Business and Human Rights Part IV: Foundations--Content of the Corporate Responsibility to Respect

This Blog Essay site devotes every February to a series of integrated but short essays on a single theme.  The Ruminations Series in 2009 produced a month long series of aphoristic (ἀφορισμός) essays, meant to provoke thought rather than explain it. The hope was that, built up on each other, the series would provide a matrix of thoughts that together might lead the reader in new directions. 

For 2010, this site introduces a new series--Business and Human Rights.  The series takes as its starting point the issues and questions raised by John Ruggie, the United Nations Special Representative of the Secretary-General (SRSG) on business and human rights, in a global online forum 

The U.N. "Protect, Respect, Remedy" framework is made up of three pillars: the State duty to protect against human rights abuses by third parties, including business; the corporate responsibility to respect human rights, which means to avoid infringing on the rights of others; and greater access by victims to effective remedy, judicial and non-judicial.  The forum is currently focused on the corporate responsibility to respect human rights, the second pillar of the framework. The forum is divided into sections, each of which contains multiple topics with space for discussion and comment.

New Online Forum for U.N. Business and Human Rights Mandate, United Nations Press Release, New York and Geneva, Dec. 1, 2009. Each of the Essays will consider one of the topics raised in the online consultation.  My hope is to help generate discussion and to encourage further discussion of the issues within the framework fo the consultation  framework. 

Part IV: Foundations--Content of the Corporate Responsibility to Respect.

The SRSG has described the content of the corporate responsibility to respect human rights in the following way:

Based on the analysis of some 400 public allegations against companies, the SRSG found that companies can affect the entire spectrum of internationally recognized rights, not only a limited subset.  In addition to workplace issues, companies can impact health-related rights; rights related to an adequate living standard, including access to housing, food and water; the physical security of the person; the rights of indigenous peoples; and civil rights such as free expression, privacy, peaceful assembly, and a fair trial. 
Therefore, constructing a limited list of rights for which companies bear responsibility would fail to capture all of business's potential impacts.  All rights are relevant for business, though some may be more so than others in particular circumstances.
Therefore, for the content of the corporate responsibility to respect human rights, companies should look to the Universal Declaration of Human Rights; the International Covenant on Economic, Social and Cultural Rights; the International Covenant on Civil and Political Rights; and the core conventions of the International Labour Organization.
Many of these standards have already been implemented through national law in a way that creates direct obligations for companies.  Beyond that, the principles these instruments embody are the most universally agreed upon by the international community, and are the main benchmarks by which social actors judge the human rights impacts of companies.
Companies might need to consider additional standards depending on the situation.  For example, in conflict-affected areas they should take into account international humanitarian law and policies; and in projects affecting vulnerable groups, for example indigenous peoples or children, standards specific to those communities will be relevant.

United Nations Special Representative of the Secretary-General on business &; human rights, content of the corporate responsibility to respect.

The content of the corporate responsibility to respect ought to serve as one of the most contentious and volatile issues in the construction of a theory of corporate responsibility to respect.   In a fundamental sense, the issue of the content of the responsibility to respect embodies the conceptual core of what separates the state duty to protect human rights from the corporate responsibility to respect human rights.  But that difference also highlights the difficulties  of elaborating a polycontextual governance system.

Traditionally, corporations tended to adhere to and protect the presumption of a "one corporation, one law, one governance" framework.  It was this strongly held conception that has driven much of American corporate law, from the development of the "internal affairs rule" to the jurisprudence permitting a certain margin of appreciation for state regulation of corporate takeovers.  See, e.g., CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987).  In the European Union, similar notions were at the heart of the interpretation of the E.U. Treaty's right of establishment starting with Centros Ltd v Erhvervs- og Selskabsstyrelsen, Case C-212/97.  See, Wymeersch, Eddy, Centros: A Landmark Decision in European Company Law (October 1999). Financial Law Institute Working Paper 99-15.  The need for certainly, predictability and efficiency certainly contributed to the value of this presumption for corporations.  

These presumptions were combined with the evolution of the relationship between the state--as the source of and regulator of the nexus of privileges and contracts that defined the character of the corporation (and its relationships with its stakeholders.  This combination tended to cement the idea that corporations, as creatures of the state (or of contracts derived from the legal framework within which such agreements would be given effect), were to look to the state both for its legal personality and fr the extent of its obligations  defined by (and through) law.  Beyond that there were effects but no obligation.  These effects were organized along market principles but had no regulatory (public) status for which a remedy (other than the consequences of making bad choices in markets) was not available.

Within this context, the notion of a state obligation to protect human rights--and to produce law to implement these obligations with effects on the legal obligations of corporations--is perfectly understandable.  The relationship between state, corporation and law is both conventional and  ell defined.  States are understood as the legitimate source of binding rules (law) which when lawfully enacted can impose obligations on corporations that can produce substantial consequences.  As importantly, those legal obligations were bounded both by rule of law limits and the commonly embraced notions of legal effects mediated exclusively through the domestic legal orders of states within whose territories a corporation was formed or operated.  The rules are precise and their is a well understood means for interpretation and enforcing these enactments.  Most importantly, perhaps, corporations, like natural persons, are  stakeholders in markets for law.  They may lobby, aid in the election of lawmakers and judges involved in the law making process and seek to influence the electorate about the nature and scope of applicable law.  These notions of lawfulness and of territorial effects produced a well contained, well understood and singular set of standards that could be managed by an entity operating within a variety of territories.  From the perspective of a conventionally trained American lawyer, corporations have a duty to obey the law of jurisdictions with power  to reach corporate activity.  But that duty is bounded by the lawfulness of the enactment and the means asserted for its enforcement.  

On the other hand, the second pillar responsibility to protect appears to apply  a substantially different framework to the relationship between entity and obligation.  It seeks to apply an additional layer of governance that is neither confined within the well known parameters of state-based lawfulness, nor bounded by the limits of conventionally legitimate assertions of political power.  The usual connections between state, law and entity are absent.  Applicable doctrine is  identified and approached in a different way that under national law.  The precision associated with law within domestic legal orders is absent.   And the relationship between norm maker and object of behavior is attenuated. 

Moreover, the source of governance legitimacy is different.  The responsibility to protect arises from what had been considered an imprecise set of social obligations to which would be appended a number of norms that were derived from legal instruments that had not been directly applied to corporations before as well as other instruments with no precise legal effect.  These are to form the nucleus of a social order based governance regime that will exist simultaneously with the traditional law based governance order derived from the poltiical authority of states.  Corporations understand the structure of political legitimacy.  They are less sure about the  substance and effect of social legitimacy.  

For traditionalists this may appear to be a leap too far.  Rules grounded in political legitimacy are understood as requiring obedience.  The same has not been true of social license rules.  Their force is felt, it is true, but the rules of economics and self interest have generally not been actionable before the courts of any state.  From a single governance center to multiple simultaneous centers with obligations that are derived from the application of different processes and with different effects, serving different but overlapping constituencies can be unnerving, even if none of the rules are either aberrational or require substantial changes to corporate behavior or fundamental corporate culture.  Thus, for some, the temptation, in the face of this complexity, is to retreat to the conceptual framework that reached its height immediately after the Second World War, rejecting a governance framework for a corporate responsibility to protect and resisting the imposition of what appears to be a legal framework for corporate social license (market and communal) rules.    

Yet for all that, critiques of both an independent set of obligations under the second pillar responsibility to respect and the content of that responsibility tend to degenerate into a defense of formalism and an aggressive extension of the power of states to levels asserted before the Second World War but decisively rejected since the defeat of those states that were its grandest advocates. The notion that states are the sole source of law has long been discredited--and by action or acquiescence of virtually every state on the planet. The notion of governance beyond law codes have been accepted as a vital foundation of administrative states since the early part of the 20th century.  Administrative regulation, monitoring, privatization of enforcement, devolution of regulatory function (to bodies from professional societies to banks) is widely practiced, and the use of social markers in regulation (from the family as a governance unit to religious and social communities) has become a matter of fact basis of governance even at the state level.  Polycentric governance, from its mildest forms in federalism (as a domestic governance vehicle in the U.S. or as an instrument of international governance within the EU framework) to its most complex forms in public-private soft law regimes (for example under the OECD corporate governance framework) is now established well enough that it is neither new nor frightening.  See Elinor Ostrom, Vulnerability and Polycentric Governance Systems, Newsletter of the International Human Dimensions Programme on Global Environmental Change, Nr. 3/2001. See, also, Larry Catá Backer, Governance Without Government: A Preliminary Overview, Law at the End of the Day, June 16, 2009.

But what of the content of the corporate responsibility to respect?  First, because they apply outside the state and comprise an additional and autonomous set of obligations, the issue of transposition of these norms into domestic legal orders is effectively irrelevant.  Though such transpositions ought to be encouraged, the nature of the responsibility to respect is not grounded on that action.   Second, though the content of the second pillar norms may not be binding even as instruments of international law does not reduce their value.  This is particularly the case with respect to the Universal Declaration of Human Rights, whose legitimacy and binding nature as principles of conduct are hard to refute (though not impossible).  Third, the norms serving as the content of the responsibility to respect  do not challenge the important human right of democratic legitimacy in its development and adoption.  Each of the relevant instruments represent the product of consensus or adoption by elements of the community of nations.  Lastly, each is sufficiently precise to be capable of providing guidance with respect to behavior.  This last point is important ot understand in context.  The responsibility to protect is a principles based approach; law tends toward a rule basis.  The nature of principles based governance necessarily requires a different sort of precision than what might be expected of rules based norms.   This is especially appropriate to norms designed to inform conduct in the context of a social license to operate existing alongside a corporation's obligation to comply with law.    

On last point, like all rules and principles, the content proposed for a corporate responsibility to respect human rights must necessarily be interpreted in order to be applied.   In the absence of efforts to harmonize interpretation, it is possible that what appears to be a unitary set of principles and content can effectively produce a broad and inconsistent set of norms.  One example will suffice.  The second pillar responsibility to respect human rights is grounded in part in the Universal Declaration of Human Rights.  In some states, the Universal Declaration might be interpreted only through the prism of the  Cairo Declaration on Human Rights in Islam,Aug. 5, 1990, U.N. GAOR, World Conf. on Hum. Rts., 4th Sess., Agenda Item 5, U.N. Doc.  A/CONF.157/PC/62/Add.18 (1993) [English translation].   But the principles in the Cairo Declaration may be inconsistent with notions of Human Rights under other traditions.   Under the Second Pillar principles it remains unclear  how issues of interpretation of this kind are to be rtesolved.  And underlying that issue is the greater one--the extent to which the second pillar responsibility to respect is meant to help elaborate a  universal set of norms the interpretations of which are harmonized