Business and human rights:
joining the dots
Professor John Ruggie, Special Representative of the UN Secretary-General on Business and Human Rights, speaks exclusively to the IBA.
John Sherman (JS): I understand that when you came on the scene in 2005, there was no consensus at the United Nations on the relationship between business and human rights. How were you picked, and how did the mandate come about?
John Ruggie (JR): Well, the origin of the mandate was exactly in a situation of deep divisiveness, as you’ve described, essentially between the advocacy community and the business community. A subsidiary body of the then Commission on Human Rights, which is now the Human Rights Council, had been drafting an instrument that it intended to be binding, which essentially would have imposed on businesses the same human rights duties that states have accepted for themselves over time, separated only by the slippery distinction between primary and secondary responsibility or duties, and corporate spheres of influence.
So within a corporate sphere of influence, which was not defined, companies would have secondary responsibility for human rights and states, primary. Business was vehemently opposed to that, thought it was unworkable; governments were not thrilled about it either because some of them said that this was essentially privatising governmental functions to regulate human rights. The advocacy groups were strongly in favour because this promised to be binding; there was no agreement, there was no consensus, so after a year the Commission on Human Rights gave the problem to somebody else, namely, me.
JS: When you saw this problem for the first time, you identified global governance gaps caused by globalisation as a major issue. How did that inform your approach to your mandate?
JR: That was part of reframing the debate. As the debate stood, it wasn’t going to move forward. The advocacy groups were interested, essentially, in the notion of ending corporate impunity and the problem of business in human rights is far wider and deeper than simply individual acts by individual businesses. We increasingly have a globally integrated economy; corporations function in accordance with a single global strategic plan, yet the regulatory system in the world remains fragmented, and international law and institutions barely touch on the issue of business in human rights. So the exclusive focus on corporate impunity, I thought, was far too narrow and what we needed to focus on were exactly these gaps between an increasingly integrated global economy and the fragmented political and regulatory systems and how to bridge those gaps, which involved states, it involved businesses, it involved other actors, it involved preventative measures, it involved remedial measures, it would involve law, it would involve voluntarism – it was just a much bigger puzzle that had to be put together.
JS: Initially, what did you think about the impact that lawyers who advise business have on human rights?
JR: I had several initial impressions. One was that they were on the same learning curve that I was. This was certainly a new area in 2005, and lawyers were bringing themselves up to speed even as I was. That was one impression. The second impression was the impact of different corporate legal cultures, which I found fascinating. I met with general counsel from companies whose philosophy was ‘we will litigate until hell freezes over, and then we’ll skate on it’ to the opposite end of the spectrum, saying ‘There has to be a better way than spending 12 years in an Alien Tort Statute case in the US courts to deal with these issues – can’t you do something to help?’. So it was a broad spectrum of views that I encountered among lawyers.
JS: What role do you think that today’s lawyer advising business should play with respect to human rights?
JR: I often compare human rights and business today to where environmental issues were maybe 25 years ago; and it’s the same kind of learning curve and today lawyers are much better equipped to deal with some of these issues than they were five years ago. We’ve had enormous collaboration with various groups of lawyers and various law firms on different issues in the mandate. We’ve got many reports showing how directors’ duties, how reporting requirements, disclosure requirements, and so on and so forth, relate to the attention that a corporation pays to its impact on human rights.
JS: Your framework is entitled ‘Protect, Respect and Remedy’; can you describe it for us?
JR: The framework consists of three pillars, as you’ve suggested. The first is the state’s duty to protect: this is based in considerable part on international law. When states sign on to international human rights treaties they take on certain obligations: the obligations vary in the precise language, depending on whether it’s the covenant on civil and political rights or the covenant on economic and social rights, or whether it’s an anti-discrimination convention; but there is one common element in all of the human rights law that states sign onto, and that is that they will ensure the enjoyment of those rights of people within their jurisdiction, or within their territory. Ensuring the enjoyment of rights means that the state promises to protect people within their jurisdiction from the abuse of third parties, not only the state itself, and that includes business.
States know that they have this responsibility, or this duty, and it’s in large measure a legal duty, but because the issue is relatively new, they haven’t fully thought through what all the implications are. We’ve worked with states to help think through what the implications are: that’s the first pillar. The second pillar is the corporate responsibility to respect, and I use responsibility advisedly, as opposed to duty, because currently under international human rights law, companies do not have legal duties – they have legal duties under other bodies of law, but not under international human rights law. But if there is one norm that enjoys universal acceptance, even by companies themselves, it is that companies have the responsibility to respect rights, which means not interfering with the rights of others as they go about their business.
Every voluntary initiative that companies have adopted, ILO conventions, OECD guidelines on multinational enterprises, all those instruments recognise and affirm that companies have a responsibility to respect human rights. So what we’ve done there is to say, companies, we take you at your word: you respect human rights, but how do you know you respect human rights? Do you actually have systems in place that would allow you to demonstrate to yourselves, let alone to anybody else, that you respect human rights? And the answer in most cases has been no; and there we have worked with companies to develop a due diligence process that incorporates human rights factors in enterprise risk management strategies. The third pillar has to do with remedy.
No system of prevention is perfect – things are going to go wrong and you need remedies for when they do. And there we’ve examined voluntary grievance mechanisms that companies can set up themselves, particularly large footprint companies that have a big impact in communities. Why would they want to do that? Because most major human rights violations didn’t start out that way, we discovered – they start out as minor grievances that get ignored, and if a company had a mechanism, a place where the community could come with their grievances, they could head off the escalation of minor grievances into major confrontations that may lead to major human rights violations.
JS: Let’s now go through an analysis of the individual three pillars. And, starting with the state duty to protect: you have said that governments can do a much better job in addressing and preventing human rights abuse. And one example that you’ve referred to from time to time was an arbitration by European investors against South Africa, and in this arbitration, investors claimed that the South African Black Empowerment Act has amounted to an expropriation of their investment. What’s wrong with that from the perspective of the mandate?
JR: What’s wrong with that is how poorly governments connect the dots internally – they’re highly fragmented. The South African Government in this particular case launched an inquiry, a sort of a policy assessment, asking the question: how did we get ourselves into this situation? The Black Economic Empowerment Act is the most important single piece of legislation of post-apartheid South Africa: how was it possible that we ended up in international arbitration that’s binding on us, and we might have to pay compensation for this? The answer they found was that the people who negotiated the investment treaty had absolutely no idea that this could have any impact on anything else – all they were focused on was getting the investment.
‘I often compare human rights and business today to where environmental issues were maybe 25 years ago; and it’s the same kind of learning curve’
What the South African Government, or any other government going forward now will think is, before we sign on to an investment treaty or any other contract, we’ve got to be more careful regarding what the implications are, for our ability to regulate and to pass progressive legislation with regard to labour standards, with regard to the environment, with regard to human rights, without fear of being hauled into international arbitration and having to pay a small fortune. Because, technically, this might be termed equivalent to regulatory takings. So I’m not blaming the company in this case – I’m blaming the government for not having done its own due diligence, as it were, before it signed on to an international investment treaty.
JS: And this feeds directly into the second pillar, which is the responsibility to respect; and I think this is very important to lawyers, because you said earlier, and you said in your reports, that this is not a legal duty, but it is a responsibility on the one hand. On the other hand, you have said that the responsibility to respect is not a law-free zone; so could you reconcile those two statements for us?
JR: As I said before, companies are currently not subject of international human rights law. Nevertheless, certain aspects of the responsibility to respect may be incorporated in domestic laws, either in the host country or the home country, and so, even though international law as such may not directly apply to companies, various domestic laws, as in the ATS [Alien Tort Statute] case, for example, could. That’s one element of why this isn’t a law-free zone. And another is that we’re reaching the point where certain international crimes, which companies don’t often commit themselves – or very rarely commit themselves, but they are increasingly charged of being complicit in those crimes – we’re nearing the possibility of universal jurisdiction. An example besides the ATS is any country that has ratified the Rome Statute of the International Criminal Court and has incorporated those standards in its domestic legal system; and if those domestic legal systems provide for criminal liability of companies, then, in theory, a case could be brought against a company for violating international criminal law, even though it is not yet black-letter law. It’s a rapidly evolving situation. And what I’ve proposed to companies is that in the area of crimes they ought to be treating this purely prudentially as a legal compliance issue, because getting it wrong is very costly in terms of reputation and in terms, literally, of the material costs.
JS: Going back to the concept of the responsibility to respect, you said that what it means is not infringing on human rights. And that sounds like a passive duty: is that what you mean?
JR: No. If you have an anti-discrimination policy as a company, you don’t just issue a piece of paper saying: we have an anti-discrimination policy, because that isn’t going to change anybody’s behaviour. You set up training seminars, you set up internal monitoring mechanisms, you provide a sort of dispute settlement resolution or dispute resolution mechanisms inside the company – all of those are proactive steps; they’re not a passive posture on the part of the company. They’re intended to ensure that no discrimination takes place.
JS: Now we come to the third pillar of your framework, which is the access to remedy; and in recent years there has been a significant volume of litigation against, under a statute that you mentioned earlier, the so-called Alien Tort Statute, which permits aliens to sue in the US courts for violation of the law of nations, even if those allegations have occurred outside the United States. There have been big settlements, a couple of jury losses, and the United States Supreme Court has yet to decide some of the key issues. So I’m just curious as to how the Alien Tort Statute has informed your understanding of remedy, in the context of your mandate?
JR: I would say two things. One, the ATS clearly has raised the visibility of these issues and has caught the attention of companies, because no one enjoys going through this kind of process. At the same time I think everybody recognises that this is not a complete solution: it’s a quirky statute, it’s unique to the United States, and other means of effecting remedy are required. I mentioned, in countries that have ratified the ICC Statute, that theoretically, the door is now open to bringing criminal charges against companies for violations of international crimes like forced labour, and so on. There hasn’t been an actual case, but several have been explored.
JS: If we’re talking about remedy, we’re usually talking about lawyers, and lawyers are expensive. And people who have, or who claim that they have suffered harm as a result of business-related human rights abuse may not have the ability to afford lawyers. So what does your mandate have to say about that?
JR: We’re addressing the problem of legal costs and are exploring innovative solutions like being able to buy insurance policies against possible settlements. But, John, let me be very honest with you: the issues of legal trials and punishment, if you will, remain a relatively small part of the overall picture, because in many of the countries that we‘re talking about the judicial systems are very weak, if not dysfunctional, and it’s a long-term process of building them up to current international standards. And so what we have to work much harder at is non-judicial mechanisms, various grievance mechanisms, mediation services and so forth, because that can be done in the shorter run as we continue to make slow progress with the long-run issues.
JS: And you’ve used a phrase recently, which is changing the game from naming and shaming…
JR: To knowing and showing – yes. The prevailing strategy with regard to the activist community interacting with business has been naming and shaming. What I’ve said to companies is, I have a better game for you: it’s called knowing and showing. Rather than responding to external naming and shaming, establish internal systems that will allow you to know, and then to show, what you are doing with regard to human rights. And so you, in other words, take the game over and stop being reactive, and become proactive, and drive the agenda.
JS: Okay. One last question from the audience is: tell me what BASESWiki (http://baseswiki.org) is all about.
JR: BASESWiki is a very important mechanism. It draws on the wiki culture, obviously; it is a collection of available grievance mechanisms all around the world. It’s now in multiple languages; if an individual or a community has a grievance against a company, they can log onto BASESWiki and find out if there is an available grievance mechanism that meets their needs, where it is, what the track record is of this grievance mechanism. And what we’re working towards, also, is to provide advisory services, so that people would actually be able to speak to a live person to give them advice on how to pursue their grievance.
JS: The mandate ends in 2011; so between now and then what is next?
JR: Two major steps: one is to continue with this horizontal effort of pushing the framework out into the actors that actually do all of the work that needs to be done: the companies themselves; the governments; the IFC; the OECD; the ILO; and other institutions. And, secondly, to deepen and drill down on what the Human Rights Council has asked me to do, namely, to operationalise the elements of the framework, and the final product of that, which we will put forward next year, will be a set of guiding principles for consideration of the Human Rights Council – guiding principles that will indicate what is expected from whom, under what circumstances, under the framework.
John Sherman is Co-Chair of the IBA’s CSR Committee and former deputy general counsel at National Grid.