Taking Stock of Business and Human Rights in the United States

by Foley Hoag LLP - Corporate Social Responsibility
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iStock_000019288608XSmallThis post was originally published by the Institute for Human Rights and Business.  It is reposted here with permission.  

This week, members of the United Nations (“U.N.”) Working Group on Human Rights and Transnational Corporations are making an official visit to the United States as part of the Group’s mandate to promote the effective implementation of the U.N. Guiding Principles on Business and Human Rights. The visit, only the second by the Working Group since its establishment in 2011, provides an important opportunity to engage all stakeholders on efforts to make respect for human rights part of mainstream corporate practice in the United States.

The home of some of the world’s largest corporations, the United States is an important test case for Guiding Principles implementation. The visit by the Working Group will undoubtedly highlight the extent to which major U.S. companies are addressing challenges and opportunities in implementing the human rights due diligence process called for in the Guiding Principles. Equally important, it will also point to the critical role of the U.S. government in making this framework part of corporate America’s DNA.

The U.S. approach to integrating human rights concerns throughout business practices has been piecemeal and limited to date, due largely to the structure and culture of our political system:

  • First, there are few U.S. federal government institutions and agencies that focus specifically on human rights, which can lead to policy incoherence. The State Department’s Bureau of Democracy, Human Rights, and Labor has a specific human rights mandate, as does the relatively new Human Rights and Special Prosecutions Section at the Department of Justice, although it has thus far not focused on the nexus of business and human rights in its prosecutions. The Department of Labor covers a subset of human rights. At the same time, other government agencies don’t see human rights as part of their mandate, even though they interact far more with and have more influence on business.
  • Second, the U.S. Congress has created two permanent bodies that focus on human rights: the Senate Judiciary Subcommittee on Human Rights and the Law and the Tom Lantos Human Rights Commission in the House of Representatives, neither of which has focused attention on corporate related challenges to date.
  • Third, the United States does not have overarching human rights legislation or a national human rights institution, unlike most countries in the world.  Far more energy is poured into our impressive domestic civil rights machinery, which protect Constitutional rights that apply domestically – which can leave externally-focused human rights efforts sitting in few and underfunded homes.
  • Fourth, the Congress is less responsive to U.N. backed initiatives. Historically, it has shown limited deference to and interest in the U.N. compared to its European brethren.  For example, the U.S. Congress has refused to ratify a number of international conventions, even though the President and most other countries had signed them.  It is fair to say that most Members of Congress are unlikely to have ever heard of the Guiding Principles or the six-year global multistakeholder consultation process led by Harvard Professor John Ruggie that led to their unanimous endorsement by the U.N. Human Rights Council in 2011. Under the U.S. Constitution, only Congress can legislate, and it has passed no legislation supporting the U.N. Guiding Principles, nor has it held any hearings on them.  Notably, although some Members of Congress care passionately about human rights, they simply have no awareness of the helpful framework provided by the Guiding Principles to promote good conduct among all companies wherever they operate.

But it isn’t an altogether bleak scenario: the Obama Administration has taken a handful of steps to support the Guiding Principles. For example, the State Department’s Bureau of Democracy, Human Rights, and Labor (“DRL”) worked with the Treasury Department to develop the landmark Burma Reporting Requirements on Responsible Business, which require U.S. companies investing in Burma to report on their social and environmental due diligence. The Reporting Requirements are not final, but are likely to recommend the due diligence system in the U.N. Guiding Principles as a good practice. Likewise, DRL has held a series of roundtables with companies and civil society to increase awareness of the Guiding Principles. Separately, the Department of Labor has developed a Toolkit for Responsible Business aiming to reduce child and forced labor that refers to the Guiding Principles.

In an effort to cut off funding to armed groups in the Democratic Republic of Congo (“DRC”), Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires companies reporting to the Securities and Exchange Commission to identify whether their products are “DRC conflict free,” and describe the due diligence they conducted to arrive at their conclusions.  The Dodd-Frank Act, as it is popularly known, was passed before the Guiding Principles were finalized, and its provisions were not developed with them specifically in mind.  They do, however, use the language of due diligence to address indirect business impacts on human rights, and to that extent, are consistent with the Guiding Principles.

In sum, U.S. progress to date has been limited and issue-specific.  There is no indication of sufficient momentum to prompt most U.S. companies to develop human rights policies and procedures – except for the largest, brand-facing companies, many of which have these in place anyway.

But the United States cannot afford to ignore the issue. It needs to adopt a more coherent approach so that the goal of ensuring corporate respect for human rights in a more targeted and efficient manner can be  achieved. For example, the conflict minerals provision, while well-intended, is extremely expensive to implement, and it is unclear whether it will attain its fairly narrow goals. Attacking each human rights issue in such a ponderous way isn’t feasible. We need measures that lead companies to adopt systems that take human rights, writ more broadly, into account throughout their decision-making, from procurement to product design to investment choices.

The good news?  The United States can learn from the experiences of other nations. For example, human rights could be put on the radar for thousands of U.S.-based companies simply by requiring them to report on whether they have in place human rights policies and procedures, and what they include, as a number of other countries have done. Such a step would help quickly start to shift U.S. business culture, which for the most part remains convinced that human rights are of no direct relevance to companies or their bottom lines.

Moreover, the United States can learn from its own experience. The United States has helped companies incorporate social and environmental issues into their business fundamentals before. A report from the International Corporate Accountability Roundtable notes that the U.S. government has improved corporate environmental and labor practices through administrative law requirements, incentive schemes, and disclosure requirements.  For example, federal procurement regulations incentivize companies to improve their labor practices by requiring companies seeking government contracts to certify that their products were not made with forced or child labor. These regulations could be expanded to include human rights more broadly.

Moreover, the United States government has played an important role in developing industry-specific guidelines on human rights through its role in founding the Fair Labor Association and the Voluntary Principles on Security and Human Rights.  Such efforts should continue.

The human rights bodies in the Congress should hold hearings that regularly touch on the U.N. Guiding Principles and the nexus of business and human rights. The State Department should continue to leverage opportunities to heighten awareness of the agenda in other government agencies.

Of course, the U.S. government will not be the only entity seeking to support the Guiding Principles. Perhaps the most likely vehicle to “encourage” companies to conduct human rights due diligence will arise from the Supreme Court’s recent decision in Kiobel v. Shell.  This narrowing of the Alien Tort Statute’s applicability is almost sure to prompt U.S. NGOs to advocate for a law providing a cause of action against companies complicit in human rights abuses abroad.

The U.N. Working Group’s visit provides an opportunity to reflect on our progress. And our path has just begun.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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