Opinion:
Business and human rights: Why investors need rules not principles

Comments:

Ruggie response - Toby Webb, 16 Jun 2010

16 June 2010

Professor John Ruggie, Special Representative of the United Nations Secretary-General on business & human rights

Comments on opinion article by Rory Sullivan, “Business and human rights: Why investors need rules not principles”, in Ethical Corporation, 15 June 2010

Rory Sullivan calls on me to propose a "clear human rights performance framework for companies."

In fact, I proposed precisely such a framework to the UN Human Rights Council in 2008. It is comprehensive and dynamic, based on the state duty to protect human rights from abuse by business, the corporate responsibility to respect human rights, and the need for greater access by victims to effective remedy, both judicial and non-judicial. Its details may be found in my 2008, 2009 and 2010 reports to the Council; in voluminous consultation reports, research papers and speeches posted on the Business & Human Rights Resource Centre website; and in an online consultation that may be accessed at www.srsgconsultation.org. The Human Rights Council unanimously welcomed the framework in 2008. It is supported by business and increasingly by NGOs, and has been taken up by individual governments as well as a multitude of international organizations that are adapting their own approaches to business and human rights. Moreover, just two weeks ago there was uniform support in the Human Rights Council that the final product of my mandate should consist of Guiding Principles on the implementation of this framework. Never before has the international community reached such consensus on the business and human rights agenda.

So, while I cannot answer Rory Sullivan's question about why institutional investors are not more engaged, insofar as he has spent the past eight years in that industry perhaps he can lead the way--in Eleanor Roosevelt's inimitable language, not in cursing the darkness, but to light a candle.

Nicholas A.J. Taylor comment - Nicholas A.J. Taylor, 16 Jun 2010

Nicholas A.J. Taylor
Principal, Outcrop Research Consulting
http://outcrop.com.au
Lecturer in Political Risk, La Trobe University
Member of the United Nations Expert Group on Business and Investment in Conflict-Affected and High-Risk Areas


Following Rory's oped and John's response, I'd like to make three points.

First, whilst I agree with Rory in that civil society have a far more important role in the shaping and implementation of international norms (e.g. as occurred in the case of the landmines treaty or the formation of the International Criminal Court), I don't think the issue is one of coordination, but rather one of expertise.

Apart from those viewing human rights in amongst what the investment industry has termed ESG Risk, I see many sophisticated proponents of a more normative-based alternative from civil society. For instance, whilst some work is being done to highlight those firms involved in the production, development and transfer of cluster munitions, it fails to offer anything but useful information on the (non-existent) "armaments industry". How might an institutional investor, with interpretative fiduciary duties, ongoing responsibilities to generate competitive returns, and other competing interests manage the presence of such companies in the portfolio?

There is an answer, and that is very much individual to the investor itself, as well as the legal jurisdiction within which it falls. However, even an initial step in that direction would take something beyond the capacity of most NGOs out there today. In my experience, they are simply not equipped to apply their findings into any meaningful, practical advice for institutional investors.

Second, to add some colour to John's response, it might be useful to consider what pressures and compromises someone like John has to make in order to get his ideas through the relevant decision-makers. Invariably, civil society, industry professionals and academics are involved in their formation, but in terms of getting traction, this is very much a function of how well one navigates the politics than is commonly appreciated.

International law, even when applied to 'supreme crimes such as genocide is often contentious, and many argue that normative responses are far more useful in certain circumstances. For instance, to define war crimes as the ICC have done crystalises a view of what is permissible that falls short of what moral judgements might find tolerable.

Third, we must remember that the main driver of change toward investors considering their role in business and human rights, the UN Principles for Responsible Investment, was itself formulated by fifteen Western investors with little to no consultation with (or invoking of) any international legal or moral normative concepts as did the UN Global Compact.

Quite aside from the representation issue within the formulation of the UN and its treaties and declarations, it might best be cautious in being too prescriptive in setting standards without any consideration of difference across cultures, religions, and civilisations.

And so before reiterating my support for the ethos of Rory's remarks, I might ask a more direct question than does John: why should a Western academic - John Ruggie - be the one vested with formulating the normative framework with which the investment industry operates?

Go well,
Nicholas A.J. Taylor

Why a western academic? - Alice de Jonge, 17 Jun 2010

Nicholas Taylor asks why John Ruggie - a western academic - should be the one vested with formulating the normative framework with which the investment industry operates.

The answer is that John Ruggie has been extremely careful to ensure that he is NOT the one formulating the aforementioned framework. If there is one thing he has proven good at, it is consultation and, even more importantly, taking on board the messages received during such consultation.

If the objection is that Prof. Ruggie is Western, then the answer is to point to then many regional consultative forums he has conducted in Asia and Africa.
If the objection is that he is an academic, then the answer is his extensive engagement with professionals in law and investment and finance and business.

The actual reason why a western, white male was chosen of course relates to the fact that the UN is dominated by WWMs so of course they chose one of their own.

But that is a problem with the UN, not a problem with the work of the SSRG on business and human rights.

Let us hope that the forthcoming elections to replace two retiring judges on the International Court of Justice results in a woman being elected.

So far there has been only one woman judge out of over 100 judges who have served on the ICJ. This is an appalling statistic in an institution which should be striving for gender equality.

cheers
Alice

Response to Alice - Nicholas A.J. Taylor, 23 Jun 2010

Hello Alice, to clarify, it was Rory who called for John to devise the framework. I was merely pointing out the dangers in a single, Western academic doing so in a manner so emblematic of business and issues of CSR, ESG, ethics, human rights...

Perhaps I should have been more clear.

Go well,
Nicholas A.J. Taylor
http://najtaylor.com

Business and human rights: why investors need rules not principles - david roberts, 25 Jun 2010

To declare my interest, I have a foot in three camps on this issue. I worked for the UK government on business and human rights issues, then created a corporate responsibility policy and system for 3i plc (Europe’s biggest private equity company) and am now an independent consultant.

I sympathise with Rory’s frustration at what may seem like slow progress over the last five years. In particular, I can testify to the siphoning-off during this period (at least up until last December’s Copenhagen summit) of both resources and political attention from human rights in the direction of some of the more photogenic environmental aspects of climate change. It is easier to sentimentalise the rainforest or stranded polar bears (not that these are unimportant) than human trafficking or forced labour. Despite what Rory says, I think anti-corruption efforts have also been damaged, with an alarming ‘cognitive dissonance’ exhibited between a universal recognition that states like Afghanistan are failing because of corruption and a general lack of interest in enforcing existing anti-corruption norms.

That said, the enormity of Ruggie’s project and the progress he has made should not be underestimated. What his ingenious ‘Protect, Respect, Remedy’ framework implies is nothing short of reformulating a global human rights structure designed for a 1940s world of flags to fit the new world of brands – putting the impacts and obligations of business centre-stage for the first time alongside those of states.

For this to stick it can only be done by consensus – among social actors and internationally – which takes time. Even to reach the stage of cooking up a new UN convention takes years and many conventions, once enacted, are not adequately enforced. The good news is that even the distant prospect of new ‘soft’ law influences corporate behaviour, as intelligent companies anticipate possible jurisprudential rulings and future ‘hard’ national legislation in their risk planning. Yes, not all companies are intelligent and progress may well be glacial, but maintaining the direction of travel is important.

The key to this (as Nicholas Taylor implies) is managing the international politics – not winding up more pressure from NGOs. Nostalgia for the so-called Draft Norms of 2004 will not help. Ruggie’s mandate sprang directly out of this reckless attempt to rush straight into a set of mandatory global norms that commanded almost zero support among states and companies. They are truly dead and buried and deservedly so.

Voluntary norms are a different matter. I recognise that some see these as the work of the devil – a soft option where there ought to be hard rules. But like Ruggie I believe they are much better than nothing, which in practice is often the only alternative. The problem here is not so much a lack of codes and rules. The number of human rights conventions, business codes and multi-stakeholder initiatives far exceed those in the environmental or anti-corruption field. Human rights experts seem to revel in this complexity, but most businesspeople just want to hit this month’s sales or profit targets. It is unfair to expect them to be social science PhDs or even to have thought much about what human rights are.

My comment above is incomplete ! - david roberts, 6 Jul 2010

Please note that you've edited out the last part of my comment above. I'd be most grateful if you could re-insert it at the end, as follows:

A weakness of the global human rights dialogue is that it is too often to be incestuously conducted between a handful of big NGOs and a dozen or so ‘usual suspects’ in the corporate world – the CSR managers of the Western oil and mining majors and a few others who actually know their GRI from their PRI. Of course, the latter must set an example, but breaking out of this cosy ghetto and engaging the new, post-crash heirs of globalisation – newly internationalising SMEs, sovereign-wealth investors, state-backed companies from the big emerging economies – is going to be relatively more important to the future human rights observance.

If nothing else, I therefore hope Ruggie can simplify things for the lay audience and help make complying with fundamental human rights principles in their day-to-day operations a natural reflex for all kinds of business, everywhere.

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