LECTURE 2: Corporate Responsibility for HR in an era of Globalisation - the Ruggie framework

Question 1

Post-War implied Social Contract (Cragg 2004)

Answer 1

• State primary responsibility or HR

- Private sector responsible for generating wealth (corporate responsibility circumscribed by HR law)

Question 2

Impact of globalisation

Answer 2

• Reduction of cost; mobilisation of labour
• The diminishing border?
• Reduction in capacity of states to set standards to protect HR.
• Increase in power of corporations.

Question 3

Ruggie, J., (2008), Protect, Respect and Remedy: A Framework for Business and Human Rights
Globalisation & state/ legal control of corporations:

How do investment treaties affect human rights?

Answer 3

“The more than 2,500 bilateral investment treaties currently in effect are a case point. While providing legitimate protection to foreign investors to take host States to binding international arbitration, including for alleged damages resulting from implementation of legislation to improve domestic social and environmental standards.”

Question 4

Ruggie, J., (2008), Protect, Respect and Remedy: A Framework for Business and Human Rights
Globalisation & state/ legal control of corporations:

What is the legal framework regulating transnational corporations operates much as it did before the recent wave of globalisation?

Answer 4

“the legal framework regulating transnational corporations operates much as it did long before the recent wave of globalisation. A parent company and its subsidiaries continue to be construed as distinct legal entities. Therefore, the parent company is generally not liable for wrongs committed by a subsidiary, even where it is the sole shareholder, unless the subsidiary is under such close operational control by the parent that it can be seen as its mere agent.”

Question 5

Ruggie, J., (2008), Protect, Respect and Remedy: A Framework for Business and Human Rights
Globalisation & state/ legal control of corporations:

Why is it difficult to hold an extended enterprise accountable for human rights harm?

Answer 5

“Furthermore, despite the transformative changes in the global economic landscape generated by offshore sourcing, purchasing goods and services even from sole suppliers remains an unrelated party transaction. Factors such as these make it exceedingly difficult to hold extended enterprise accountable for human rights.

Question 6

Ruggie, J., (2008), Protect, Respect and Remedy: A Framework for Business and Human Rights
Globalisation & state/ legal control of corporations:

Why do some states have lacking human rights?

Answer 6

“Each legally distinct corporate entity is subject to the laws of the countries in which it is based and operates. Yet States, particularly some developing countries, may lack the institutional capacity to enforce national laws and regulations against transnational firms doing business in their territory even when the will is there, or they may feel constrained from doing so by having to compete internationally for investment.”

Question 7

Ruggie, J., (2008), Protect, Respect and Remedy: A Framework for Business and Human Rights
Globalisation & state/ legal control of corporations:

Why might home states of transnational firms be reluctant to regulate against overseas harm?

Answer 7

“Home States of transnational firms may be reluctant to regulate against overseas harm by these firms because the permissible scope of national regulation with extraterritorial effect remains poorly understood, or out of concern that those firms might lose investment opportunities or relocate their headquarters.”

Question 8

What is the root cause of the business and human rights predicament we have today?

Answer 8

Lies in governance gaps created by globalisation which create a permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation.

Ruggie 2008

Question 9

What does globalisation open up for corporations?

Answer 9

Globalisation opens way for corporations to operate in regions beyond the easy reach of law and accountability.

Question 10

THE RUGGIE FRAMEWORK

Answer 10

In April 2008, John Ruggies proposed a framework for human rights and companies which breaks down into three principles: protect, respect and remedy:

• The state duty to protect against human rights abuses by third parties including businesses.
• An independent corporate responsibility to respect human rights.
• The need for more effective access to remedies.

Ruggie 2008

Question 11

PROTECT

Answer 11

• Set up an appropriate legal framework and enforcement mechanisms responding to domestic and international law.
• Governments are uniquely placed to foster corporate cultures in which respecting rights is an integral part of doing business.

Ruggie 2008

Question 12

RESPECT

Answer 12

• “to respect rights essentially means not to infringe on the rights of others - put simply, to do no harm. Because companies can affect virtually all internationally recognised rights, they should consider the responsibility to respect in relation to all such rights, although some may require greater attention in particularly contexts.”
• “finally, “doing no harm” is not merely a passive responsibility for firms but may entail positive steps - for example, a workplace anti-discrimination policy might require the company to adopt specific recruitment and training programmes.”
• Applies, by implication, even when there are gaps in HR law/governance gaps.
• Therefore a responsibility grounded in something beyond law:
  1. “the broader scope of the responsibility to respect is defined by social expectations - as part of what is sometimes called a company’s social licence to operate.”

2. By implication (for Ruggie), responsibility to respect seems to be grounded in a business case for HR?

Question 13

RESPECT - Is enlightened corporate self-interest an adequate foundation for corporate responsibility to respect HR (Cragg 2012)?

Answer 13

• Hr not all respected in the various parts of the world where an MNC may operate.
• Social expectations may not always require or even support respect for HR.
• The self-interest rationale may be weak.
• International opinion and NGO’s may help fill the gap

Question 14

PROTECT - MAIN ALTERNATIVE

Answer 14

Option of direct application:

• “one early UN based initiative as called the Norms on Transnational Corporations and Other Business Enterprises; it is sought to impose on companies, directly under international law, the same range of human rights duties that States have accepted for themselves under treaties they have ratified: “to promote, secure the fulfilment of, respect, ensure respect of an protect human rights.”
• “This proposal triggered a deeply divisive debate between the business community and human rights advocacy groups while evoking little support from Governments.”
• continuing pressure for direct application: Binding treaty proposal - led by Ecuador and with backing from 20 countries and many NGOs:

“to establish an open-ended intergovernmental working group with the mandate to elaborate an international legally binding instrument on Transnational Corporations and Other Business Enterprises with respect to Human Rights.”

Question 15

Skepticism about the binding treat/ direct application approach

(Ruggie 2014)

Answer 15

“Going forward, the fact that many of the most ardent treaty proponents have done least to acton the UNGPs poses a fundamental challenge for treaty advocates. Given Ecuador’s own conjecture that a treaty may be a decade or more away, what do they plan to offer in the interval to achieve practical progress on the ground?
Will they now take steps toward instituting the UNGPs - as an interim measure if nothing else?
If not, they will fuel the suspicion voiced by opponents that the treaty initiative has less to do with achieving practical improvements in business and human rights than it does with using this sensitive issue in the pursuit of other international political aims.”

Question 16

Is international law an adequate foundation for state responsibility to protect HR?

Answer 16

• International HR law almost voluntary for states.
• Globalisation also puts pressure on states that can work against their always respecting international HR law (Ruggie 2008)

Question 17

PROTECT/RESPECT DUALITY - HR as direct moral obligations for corporations reaching into the governance gaps (Cragg 2012)?
Problems?

Answer 17

• HR as direct moral obligations for corporations reaching into the governance gaps (Cragg 2012)
• Three problems:
  1. Do HRs rights exist at all outside legal obligation?
  2. If so, do HRs as moral claims generate obligations for corporations?
  3. If so, what obligations do they produce?

Question 18

PROTECT/RESPECT DUALITY - assuming HR as moral claims - do they generate obligations on corporations?

Why should an individual be held responsible?

Answer 18

“In ethics, we accept a general obligation to help those in distress, at least if the benefit we can confer is great and the cost to us is small. That is almost universally agreed upon. … Why, then, should if fall upon me in particular? Well, obviously because I happen to be the only one on the scene. Accidental facts such as being in a position to help can impose moral responsibilities – and nothing more special to the situation may bring the responsibility than that. … At different periods in history, different agencies have had that ability” (Griffin, 2004)

Question 19

PROTECT/RESPECT DUALITY -
Assuming HRs as moral claims – do they generate obligations for corporations?

Do modern corporations have capacity to respect human rights?

Answer 19

“the modem shareholder-owned corporation shares with the State not only the capacity to abuse human rights but also the capacity to institutionalize respect for human rights within their own operations and the attributes required for institutionalization.” (Cragg, 2012 p. 20)

Question 20

PROTECT/RESPECT DUALITY
Assuming HRs as moral claims – do they generate obligations for corporations?

Difference between scope of states power and transnational companies.

Answer 20

“The jurisdictional scope of the State’s power and capacity to address human rights issues is limited for the most part to national jurisdictions that are geographically bounded. The reach of modern, transnational corporations, on the other hand, is not restricted in the same way. The reach of transnational corporations extends to all those areas of the world in which they are actively engaged.” (Cragg, 2012 p. 20)

Question 21

THE RUGGIE FRAMEWORK

Assuming HRs as moral claims – do they generate obligations for corporations

Answer 21

“While corporations may be considered “organs of society”, they are specialized economic organs, not democratic public interest institutions. As such, their responsibilities cannot and should not simply mirror the duties of States.”

Ruggie, J., (2008), Protect, Respect and Remedy: A Framework for Business and Human Rights. UN Doc A/HRC/8/5, para 53.

Question 22

DUE DILIGENCE

Answer 22

Due diligence (56):  
“To discharge the responsibility to respect requires due diligence. This concept describes the steps a company must take to become aware of, prevent and address adverse human rights impacts. Comparable processes are typically already embedded in companies because in many countries they are legally required to have information and control systems in place to assess and manage financial and related risks.”

Ruggie (2008)

Question 23

Factors to be considered in due diligence

Answer 23

• The country contexts in which their business activities take place.
• What human rights impacts firms’ own activities may have within that context.
• Whether they might contribute to HR abuse through the relationships connected to their activities.

Question 24

Due diligence practices

Answer 24

• Policies
• Impact assessment
• Integration
• Tracking performance

“As companies adopt and refine due diligence practices, industry and multi-stakeholder initiatives can promote sharing of information, improvement of tools, and standardization of metrics.” (64)

Question 25

Scope of due diligence

Answer 25

Scope:
It must go beyond simply identifying and managing material risks to the company itself to include the risks a company’s activities and associated relationships may pose to the rights of affected individuals and communities.”

“because human rights concern affected individuals and communities, managing human rights risks needs to involve meaningful engagement and dialogue with them.”

Ruggie, J., (2010), Business and Human Rights: Further Steps Toward the Operationalization of the “Protect, Respect and Remedy” Framework. UN Doc. A/HRC/14/27. para 81.

Question 26

Role of due diligence

Answer 26

“ Human rights due diligence can be a game-changer for companies: from “naming and shaming” to “knowing and showing”. Naming and shaming is a response by external stakeholders to the failure of companies to respect human rights. Knowing and showing is the internalization of that respect by companies themselves through human rights due diligence.”