Did you know that 51% of the world’s top revenue-generating bodies are private corporations?

There is no doubt that companies have the potential to generate investment, employment, and economic growth, and can play an essential role in poverty reduction, promoting respect for the law and democratic processes. They also can provide high-quality work, equal opportunities, non-discrimination, and access to knowledge and technology through the market, expanding political, economic, and social opportunities for people, thus contributing to the realization of various human rights.

There may also be market failures or gaps, and companies may not always be willing to respect human rights. For example, they may pay lower wages than the legal wage, endanger the health and safety of their workers, violate freedom of association, or participate in the forced displacement of indigenous communities in certain countries. 

For example, according to Amnesty International, more than 20,000 people died from a toxic gas leak from a Union Carbide chemical plant in India in 1984. 100,000 people received medical treatment for various health problems following the dumping of toxic waste at various sites in Abidjan, Côte d’Ivoire, in August 2006. The waste was generated by the multinational oil company Trafigura.

Although the issue of the relationship between business and human rights is not new, it has become increasingly important due to the rapid expansion of transnational economic activities and the consequent failure of global governance. Therefore, the question arises: is it possible to hold companies accountable for human rights violations in the international human rights protection system? 

To address this problem, the United Nations approved the Guiding Principles on Business and Human Rights in 2011, the first global framework to promote corporate respect for human rights. This document enshrines the responsibility of states to redress business impacts suffered in their territories and establishes the responsibility of companies to respect human rights. It should be noted that for private companies, this is not a legally binding responsibility. However, this pact offers a global standard of conduct that applies to all companies, regardless of where they operate (Isea, 2011).

Generally, the state has the greatest obligations stipulated in international human rights law. Likewise, states cannot waive these international obligations by privatizing the provision of services. Suppose the state cannot ensure that the companies providing these services comply with its human rights obligations. In that case, the consequences can damage the country’s reputation and generate severe legal consequences. 

According to Ruggie (2007), when the state controls a company, or its behavior can be attributed to the State for other reasons, the violation of human rights by the company can mean a violation of obligations under international law, since the closer a company is to the state, or the more it depends on the support of public institutions or taxpayers, the more reason the state has to ensure that it respects human rights.

In this sense, the fact that the states are the signatories of the legal instruments that oblige them to respect human rights, their violation can only and exclusively be committed by them. Thus, the possibility of appealing to the Inter-American Commission on Human Rights (IACHR) for human rights violations committed by transnational corporations is ruled out since the states would be legally responsible at the international level for the actions of individuals.

However, this does not mean that transnational corporations are exempt from responsibility; companies have a domestic legal duty to respect human rights based on the legal instruments relating to human rights. 

The United Nations Resolution 17/4 (2011) has pointed out that transnational corporations and other business enterprises have a responsibility to respect human rights, and that states should ensure due regulation through national legislation since the responsible operation of these can contribute to the respect for human rights and help to channel the benefits they derive towards the enjoyment of human rights and fundamental freedoms.

There has been much debate on the customary nature of human rights. Recently, the Supreme Court of Canada in Nevsun Resources v. Araya held that the customary nature of international law tacitly implies the domestic application of international human rights law as domestic law applicable to corporations. Newsun is a compelling case to highlight as the appellant; a Vancouver-based mining company could be held directly responsible for violations of customary international law standards against slavery, forced labor, and cruel treatment in connection with the operation of a mine in Eritrea.

This is why it is important to analyze the organization’s value chain and understand where a company’s operations begin and end to calculate its human rights and social responsibility impacts. 

People today are more aware of the role of business in human rights, and, based on this, they demand that their social, economic, and cultural rights be respected and guaranteed. Public opinion is crucial in this regard. On the one hand, society demands change in how companies conduct their business operations. On the other hand, the legislation increases the fiscal burdens on business, as the state cannot assume all its administrative and public purposes.

It is not only morally and legally necessary for companies to be the source of positive effects for people.  Corporate Social Responsibility (CSR) is a strategic part of business, and this is not a matter of philanthropy since companies are oriented to make social investments in areas of their business activity, mitigate risks associated with their stakeholders, and maintain a positive reputation with public opinion that gives them their “license to operate”.

Companies must innovate how they produce, manufacture, and distribute their products or services. It is no longer a question of being an entrepreneur just to make a profit; companies must add value to consumers’ lives.

For some, the dilemma posed by corporate social responsibility is the crossroads between competitiveness and the goal of a fairer society. The answer is clear: respect for human rights and social responsibility does not make a company less competitive than another in financial terms. Both CSR and human rights represent opportunities that companies should capitalize on for the benefit of all because only a responsible company can do truly meaningful business in today’s world.

 

Bibliography:

Isea, R. (2011). Las Empresas y los Derechos Humanos. IESE Business School: Universidad de Navarra.

Nevsun Resources Ltd. v. Gize Yebeyo Araya, et al., sentencia del 28 de febrero de 2020: https://decisions.scc-csc.ca/scccsc/scc-csc/en/item/18169/index.do. 

Organización de las Naciones Unidas. (2011). Principios Rectores sobre las Empresas y Derechos Humanos. Ginebra.

Organización de las Naciones Unidas. (2016). Principios de contratación responsable: integración de la gestión de los riesgos relacionados con los derechos humanos en las negociaciones entre Estados e inversores: orientación para los negociadores. Ginebra.

Ruggie, J. (2007). Business and Human rights: The Evolving International Agenda. John F. Kennedy School of Government, Harvard University: Cambridge.

Tangarife Pedraza, M. (2010). La estructura jurídica de la responsabilidad internacional de las empresas transnacionales y otras empresas comerciales en casos de violaciones a los Derechos Humanos.

 

Michelle Bernier is an attorney specializing in international law and commercial law. She is studying Master of Laws and International Business with a double degree from the Universidad Internacional Iberoamericana in Mexico and the Universidad Europea del Atlántico. She is also a part of Students for Liberty’s inaugural cohort of Fellowship for Freedom in India.