs, or finished products) from Xinjiang.” https://www.fairlabor.org/blog/entry/fla-statement-sourcing-china
