Top Ten Business and Human Rights Issues in 2011

The Institute's 2011 Top 10 list pulls together some of the key themes that are set to drive debate over the coming year, including the culmination of John Ruggie's mandate as UN Special Representative on Business and Human Rights, growing efforts to balance security, privacy and free expression on the internet and mounting challenges relating to the links between natural resource extraction and use and the impacts on human rights and development.

The 2011 Top 10 list seeks to provide an overview of the business and human rights landscape and encourage discussion amongst individuals and organisations working in the fields of human rights, corporate social responsibility and sustainability. The issues identified are listed in no particular rank order. IHRB welcomes feedback.

Note: These ten issues are not ranked in order of importance.

2011 will see the culmination of John Ruggie’s mandate as UN Special Representative for Business and Human Rights, highlighting the need to maintain and build on the momentum for positive action that has developed over the past five years. The release in November 2010 of draft Guiding Principles...

The release in November 2010 of draft Guiding Principles on the operationalization of the UN “Protect, Respect, Remedy” policy framework on business and human rights by UN Special Representative John Ruggie signals the final stage of this important mandate which has moved the business and human rights agenda forward significantly over the past five years.

The draft Principles, to be finalized and presented by the Special Representative along with his final report to the UN Human Rights Council in June 2011, seek to provide concrete recommendations and guidance to governments, companies and other actors. Once adopted, the Principles will become a global benchmark of good practice on business and human rights with the potential to reshape much of the current corporate responsibility landscape.

The challenge for 2011 and in the years to come is to put these Principles into practice at local, national and global levels. This will require a multi-faceted strategy and follow up involving UN actors, governments, companies and leaders in the Corporate Responsibility field. It will also mean effective integration of the Guiding Principles into relevant ongoing processes such as the updating of the OECD Guidelines for Multinational Enterprises, the new ISO 26000 Social Responsibility Standard as well as other relevant multi-stakeholder initiatives including the UN Global Compact and the Global Reporting Initiative among others.

The Guiding Principles should also influence other developments in 2011 such as the expected release of a new ‘CSR Communication’ from the European Union with much greater reference to human rights and business, the terms of reference for the ASEAN Human Rights Commission which are likely to include business issues and a more prominent role generally for National Human Rights Institutions on business related issues.

The Institute for Human Rights and Business welcomes the release of the draft Guiding Principles and looks forward to continuing its involvement in supporting and engaging with the Special Representative and other stakeholders in this important process during 2011 and beyond.

The application of new US legislation on minerals from Congo, the OECD’s guidance on conflict minerals, the potential for new multi-stakeholder initiatives relating to natural resources and other key developments such as the planned plebiscite in Southern Sudan will all keep resource extraction and human rights a top priority in 2011.

The role of companies in countries rich in natural resources but prone to weak governance has been at the heart of the business and human rights agenda for the past decade. Yet efforts to find constructive ways forward have only begun to emerge. Operating in such contexts poses significant dilemmas for governments and businesses. Prudent use of resources can help the state overcome poverty, but there are many instances where the combination of conflict, corruption, and corporate complicity has contributed to flagrant human rights abuses.

Path-breaking efforts like the Voluntary Principles for Security and Human Rights and the Kimberley Process to eliminate trade in conflict diamonds were important early efforts to address such problems. Newer initiatives, such as the Development Diamonds Initiative and the new code of conduct for private security companies are good examples of multistakeholder initiatives aimed at learning lessons from earlier efforts as they seek to improve protection of human rights.

There is renewed focus on conflict minerals, particularly after the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act which requires listed companies that use minerals from the Democratic Republic of Congo to disclose measures taken to exercise due diligence. Civil society groups are campaigning for similar laws in Europe.

But challenges remain. Conflict related dilemmas require urgent, constructive action. Initiatives such as the UN Global Compact’s new guidance on responsible investment in conflict-affected and high-risk areas, the Red Flags initiative, a joint project of FAFO and International Alert which provides guidance to companies on the liability risks they face when they operate in conflict zones as well as International Alert’s Conflict Sensitive Business Practices, for the extractive sector are all important tools.

Other resources such as a new book by the Collaborative for Development Action called Getting it Right provide useful guidance for companies on how to engage stakeholders.

In 2011 the Institute for Human Rights and Business will publish its own guide for companies on responsible operations in conflict zones. The outcome will be the result of a multi-year study involving convenings in India, Colombia, and South Africa, and will incorporate insights drawn from consultations with and viewpoints of close to one hundred international experts from all continents representing civil society, academia, business, governments, international organizations, and the United Nations system.

In spite of new laws and reforms to regulate the finance sector following the global financial crisis, deeper questions about global financial integrity remain. 2011 will see continued campaigning for much greater international transparency on revenues as well as taxes.

Efforts to promote greater accountability and transparency in the global financial system have advanced in recent years and are likely to be an even bigger focus for corporate responsibility and human right advocates in 2011. In 2009, the G20 group of nations declared that the "era of bank secrecy is over" and committed to taking action "against those jurisdictions which do not meet international standards in relations to tax transparency."

Civil society groups like Global Witness have carried on sustained campaigns to focus global attention on the issue of revenue transparency and demand that companies make public what they pay governments. Some governments have come together with industry and civil society groups in the Extractive Industry Transparency Initiative to ensure that royalties and other payments extractive companies make to governments are used for development purposes.

Pressure will continue to build for companies, international financial institutions and others to increase transparency as a means to promote economic development, reduce poverty and realize economic and social rights. Alliances such as the G20 Advocacy Coalition are calling for additional state and global measures such as requiring all multinational corporations to report their income and taxes paid on a country-by-country basis. Other civil society initiatives such as the Bretton Woods Project are focusing attention on the role the International Finance Corporation should play in this respect.

These and other initiatives are set to increasingly highlight how laws and policies of wealthier countries and institutions in certain circumstances enable the illicit outflow of funds from developing countries and undermine development prospects. Changes in domestic legislation in countries such as the U.S. through the extractive industries transparency provisions included in the 2010 Financial Reform Act (§ 1504) suggest that efforts to achieve a level playing field for all companies worldwide are beginning to make a mark on the political agenda.

The implications of the international recognition of the right to water and sanitation in 2010 will become clearer in 2011, particularly regarding corporate water use and provision of water and sanitation services.

2010 was an important year in clarifying state duties in relation to respecting, protecting and fulfilling the rights of over one billion people without safe drinking water and 2.4 billion still without adequate sanitation. The human right to water and sanitation, endorsed by both the UN General Assembly and the UN Human Rights Council this year was an important normative development.

International recognition of this right raises a number of new questions concerning the responsibilities of business given the UN ‘Protect, Respect, Remedy’ framework and draft Guiding Principles which affirm that the corporate responsibility to respect human rights covers all ‘internationally recognized human rights’.

These resolutions follow sustained campaigns from civil society groups and local communities deprived of access to water. While human rights law does not require that states alone can provide water, nor does it say that the private sector cannot provide water, in countries as diverse as Bolivia, Tanzania, South Africa, and the Philippines, consumers and local communities have protested against private sector water provision.

Businesses engaged in water use and provision should not undermine or detract from the state duty towards progressive realization of the right to water and sanitation. Closer human rights analysis of the contracting process between states and both public and private water and sanitation providers is needed. So too, is the application of human rights due diligence by all businesses to their use of water.

The achievement by 2015 of Target 7c of the UN Millennium Development Goals, (which concerns water and sanitation) is a key international commitment. Several companies have already declared their support for the right to water but far fewer for sanitation. This will need to be prioritized by both governments and business in 2011. 26 of Africa's 53 countries are currently on track to reduce by half the number of people without sustainable access to clean drinking water by 2015, while only five countries on the continent are expected to attain the target on sanitation.

In January 2011, the Institute for Human Rights and Business will release its draft briefing paper on the human rights responsibilities of business in relation to both water use and the provision of water and sanitation for consultation. The final version will be released in advance of World Water Day in March 2011. This briefing paper will form the basis of the Institute’s further interactions with businesses, governments and civil society on water related issues throughout 2011.

2011 will see updated OECD Guidelines for Multinational Enterprises with expected additional human rights content and greater clarity on procedures. At the same time, extra-territorial legal accountability for business implicated in human rights abuses will remain a critical issue, with renewed emphasis on developing direct corporate liability for international crimes.

For several years now, human rights lawyers representing victims’ groups have sought justice for human rights abuses where companies are implicated from an unusual place: the United States judiciary. The key to this strategy has been the use of the Alien Tort Statute, which grants American district courts jurisdiction in a civil action by a non-US citizen for a tort that violates the laws of nations or a treaty the United States has signed. Civil society groups around the world have turned to such an unusual mechanism because they believe states are not doing enough to prosecute alleged corporate involvement in human rights abuses.

Over 40 cases have been filed against corporations in American courts in the past decade under the Alien Tort Statute. Most cases are dismissed in pretrial hearings, and none has reached the trial stage. Some have been settled out of court without the companies admitting any wrongdoing. But a recent judgment in a US district court has raised doubts about the long-term sustainability of using the Alien Tort Statute to make companies accountable for abuses committed elsewhere in the world.

What will 2011 bring for the Alien Tort Claims Act strategy? One result of a shifting US legal landscape may be more cases being filed in other jurisdictions. For example, cases dealing with corporate involvement in international crimes have already been prosecuted successfully in the Netherlands.

With the OECD Guidelines for Multinational Enterprises updating process and the anticipated UN Guiding Principles on business and human rights coming into effect in 2011, calls for corporate accountability, including through remedial measures such as alternative dispute settlement mechanisms and non-judicial mechanisms are likely to intensify.

Renewed civil society efforts to create binding mechanisms are to be expected, as are efforts by businesses working with governments and civil society groups to develop grievance mechanisms and processes that are rights-compatible.

The Institute for Human Rights and Business presented a paper on this subject at the Genocide Forum in Arusha and contributed a chapter in a forthcoming publication of Politorbis, a publication of the Swiss Government. We are also engaged in ongoing efforts to strengthen international accountability with like-minded organizations.

Efforts to address the exploitation of migrant workers will continue to be a major issue in 2011, with greater scrutiny on the role of intermediaries who facilitate their movement. Companies will become more aware of the role recruitment agencies play in their supply chains, and the need for more effective due diligence.

Migrant workers, both internal and international, continue to underpin economic growth in many parts of the world and within many industry sectors – apparel, electronics, construction, agriculture, hospitality to name just a few. Yet despite their contributions to the global economy, individuals seeking to find work abroad are vulnerable to all manner of abuses from unscrupulous labour brokers. These abuses include debt bondage due to excessive fees, loss of freedom of movement as passports are withheld in receiving countries, and the risk of ending up being trafficked into various forms of modern-day slavery, including sexual exploitation.

Governments have not instituted adequate and transparent regulation of the recruitment industry, and access to justice or remedy for victims is rarely available or affordable. Verité has recently published a report:
"Help wanted. Hiring, human trafficking, modern-day slavery in the global economy" [72 pages, 5.9mb] on the intersection of brokers, migrant
 workers, and slavery. The report concludes that the ‘presence of labour brokers in the recruitment and hiring of migrant workers signals a heightened risk for forced labour’.

Much emphasis has already been placed on labour conditions within global supply chains, but only recently has the spotlight extended to the labour brokers - the recruitment agents who are providing these massive flows of mobile labour. One industry leader is calling for more regulation to ensure responsible recruitment and a role for the private sector in contributing to ending human trafficking. Pressure will grow for recruitment agencies to join this platform in exerting pressure on governments, regulatory bodies and industry peers to end abusive practices and adopt responsible recruitment practices.

The Institute for Human Rights and Business is hosting a series of roundtables in 2011 to bring brands and suppliers from the apparel sector together with relevant government representatives in Mauritius to identify areas of shared risk as well as good practice in responsible recruitment and employment of migrant workers. A second roundtable will bring the same group of brands and suppliers to Bangladesh, a major labour exporting country for Mauritius, to engage with key recruitment agencies and government departments to discuss common guidelines for responsible recruitment of migrant workers, as well as possible areas of collective action to promote responsible recruitment practices. This process will contribute to the work being done by Verite, Business for Social Responsibility, the Fair Labor Association, and others.

The level and nature of overseas land acquisition on continents such as Africa is becoming clearer and 2011 will see an increasing drive towards greater transparency and understanding of the human rights vulnerabilities engendered by these trends.

Driven by increasing demand for food and other agricultural commodities, rich countries with food security concerns have begun making investments in developing countries where agricultural prospects are bright but productivity is low.

Some of the investment is meant to address legitimate domestic food security concerns such as in Saudi Arabia (due to minimal rainfall) or China (with its vast population). Other overseas land acquisition is driven by the need for bio-fuels to supply global markets, in particular in Europe and North America. But there are growing concerns over speculative investment in land as well.

Academic studies have posed questions about whether the investments can be turned into development opportunities. The UN Special Rapporteur on the Right to Food has published a set of core principles to deal with the related human rights challenges.

The impact of investments on local communities is less clear. On one hand, sound investment can boost productivity, create jobs, increase food production, and create a virtuous cycle of development. On the other hand, if food is produced only for export, and small farmers are marginalized and displaced from their land without due process, adverse effects are likely on a whole range of rights.

What complicates the picture is that current trends in land acquisition indicate the purchases are not only for agricultural purposes. Often it is to develop other sectors, such as tourism, export-oriented horticulture, building special economic zones, and creating industrial estates. While such activities may lead to positive impacts on human rights, it isn’t clear if those whose land is taken away are likely to benefit from the new developments.

In 2011, this issue will be under sharper focus, and the Institute for Human Rights and Business will seek to contribute by building on our work on land and water and publishing guidance on land acquisition and use at a convening in Kenya in early February.

2010 started with Google’s shift in policy with regard to operating in China, and ends with the WikiLeaks affair and its multi-various global implications. The dilemmas for internet service providers will only deepen in 2011, and so too the need for multi-stakeholder initiatives to examine the impact of the industry on all rights.

Security, openness and privacy on the Internet have become critical issues as a result of the explosive growth in online traffic around the world. The implications for human rights are enormous and will require further engagement between governments, business and civil society in the years ahead.

Companies in the Information & Communications Technology (ICT) sector will face mounting pressure from states which want access to data, community groups that want material that offends them to be taken down, and authors, artists, campaigners, and others, who wish to express themselves freely. Many measures they undertake may conflict with internationally recognized human rights standards relating to freedom of expression and privacy. The growth in social networking and other online sharing of information is also a challenge for the industry, as it may put individuals, particularly children, at risk as targets for identity theft and other forms of abuse.

Legal systems are in an ongoing process of catching up with rapid developments taking place in information technology. The dissemination of hundreds of thousands of confidential documents of the U.S. departments of State and Defense on the website, Wikileaks has raised serious human rights concerns, not least the safety of human rights defenders who may be named in such documents who may face the risk of being identified and persecuted by their governments because of such exposure.

The legality of what WikiLeaks has done apart, a host of serious questions concerning freedom of expression need to be addressed urgently. For example, the decision by Amazon to cancel its contract with WikiLeaks, which was renting its servers, was taken, according to the company, because of violations of its terms of service, but human rights organisations have called for greater transparency in such decision-making.

The work of the Global Network Initiative set up in 2008 by a group of companies, civil society organizations (including human rights and press freedom groups), investors and academics will be key to this unfolding area. The Initiative has sought to shape a collaborative approach to protect and advance freedom of expression and privacy in the ICT sector, and participants are now putting in place the structures that will carry the work forward in the years ahead.

Business leaders are slowly coming to grips with the need to develop corporate cultures that respect human rights. 2011 will see increasing efforts by governments and companies to move in this direction through a range of measures such as adopting new policy statements, assessing the impacts of corporate activities on human rights, and tracking performance against international standards.

The introduction to the draft Guiding Principles on the operationalization of the UN “Protect, Respect, Remedy” framework released by Special Representative John Ruggie in November 2010 point out that:

“Most States long ago adopted individual measures relevant to business and human rights, including labor standards, health and safety provisions, and non-discrimination policies. However, States have been slow to address the more systemic challenge of fostering human rights-respecting corporate cultures and conduct.”

Governments will increasingly be called on to clearly set out their expectation that companies operating in their territory respect human rights and back this up through steps such as enforcing existing laws, ensuring that laws and policies governing business such as corporate law enable business to respect human rights and providing effective guidance to business on what this means in practice including through adequate communication on human rights performance.

The draft Guiding Principles make clear that a foundation for embedding the responsibility to respect human rights into any business is a statement of policy. The recommendations that such a statement be approved at the most senior level of the company; be informed by appropriate consultation with relevant internal and external expertise; stipulate the enterprise’s expectations of personnel and business partners; be communicated internally and externally to all personnel, business partners and relevant stakeholders; and be reflected in appropriate operational policies and procedures are important markers for future efforts.

The Business and Human Rights Resource Centre tracks companies that have taken the step of adopting a formal policy statement explicitly referring to human rights. As of December 2010, less than 300 companies are known to have such statements highlighting the urgency for scaled up action in this area.

During 2010, the Institute for Human Rights and Business undertook a study of a group of companies seeking to integrate these and other aspects of human rights due diligence into their operations. The resulting report makes clear that such changes in corporate culture are possible but that much more work is needed to support this ongoing effort including through business education. Over the past decade, a small number of business schools have introduced degree programmes and specific modules on business and human rights aimed at giving future managers a more robust conception of these issues to guide business decision-making. The Institute for Human Rights and Business plans to expand its outreach during 2011 to academic networks, business schools and others working to strengthen leadership in this area.

2010 saw the launch of new efforts to develop globally accepted frameworks for corporate sustainability reporting that bring together financial, environmental, social and governance information into clear and comparable formats. The importance of engaging institutional investors on these issues also took on increasing prominence. To what extent will human rights concerns factor into these emerging efforts during 2011?

"Integrated reporting" – the concept of combining financial, environmental, social and governance information into a single company reporting framework comparable across borders, gained ground in 2010 with the launch of a new initiative known as the International Integrated Reporting Committee (IIRC).

The new initiative, spearheaded by The Prince of Wales Accounting for Sustainability Project and the Global Reporting Initiative, has the support of the International Accounting Standards Board, the US Financial Accounting Standards Board, which set the rules for corporate financial reporting, as well as the International Organisation of Securities Commissions, which develops and promotes international regulatory standards across financial markets. The IIRC plans to put forward to the G20 in 2011 its proposals for an integrated reporting model that would make corporate annual reports comparable globally.

Similar efforts are underway in the institutional investment arena. The over 800 members of the UN Principles for Responsible Investment network are in the process of exploring standardized and integrated reporting from an investment standpoint.

Human rights have to date not been at the heart of these and other discussions concerning sustainability reporting and the role of the investment community. Fortunately, civil society groups like Oxfam have begun focusing more attention on the human rights related responsibilities of institutional investors. Earlier in 2010, Oxfam released "Better returns in a better world", a report based on two years of engagement with pension funds, insurance companies and investment managers to explore the extent to which investment decisions take account of social and environmental, as well as financial returns and how investors can encourage the companies in which they invest to take a proactive approach to the management of their development impacts. The report stresses that while there is now extensive literature on the investment implications of climate change and other environmental issues, social issues such as poverty reduction and human rights have received comparatively little attention within the investment community.

In the year ahead, there is greater scope for human rights advocates to work with and encourage institutional investors and companies to focus more on the completeness and quality of reporting data, including human rights due diligence information, to report in a form that enables meaningful comparisons to be made, as well as increasing the use of independent verification and monitoring.