What’s the point of a business and human rights treaty?

On his website, Richard Karmel discusses issues relating to human rights and corporate social responsibility in corporate society. 

He is a Partner at international audit, tax and advisory firm Mazars and heads their Business and Human Rights team. In his blog today, he considers the reasons for a business and human rights treaty.

How should companies adopt the United Nations Guiding Principles (UNPGs)?

Last year, the Ecuadorian government proposed that there should be an international legal instrument, ensuring that companies infringing their human rights obligations were held accountable and faced legal sanction.

The Ecuadorian’s weren’t alone in this matter and managed to gain lead support from the South African government. The UNCHR also agreed that an international binding treaty on business and human rights should be pursued, despite the majority either voting against or abstaining.

By doing this, it could be read that the UNCHR are tacitly implying that they are unhappy with corporate adoption of the UNGPs.

In December 2014, at the UN Forum in Geneva, it was indicated in the opening plenary session that there was no form of further help in the pipeline to help companies adopt the UNGPs. However, this last point was wrong.

The Reporting Framework co-facilitated by Mazars and Shift

They were wrong because in February 2015, the United Nations Guiding Principles Reporting Framework will be launched.

This Framework is the culmination of a two year multi-stakeholder initiative project led by Shift, an non-governmental organization (NGO) which incorporates several members of the former UN team that drafted the UNGPs, and the international audit, tax and advisory firm, Mazars.

This initiative was germinated in a response to companies who were indicating that, whilst they understood the UNGPs, they were having difficulty trying to implement them.

Accordingly, given that two of the fundamental principles which underpin corporate respect for human rights are transparency and accountability, it was felt that the best way to change corporate behaviour would be for companies to report publicly on how they are respecting human rights.

Therefore, the aforementioned Reporting Framework should not just be seen as a tool for reporting, but also as a tool for behavioural change. It should be noted that from the outset this initiative has been officially supported by the UN Working Group on Business and Human Rights.

The need for an international treaty

So, back to the treaty argument. In theory, an international treaty that has teeth and is respected by all countries, sounds like an idea that has merit.

Upon reading the Ecuadorian proposal, you could believe that it’s the only theory available to ensure corporate respect for human rights.

However, we should remember what the LSE based philosopher, Karl Popper, once said: “Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory nor the problem it was intended to solve.”

The problems with the Ecuadorian proposal

Despite their good intentions, there are several issues with their treaty:

  • Its principles, if pursued, are likely to be watered down due to countries’ self-interest, thereby not producing anything meaningful.
  • Its inception didn’t receive a clear majority of the votes in the first instance.
  • Implementing a global law, outside of a state judicial system, will run into so many obstacles, that it will become unworkable. As John Ruggie has said: “neither the international political or legal order is capable of achieving it in practice. The crux of the challenge is that while business and human rights may be a single label, it is not so discrete an issue-area as to lend itself to a single set of comprehensive and actionable treaty obligations.”
  • It’s unlikely to incorporate the voice of business (which is pretty fundamental to any future adherence) and which have already said that they will boycott negotiations.
  • The treaty proposal will apply only to transnational companies and will exclude national companies. For example, it won’t apply to local suppliers, which in some cases are state owned by those supporting the proposal (e.g. there is self-interest at work here).
  • There are already existing legal instruments to tackle human rights infringements, which could be further enhanced.
  • Given the speed of the UN, and the impediments that the production of a treaty are likely to face, even Ecuador have indicated that the negotiation period will be a minimum of 10 years; and
  • we have, of course, the unanimously endorsed UNGPs. Whilst Ecuador stressed their importance, the idea of a treaty immediately undermines them, and could potentially act as a distraction to their implementation.

Continuing treaty discussions may be a waste of time

Consequently, these treaty discussions, whilst intellectually interesting, are probably a waste of time.

We simple don’t have 10 years to wait!

I strongly believe that corporate behaviour will change without a Treaty. Transparency, through social media and regulations and local laws are demanding a change.

If companies really value their reputations and the large amounts of money they spend in building up their brands, then they will understand that for a fraction of this cost, they can protect themselves against the risks of harm to individuals arising from their activities.

With or without a treaty, there will always be abuses. But, if the majority of companies and governments do change their behaviours, abuse will reduce and the UNGPs will have succeeded.

The best thing that can be said about the treaty, is the threat it poses to companies.

If the corporate world doesn’t start behavioural change then they know a treaty process has already started and it could gain greater support if there is no change.

However, the reality is that the treaty should be a non-starter. I’m sure that in the not-so distant future, on account of current and future national regulations and the UNGP Frameworks, corporate behaviour will change; thereby precluding the need for a treaty in the first place.

Richard Karmel

Richard.Karmel@mazars.co.uk

Mazars LLP