How can companies respect human rights while pursuing profits?

The adoption of the United Nations Guiding Principles on Business and Human Rights in 2011 was a seminal moment and acknowledgement of the influence of business on people’s rights. 

In the years that have passed since, what have we learned about whether and how companies can respect human rights while pursuing profits?

To help answer this question IHRB’s CEO, John Morrison, speaks to Mike Posner, a human rights lawyer who served as Assistant Secretary of State under Hilary Clinton, and is the Director of the Centre for Business and Human Rights at New York University.

They discuss the evolving role of companies in addressing human rights challenges; the governance gap between powerful corporations and weakening governments; the mass expansion of the global economy and subsequent 'outsourcing of responsibility' engendering harms in supply chains; what the future might hold for responsible business under the influence of China and the new Trump administration; and other important themes from Mike’s new book “Conscience Incorporated”.

Mike’s book is described as a guide for business leaders to respect human rights whilst pursuing profits, and captures the A to Z of business and human rights and some of the critical dilemmas and cases that have shaped this agenda.  

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Host: Deborah Sagoe, IHRB's Communications Coordinator
Producer & Editor: Helen Brown
Additional Contributors: Sam Simmons, IHRB's Head of Communications

Transcript

Mike Posner: We live in a world where businesses are getting stronger and bigger, and governments are in some respects getting weaker. And there's a huge governance gap.

Deborah Sagoe: Hi, there. And welcome to Voices from the Institute for Human Rights and Business, all also known as IHRB. I am Deborah Sagoe. In this podcast, you'll hear from people working to make respect for human rights part of everyday business. You've just heard from Mike Posner, a human rights lawyer who served as Assistant Secretary of State under Hillary Clinton. He also heads up the Centre for Business and Human Rights at New York University.

In this episode, Mike and IHRB CEO, John Morrison, talk about the evolution of business and human rights. They discuss how we've got to where we are today, what the future holds with both the influence of China and the new Trump administration, another important theme from Mike's new book, Conscience Incorporated. The book is described as a guide for business leaders to respect human rights, whilst pursuing profits. Despite current global challenges, Mike says he's still an optimist. Let's hear from him and John now.

John Morrison: So, Mike, you've got a rich history here. Lawyers' Committee for Human Rights, better known nowadays as Human Rights First, Assistant Secretary of State under Hillary Clinton. I'm kind of intrigued, given you have a sort of generic human rights background. What brought you to double down in business and human rights, and what led you to this area?

Mike Posner: So, when I was in the government, one of the things that became strikingly obvious to me was that I would go to these diplomatic meetings, and we would all sit there with the flag behind us and with the placards. And we would pretend the governments of the world could sit around a table and we would solve the world's problems. And we were facing and still face violent extremism, ISIS, Al-Qaeda. They may have flags, but they didn't come to our meetings. In fact, they were trying to destroy everything we were trying to do.

And then you have the whole range of humanitarian crises, whether it's COVID or Ebola, or hurricanes, or climate, all the range of things that are going on. And it's clear that even the richest governments, the United States, the UK, et cetera, Germany, don't have the resources to deal with it. We rely on the non-governmental sector, the Red Cross, Médecins sans frontières, et cetera.

And then the third piece that was obvious to me is that we live in a world where businesses are getting stronger and bigger, and governments are in some respects getting weaker. And there's a huge governance gap. So, ideally, we live in a world where there are 193 governments. They protect their own people. But a majority of the world's population lives in places where that's just not true. Their governments are either unable or unwilling, or often both, to do what they're supposed to do. So, you have giant companies in weak states. And inevitably, one way or another, the companies are going to be pushed to be part of the solution to other way forward.

The way I put it, and it's a bit of an unfair comparison. But if you compare the GDP of countries and revenues of companies, half of the biggest 100 economies in the world are not states. They're private companies. Walmart's revenues who are now over $600 billion a year, puts them more or less equivalent to the GDP of Belgium. And so, I kept saying to people in the State Department, "Why do we have an ambassador to Benin and we don't have an ambassador to Walmart? Is there any question that Walmart has as much influence on what goes on in the world?"

So, that all led me to think, boy, this is a big gap in the human rights movement. We sort of know around the edges, companies matter for better or worse. But I thought, let's dig in and take it up as a subject. I did quite a bit of building capacity in the State Department to take these issues on. And when I came out of government in 2013, I was looking for a place to basically continue working on this.

John Morrison: So, when you came out of government, then, John Ruggie had finished his work on the UN Guiding Principles. Mary Robinson, who we both know very well, has been working on this area for a long time. What do you think are the landmarks that you'd look to for the progress that we've made or not made over the past 20, 25 years?

Mike Posner: Yeah. So, what's interesting about this field is how new it is. If you go back even before the UN Guiding Principles, the Global Compact, I worked with Kofi Annan and a bunch of both human rights and environmental groups to bring companies to the UN to talk about environment, labour, human rights, corruption. That was the year 2000. Now, that's 25 years ago. And so, then John Ruggie followed up with the Guiding Principles in 2011. And the Guiding Principles opened the door, legitimised the discussion. The fact that the UN Human Rights Council unanimously embraced this broad model was a very important milestone.

But as Professor Ruggie, who I greatly admire, said, "That was the end of the beginning." And I think I would say, in the last 14 years, we've made some progress to my mind, not enough. I'm a bit impatient. And it's become increasingly clear to me that the broad framework of saying governments have the primary duty, companies have some responsibility to respect TBD, what that means, doesn't go far enough. There are too many companies that assert, "We're following the Guiding Principles, we do due diligence, we do it our way, we define it our way," is not enough.

We need to move to a place, recognising that unlike the environment, human rights issues really vary quite dramatically from industry to industry. And we need to develop industry standards for each industry that companies are part of the process of accepting and developing. We need metrics. We need a way to assess compliance. And ultimately, we need some measure of accountability so that companies that are non-compliant, and there are many of them, have some incentive to get their act together and do the right thing.

John Morrison: Why write the book? Is it work left undone? What compelled you on this one?

Mike Posner: So, I've been at Stern, at NYU Business School for the last 11, almost 12 years, and created a centre, the first centre on human rights at a business school, anywhere. And so, my first thought was I want to distil what we've learned over this period and put it in a accessible place, in one place. Secondly, I really want to encourage business schools to embrace this agenda. I think a number of businesses are actually ahead of business schools, recognising that these issues, which economists would call externalities, are actually quite important to business.

When companies get in trouble on human rights, they're often ill-prepared to deal with the consequences. And so, my second reason for writing the book was to create an opportunity to go to business schools. But more importantly, I think in many ways, is the fact that these are issues that I think a lot of business leaders are afraid to tackle. They seem daunting, they seem risky, they involve costs. But I wanted to give people a sense of hope that there is actually a way forward.

Our centre says that we're pro-business, but we want high standards. I'm not trying to undo the capitalist system or globalisation, but I really want companies to view human rights as a business priority. Not the only one, but attach the same things they do to any business priority. Return on investment, productivity, retention of workers, quality control, the things that businesses really regard as priorities. They spend a lot of time setting up systems to make sure that they evaluate performance. That's what they need to do with human rights.

We aren't there yet. But I use the book to both give examples of where it's gone wrong. But more importantly, to give some markers of what could be done, can be done, has been done, so that business leaders, investors, even consumers, can begin to think about this as something where they both have a stake and they can be part of the solution.

John Morrison: So, dipping into some of the chapters of your book now a bit. Ethics in an age of outsourcing, you give examples in your book, which are well known to us and to many listeners, I think. The tragedy in Rana Plaza, which killed over 1,100 women. The conditions facing migrant workers in the GCC. And you think about Saudi Arabia, I think, and then Ukraine, post-Russian invasion, et cetera. And I was at Davos, talking about forced labour. And one of the reactions you get is, "Well, it's systemic. It's part of the background noise. It would be there even if our global supply chains weren't there. We're just tapping into stuff that's there anyway."

I think you argue something different. I mean, I think you argue that there is something about the nature of outsourcing and global supply chains that engenders some of these harms. Can you explain a little bit as to why global supply chains are not coincidental, they're actually part of the problem in some ways?

Mike Posner: Yeah. I mean, I may put it a little bit differently. We've had, over the last 50 years, the mass expansion of a global economy, which among other things I tell my students is the greatest human rights change of the last 50 years, is the dramatic reduction in extreme poverty. DFID, and AID, and the World Bank, and UNDP play a part in that. It's primarily jobs. It's primarily a global economy where people have been moved from subsistence farming to the moneyed economy.

And so, 2 billion people have been lifted out of extreme poverty. That is the result of business, the commercial sector going to places where production is cheap, where it's easier to do things in an economical way. But what comes with that is what I call the outsourcing of responsibility. And so, it's one thing to say we're manufacturing of clothing, we're going to go to Bangladesh or Vietnam, because it's a heck of a lot cheaper than producing in Europe or the United States. But then to say it's not really our problem what happens in those factories, because we don't own the factories, that's the outsourcing of responsibility.

So, my basic argument to people like those you met in Davos, is take a look at how you're actually making money. What's your core business? What are the human rights challenges that are inherent in your business model? If it's outsourcing of production for farming, for fishing, for mining, for manufacturing, for construction, then ask yourselves, how could we get this done without these people? And what are the minimum things that they ought to be entitled to? They ought to work in a safe environment. They ought to have enough income that they can feed their families. They ought to be not subjected to forced labour, child labour, et cetera, et cetera. So, I think there's a certain logic of this. And again, I draw a lot from my American experience.

I work two blocks away, literally, from the Brown building, which is the place where in 1911, the Triangle Shirtwaist Factory killed 146 people. And it resulted in a whole range of things happening, first in New York City, New York State. And then with the new deal with Roosevelt and Frances Perkins, we created a set of protections for workers. If we can do it at a national level in an industrial economy, we need to be thinking these are actually minimum standards for the whole world. And if you're a global company benefiting from cheap labour, good production, et cetera, you have some responsibility for making sure that those workers are treated well.

John Morrison: You also, though, call out the Fair Labour Association, the Bangladesh Accord, as possible models for ameliorating or solving the problem. What is it about those initiatives particularly that attracts you?

Mike Posner: I try to put myself in the shoes of a corporate leader. It's very difficult to be the one exemplar of doing the right thing when your competitors are not. There is the free rider problem. You're out there calling for all these things to happen, and you look back and nobody's following. And so, the advantage... I was involved in the creation of this organisation called the Fair Labour Association in the 1990s. Bill Clinton, Robert Reich. And the idea was to bring together a group of leading apparel companies with NGOs, with unions, so that the unions dropped out, and with universities to come up with a common industry standard and a common way of assessing performance. Again, compliance with those standards and metrics.

It's a heck of a lot easier if it's a collective effort and it's more effective. The same factory may be producing things for five or eight, or 10 different brands. If all eight of the brands are asking for the same thing and putting some money behind it, then I think you have a much greater chance of success. The accord in Bangladesh has some of the same attributes, although I will say what the 200 brands did there after the Rana Plaza tragedy was to fund factory inspections, which yielded a laundry list of things that the factory owners needed to do.

But they more or less said to the factory owners, "You go do that and you go pay for it." So, I think one of the challenges we face if we take a holistic view, is that the global brands both need to identify the problems, but then they to share some responsibility also for correcting.

John Morrison: Bangladesh will become a middle-income country in the next few years. Circling back to what you said at the beginning and the 2 billion people who are no longer in poverty, these things are not necessarily bad for growth. These things are not going to stifle the economics or the development of a country. Bangladesh might be one example for that, right?

Mike Posner: Yeah. Vietnam would be another example. There are places that are more economically viable today because of the globalised economy. And now, for me, the next step is how do you ensure that basic protections for workers in those places become routine and part of business priority setting.

John Morrison: So, China gets its own chapter on supply chain. I'm sure they'll be delighted about that. You characterise three corporate reactions to the challenges of sourcing from China. Graveyard whistling, soul selling, and rights thinking. Very clever, witty, and also interesting. I think if you were to put the companies in the three buckets, the smallest would be the rights thinking. But you mentioned LinkedIn and Sony as examples.

I think a lot of people listening will know some of the challenges that have faced auditors and others who've been trying to speak up in China around forced labour in Xinjiang and the difficulties around that. But where do you think that's going? And how do we move companies from graveyard whistling, soul selling, into the rights thinking bucket?

Mike Posner: Yeah. So, China is the both biggest opportunity for global companies, but also poses some of the greatest risks. It's the largest manufacturing country in the world by far. Almost 40% of everything that's manufactured in the world is manufactured in China. It's almost double any other country. It's also now the second and soon will be the largest market. Whether you're selling sneakers or movies, or cars, you can't walk away from China, so that's the reality.

And the second reality is that the Chinese government, under Xi Jinping, has taken a pretty sharp step backwards on human rights. It's a blast from the past. It's almost back to Mao Zedong. Nationalistic, highly controlled central economy, central government, party controlled, lots of repression. Especially in places like Xinjiang, forced labour is now commonplace and everybody knows it. So, the challenge for companies is to figure out how do you exist there. How do you find a way to navigate those two realities? You can't live without it. You need to be there and you're up against a government that is prickly, nationalistic, and vindictive.

And so, the examples of Sony Pictures with Spider-Man, where the government of China basically told them, "Edit your movie and don't have Spider-Man climbing up the Statue of Liberty." And to their credit, Sony said, "If that means we don't circulate the movie in China and lose a lot of money, that's what we're going to do." Microsoft, again, with LinkedIn, said the social media part, the networking part of LinkedIn doesn't fit with the model because the Chinese government is going to control content and invade people's privacy.

A more recent example. Volkswagen had a major manufacturing, an assembly plan in Xinjiang. It took them a long time to figure out what to do about it. They left, and they left without a lot of fanfare. They didn't issue a big press release. But that's a profile encouraged to me. They figured out we don't want to be implicated in the forced labour that's going on in Xinjiang. So, that's the direction I'd love to see companies going.

I think most companies, as you say, are in that middle category where they keep their heads down. They hope that nobody will notice. They try around the edges to figure out... So, for example, the apparel industry relies on cotton. 80% of the Chinese cotton comes from Xinjiang. Solar panels, 98% of the ingots and wafers that go into solar panels are produced in Xinjiang. Those are business realities. I don't have the answer, but I know that companies ought to be thinking about how do we mitigate the damage, mitigate our relationship to that.

And then at the other end of the spectrum, which I find just appalling, is the number of business leaders who basically curry favour with the Chinese authorities and try to pretend away the problem. Ray Dalio and others, who fawn over the Chinese government and try to dismiss their bad behaviour. Keep your mouth shut. If you're going to be there and you can't really figure out what to do in terms of your business, go out of your way not to curry favour and make statements that you know are wrong just to ingratiate yourself to Xi Jinping.

John Morrison: Well, talking about ingratiation and prickly nationalist, vindictive governments were speaking at the end of January 2025. There's been a new administration in the US, not the one that you are part of. The other side. And the new president has got his Sharpie pen out. Lots of executive orders. Some of them fired off in relation to the DEI agenda, ESG perhaps to come, anti-wokeism. I know you've been in Washington recently. What's the atmosphere like? How will this play out in the next few months for our agenda?

Mike Posner: Well, of course, I wrote the book many months before Donald Trump was elected. And I would say that a lot of what's happening was predictable in the sense that things that Trump is doing are things he previewed and even celebrated as part of his campaign. He's gone faster, farther and I would say more recklessly than I had anticipated. And there's enormous anxiety, I would say, the word that jumps out to me, having talked to a number of people over the last several days in Washington.

Everybody is on pins and needles that I talk to, either because they're part of a company that's worried about retribution if they say or do something that's against Trump's mantra. But even NGOs. Any organisation that's getting money from the federal government is now thinking, "Oh, my God, there's going to be a litmus test, a loyalty test." And so, we're in a bad way. I don't want to sugarcoat it. I think this is a very dangerous time. Trump, personality-wise, he's very transactional. He personalises things. He's not beyond retaliating against those who are critical of him, and so I think right now there's maximum anxiety.

Everything he's now promising or even putting into those executive orders is not going to come to pass. It's a big complicated country. We have strong institutions outside of government, including business, including the legal community, including religious community, including the military. And I think there's even a lot of dissension within his base about some of these things. People want to close the border, which I understand that's a big issue here as it is in Europe, but they also want to buy foods at a reasonable price.

And if you look at the agricultural sector in the United States, the people picking fruit in Florida or California are undocumented. They're not citizens of the United States. Same with the restaurant business construction. There's a whole range of industries that depend on low wage work. And historically, it's tended to be people who are coming here undocumented.

So, we're going to have a lot of tough days ahead, but I do think we have to be, one, smart about picking our fights and challenging things that are beyond the pale where we can actually try to reduce, mitigate some of the damage. And perhaps, more importantly, we have to be thinking about life after Trump. It seems like a silly thing to say nine or 10 days into the new administration. Four years is a long time, but he's not going to be there forever. And a lot of the progress we've made on human rights depends on taking a long-term view of what should it be. And we need to be better prepared when the next regime comes to power.

John Morrison: Right. To finish, then, I think you end your book relatively optimistic, if I might say so, given where we are. You parcel out recommendations to different actors, even consumers, which I think I'm glad to see. But you remind us of how change came to apartheid, South Africa, Northern Ireland, the end of the Cold War, et cetera, quite suddenly. And just thinking about what happened in Syria. And I've talked to Syrians about that, who are as surprised as we are, how quickly that happened. Are you then an optimist? I think you are an optimist. So, my question more is what makes you that. What makes you feel that some of the things you're wishing for in your book could actually happen in the next five years?

Mike Posner: So, yeah, I call myself a chronic optimist. And it's based on really decades of... It's not wishful thinking. It's based on empirical evidence. The world does change. People do demand that they be treated with dignity. There are forces at work within every society that are sometimes invisible, but do lead to fundamental change. And as you say, when the change happens, it happens very quickly.

I was in Northern Ireland in 1991. And people kept telling me the troubles have been going on since 1969. We've been Catholics and Protestants, at each other's throats for 400 years, whatever. It's never going to change. And four years later, we had the Good Friday Accord and a dramatic change in the society, change of the police. The Royal Ulster Constabulary became the Northern Ireland Police Force. Totally different institution.

I think the same is true of these issues relating to business. There is a way forward. Inevitably, companies are recognising they live in a global environment, they're in a fishbowl. There's pressures from their own employees, pressures from the communities where they operate. I think there's going to be increasing consumer pressure once consumers have data that they can actually evaluate corporate performance.

So, I am optimistic. I've got my eyes open. I see the challenges, but I think there are some very practical things that good companies can and should do. And we haven't talked about it, but I think there's going to be some regulatory push from Europe. It's not going to be a linear process. But inevitably, I think publics in Europe are going to push their governments to say, "We need to be attentive to these issues across the world and use whatever influence we have." And so, I am optimistic. I think we're moving in the right direction broadly. I think we're going to keep moving in that direction, and I'm excited to be part of it.

John Morrison: Thank you, Mike. Do go and buy Mike's book, Conscience Incorporated: Pursue Profits While Protecting Human Rights, written by Michael H. Posner, with a preface by Hillary Rodham Clinton. I think it's a brilliant book in encapsulating the A to Z of business in human rights, and some of those dilemmas and cases that many of us have worked on. And as we just ended, it's optimistic. It does give the next generation, I think, something to get their teeth into. So, thanks, Mike, for everything you do. And thanks for giving us time today.

Mike Posner: Thanks, John. Thanks for having me on.

Deborah Sagoe: Thanks to my colleague, John Morrison and to Mike Posner for that engaging discussion. And thank you for listening to this episode of Voices, which is brought to you from the Institute for Human Rights and Business. Until next time, be sure to share and follow this podcast. That way you would never miss an episode. And if you'd like to find out more about the work that we do at IHRB, then head to ihrb.org.