Bringing Human Rights Home

April 13, 2017

Transnational corporations (TNCs) have a vital role to play in achieving the Sustainable Development Goals (SDGs). Whilst the SDGs underline the importance of Human Rights, they fall short in outlining a legally binding framework that guarantees their compliance. TNCs have been heavily criticized for not complying with basic Human Rights, particularly when operating in fragile environments. Home states of TNCs, the states where the headquarters of the TNC are incorporated, should take the SDG’s stance on Human Rights seriously. [1] They should seek to establish a legally binding framework to guarantee Human Rights compliance of their companies worldwide.

“People, planet, prosperity, peace, and partnership:” the Sustainable Development Goals (SDGs) or 2030 Agenda have been viewed as a major step forward in tackling the most prevailing challenges of the 21st century, namely ending poverty, protecting the planet, and ensuring worldwide prosperity by realizing realizing “the human rights of all.” [2] In order to achieve such ambitious goals, massive financial means must be unlocked, up to $2.5 trillion annually.

The Addis Ababa Action Agenda (AAAA), the outcome document of the 2015 Finance for Development Conference, underlines the important role of TNCs attaining the SDGs.[3] The SDGs, however, do not elaborate on how investments of TNCs  should be regulated, particularly in fragile environments in the Global South.[4]

A legal framework seems to be necessary, providing the strong influence and bargaining power of TNCs in the host states in which TNCs operate.[5] Another point in favor of a legally binding agreement is that in countries in which TNCs disregard Human rights the “ability to enjoy the fruits of development are much reduced.”[6] Relying on TNCs as a major vehicle to realize the SDGs may result in the circumvention of one of the SDGs central goals: Human Rights.

Whilst the SDGs recognize and value the importance of Human Rights, they are not legally binding. The 2011 United Nations Guiding Principles on Business and Human Rights (UNGPs), based on the “Protect, Respect and Remedy” framework, are the most advanced guidelines put forward in addressing the human rights compliance of TNCs. [7] In order to ensure that the SDGs and Human Rights do not contradict each other, the 2011 UNGPs should be legally enforceable.

Reinforcing the SDGs’ stance on Human Rights, along with the UNGPs, is key to ensuring TNC compliance with Human Rights norms. So how can we ensure their successful implementation?

A key measure in implementing the Guiding Principles are the so-called “National Action Plans” (NAPs), which serve as guidelines for respective governments to promote and protect human rights. All countries are eligible to set up NAPs, but they are particularly important in countries where the TNCs are based, the home states.[8]

Firstly, state-driven NAPs should be designed to encompass the SDGs whilst respecting Human Rights. NAPs should incorporate SDGs concerned first and foremost with labor conditions, but should also take into account goals dealing with ending poverty, hunger, health, education, water, and sanitation.[9]

TNCs have a particular role with regards to Goal 10: Reducing Inequality. For many, this goal is the most groundbreaking, requiring states to address the inequality that exists both within and between states. [10] For TNCs, this means adopting a positive approach towards equal payment, whilst ensuring that TNCs’ activities in foreign countries are non-exploitative. Sweden’s NAP may be taken as an example. Its plan clearly emphasizes the inseparable goals of achieving the SDG’s and protecting Human Rights. [11]

Beyond this point, NAPs should underline TNCs’ “responsibility to protect.” The envisaged transformation of the economy by SDGs will have direct implications on wages, working conditions and social protections. [12] As TNCs are pivotal partners in this transformation, they should guarantee that this does not come at the expense of Human Rights.

TNCs should be an active partner in setting up NAPs and should have an intrinsic interest in ensuring that Human Rights are not infringed. So far, private businesses are prone to cherry picking SDGs that are in their interest. [13] Adhering to Human Rights standards, including promoting a culture of inclusion, mutual respect and equal pay, will allow businesses to reap the maximum yields of their investments.

Lastly and most importantly, NAPs should outline effective remedy schemes for those affected by Human Rights violations. Whilst the Guiding Principles focus primarily upon host countries’ duty to set up a remedy system, direct liability of the TNC’s parent corporation must be strengthened. This should include the exercise of extraterritorial due diligence of its subsidiaries. Overcoming the “corporate veil” should thus be the core focus of all NAPs.

As a consequence of setting up and implementing NAPs, the home state of the TNC becomes the major actor in guaranteeing that its corporations act in compliance with human rights. But as the infamous case of Kiobel underlines, human rights violations are often committed by subsidiaries. [14] By including subsidiaries into the remedy scheme, TNCs are forced to monitor their activities.

Such a proposal would go beyond Sweden’s NAP, which acknowledges the importance of an active remedy scheme, but disregards the role of subsidiaries. The “do no harm” principle would thus be applied to all types of private business activities that are mentioned in the context of the SDGs, namely foreign direct investment, public-private partnerships, and blended financing. [15]

Consequently, by legally enforcing the Guiding Principles and linking them to the SDGs’ stance on Human Rights, TNCs can make a significant contribution to achieving sustainable development. This is consistent with a more prominent role of the home states of the TNCs, particularly when it comes to ensuring an active remedy scheme for both companies of concern, and their subsidiaries.

 

References

[1] Robert McCorquodale and Penelope Simons, “Responsibility beyond Borders: State Responsibility for Extraterritorial Violations by Corporations of International Human Rights Law,” The Modern Law Review 70, no. 4 (2007): 598–625.

[2] United Nations General Assembly, “Transforming Our World: The 2030 Agenda for Sustainable Development,” New York: United Nations, 2015.

[3] United Nations, “Addis Ababa Action Agenda,” 2015, http://www.un.org/esa/ffd/wp-content/uploads/2015/08/AAAA_Outcome.pdf.

[4] Institute for Human Rights and Business, “State of Play: Business and the Sustainable Development Goals – Mind the Gap – Challenges for Implementation,” 2015, https://www.ihrb.org/pdf/state-of-play/Business-and-the-SDGs.pdf.

[5] Olivier De Schutter, Transnational Corporations and Human Rights (Bloomsbury Publishing, 2006).

[6] John Ruggie, “Making Globalization Work for All: Achieving the Sustainable Development Goals Through Business Respect for Human Rights,” 2016, http://www.shiftproject.org/resources/viewpoints/globalization-sustainable-development-goals-business-respect-human-rights/.

[7] United Nations, “Guiding Principles on Business and Human Rights,” 2011, http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf.

[8] Robert McCorquodale and Penelope Simons, “Responsibility beyond Borders: State Responsibility for Extraterritorial Violations by Corporations of International Human Rights Law,” The Modern Law Review 70, no. 4 (2007): 598–625.

[9] Danish Institute for Human Rights, “The Human Rights Guide to the Sustainable Development Goals Linking Human Rights with All Sustainable Development Goals and Targets,” 2017, http://sdg.humanrights.dk/.

[10] Kate Donald, “Will Inequality Get Left behind in the 2030 Agenda? | Social Watch,” accessed February 24, 2016, http://www.socialwatch.org/node/17294.

[11] Ministry for Foreign Affairs Sweden, “Action Plan for Business and Human Rights,” 2015, http://www.government.se/4a84f5/contentassets/822dc47952124734b60daf1865e39343/action-plan-for-business-and-human-rights.pdf.

[12] International Labour Organization, “Decent Work at the Heart of the UN Development Goals,” 2014, http://www.ilo.org/wcmsp5/groups/public/—dgreports/—exrel/documents/publication/wcms_310650.pdf.

[13] John Ruggie, “Making Globalization Work for All: Achieving the Sustainable Development Goals Through Business Respect for Human Rights.”

[14] Anna Grear and Burns Weston, “The Betrayal of Human Rights and the Urgency of Universal Corporate Accountability: Reflections on a Post-Kiobel Lawscape,” Human Rights Law Review 15, no. 1 (2015): 21–44.

[15] Office of the United Nations High Commissioner for Human Rights, “Key Messages on Human Rights and Financing for Development.,” 2015, http://www.ohchr.org/Documents/Issues/MDGs/Post2015/HRAndFinancingForDevelopment.pdf.

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Fabio Thoma

Fabio is responsible for the strategic direction of our project along with Dylan and organizes internal team trainings. Fabio has a particular interest in questions of sustainable development and inclusive growth. Besides his studies he works as a consultant for the IFC MENA Development Impact Unit.