Phil Bloomer on how the business and human rights movement can help make globalisation work for everyone
Working on business and human rights in 2016 has sometimes felt like being in a canoe, paddling with some success close to shore, but realising that the sea is sucking out in preparation for a tsunami of change. Brexit and the election of Donald Trump are part of the earthquake that may cause the tsunami. But the tectonic rise of chauvinist nationalism reaches far beyond, to the strong men of China, Russia, India, Turkey, Poland, Hungary, and others.
From win-win to win-lose
If the rhetoric is to be believed, then the values of human rights are under greater global threat than at any time in the last three decades. That applies particularly to markets and business. Powerful governments are leading the charge to move markets away from an international, rules-based system of "win-win" cooperation, which includes the UN Guiding Principles, and global conventions. Instead, they will make markets work more exclusively for national purposes, often linked to particular business interests, and with the rising threat of "win-lose" trade wars.
But before describing the challenge, we should celebrate the advances in 2016. Embedding human rights in the core of business practice has continued to develop this year with advances in mandatory transparency and due diligence in modern slavery; worker-driven corporate accountability; corporate due diligence with the UNGP Reporting Frameworks; initiatives on corporate legal accountability in Switzerland, France, and Canada; four new National Action Plans in the US, Italy, Switzerland, and Poland (with Germany due imminently); the signing of the International Code of Conduct for Private Security Service Providers; increasing understanding of the importance of business and human rights in the delivery of the Sustainable Development Goals; business action against discrimination, especially LGBTI; and increasing willingness by leading companies to speak up for civic freedoms and human rights defenders – the Andy Hall case being iconic in 2016. That is an impressive list of developments we can be proud of as a global community.
Yet despite these advances, the larger market forces of the global economy continue to drive widening inequality, insecurity, and environmental damage. These are factors that undermine the appeal of the current economic model. The “win-win” of trade has not been felt by middle and working classes, who have seen their incomes continue to stagnate, while the incomes of the richest have continued to balloon. The support for broad phrases like “Make America Great Again”, “Take back Control”, “Au nom du people” and “Mut zu Deutschland” comes from a nostalgia for a fairer era, and a fear of increased precariousness in work and income, alongside anxiety about rapid cultural change. None of these fears are irrational, and each speaks to personal experience for many. Nevertheless, unscrupulous politicians have played upon fears and pandered to our uglier emotions by blaming “immigrants”, “refugees”, “skivers”, “the establishment”, and trade deals with neighbours.
There are many reasons for the rise in chauvinist nationalism around the world. But the loss of any popular sense that globalised markets deliver on their promise of shared prosperity and shared security is a powerful factor. Globalisation, in the sense of the free movement of capital, goods and services, and labour, is possibly more questioned than at any time in the last three decades.
Governments and business are the architects of these markets, so it is vital they start to reshape them to deliver more for the common good if they are to be sustainable. If our societies want to cleave to principles of freedom, human dignity, and fairness, then markets will have to demonstrate they can deliver these values. This is where human rights in business has such a central role to play: helping to redistribute the benefits of globalisation. And that is what it will take if the model is not to be dismantled by myopic nationalisms.
The Business and Human Rights Resource Centre is, in a small way, a barometer of part of globalisation’s success and failure. We receive allegations of abuse from grassroots communities and organisations around the world. We provide evidence of where and which businesses are embedding human rights in their business models, and the many that do not.
In the last year we have many examples of leaders and laggards.
(Credit: Eak Moto)
For instance, most of us thought slavery had been abolished around 150 years ago. But we now find it is in almost every global supply chain in the form of trafficked people, bonded and forced labour. Modern slavery generates $150bn in illegal profits each year, and almost 21 million victims. This most egregious form of labour exploitation is an outrage that a small group of leading companies are seeking to eliminate in their operations and supply chains. In our work with Know the Chain, we ranked the policies and practice of the top 20 companies in three high-risk sectors: apparel, food and beverage, and ICT.
In each, there was a handful of companies ahead of the rest: names such as Adidas, Gap and H&M; Unilever, Coca-Cola, and Nestle; HP, Apple, and Intel. Unfortunately, they are accompanied by a long tail of laggard companies that show far less effort or concern. Our work on trafficking and forced labour in construction in the Gulf was worse: only 22 companies of the 100 we approached were concerned enough to share their policies and practice. Again, a cluster of companies, such as Laing O’Rourke, Carillion, and Vinci, demonstrate that it is both commercially viable and ethically imperative to tackle modern slavery. And our investigation into fashion brands' efforts to protect Syrian refugees in their supply chains in Turkish apparel factories highlighted that only a few of the 40 brands, such as Next, Primark, White Stuff, and H&M, had begun concerted efforts to ensure fair treatment.
Alongside this mixed record, some governments are also embedding mandatory transparency and due diligence on modern slavery. Theresa May’s Modern Slavery Act in the UK demands a statement on action against slavery by every company with a turnover greater than £36m, and presence in the UK market. Obama’s closing of loopholes in the Trade Facilitation and Enforcement Act creates mandatory due diligence for importers of goods from regions and sectors known to employ forced labour. And Obama’s Anti-trafficking Provisions of the Federal Acquisition Regulation provides public procurement incentives for companies taking action to exclude slavery from their supply chains.
These moves are extraordinarily welcome. They demonstrate to workers that governments do not want them competing in national and global markets with slaves. However, let’s not kid ourselves, the elimination of slavery is an entirely insufficient initiative to demonstrate that global markets can work for the majority. Companies and governments should be far bolder in re-shaping markets for the common good. New efforts by companies, governments, and unions to make a living wage pre-competitive (such as ACT in Cambodia) are ground-breaking, as is the hard-won support for worker-driven accountability, such as the Imoklee Workers’ Coalition’s collaboration with Walmart and McDonald’s to increase wages and stop abuse of tomato-pickers in Florida.
Starbucks paid almost no tax in the UK for 14 years (Credit: Inexplicable)
Tax avoidance fuelling the flames
Another key factor in the loss of popular support for global markets is aggressive tax avoidance. When Starbucks paid almost no UK tax in the 14 years to 2015 while boasting to investors of its "profitable" UK market, it became iconic of global corporations’ expertise at evading responsibility to the countries they were invested in. The mysterious leap in pre-tax profits from £2m in 2014 to £34.3m in 2015 resulted in £8.1m income to the UK Treasury.
Equally, for small and medium-sized companies, which cannot avoid tax, this is unfair competition that is driving them out of business.
Leading companies are demonstrating that markets have the potential to deliver fairer, more inclusive, and sustainable markets. Their efforts would be better rewarded if governments were prepared to use companies’ voluntary action to then raise the floor of corporate behaviour through regulation and incentives, as is happening with modern slavery. This would challenge the unscrupulous companies that undercut competitors with higher standards. It would also undermine the arguments for chauvinist nationalism by showing the market’s commitment to shared prosperity and security.
We now need business associations to take up this challenge and represent more of the higher common denominator of their members' approach to human rights, rather than the lowest. The International Organisation of Employers, the US Council for International Business, and Econsense in Germany have taken leadership on human rights and sustainability. But far too many associations oppose anything that might be construed as even a short-term cost to business.
The current model of globalisation is working for too few people. That’s the bad news. However, the business and human rights movement has an enormous amount to offer in terms of principles and experience in generating feasible and transformational solutions for global markets. We must make this urgent contribution count. The danger is that unless we are bolder soon in making markets fairer, we will become irrelevant: our voices can increasingly be drowned out by the voices of blame and bigotry.
Phil Bloomer is executive director of the Business and Human Rights Resource Centre.