John G Ruggie, who from 2005-2011 served as Special Representative of the Secretary-General for
Business and Human Rights, in which capacity he produced the U.N. Guiding Principles, delivered his remarks at the opening of the 5th U.N. Forum on Business and Human Rights, November 14, 2016. The remarks are worthy of careful study. It suggests, and quite presciently, the challenges and opportunities for the project of embedding business and human rights norms within the structures and regulatory structures of economic activity.
This post includes the text of those remarks and my brief thoughts on their implications for both the UNGP and sustainability.
Making Globalization Work for all: Achieving the Sustainable Development Goals Through Business Respect for Human Rights:
Respect for the dignity of every person is at the very core of the people part of sustainable development — and is critical for a socially sustainable globalization.
November 2016 | John G. Ruggie
The following is the full text of the keynote address delivered by Shift Chair and author of the Guiding Principles John Ruggie on November 14, 2016 to the UN Forum on Business and Human Rights in Geneva, Switzerland.
Also see: Shift position paper on putting the Guiding Principles at the heart of the "people part" of the Sustainable Development Goals | Shift President Caroline Rees' Viewpoint on this topic
I suspect that many of you here today were surprised, as I was, by the results of the US presidential election. I also suspect that many of you were surprised, as I was, by the results of the Brexit referendum. Perhaps we should not have been.
As far back as January 1999 former UN Secretary-General Kofi Annan warned, in a World Economic Forum speech, that unless globalization has strong social pillars it will be fragile and vulnerable —“vulnerable to backlash from all the ‘isms’ of our post-cold war world: protectionism; populism; nationalism; ethnic chauvinism; fanaticism; and terrorism.” He specifically appealed to the business community to step up and play its role in achieving a socially sustainable globalization.
Clearly, we must redouble our efforts. Equally important, we have to maximize the effectiveness of our efforts to make globalization work for all because, as Annan has also said, if it doesn’t, “in the end it will work for none.”
We neither need, nor do we want, additional evidence of his prophetic insight.
In keeping with the urgency of this challenge, my focus today is on the relationship between the Sustainable Development Goals and the UN Guiding Principles on Business and Human Rights. And my message is that for business to fully realize its contribution to sustainable development, it must put efforts to advance respect for human rights at the heart of the people part of sustainable development.
My message is that for business to fully realize its contribution to sustainable development, it must put efforts to advance respect for human rights at the heart of the people part of sustainable development.
The Guiding Principles set out the global standard of what businesses must do to embed respect for human rights throughout their operations and business relationships. The SDGs, in turn, are a vision statement and action plan for achieving social and environmental sustainability on our planet. Logically and in practice the two should be inextricably linked, with the Guiding Principles setting the tone for the social components of the SDGs to which business is expected to contribute.
Given the sheer ambition of the SDGs and the pressing need for all sectors of society to contribute to their realization, I urge businesses everywhere to help meet our common existential challenge.
At the same time, I want to flag an emerging risk I see in some of the SDG narratives within the business community that may weaken the link between the Guiding Principles and the SDGs, or possibly sever it altogether. This can occur when businesses are encouraged to believe that advancing respect for human rights involves merely doing no harm, and that to do positive good they need to go beyond respecting rights. This view misses one of the most important features of respecting human rights. When companies drive respect for human rights across their own operations and their global value chains, they generate an unprecedented large-scale positive impact on the lives of people who may be most in need of the benefits of sustainable development.
Is there a risk of weakening the link between the Guiding Principles and SDGs? And if there is, how should it be dealt with? Let me begin by summarizing some of the emerging narratives that are the source of my concern.
First, the General Assembly resolution adopting the SDGs in its operative part makes only a passing reference to relevant standards and agreements that address corporate accountability for human rights harm, including the Guiding Principles. This may be misread by some to imply that these standards matter less than getting business to engage in the SDGs on any terms. Of course that was not the intent, as the Resolution’s section on implementation makes abundantly clear. But it is an impression that we are starting to see gaining ground.
Second, quite a number of business strategies for contributing to the SDGs draw on the Creating Shared Value paradigm, made famous by my Harvard colleague Professor Michael Porter. In a Harvard Business Review article Porter defines creating shared value as “the policies and operational practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates.” It stands to reason that any such win-win situation should be prized and seized upon, and the more of them that can be created, the better.
However, Porter clearly stipulates that "creating shared value presumes compliance with the law and ethical standards, as well as mitigating any harm caused by the business." But isn't the business and human rights challenge precisely about the fact that this presumption fails to hold in far too many circumstances? Why else would we have needed the Guiding Principles? Why else is there a move in several countries, including France and Switzerland, to make human rights due diligence mandatory? Why else are some governments and many advocacy groups pushing for the adoption of an international business and human rights treaty? In short, business strategies drawing on this paradigm need to take into account that its underlying presumption is problematic in practice.
Getting respect for human rights right is itself radically transformative and disruptive.
My third concern stems from findings in early consultancy reports. Most companies surveyed indicate that they are not planning to assess their possible contributions against all 17 SDGs but, in the words of one report, that they will “cherry-pick.” On what basis will they pick? The answer is: materiality, or put simply, business risks and opportunities. But business and human rights in the first instance is not about what is material to the firm: it is about the salient risks, or most severe potential harms, that business activities and relationships pose to people. Salient risks may turn out to be material to the business if they are left unattended. But a traditional materiality test will often miss them. Nor can business initiatives to promote social goods substitute for failing to address salient risks. This is a fundamental difference between human rights and climate change: in human rights there is no equivalent to buying carbon offsets.
A fourth and related reason for my concern stems from the way in which strategies for contributing to the SDGs are being framed by some who are advising business. The claim is made that these strategies are so novel that they will generate “transformative” and even “disruptive” business models. Indeed, one report suggests that the SDGs invite a shift “from responsibility to opportunity.” It posits what it calls a “maturity continuum,” with responsibility at one end, and transformative opportunity at the other. Now, who would not prefer to be considered “mature” and leave behind the irksome task of being responsible for one’s own negative externalities in the quest for new business opportunities? Of course, no such maturity continuum exists. In fact, getting respect for human rights right is itself radically transformative and disruptive.
My fifth and perhaps most critical concern is the assumption embedded in this whole discourse that respecting human rights is merely about stopping a negative practice, lacking the more inspirational virtue of making a positive contribution. This rests on a false dichotomy, between compliance-based views of ‘respect’ on the one hand, and voluntary efforts to ‘promote’ human rights on the other. Ironically, this is the same false dichotomy on which the old CSR model was based—a dichotomy the Guiding Principles left behind long ago.
Consider this example. Companies have learned that non-discrimination in their personnel practices involves much more than adopting a few rules to regulate unacceptable behavior. It involves instituting a positive culture of inclusion and diversity, of empowering people whose potential previously might have been discounted, of providing equal pay for equal work and equal opportunity for advancement. It requires extensive training and other support systems that did not exist before. These are not negative acts. They are powerfully affirmative, transformative and even disruptive of traditional practices.
One of the Guiding Principles’ most transformative contributions is the requirement that companies’ responsibility to respect human rights is not limited to their own operations, but extends to human rights impacts connected to their products and services throughout their network of suppliers and other business relationships. The GPs recognize that companies do not control every dimension of these relationships, so they introduce the concept of leverage. Where people’s human rights are adversely affected by activities in a company’s value chain, the company’s responsibility is to use its leverage to try to improve those people’s situation. Where the leverage is insufficient the company is expected to try and increase it, perhaps in collaboration with other companies or different stakeholders. I venture to predict that this is where business can make its single biggest contribution to the people part of the sustainable development agenda.
Why? Because the labor of roughly one in six workers in the world today is part of multinational value chains. This doesn’t count those in “informal” work, which may include in-home subcontractors. It does not count non-standard work, such as temporary work or forced labor. Also reflect on the fact that many of the workers in multinational value chains have families and live in communities, which suffer the ill effects or reap the benefits from how those workers are treated. The numbers add up very quickly to reach perhaps two billion people or more — out of the total world population of 7.4 billion. Now that is scale.
A concerted effort by business to respect the human rights of workers in their global value chains would have two transformative effects. First, by helping to ensure that people are paid a living wage, that men and women workers are treated with equal dignity and provided equal opportunity, that their rights to organize and bargain collectively are respected, their health and safety on the job and in their communities protected, and so on, business would uplift those people’s situation significantly. It would enable them to lead decent lives and contribute to their own wellbeing as well as their country’s development — while also increasing the global consumer base of business.
I hasten to add that this focus involves not only SDG 8 (decent work and economic growth). It would also have positive effects on SDG 1 (poverty), 2 (hunger), 3 (health), 4 (education), 5 (gender equality), 6 (water and sanitation), 10 (reduced inequalities), 11 (sustainable communities), and in some respects even SDGs 14 and 15 (life below water and on land). I strongly suspect that the scope and scale of the positive impacts this would unleash significantly outstrip many of the initiatives that currently dominate business attention and resources.
Focusing laser-like on respect for human rights in global value chains would also help manage the growing threat that globalization itself faces from populist forces in industrialized countries.
A second benefit of focusing laser-like on respect for human rights in global value chains would be to help manage the growing threat that globalization itself faces from populist forces in industrialized countries. Whether on the political left or right, these populist forces involve people who have been left behind by the liberalization and technological innovations that have made it possible to slice and dice production processes into the most minute of parts, each located where labor costs are cheapest or the regulatory context is the most malleable. Surely a more level playing field is a better answer to this challenge than more Brexits and other such electoral surprises.
So to conclude, of course businesses should look for every opportunity to create shared value and find other ways to contribute to the SDGs. So much hangs in the balance. My concern is that the greatest potential contribution business can make risks getting discounted in the minds of too many, as they slide along an imaginary continuum from responsibility to opportunity.
In contrast, my proposition to business -- and to you all -- is that far from being at the “immature” end of a transformative trajectory of business models, respect for human rights, respect for the dignity of every person, is at the very core of the people part of sustainable development. And as if that alone were not enough, it is also the key to ensuring a socially sustainable globalization, from which business stands to be a major beneficiary.
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John G. Ruggie is the Berthold Beitz Professor in Human Rights and International Affairs at the Harvard Kennedy School of Government, Affiliated Professor in International Legal Studies at Harvard Law School, and a Fellow of the American Academy of Arts & Sciences. He is also the Chair of Shift. From 1997-2001 he served as UN Assistant Secretary-General for Strategic Planning, and from 2005-2011 as Special Representative of the Secretary-General for Business and Human Rights, in which capacity he produced the UN Guiding Principles on Business and Human Rights. His book reflecting on that experience, Just Business: Multinational Corporations and Human Rights (W.W. Norton), has been translated into Chinese, Japanese, Korean, Portuguese and Spanish.
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Thoughts on John Ruggie's Remarks
I suspect that many awaiting Professor Ruggie’s speech, delivered
to the opening session of the 5th U.N. Forum on Business and Human
Rights, expected a somewhat clever reworking of past themes—the coherent and integrity
of the Guiding Principles, the focus of the objectives of the Working Group
and, most anticipated of all, another broadside at the efforts to elaborate a
treaty on business and human rights.
That they were disappointed speaks much to the vitality to the U.H.
Guiding Principles half a decade after their enforcement. More importantly, Professor Ruggie’s forward looking
speech, served as a reminder both of the anachronism that is at the heart of
the treaty elaboration process and pointed to the substantial work still
necessary to fully integrate the three pillars of the UNGP into patterns, of
global economic activity, into emerging systems that robustly connect normative
obligation and remedial mechanisms, and finally that tie the UNGP vigorously into
not merely the specific architectures of human rights, but more broadly into
the ecologies of sustainability and development that have emerged, within
globalization—as critical human rights tinged fields. In this his remarks
echoed those of Mr.
Pavel Sulyandziga, a member of the Working
Group whose remarks paralleled those of Professor Ruggie in important
respect.
The following are my reflections on Professor Ruggie’s
remarks and their consequences for the transnational project of multi-level
governance responses to the duty of states to protect human rights, the responsible
of enterprises to respect them, and of both states and enterprises to ensure remedial
mechanism.
1. The Threats to Globalization. Professor
Ruggie is right to worry about the threats to globalization—in the West. And he is right to embed that warning in the
criticism of the arrogance of Western leadership organs that have
failed—either at the state or enterprise level (and to some extent at the civil
society level as well)—not merely to embed what he called “strong social
pillars” (quoting Kofi Annan) into globalization, but also through the
cultivation of nationalism, ethnic chauvinism, etc. the object of which is to
attack the very concept of global economic frameworks. He points to the recent
American election—he could as well have pointed to developments all over Europe
in the face of the uneven distribution of wealth creation after the Great
Recession of 2008 and the fear of the violence initiate migrations from out of
Africa and the Middle East. Yet it is unfair to speak of these entirely as
factors that had magically appeared from out of some alternate universe. These reactions, that fear, and those responses,
all threatening the economic and social orders so painfully constructed since
1945, are
to some extent the product of the very social, economic, intellectual, and
political classes against which all this rage and fear is now deployed. That
deadly cocktail of quite consciously “talking
at” those social and economic classes who are the most vulnerable to the
changes brought by globalization and the most likely to feel left out—who feel
they are more the part of pockets of depression that exist disconnected form the
transnational and cosmopolitan prosperity of globalization—the more likely that
this pattern of rupture within states will grow. What we see rising now are two Wests-one a
coherent international globalization class and large, and the other disparate
pockets of disconnected national groups. This has been a long time in the
making.
2. The Opportunities for China. But the
threats to globalization so visible now only tell half the story. As the West fractures, the Chinese seek to
build—from the bottom up—an alternative vision of globalization. The
one belt one road alternative to the Western project of globalization offers
something the west has increasingly abandoned—facts on the ground form out of
which conceptual frameworks can be developed.
The West has tended to offer much in the way of conceptual frameworks
and little in the way of “facts on the ground.” And it appears that even as
nationalism etc. hobbles Western globalization it only opens doors for its
Chinese variant—from Ashdod
to Shanghai. If the Chinese are able to avoid both the arrogance of top down
social engineering, and the resentment of large pockets of people who feel “left behind” by the local changes of global
macro-economics, then both the shape of economic globalization, and the
role of human rights within the wider context of sustainability and corporate
social responsibility will take on a wholly distinct complexion, one
with its own set of challenges. That neither the sustainability nor human
rights establishments in the West have sought to engage with this, focusing almost
entirely on either the false hope alternative of the human rights treaty or the
intra-elite battles among its left and right wings encourages those elements to
continue to go their own way until either they might themselves set the tone
for conceptualization of the fundamentals of economic globalization, including
its application of principles of human rights to business activity or they converge
with Western models. But it also suggests that the purely Western fears and
approaches to the business and human rights problems will ill serve its
objectives to develop an inclusive, engaged and relevant structure for the
development of effective social elements in globalization.
3. Socially Sustainable Globalization and the Compartmentalization
of Economic Development. Professor Ruggie’s redirection of the UNGP from an
engagement with itself, to its embedding within the larger project of sustainability
and the Sustainable
Development Goals of the United Nations, is both smart and often overlooked
by other major actors. His fundamental
message: “for business to fully realize its contribution to sustainable development,
it must put efforts to advance respect for human rights at the heart of the
people part of sustainable development” serves as a powerful warning both about
the fundamental connection between the human rights and business discourse and
the dangers of compartmentalizing the structures of economic regulation. I start with the second—the practice of
compartmentalizing and segregating aspects of a unified problem has dogged the
development of both the sustainability and of the human rights movements with
respect to the regulatory
governance of economic activity (note I did not say of business—since it is
business activity rather than business entities that both sustainability and
human rights ought to be directed (here)). It is
somewhat ironic—indeed perverse—that even as the 5th U.N. Forum for
Business and Human Rights was being held in Geneva, COP22 Sustainable Innovation Forum 2016
(the annual Conference of the
Parties of the UN Framework on Climate Change)) was being held in Marrakesh,
Morocco. Here are two sides of the same
sustainability-development-human rights coin that Professor Ruggie so well
reminds us, and yet neither speaks to the other about issues of mutual
concern. And lurking in its own corner,
the Inter Governmental Working Group foe a Business and Human Rights Treaty
occupies its own lonely space. That compartmentalization
may well serve those who mean to augment their personal or institutional power
by gate-keeping and the creation of jurisdictionally distinct empires. But it does not serve the project of
sustainability, of human rights or of development at all. But Professor Ruggie
is right to remind us that the UNGP remind us that it is the responsibility of business
to embed human rights throughout their operations,
and that states have a duty to protect human rights within their jurisdiction. These core objectives cannot be adequately undertaken
when human rights is conceptualized as something distinct from sustainability
or development. And that brings us back
to the first point, it should now be beyond dispute that sustainability
(environmental, social, cultural, etc.) and human rights are inextricably
linked and that each are merely aspects of the other. “Without a healthy environment, we are unable
to fulfil our aspirations or even live at a level commensurate with minimum
standards of human dignity. At the same
time, protecting human rights helps to protect the environment. When people are able to learn about, and
participate in, the decisions that affect them, they can help to ensure that
those decisions respect their need for a sustainable environment” ( here).
4. The Materiality Problem. Professor Ruggie
is right to highlight the materiality problem (“Most companies surveyed
indicate that they are not planning to assess their possible contributions
against all 17 SDGs but, in the words of one report, that they will
“cherry-pick.” On what basis will they pick? The answer is: materiality, or put
simply, business risks and opportunities.”(Ruggie Remarks)). He draws a
distinction, now increasingly fashionable among non governmental actors, between materiality and salience. Professor
Ruggie suggests that salience is a broader concept basis on which to build
business and human rights sensitive business
decision making.
But
business and human rights in the first instance is not about what is material
to the firm: it is about the salient risks, or most severe potential harms,
that business activities and relationships pose to people. Salient risks may
turn out to be material to the business if they are left unattended. But a
traditional materiality test will often miss them. Nor can business initiatives
to promote social goods substitute for failing to address salient risks. This
is a fundamental difference between human rights and climate change: in human
rights there is no equivalent to buying carbon offsets (Ruggie Remarks).
Yet, it is not clear that this distinction between materiality and salience, and thus between the project of business and human rights and the project of economic sustainability, ought to be distinguishable in quite this way. True enough, the difference between salience and materiality is focus—materiality relates to effects on the enterprise; salience relates to the prominence of effects on those who bear them. Materiality goes to valuation to the firm; salience goes to ranking effects with relation to its bearer. The two intersect only where salience of effect (to actors) becomes material (to the enterprise). Yet it is not clear that the carbon offsets example of difference between salience and materiality as a market of the fundamental differences in approaches between human rights and environmental sustainability is itself sustainable. Carbon offsets work precisely because they incorporate a premise of convergence of salience and materiality within offsets that in the aggregate produce no (agreed upon) detriment that is otherwise remediable because (in the aggregate) there is neither salience nor materiality. It remains substantially unexplored whether the same underlying concepts are also central to the human rights remediation at the heart of the UNGP. That conflation may be bound up either in the forms of remediation (where enterprise risk/materiality and societal/salience converge) or in the interplay between environmental harm and its human rights effects.
5. Of Maturity Continuums.
Professor Ruggie expresses skepticism for maturity continuums in the context of
getting human rights right—which Professor Ruggie posits is itself radically
transformative. Agreed. However, it should be noted that the transformation is
not radical in the sense of embracing something new and transformative (in its
clinical sense). Rather Professor Ruggie
himself points to the source of disruptive transformation—the process of
embedding externalities back into the enterprises (and the processes) within
which they are generated. Iona sense there is nothing radical about
this. It merely shifts a subsidy from
the state (and the people who have borne its effects—again the salience issue
is intertwined here) back to the consuming enterprise (“Now, who would not
prefer to be considered “mature” and leave behind the irksome task of being
responsible for one’s own negative externalities in the quest for new business
opportunities?” (Ruggie Remarks)). The history of Western economic development
itself might be understood as a long process of embedding externalities within
their proper transactional processes and assigning the burden of their effects
to those use has otherwise been subsidized. The “radical” reordering of human
rights and sustainability salience effects merely continues this process.
6. Transformative Cultures, Enterprises and the
State. The consideration of salience and externalities in the context of
sustainability and human rights moves Professor Ruggie to the central element of
his remarks: the fundamental objective of the UNGP in fostering positive as
well as negative responsibilities. It is not for nothing that the Second Pillar
responsibility to respect is deeply entrenched within the societal sphere. Inherent in that entrenching is a methodology
of implementation—through the societal transformation of enterprises to embrace
appropriate cultures of behaviors within their operation. The state commands—or
manages; societal regulatory communities discipline and socialize. The state
focuses on its institutional creatures—the enterprise and the institution;
societal regulatory communities can focus on the activities themselves and then
reach all actors involved. That last is
the essence of the beginnings of the case for the regulation of supply chains
rather than of the enterprises that are part of them. These are ideas to which Professor Ruggie
points. It may be time to make good on
them—in the UNGP, within the OECD processes, and in multilateral actions among
states. As Professor Ruggie suggests, the essence of the UNGP project—especially
in its 2nd Pillar—is not merely to reduce the business risks of economic
transactions (of materiality and risk management) but also to ensure that the
full social and environmental costs of economic transactions are appropriately
borne. That, perhaps, is as way of approaching the notions of shared value from
shared responsibility at the heart of Professor Ruggie’s remarks. That,
perhaps, is the new frontier—to begin to embed
the UNGP within the frameworks of socially sustainable globalization, and with
it embed the state, the enterprise and
civil society as well within a decompatmentalized approach to the appropriate
valuation of effect, the assignment of its costs and the allocation of the
burdens of mitigation and remediation at the center of systems of mores of
economic systems whatever the political ideologies within which they are realized.
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