Thursday, 2 July 2015

Can CSR now Support International Law?

By Professor Jem Bendell, Founder, IFLAS

This week a coalition of international business organisations announced cautious support for an initiative at the UN's Human Rights Council to negotiate a treaty on business and human rights. Although tentative in its support, this stance from organisations that have in past decades been negative about intergovernmental collaboration on treaties on business and human rights is an interesting development. It could signal how many large firms' commitment to voluntary corporate responsibility is now maturing to recognise a valid role for intergovernmental agreements to ensure that no firms can gain market advantage by abusing people's basic rights.

The initiative at the UN recognises that “transnational corporations and other business enterprises have the capacity to foster economic well-being, development, technological improvement and wealth, as well as causing adverse impacts on human rights” and sees a natural role for intergovernmental human rights law to help address the downside. It seeks to build upon the Guiding Principles on Business and Human Rights,” sometimes called the 'Ruggie Framework', that were adopted a few years ago by the Human Rights Council and connect this to international law.

The statement of cautious support came from an influential coalition: The International Chamber of Commerce, International Organisation of Employers, Business and Industry Advisory Committee to the OECD, and the World Business Council on Sustainable Development. They said they “are committed to constructively engaging in the work of the Intergovernmental Working Group (IWG)” and mapped out the need both for further improvement in business performance on human rights issues and for the IWG process to build on what is being done by leading companies in the context of the Ruggie Framework.

Since the 1960s there have been various failed attempts at the UN-level towards treaties on the ethical conduct of international firms. Often many Western governments were against them, heeding the influence of transnational corporations that did not want any possible checks on their activities. The rise of contemporary forms of voluntary corporate responsibility, ranging from famous brands like Nike adopting codes to ensure good working conditions in its supplier factories to manufactures like Interface committing to achieve zero carbon emissions, has changed many business cultures towards recognising the importance of issues of sustainable development, including human rights. However, the growth of what some call Corporate Social Responsibility (CSR), has often been used by right wing elements in the business community to argue that no new regulations on business conduct are needed. Not just ideological, that view is clearly illogical, as leadership by some businesses does not mean that all businesses will improve. Enough people in centuries past were NOT satisfied with praising those companies not using slaves and saying that meant we did not need to abolish slavery. In the same way, I don't know any business person today who wants to have to compete with firms that can be cheaper by hiring kids, shooting strikers or dumping their waste in the nearest river. Or, indeed, wanting to compete with those using the over tens of millions of slaves working in our supply chains this very day (according to the ILO).

A global survey of a 1000 CEOs of the world's largest companies, conducted two years ago by Accenture for the UN Global Compact, found that business leaders have this more mature understanding of the complementarity of CSR and improved government regulation. 83% said they wanted government to create a better enabling environment for addressing sustainable development. That view reflects how, after 20 years of the contemporary form of CSR and its variant concepts, widespread business malpractice persists and the global social and environmental challenges become more threatening. Therefore, if voluntary business action for sustainable development is to be transformative it needs to work with efforts to raise the global floor, rather than be used in reactionary efforts to thwart such developments.

So a key question today is whether the corporate responsibility profession is up to the challenge? Can it be a corporate responsibility movement, contributing to wider social transformation? Many professionals in this field self-identify as being part of a movement, and I explored the implications of that in my 2009 book The Corporate Responsibility Movement. A key sign of whether the movement will rise to the occasion is how the major CSR networks respond. Will the leaders of those networks recognise that intergovernmental law can help hardwire CSR into business, and protect their leading companies from unfair competition from the laggards that don't care? Will they curb the ideological views of a minority of their business members who seek to undermine any regulatory developments?

One year on from the launch of the initiative, a look at the websites of the key international networks working on CSR and related responsible investment, reveal they have said... er... nothing. At least not in public. That includes the UN Global Compact (UNGC), Business for Social Responsibility (BSR), World Economic Forum (WEF), and UN Principles for Responsible Investment (UNPRI). If we do not see statements of support and engagement in the coming weeks, then we would wonder what that Accenture survey really meant. Do the CEOs know what their political affairs teams are up to, or their trade associations positions are?

A broad spectrum of countries from Africa, Latin America and Asia supported the launch of this process. Given past criticisms of China at home and abroad, it was welcome that China also voted for the initiative. Those who voted against might have difficulty in explaining why they wont be seen as the hypocrites of human rights: the United States of America and nations of the European Union. Even Saudi Arabia abstained.

Clearly there is a role for more large firms that have a mature understand of CSR to encourage their government delegations to support the development of international law in line with the evolving strategies and value propositions of their successful global companies. Anything less than public support in favour open deliberation of the content of a new treaty would be irresponsible and should therefore be punished through downgrades by responsible investment analysts. To help that, specific initiatives we could see are joint statements by the world's largest investors to welcome the effort to clarify and confirm legal responsibilities of international business on human rights issues and call on firms they invest in, and the lobbyists they fund, to support not hinder processes at the UN in this regard.

So watch this space, to see if hypocrisy or responsible pragmatism shapes the global agenda.
The first session of the (deep breath) “open-ended intergovernmental working group on the elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect for human rights” starts on Monday July 6th 2015 in Geneva.

The network BHRRC is following the process closely, so is the place to go for updates:

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