Top Ten Business and Human Rights Issues in 2014

To mark International Human Rights Day, IHRB has published its annual list of the Top 10 Business & Human Rights Issues for the forthcoming year.

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

Revelations during 2013 of mass data gathering practices by a number of intelligence agencies have called into question the commitment of some governments to ensuring protection of privacy rights, and highlighted the potential chilling effect on freedom of expression and freedom of association.

In response, more ICT companies have joined the handful that pioneered the practice of releasing ‘transparency reports’, which publish the number of government requests or judicial orders to take down or block content under local laws or obtain access to and monitor user data that the company has received and complied with.

US companies have petitioned the US government to allow all such requests, including those authorised by secret court orders, to be aggregated in transparency reports. Some companies are exploring new ways to respond, such as making efforts to strengthen encryption to prevent unauthorised access to user data. Fundamentally however, this is a challenge to principles of accountability, transparency, and governance.

While intelligence agencies can conduct legally-authorized secret operations in order to prevent serious crime and terrorism, revelations over the past year have raised questions as to whether data gathering and sharing is disproportionate, or of questionable necessity. Many questions remain, such as whether existing laws need to change to limit the potential abuse of human rights through mass, untargeted surveillance that new technology enables, including further controls on collecting and sharing metadata, and whether unsupervised data sharing between intelligence agencies has circumvented national laws.

A UN General Assembly resolution to strengthen the right to privacy in the digital age, co-sponsored by Germany and Brazil, received widespread support. The UN Special Rapporteur on Counter-Terrorism has launched an investigation into some of these questions and will present recommendations to the UN General Assembly next year.

Demand will grow in 2014 for greater accountability from governments capable of mass surveillance and will reopen the question of how the Internet is governed. More companies will try to protect their data by seeking to secure their own “cloud,” and ICT companies will have to continue to push back on untargeted and mass surveillance requests that can have adverse impact on human rights from governments and demand fairer rules for greater transparency. Civil society will also remain vigilant, calling for increased accountability from governments and companies.

In 2015, world leaders will adopt a new international development agenda to succeed the UN Millennium Development Goals, which were agreed in 2000, and also make renewed attempts to reach a new global agreement to address climate change. Towards that end, the year ahead will be key to set in place necessary conditions to achieve success in 2015. What role will business play in these important and intertwined agendas?

Earlier in 2013, a high-level panel appointed by UN Secretary-General Ban Ki-moon on post-2015 priorities issued a report suggesting that public-private partnerships (PPPs) are key in making rapid progress to meet a range of development challenges. As IHRB’s Chair, Professor John Ruggie, pointed out in a recent opinion piece, the panel’s report suggests that PPPs should be based on a “process through which to measure progress towards goals and targets and to hold people accountable for meeting their commitments.” Moving forward, partnerships involving the private sector should be built on robust evidence of what has and has not worked in past efforts, combined with a human rights based approach to meeting goals and a clear accountability framework consistent with the UN Guiding Principles on Business and Human Rights.

In terms of climate change, 2014 will see the UN convene a Climate Summit at which business, governments and civil society will have an important opportunity to demonstrate real action to combat climate change. IHRB’s founding Chair and Patron, Mary Robinson, stressed during her remarks at the 2013 UN Forum on Business and Human Rights that because climate change has an adverse impact on human rights, governments and the private sector should avoid actions which may undermine efforts to address climate change and instead promote more sustainable development.

Will the post-2015 agenda finally see world leaders account for and reduce the vast externalities created by some business sectors? A recent report by Trucost estimates the global top 100 environmental externalities are costing the economy world-wide around $4.7 trillion a year. No one has yet undertaken the even more daunting task of estimating social externalities

Just as the environmental movement has shown that the polluter must pay, businesses avoiding true costs of their activities and negative human rights impacts by externalizing them, will have to recognize that if a deal is too good to be true, it generally is. Time will tell whether 2014 is a year in which human rights principles and standards begin to significantly influence state and business actions on global development and climate change agendas so that human rights impacts are understood, and mitigating steps taken.

Realisation of human rights requires resources. When the rich, the better off, and companies don’t pay their fair share of taxes, society – and in particular its vulnerable members – suffer. Tax justice movements have emerged in many countries to prompt states to strengthen their ability to develop and enforce tax systems that apportion taxes appropriately to generate the resources needed to deliver public services core to the fulfillment of many human rights – health, education, infrastructure, social protection.

A growing body of research shows the inter-linkages between financial flows, poverty and human rights, such as the recent review by the International Bar Association’s Human Rights Task Force.

The UN Special Rapporteur on Extreme Poverty is conducting a public consultation on the human rights impacts of fiscal and tax policy, including the role of the private sector. Earlier this year, ActionAid released an investor’s guide to tax responsibility.

The Netherlands recently announced measures to combat the adverse social impacts of tax through a two-strand approach at national and international level, in particular through anti-abuse provisions within many of its bilateral tax treaties. The European Commission has announced a tightening of EU tax rules to curb the ability of “mailbox” or “shell” companies, which exist only in name to minimize, if not eliminate, a company’s tax liability.

States often legitimately provide tax relief for exports, or to attract investment. States also legitimately sign bilateral treaties, so that the same income is not taxed twice. But tax havens flourish, drawing in wealth looted from national treasury by corrupt rulers, corporate income not brought back to the country where profits were earned, to avoid taxes. There are major resource and enforcement gaps, systemic corruption, and criminal tax evasion at national and international level, the consequence of which are seen in weak and inefficient public infrastructure and services.

The issue of taxation and human rights is complex, and more thinking is needed to fully address the linkages. Collaboration between tax experts, regulators and human rights, tax justice and revenue transparency advocates is needed to build consensus to distinguish legitimate tax saving schemes from those constituting illegal tax evasion and to address the grey zone in between of aggressive tax avoidance. A vibrant civil society, accountable parliament, impartial judiciary, and a free press, are all also vital in ensuring that resources at the State’s disposal through taxation lead to realisation of all human rights.

The decision by the US Supreme Court in 2013 declaring the Defense of Marriage Act discriminatory demonstrated powerful support of equal protection for gay and lesbian couples. Most major American companies have policies in place beyond current legal requirements that extend benefits to the spouses of their employees regardless of their sex. Soon after the Court’s judgment, in late September 2013, Exxon Mobil became one of the last major US companies to offer all benefits to all married couples, including same-sex couples, removing one of the policies that set the company apart from other large businesses.

Many European countries have broadened their equality provisions in a similar manner. But in many other countries change is slower. Other countries too are moving away from discrimination. South Africa’s post-apartheid constitution specifically outlawed discrimination based on sexual orientation. The Indian judgment in 2009 outlawing criminalization of gay relationships is noteworthy and may influence other courts. In some countries in East Africa, lynch mobs have hunted down gays and murdered them and in South Africa lesbian women have been subjected to 'corrective rape', while governments look the other way.

Russian laws outlaw promotion of homosexuality. Complying with that law, the furniture retailer IKEA removed a feature from the Russian edition of its magazine, which showed a lesbian couple with a child, leading to protests and criticism from human rights groups. Countries participating in the Winter Olympics in Sochi, Russia, and companies sponsoring the event are caught in a dilemma – should they protest, or should they comply?

The tide of events is firmly moving against discrimination on the grounds of sexual orientation. Companies will increasingly have to deal with this issue and address the related issue of gender identity. Complying with discriminatory laws runs the risk of boycotts and protests in other markets where gay and lesbian relationships are accepted. If companies stand by their values, they may lose business in important markets, at least in the short term.

In 2014, calls to respect the fundamental rights of LGBT individuals will continue to gather momentum. Many companies will have to rethink their practices, especially when they operate in countries that continue to discriminate.

The year 2013 saw continued reliance on multistakeholder approaches as a way to tackle difficult human rights challenges involving the private sector. In September, the new association to govern and oversee implementation of the International Code of Conduct for Private Security Service Providers (ICoC) was launched in Switzerland. Over 700 companies from the private security industry have signed the Code, which seeks to clarify standards for operating in complex environments and to improve the accountability of these companies. The new initiative, which involves the participation of select governments and civil society actors in addition to industry representatives, will provide support for certification of the companies involved, monitoring their compliance with the Code and complaints resolution.

In July, two new initiatives were launched in response to the Rana Plaza factory tragedy in Bangladesh. The first includes a group of over 100 apparel companies from 19 countries along with global and Bangladeshi trade unions, who have come together to create the Accord on Fire and Building Safety in Bangladesh. The International Labour Organisation (ILO) acts as the independent chair of this legally binding agreement, which seeks to ensure a safe and sustainable garment sector in Bangladesh. The second initiative, the Alliance for Bangladesh Worker Safety, is a company led initiative involving North American retailers and brands committed to a five-year effort to improve safety in Bangladeshi garment factories.

The increasing number and diversity of multistakeholder and business led initiatives in the human rights field raises questions about their effectiveness and legitimacy. New projects are developing to study the impact and value of multistakeholder initiatives. And calls at this year’s UN Forum on Business and Human Rights for sharing of experience and commitment by the initiatives to integrating the UN Guiding Principles on Business and Human Rights into their core standards and governance mechanisms are likely to grow during 2014 and beyond.

Getting it right will be important, not only for the continued success of the existing and new initiatives, but also because the post-2015 international development agenda looks set to give a bigger push to public-private partnerships (PPPs) to address key global challenges.

Demands for more effective action to combat human trafficking and forced labour continued to build throughout 2013. While launching the UK government’s national action plan for business and human rights, the foreign secretary William Hague highlighted the importance of rooting out human trafficking in supply chains.

Efforts such as the 2012 Executive Order on Strengthening Protections Against Trafficking In Persons in Federal Contracts enacted by the Obama administration in the USA and the State of California’s new laws are examples of how the economic muscle of governments might be exercised and expectations for business made clear. Similarly, in Brazil the government and private sector have taken steps through the National Slave Eradication Pact to eradicate slavery from company supply chains.

Yet the reality is that State regulation and oversight of the recruitment and employment of workers remains sorely lacking in far too many situations, placing workers at risk and law abiding business at competitive disadvantage. According to the ILO, nearly 21 million people are trapped in conditions of forced labour yet little is still known about the supply chains themselves that lead to such abuses and how to make the case to more companies that trafficking and forced labour present operational, reputational and legal risk.

In 2014, efforts to end human trafficking and forced labour will continue to gain energy. New projects such as the Global Slavery Index and ongoing work to examine the scope of the problem and propose solutions will help ensure that all businesses comply with the law and meet international expectations to end modern forms of slavery.

The search for natural resources has historically attracted foreign traders and businesses, and the consequences for countries in Africa and elsewhere has often been negative. Today, South African companies are investing heavily in other parts of Africa. Indian companies are growing crops on agricultural land in Ethiopia. China has become Africa’s biggest trading partner with nearly 800 Chinese companies doing business in a range of industries, including infrastructure and natural resources.

Civil society groups remain skeptical that corporate respect for human rights will become part of mainstream business practice, and have begun publishing reports highlighting the conduct of companies from emerging economies. The case of Wanbao Mining in Myanmar is one such example; the case of Indian agricultural companies in Ethiopia is another. As companies from the global “south” increasingly invest abroad, scrutiny of their conduct will continue to grow. While traditional tools used by civil society groups to push for change such as organizing boycotts may not be adequate in moving companies that have to date remained unresponsive to such pressures, they will increasingly track and monitor business performance.

In recent years, many companies have taken steps to act more responsibly, by launching, or being part of multistakeholder initiatives aimed at fostering responsible business practices, such as the Extractive Industries Transparency Initiative, the Voluntary Principles on Security and Human Rights, the Kimberley Process, and the Round Table on Sustainable Palm Oil.

As the global order changes, a major challenge emerges: what steps can be taken to ensure that multinational firms from all regions respect human rights in their pursuit of opportunities?

Smart companies increasingly seek to understand human rights issues through participation in business initiatives or associations like the Global Business Initiative on Human Rights, and sector-specific industry-only groupings, like the International Council on Mining and Metals or IPIECA, an association of oil and gas companies), which work towards embedding respect for human rights throughout business operations.

During 2014, major companies from emerging economies will face increasing questions about how they are seeking to implement the responsibility to respect human rights. They will need to provide solid answers.

The average wage of the more than one thousand workers who died in the Rana Plaza factory collapse in Bangladesh earlier in 2013 was about $38 per month, which just about reached the dollar-a-day benchmark many economists use for an individual’s survival above absolute poverty. Bangladesh’s per capita income is about $87 per month. Responding to demands from workers, the government has agreed to raise this to $67 – higher than the current levels, but still below the country’s per capita income.

H&M, the largest buyer of Bangladeshi garments, recently committed to raising wages in the country to “living wage” levels within five years. Efforts at estimating a living wage underscore the complexities of the issue and the need for judicious analysis.

But the struggle for adequate wages is not unique to developing countries. In the United States, city councils are taking a close look at the wages large employers like Walmart pay their workers, sometimes mandating them to pay a living wage, although in some cases city mayors have vetoed such legislation. Walmart and other large retailers will likely continue to face pressure from unions and communities.

Living wage campaigns risk running headlong into efforts to get young people into work, where one approach is to lower wages for young workers to entice employers to hire them. However, this approach can have the opposite effect. Research from Africa, Europe, and Latin America shows a persisting global trend: low wages discourage people from looking for work; unemployed young people sometimes turn to violence; and the consequences can lead to a spiraling human rights crisis. Instead, the decent work agenda should be for all – young workers and old.

Efforts such as a recent conference convened by the German Federal Ministry for Economic Cooperation and Development and the Dutch Ministry of Foreign Affairs, which brought together business, international organisations, NGOs and trade unions provide some hope for more effective global action on these issues over the coming year. In line with the UN Guiding Principles of Business and Human Rights, the conference’s Declaration of Intent calls upon all stakeholders to “show their commitment to realizing living wages in international supply chains” and to develop a “shared understanding of the concept of a living wage and it's importance.”

There is a long-standing association between human rights and major sporting events. Sport celebrates some of the most outstanding of human achievements and is a powerful reminder that every man and woman is equal when standing at the starting line.

Over the next ten years, two of the world’s biggest sporting spectacles – the Olympic Games and World Cup Football – will again focus global attention on human rights achievements and challenges. In 2014, the football World Cup will be held in Brazil, which will also host the 2016 Olympic Games. The Winter Olympics next year will take place in Russia. In 2018, the World Cup moves to Russia and in 2022 to Qatar.

Such “mega-sporting events” are heavily reliant on businesses: to build infrastructure, create jobs, regenerate urban areas, and provide the vast number of product and services associated with the events.

But they have also come under repeated scrutiny over concerns such as the mass displacement of local populations, land acquisition, security provision, sponsorship, the welfare of small-scale vendors and the treatment of migrant workers. The events can also become lightening rods for wider concerns about discrimination in society, such as the rights of Lesbian, Gay, Bisexual and Transgender (LGBT) people in relation to the 2014 Sochi Winter Olympic Games.

These events are about excellence both on and off the field. All those that work so hard, and the countless billions around the world who delight in their achievements, deserve to celebrate human excellence in a fully inclusive way. In 2012, the Governments of Brazil, Russia, South Korea and the UK signed a communiqué in relation to human rights and the Olympic and Paralympic games. The challenge for 2014 is full implementation, including the role of business to respect these same rights.

As the world’s athletes prepare for the Games, the world’s businesses, governments, and sports administrators must ensure they live up to their standards, and that no one loses the race to protect human rights.

As an important connector of the world economy, the finance sector is in a privileged position to support or undermine respect for human rights. As most financial institutions have clients and investments in a wide range of sectors, the finance sector’s exposure to human rights risks is potentially broader than any other sector.

During 2013, the OECD began examining the scope of the term “business relationships” and its application to the financial sector chapter including minority shareholdings referred to in the OECD Guidelines on Multinational Enterprises chapter on human rights, as part of its “pro-active agenda” and in connection with a case involving the Norwegian and Netherlands OECD National Contact Points.

An interpretative letter from OHCHR in the case confirmed that investments are indeed business relationships that directly link investors, including minority shareholders, to the companies in which they invest. The question is not, in other words, whether the responsibility to respect applies to investment relationships but instead, how investors exercise that responsibility.

Other financial institutions are not waiting for the obvious conclusion from the OECD’s work and have taken it as a given that they must act in light of “’hardening’ soft law” and in order to proactively engage rather than waiting for legal requirements. The Thun Group of banks (a group of seven European banks) has issued a discussion paper that begins to explore how and when the responsibility to respect can be built into three different types of financing transactions – retail and private banking, corporate and investment banking and asset management.

In the meantime, UNEP FI has commissioned a paper on banks’ potential exposure and human rights responsibilities due in 2014. It recently held a panel discussion on human rights and the financial sector at its Global Roundtable in China in November 2013.

The Equator Banks and OECD export agencies are also examining the implications of the UN Guiding Principles, building on the International Finance Corporation’s update of its Performance Standards.

These are important starting steps to unlocking the financial sector’s potential, but there are more profound challenges ahead in integrating human rights into a more systemic response to the increasing financialisation of the world economy.