Corporate Social Responsibility, Human Rights and the Law

Stéphanie Bijlmakers

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780815399230
• eBook ISBN: 9781351171908
• Edition: 1
• Topic: Business
• Subtopic: Sustainability in Business
• Index: Business

Corporate Social Responsibility, Human Rights and the Law examines the responsibilities of business enterprises for human rights from a legal perspective. It analyses the legal status of the 'corporate responsibility to respect human rights' as articulated by the United Nations Guiding Principles on Business and Human Rights (UNGPs). This concept currently reflects an international consensus and is promoted by the UN.

The book contemplates the various founding perspectives of the UNGPs, and how the integration of notions such as 'principled pragmatism' and 'polycentric governance' within its framework provides insights into the future course of law and policy, compliance, and corporate respect for human rights. The book thus takes a global focus, examining the interaction of Corporate Social Responsibility (CSR), human rights, and the law in a broader global governance context.

Setting out a possible future scenario for the legalization of the corporate responsibility to respect human rights that is informed by the UNGPs' founding perspectives and reflects current realities in the human rights landscape, this book will be of great interest to scholars of business ethics, international human rights law, and CSR more broadly.

1 The legalization of business responsibilities for human rights in the evolving field of CSR and business and human rights

Introduction

This chapter describes the evolution of the field of CSR and business and human rights from a legal perspective. The origins are traced back to the 1970s when the first steps were taken to international standards, cooperation and individual and industry-wide codes of conduct. It notes the agenda of the business community to promote voluntary approaches and the notion of CSR. The continued exposure by the media of corporate human rights abuses, and thereby also the limitations of voluntary approaches, increased justification for mandating CSR and businesses’ human rights responsibilities. The chapter describes the emergence of the BHR discourse and how the quest by victims for legal corporate accountability and access to remedies led States towards a legalization of business responsibilities in relation to human rights. This is followed by an analysis of the initiative of the UN Norms, an attempt to create legally binding human rights obligations for companies that preceded the UNGPs and from whose failure the SRSG drew important conclusions. The aim of this chapter is to reflect on the significance and justifications of legalizing corporate responsibilities for human rights during the previous decades.

The 1970s: international codes of conduct

The 1970s witnessed increasing concerns about the overarching power of Multinational Enterprises (MNEs) on the national development agendas of countries at different stages of development.¹ The power of MNEs was reflected in their size and geographical spread. Their sales in goods and services amounted to billions of dollars. They exceeded the size of the domestic economies of most of the 150 countries existing at the time. While headquartered in developed countries, the majority of MNEs had affiliates in many developing countries across the world. MNEs employed a large percentage of the global workforce. Their production-distribution systems extended globally. MNEs had significant financial resources at their disposal for research and innovation. Due to the capabilities of companies to satisfy the needs of both advanced and developing countries, their operations where perceived as important attributes to greater interdependence in international economic relations.²

While the expansion of MNEs was a welcome development to some,³ most developing countries perceived it as a threat to their economic and social development and possibly, to their democracy.⁴ A concern of newly emerging colonial States was that the asymmetry in economic relations among States and companies would create new dependencies and restrictions on their national autonomy. The hope was that by inviting the influx of large companies, business would lead to the creation of wealth, jobs, tax revenues, technological innovation, scientific know-how, and more generally, economic growth and development. These benefits were not necessarily forthcoming, however. Policies of export restrictions, repatriation of profits and intra-company transfer pricing resulted in earnings to flow out of the country, and the costs for technology, consumer goods and healthcare to rise.⁵

Reaping the benefits of increased economic activity could come at a significant political and social cost for developing countries. Social tensions could run high over labour rights⁶ and growing inequalities. Political misconduct by business enterprises was also not uncommon. Companies were known to leverage governments in case of conflicting interests, sometimes having the latter act under direct instructions of the foreign diplomacy of the home countries of the corporations.⁷

The perceived threat of companies encroaching on national affairs left leaders of developing countries at unease. The 1970s witnessed strategic manoeuvring by these countries to consolidate international controls over the conduct of business enterprises through different forums at the international level. The issue of MNEs was integral to a broader agenda advocated by developing countries to found a New International Economic Order (NIEO). The purpose of the NIEO was agreed at the Bandung Conference in 1955.⁸ The NIEO was propelled on the UN agenda with support from the G77, after which it received official backing by the UN General Assembly (UNGA). The 1974 Declaration for the Establishment of a New International Economic Order first introduced the concept of the NIEO and outlined a list of core principles upon which the new order was to be founded. These principles alluded to the sovereign equality of States, broadest cooperation of all States based on equity, full and equal participation in solving world economic problems, and full, permanent sovereignty of every State over its national resources and all economic activities.^9,10

The Plan of Action and The Charter on Economic Rights and Duties of States were passed at the same time. Article 1 of the Charter stipulated:

Every State has the sovereign and inalienable right to choose its economic system as well as it political, social and cultural systems in accordance with the will of its people, without outside interference, coercion or threat in any form whatsoever.¹¹

The Charter recognized the right of States to regulate and control foreign investment and the activities of transnational corporations within its national jurisdiction, including through nationalization and expropriation of foreign property, and to settle disputes before domestic courts.¹² The Plan of Action called for the development and implementation of an international code of conduct to regulate business enterprises.

Through a strong, joint representation within G77, developing countries raised their concerns at the United Nations Conference on Trade and Development (UNCTAD), which was established in 1963. UNCTAD issued various reports and resolutions, and developed codes addressing two practices that could impact negatively on the economic development of developing countries: a special technology transfer draft code,¹³ as well as principles and rules governing the use and control of restrictive business practices.¹⁴ These codes were part of the first international codes of conduct that aimed to regulate the transnational operations and practices of these companies and their relations with States, and in particular ‘host’ states.

The UN started a process to establish a multilateral framework, the Transnational Code of Conduct. This was after alleged corporate involvement in efforts by the US to destabilize regimes in Iran, Guatemala and Chile in the 1950s and 1970s.¹⁵ MNCs became an item on the agenda of the United Nations Economic and Social Council (ECOSOC) in 1972, after the Chilean representative addressed ECOSOC earlier that year, denouncing the US International Telephone and Telegraph Company (ITTC) for its interference in Chilean internal politics.^16,17 ECOSOC requested the appointment of a Group of Immanent Persons to study the role and impact of business enterprises.¹⁸ Upon the Group’s recommendations, the Commission on Transnational Corporations (CTN) was created in 1974 in the form of an intergovernmental forum.¹⁹ The CTN chairman presented the first formulations of the UN Code of Conduct in 1979.²⁰ The text addressed three subjects: the activities of transnational enterprises, their treatment by the countries in which they operated and intergovernmental cooperation. The final draft of the UN draft code of conduct, which was issued in 1991,²¹ did not feature any human rights.²² After a lengthy and costly process, negotiations were suspended in 1992. No consensus could be achieved due to opposition to the initiative by most industrialized home-state governments and transnational corporations (TNCs).^2...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright page
• Table of Contents
• List of abbreviations
• Introduction
• 1 The legalization of business responsibilities for human rights in the evolving field of CSR and business and human rights
• 2 The UN Guiding Principles on business and human rights: principled pragmatism and polycentric governance
• 3 The evolution of the corporate responsibility to respect human rights: from a soft into a hard obligation for companies under national and international law?
• 4 Human rights due diligence as a legal concept: its characteristics and reformatory potential
• 5 The EU’s contribution to the implementation of CSR and the corporate responsibility to respect human rights: critical reflections on the European Commission’s Strategy on CSR
• 6 The role of mandatory disclosure in operationalizing human rights due diligence: the case of the EU Directive on non-financial disclosure and board diversity
• Conclusion
• Index