Why we need to tread carefully in drawing up human rights rules for business

Farm workers tend to a tobacco crop in Zimbabwe in 2014. The push to establish a business and human rights treaty is fraught with problems. Reuter/Philimon Bulawayo

Foundation essay: This article is a foundation essay. These articles are longer than usual and take a wider look at a key issue.

Devising the rules for holding businesses responsible for the effects of their operations on human rights, which are inherent to all human beings without discrimination, is an emotive and complicated subject that is best handled with caution.

The dizzying array of situations in which businesses affect human rights include the power relations between businesses, governments and those whose human rights have been affected by business.

The question is: how are human rights principles, primarily designed to address the relations between governments and their citizens, adapted to also cover economic activity?

In 2011 the United Nations Human Rights Council endorsed the non-binding guiding principles on business and human rights, which stipulate that states have a duty to protect human rights. It also charged all businesses - “regardless of their size, sector, location, ownership and structure” - with the responsibility to respect human rights. They also need to provide access to remedies for those harmed by corporate activities.

Last year Ecuador and South Africa, partly in response to concerns about the non-binding nature of the guiding principles, persuaded the UN Human Rights Council to establish an inter-governmental working group to prepare a business and human rights treaty. The working group recently held its first meeting.

The push to establish a business and human rights treaty is problematic given the current state of our knowledge of interactions between business and human rights. We can’t be confident that a binding treaty will not have unintended adverse consequences for the human rights of stakeholders in businesses or on their economic or environmental sustainability.

When and how businesses are accountable

The responsibility of businesses to respect human rights includes preventing human rights violations as well as remedying those that do occur. There are three situations in which human rights issues arise in the business context.

Scenario 1: dealing with the past

In these cases, there are undeniable human rights violations, such as deaths and injuries caused by poor mine health and safety practices. The challenge in deciding if the company can be held responsible for them depends on issues such as:

  • identifying the appropriate forum in which to bring an action,

  • determining how to establish jurisdiction over the corporate entity responsible for the violations,

  • and gathering the evidence needed to prove liability.

While in practice these issues are complicated, conceptually, they can comfortably be resolved under existing human rights principles.

Scenario 2: Due Diligence and the single human right

Consider the following situation: a pharmaceutical company has discovered that regular consumption of a cabbage leaf extract cures hypertension. The extract has no known side effects, is easy to use and is cheap. The company is planning to grow the cabbage and produce the extract on a farm that employs 100 workers.

The company’s plans indicate that it will need 70 farm workers and 30 workers in its production facility. None of the farm workers have the skills required for work in the production facility.

If the company decides to lay off 30 workers, its human rights due diligence indicates that the laid off farm workers will also lose their housing on the farm. The company can offer the workers a voluntary buyout and if that’s not enough, offer to compensate the laid-off workers financially or in kind.

Establishing whether this project is a positive one from a human rights perspective depends on our confidence in the due diligence studies. These include accepting the assumption that the company will only lay off 30 workers and that the compensation will be adequate at the time that they receive it.

Human rights principles can’t help us determine if these assumptions are realistic. But they can help us decide if the responses to them are adequate, subject to two limitations. First, it is reasonable to deal with the impact on the workers in isolation from the project’s other human rights impacts. Second, the human rights impact will not change significantly over the life cycle of this project.

Scenario 3: comparing apples and oranges

Assume the company decides to delay production for one year while it completes legal arrangements for exporting the product. Studies show this will substantially expand sales.

It plans to use the additional time to train the 30 laid off farm workers to work in the production facility, obviating the need to compensate them for the loss of their houses or jobs. But company studies show that the one-year delay will result in an additional 1000 premature deaths and an extra 2000 people disabled due to untreated hypertension.

For the company to decide what action to take on human rights grounds, it must decide whether to give more weight to the human rights losses/benefits of the farm workers or those of an unknown, but very real, group of hypertension sufferers and their families.

In addition, it must decide if it should give more weight to the rights to work and to housing or to the rights of access to health care and to life.

Traditionally human rights are viewed as being indivisible, interdependent and interrelated. The notion that a company may need to choose which human rights it will protect is antithetical. It is not clear that human rights law has developed the conceptual tools to make these judgements. However, they are a necessary part of business planning.

Employees work along a production line at a textile factory in Suzhou, Jiangsu province, China. Reuters

Three lessons

Because of the gaps in our knowledge, there are times that human rights principles cannot help managers make human rights compliant business planning decisions. In such situations, the wisdom of the precautionary principle suggests it would be imprudent to establish binding rules on how businesses should manage human rights issues before we fully understand how to draft such rules without causing unintended consequences. This is particularly important given how rapidly business is changing.

The second lesson is that the issue of business and human rights poses a challenge for human rights law and human rights lawyers. Human rights law is premised on the proposition that human rights are indivisible, inter-dependent and interrelated.

It has not yet worked out how to deal with human rights situations that require making trade-offs, setting priorities, and managing risk. These are standard in business. This suggests that, before agreeing a binding human rights and business treaty there is a need for more research on how to adapt the fundamental propositions of human rights law to economic and business activity.

Third, given the multi-disciplinary nature of the issues involved, the UN Human Rights Council is not the most effective forum for negotiating a treaty. It risks duplicating discussions in other settings. Examples include debates about the most appropriate environmental and social safeguard policies for the newly established development banks, like the BRICS bank, and the discussions about investment issues in the G20. These discussions, in which human rights experts are not full participants, would benefit from the inputs of the UN Human Rights Council.

The next steps

We are not ready for a business and human rights treaty and the efforts to create one are misdirected. Those who want more human rights compliant business practices should dedicate their efforts to developing our knowledge of how businesses actually incorporate human rights considerations into their planning and operations. Likewise, how to adapt human rights principles to respond to these practices.

This knowledge can be used to strengthen the General Principles and to develop procedures and practices that help reduce human rights violations by businesses. It can also be used to advocate for better and more human rights compliant practices in their projects and policies.

The Human Rights Council should focus its efforts in two areas where it has a comparative advantage. First, while our knowledge of human rights compliant business practices is limited, we have a good understanding of the floor below which corporate conduct cannot fall without causing substantial human rights violations. The council should develop clear rules to prohibit corporate conduct that falls below this level.

Second, the Council should focus on encouraging states, businesses and international organisations to develop forums, mechanisms and procedures through which those who feel their human rights have been harmed by business can seek redress.