Business and governments must find ways to protect human rights and avoid courtroom drama with activists

Business and human rights – Learning from Shell’s reputation travails

This month, Shell, often unfairly portrayed as a multinational icon of greed, stands trial for complicity in the death of Ken Saro-Wiwa, the activist executed by Nigeria’s military junta in November 1995. Before his death Saro-Wiwa had been an outspoken critic of the oil company’s presence in the country.

The fact that Shell is standing civil trial for the incident is momentous. Should it be found guilty, the case would go down as a watershed moment in international corporate civil liability (see cover story). Even if Shell is acquitted, which many predict, the case points to a growing trend of international human rights claims against companies actually coming to court.

Chiquita, for example, has already paid a $25m criminal fine to US authorities for paying protection money to Colombian paramilitaries. The banana company self-reported the payments and ceased operations in Colombia in 2004, but the banana company still faces a number of civil claims brought by US and Colombian lawyers under the Alien Tort Claims Act on behalf of the families of people who were killed.

And in the UK, Dutch commodities trader Trafigura is currently on trial for allegedly poisoning several thousand people by helping to dump toxic waste in Ivory Coast in 2006.

Learn from these cases

Shell, Chiquita and Trafigura are contesting the civil claims against them. But there is much other companies can learn from them. They are another reminder that business must do more to minimise human rights risks in operations and supply chains. Failure to do so could result in more uncomfortable public spats with victims, activists and now increasingly, their no-win, no-fee lawyers.

Screening suppliers against human rights criteria, and threatening to drop those that pose too much of a risk, is far from standard practice in business. Corporate human rights policies are spreading fast. But proactive, detailed and continuous human rights due diligence is not. This should change.

According to the United Nations Human Rights Council, corporate lawyers often tell clients to avoid undertaking human rights diligence of contractors. This advice seems to be based on the dubious legal principle that in corporate liability cases, what you don’t know, can’t hurt you. Instead, companies should find out exactly what risks might be lurking in their supply chains. If they do not, they face a nasty surprise if activists and lawyers make a song and dance about them.

But a case-by-case battle between alleged victims and perpetrators will never ensure the systemic reform needed in business to address human rights risks. In the end well-judged government intervention, in partnership with business and other stakeholders, is the answer.

Take the recent proposals from the UK government for regulating the private security industry (see EthicsWatch). The thinking behind these proposals is sound. It says: rather than regulating, national governments should work with industry to create institutions to monitor whether companies are meeting agreed standards to respect human rights. Similar thinking lies behind the UK’s Core Coalition’s proposal for a commission on business and human rights.

Governments, too, should reinforce the national contact points that hear complaints against companies under the OECD guidelines for multinational enterprises. And business has a strong interest in helping John Ruggie in his work to clarify its responsibility to respect human rights.

Business must work with government to create a framework in which human rights are protected. Companies keen to avoid an unwanted day in court should help to make this happen.

Stakeholder engagement – Be selective

The way companies approach stakeholder engagement says a lot about how far they have travelled on their so-called “CSR journey”.

Often, companies and their consultants will opt for an inclusive roundtable approach. Various “opinion formers” get together and chip in on why company X could be a leader in sustainability issue Y, if only it cared less about making money. Companies then choose to take on board whichever bits they like, and ignore the rest.

Thankfully, this limited approach to engaging stakeholders is increasingly a thing of the past. As companies have refined their understanding of social and environmental issues, and developed more sophisticated approaches to managing them, stakeholder engagement has got a lot more effective.

Today, the progressive executives in corporate responsibility are selective when dealing with stakeholders. They engage more often, sometimes with fewer people, on a focused set of issues.

One of the best ways companies have found to do this is through stakeholder advisory panels. These panels are formal, independent groups that provide expert advice and oversight on a company’s sustainability efforts. The constructive criticism of genuinely independent advisory panels can be an excellent way to inform corporate responsibility strategy. But be warned, making advisors too friendly can easily backfire.

Related Reads

comments powered by Disqus