MNCs and Human Rights: An Ongoing Struggle

The main difficulty in regulating the conduct of non-state actors lies in the nature of human rights, being obligations of a State to individuals. Non-state actors have not traditionally been viewed as holding human rights obligations. Thus, imposing these obligations has been met with resistance. Furthermore, the particular problem with Multinational Corporations (MNCs) lies in the complicated structure of businesses. For example, if a subsidiary company violates a right, there are no clear guidelines as to whether the parent company, the subsidiary, or an individual within the company ought to be held accountable. Thus, given the complicated structure of MNCs, it is unclear who bears the human rights obligations.

The attempts to regulate the conduct of non-state actors will be evaluated. In particular, the UN Global Compact (Compact) will be compared to the UN Guiding Principles on Business and Human Rights (Ruggie Principles). This article will seek to argue that the Compact has, in fact, had a greater impact in regulating the conduct of non-state actors than the Ruggie Principles, as it has resulted in incremental development of human rights in relation to non-state actors, whereas the Ruggie Principles are retrogressive.

The Compact and the Ruggie Principles will be explored individually, and their impact in regulating the conduct of non-state actors explored.

UN Global Compact

The Compact “recognizes the vital role the private sector plays in [human rights] development” and allows for human rights discourse. Those who have signed onto the Compact must abide by Ten Principles, relating to fundamental human rights, labour laws, environmental protection and anti-corruption principles. At present, 8610 companies in 163 countries have signed up to the Compact. It has been widely accepted and has increased awareness of human rights and environmental obligations, bringing the issues to the forefront of commercial and legal discourse in an increasingly globalised society.

One of the main criticisms of the Compact is its lack of enforcement mechanism. However, the Compact was never meant to be a binding and enforceable system. Thus, criticising the Compact for its lack of enforcement mechanism, when it was never meant to be enforceable, seems unreasonable. The Compact presents a forum for discourse and education, through which non-state actors can internalise the Compact into their own business practices. It is not meant to be binding, but, rather, provide guidelines for corporations desiring to make their businesses more human rights compliant.

Further, the Compact encourages participants to report credible allegations of systematic or egregious abuse of its aims and principles through a complaint mechanism. If the situation is not remedied, and the Global Compact Office’s guidance not followed, the company is labelled ‘non-communicating’ and subsequently delisted. Thus, those who do not comply with the Compact’s Ten Principles cannot benefit from the rewards resulting from being human rights compliant, such as a good public image. Further, annual Communication on Progress reports are required by participating companies, which disclose their progress and the ways in which the Compact’s principles are implemented. Thus, there is extensive monitoring to ensure the parties to the Compact comply with its principles. This prevents companies being shielded from criticism while abusing human rights.

Finally, the Compact is necessarily a supplement to national legislation: the Compact alone provides only a means for discourse and a minimalist code of corporate conduct. Though this is often regarded as a weakness of the Compact, it ought to be given credit for being the first code of corporate conduct. Though it may be minimalist, the Compact has been the first widely accepted code of conduct for non-state actors. It has been accepted and implemented on a large scale, especially by developing countries, who don’t always have any prior method of human rights implementation in relation to non-state actors, and this ought to be seen as a success. MNCs have as their priority not the achievement of human rights, but the maximisation of profit: this is the purpose of a business. Thus, it has been difficult to make corporations human rights compliant. The Compact not only provides guidelines for companies, which have been widely accepted, but also guidance for States, thereby creating a legal environment which facilitates the incorporation of the Ten Principles.

The Compact has often been criticised for not being something that it was never intended to be. In fact, the Compact has achieved its aims, and provides for incremental development of human rights application in terms of non-state actors. Further, by providing broad guidelines, it allows companies to respond to changing environmental concerns, a capacity which the UN or national governments alone lacks the capacity to achieve. It provides a basis from which human rights can be developed and strengthened, and thus ought to be seen as a success.

Ruggie Principles

The Ruggie Principles rest on three pillars: it focuses on the State’s duty to protect against human rights abuses by companies through adopting appropriate policies and regulations, and adjudication. The principles are non-enforceable voluntary guidelines which, for that reason, have been widely accepted by companies. In this way, the Principles have the same advantages as the Compact.

However, the Principles’ major weakness lies in the fact that Ruggie has taken human rights obligations away from non-state actors, and placed them exclusively on States. Thus, the Principles retrogressively develop human rights accountability. The Compact, though unenforceable, furthered the idea of corporate responsibility for human rights violations, and was widely accepted: this implies that corporations were willing to be held responsible for human rights violations. However, the Principles place this burden solely on States, thereby relieving non-state actors of any legal responsibility. This is a step backwards.

This creates further problems. Under the Ruggie Principles, the State has a duty to protect human rights. However, this presupposes that corporations have a duty to respect human rights. If non-state actors have no human rights obligations, it would be unreasonable for a State to protect human rights by imposing these obligations. The Ruggie Principles, by imposing human rights obligations only on States, not only retrogressively develops the law, but also makes it harder for States to impose human rights obligations on corporations.

Not only do the Principles weaken human rights obligations by taking responsibility away from non-state actors and making it harder for States to impose these obligations, but they also use impuissant language. The Principles ‘encourage’ States to take action ‘where appropriate’: this is reiterated throughout. This allows States a wide margin of discretion to decide where it is appropriate to take action and, in any case, suggests no obligation on States who are merely encouraged to take action.

Thus, not only do the Principles only impose human rights obligations on States, but these obligations are weak and subject to wide State discretion. Thus, the Ruggie Principle retrogressively develop the law: whereas the Compact encouraged the idea of legal obligations for non-State actors, the Principles undermine this by placing human rights obligations exclusively on States.

Conclusion

Neither the Compact nor the Ruggie Principles are enforceable or legally binding. Instead, they both provide guiding principles to regulate the conduct of non-State actors. However, the Compact, by placing obligations on non-State actors and providing a forum for discussion, provides the potential for incremental development of the law. In contrast, the Ruggie Principles stunt the law, as there is no scope for the development of obligations for non-state actors, as these obligations are placed solely on States: this retrogressively develops the law. However, States are still afforded the image of being human rights compliant, despite the fact that the Ruggie Principles do very little. Thus, though the Guiding Principles on Business and Human Rights have been lauded, it ought to be recognised that they do little to encourage, or guide, human rights compliance for businesses.

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