Thursday, December 22, 2016

On the U.S. National Action Plan on Responsible Business Conduct--Business and Human Rights: Public Leadership and Private Governance

As the sun sets on eight years of an Obama administration,  the United States of America, long quite remote as an institutional body from the global projects for the management of business activities with human rights effects, has now produced a National Action Plan on Responsible Business Conduct (US-NAP).
National Action Plans (NAPs) are policy documents in which a State articulates priorities and actions that it will adopt to support the implementation of international, regional, or national obligations and commitments with regard to a given policy area or topic. Reliance on NAPs as a policy approach and governance tool is not limited to the area of business and human rights. On the contrary, calls for NAPs based on the UNGPs follow from their increasing use in a range of other policy areas. (Danish Institute for Human Rights and International Corporate Accountability Roundtable Toolkit for the Development, Implementation and Review of State Commitments to Business and Human Rights Frameworks (June 2014), pp.8, ¶ 2.1)
This US-NAP is meant to add to the emerging body of National Action Plans the production of which is being overseen under the guidance of the U.N. Working Group on Business and Human Rights as a means of elaborating state measures to advance the U.N. Guiding Principles for Business and Human Rights (UNGPs).
To help, the Working Group has produced "guidance" on the development of a national action plan. The Guidance was launched on 1 December 2014 at the Third Annual United Nations Forum on Business and Human Rights, held in Geneva 1-3 December 2014. The Guidance was produced following an open, global, year-long consultative process that involved States, companies, civil society, NHRIs and academia. As part of the Working Group's roadmap to produce the Guidance, it published its 2014 report to the 69th session of the UN General Assembly on national action plans. It also consulted with governments on this topic via a 2014 State survey, and it launched an online consultation (Word | PDF) on substantive elements to be included in a national action plan. (UN Working Group, State National Action Plans)
In 2015, a Report of the International Corporate Accountability Roundtable and the European Coalition for Corporate Justice (Assessments of Existing National Action Plans  (NAPS) on Business and Human Rights) assessed then existing NAPs in light of the Toolkit for the Development, Implementation and Review of State Commitments to Business and Human Rights Frameworks (June 2014). The Assessments  Report noted that the most positive trend to date in NAP drafting was the statement of national commitment to the UNGPs; the greatest weaknesses were the unwillingness of states to explore regulatory options, the lack of robust tying of state action to remedial measures, and the focus on past action rather than focusing on future action points (Ibid., pp. 4-5).

It is loosely against these objectives and methodologies, especially the Toolkit's National Baseline Assessment (NBA)  (Toolkit ¶ 4.2 et seq. and Annex 4) that one ought to assess the US NAP.  That assessment follows. The U.S.-NAP exhibits all of the weaknesses and missed opportunities that has marked the NAP process for many developed states: it focuses on outward conduct and pays little attention to the human rights effects of economic activity within the United States; it is grounded in the prerogatives of executive command; it provides little assessment of the legal and remedial framework of the United States and its relationship to managing business conduct; and most regrettably, so focused on the present it fails to present a coherent vision, grounded in law and policy,  for moving forward. And yet there is a basis for moving forward revealed in the U.S.-NAP, one that might appeal to the incoming American administration--by focusing on disclosure, transparency and information sharing. The U.S.-NAP  is at its most powerful and potentially useful not as a direct manifestation of state power through law, but by embracing methods of regulatory governance that enhance the use of market levers to manage preferred behaviors.

The U.S.-NAP appears to conform to the standard approach of pre-2016 NAPs as reviewed by ICAR-ECCJ.  The Press Release suggests the Herculean effort necessary to produce this U.S.-NAP, one that took more than two years form its formal announcement.  That is curious in some respects.  And more curious that it has seen the light of day in the weeks immediately before it may well become irrelevant as a new Presidential Administration may well change course.  One, then, might consider this U.S:-NAP as a political document with as much importance to the internal bickering among the elites within the United States as they seek to capture mass imagination and manage mass consensus as it might have on the management of the human rights effects of business activity.ñ  More interesting, however, is the focus, not in human rights in business but first on on "Responsible Business Conduct" (RBC), and second on RBC in the outbound activities of U.S. business.   


"Because one of the things that we have come to understand is that in order to create successful entrepreneurs, the government also has a role in creating the transparency, and the rule of law, and the ease of doing business, and the anti-corruption agenda that creates a platform for people to succeed”
--President Obama at the Global Entrepreneurship Summit
July 25, 2015, Nairobi, Kenya
In September 2014 President Obama announced that the United States would create a National Action Plan in order to promote and incentivize responsible business conduct. Following a thorough two year process that included consultations with stakeholders from around the country, as well as significant coordination among over a dozen federal agencies, the United States has published its first National Action Plan on Responsible Business Conduct (RBC).

Over the past eight years, the administration has taken a number of steps to promote fair play, the rule of law, and high standards for global commerce. Moreover, many U.S. companies are recognized as global leaders in bringing shared value and acting responsibility in the communities where they do business.

This National Action Plan provides a framework by which the government will continue and, indeed, increase our commitment to coordinate on and clearly articulate policies that seek to further promote responsible business conduct, and work with partners in the private sector, as well as other stakeholders, to continuously build on that progress. 

The Press Release sets the framework for the US-NAP. Let's consider this in light of the NBA ¶ 5.4(4) recommendation that the "NBA should clearly identify, for each UNGP under Pillar I and all UNGPs relating to State remedy under Pillar III, national measures that support compliance with its requirements, as well as any gaps where national measures are lacking or inadequate." (Toolkit, supra, pp. 38). The Guide identifies a set of criteria for NAPs in six areas:
1. Governance and resources;
2. Stakeholder participation;
3. National Baseline Assessment (NBA);
4. Scope, content, and priorities;
5. Transparency; and
6. Accountability and follow-up. (Toolkit, supra, ¶6, pp. 40)
I reading of the US-NAP suggests both a broadening of the mandate to include what is described as RBC and a limitation of that broader mandate to "to promote responsible business conduct (RBC) by U.S. companies operating abroad"  (U.S.-NAP, pp. 4) .
RBC principles are encompassed in both the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. As laid out in these two international frameworks, a key role of governments is to provide guidance and encouragement to the private sector through a combination of laws, regulations, policies, programs, and initiatives to promote companies’ respect for human rights and labor rights and operating responsibly. (U.S.-NAP, pp. 5)
The RBC, then, are broaden than human rights, though these are encompassed within them.  On a quite positive note, the U.S.-NAP identifies the scope of its responsibilities as including:
human rights, the rights of indigenous peoples, labor rights, land tenure and property rights, anti-corruption, and transparency. The U.S. government recognizes that environmental issues are also integral to RBC and are affected by, and have an impact on, many of these areas. (U.S.-NAP, pp. 5)
Yet these broad premises are narrowly applied. The U.S.-NAP, then, is focused on external operations of U.S. enterprises; the operations of U.S. enterprises domestically remains effectively insulated form international law and norms.  This is a differentiation that is common both to Western states in the construction of the NAPs as well as a fundamental distinction within Marxist Leninist states that view their obligations as effectively differentiated depending on whether compliance is required with international standards (abroad mostly) and the more delicate embedding of such standards within domestic legal orders.  Moreover, the U.S:-NAP is meant to highlight the way in which the extraterritorial application of its law and governance structures might serve to internationalize conduct norms abroad. That internationalization can be polycentric ("in cooperation with business, labor, civil society, foreign governments, and other stakeholders" Ibid). The U.S.-NAP "highlights new initiatives that build on this strong foundation," and seeks to strengthen efforts "to promote high standards." (Ibid). 

Still, the U.S.-NAP does acknowledge this distinction between international and domestic application of the RBC.  The U.S.-NAP declares that
the U.S. government supports RBC principles domestically and has taken meaningful steps to uphold them. For example, the Obama Administration continues to take important steps to strengthen procurement rules to ensure federal purchasing practices reflect U.S. values. This Administration has also articulated a set of “good jobs” principles for businesses operating in the United States. These principles highlight the importance of worker voice, workplace safety, and the fundamental promise of a decent living from a fair day’s work. (U.S.-NAP, pp. 6)
With respect to both, then, the U.S.-NAP provides descriptive information about the inititaitives and commitments of the U.S. government five categories of action:
(1) Leading by Example
(2) Collaborating with Stakeholders
(3) Facilitating RBC by Companies
(4) Recognizing Positive Performance
(5) Providing Access to Remedy (U.S.-NAP, pp. 6)

(1) Leading by Example (U.S.-NAP, pp. 7-12)

The U.S.-NAP is focused on U.S: leadership within international forums in the construction of internalized standards abroad. 
The U.S. government remains committed to working with governments to raise global standards for RBC, including on labor rights, human rights, and anti-corruption, and to lead a race to the top. Promoting RBC benefits companies from all countries that fight corruption, combat human trafficking, promote labor and human rights, and adhere to high standards.Through leadership on these issues in various international organizations, including the UN and OECD, the U.S. government will continue to advocate for effective implementation of relevant international provisions in order to advance RBC. (Ibid., pp. 7).
But it is quite short on any inventory of its own domestic legal structures around which it implements its duty to protect human rights and the the components of RBC.  It's internal practices are centered on its procurement policies--policies that may well change with a new administration after January 2017. In this, the U.AS.-NAP is in good company.  But that does not suggest that improvement would not be useful. The U.S.-NAP lists a large number of initiatives and efforts that span a broad cross section of economic activity.  That that description is sub substantially fragile.  Many of the initiatives depend on the will of the Executive branch and the continued viability of Executive Orders.  It is not clear how this will proceed after January 2017.  On the other hand, some of these are based on compliance efforts with legislation (e.g., “Strengthening Protections Against Trafficking in Persons in Federal and Corporate Supply Chains”). It is likely that much in this section will have to be revisited then, at least with respect t its domestic application. With respect to its extraterritorial application, the continued viability of these efforts may depend on the usefulness of these initiatives to the bilateral negotiations the president Elect has suggested he will undertake. 

(2) Collaborating with Stakeholders (U.S.-NAP, pp. 13-16).

The U.S.-NAP focuses here on its funding and participation in a number of multi-stakeholder initiatives (MSIs).  
Agencies within the U.S. government have been catalysts for and participants in several MSIs, including providing start-up funding for the formation of the Fair Labor Association, which comprises companies across several sectors as well as academic, civil society, and other participants; facilitating the launch of, and acting as a leading member of, the Voluntary Principles on Security and Human Rights (VP), which guide oil, gas, and mining companies on providing security for their operations in a manner that respects human rights; and helping to launch and actively participating in the development of the ICOC and continued involvement as a member of the board of the ICOC Association.
Through the Extractive Industries Transparency Initiative (EITI), the United States is committed to promoting transparency in the extractives sector by playing an active role on the International EITI Board and Board committees. The U.S. commitment to EITI—both to promote it abroad and to implement it at home —sends a strong signal to our international partners that transparency is critical for countries at all levels of development, and in all regions. (U.S.-NAP, pp. 13.
These MSI are excellent examples of public-private partnerships.  At the same time they suggest the way in which other states might begin to view the non-governmental a sector as a mere instrumentality of the states funding those efforts.  That has caused some reaction, especially the increasing regulation of foreign NGOs in many states--especially China, Russia and other states (discussed here, here and here).  This is a matter that has not been addressed--either in the U.S.-NAP or more importantly by international organizations with any level of specificity. One can see by the listing of U.S. funded and coordinated events that it may be difficult to distinguish between the advancement of an international normative agenda by state action on the one hand and the advancement of state interests projected abroad through an internationalization of national projects (for discussion of the problem in the context of sovereign investing abroad, see, e.g., here). 

At the same time, the description of U.S: efforts also suggests the importance of both private governance and international frameworks for the development of governance structures that serve as a substitute for legal systems in those areas of business operation that fall between states.  Thus, even though the focus of the NAP ought t be on the First Pillar state duty to protect and the Thrd Pillar remedial mechanisms, the U.S.-NAP also evidences the critical function of the Second Pillar corporate responsibility to respect, and the development of governance, rather than legal--measures to move forward the First and Third Pillar projects.  In effect, the U.S.-NAP suggests the way in which the state duty might be privatized, and so privatized, might be folded into the Second Pillar and the societal sphere. While the privatization might seem awkward under the conceptual divisions of the UNGP, under the broader principles of RBC, it might be central to the project.

(3) Facilitating RBC by Companies (U.S.-NAP, pp. 17-21)

The U.S.-NAP appears particularly passive in its role of facilitation. But at the same time it reminds us of the great power of the state as a harvester of data, and as the keeper of information about corporate performance and the actions of other states. Having already suggested the way that action under the Second Pillar could be privatized through MSI, the U.S.-NAP then suggests that its role might well be centered on the facilitation of these private efforts.  
The U.S. government generates and vets relevant information that can be used to conduct appropriate due diligence and risk assessment. While the concept of due diligence is increasingly well understood and accepted among businesses, the tools and resources available to effectively conduct detailed and appropriate risk and impact assessments can be sparse, particularly in many of the complex environments where this type of data is most needed.
To help address those gaps, the U.S. government deploys significant resources to produce and disseminate a variety of reports that help describe the state of human rights, labor rights, commercial, and investment conditions across the world, and produces international company profiles to provide U.S. companies with information to help them vet potential business partners.In certain instances, the government also funds third-party reports that contain information useful to those seeking to promote and implement RBC. As part of the ongoing effort to facilitate RBC, the U.S. government will continue to enhance these resources, making them increasingly user-friendly and easier to find for the purposes of corporate human rights due diligence and social impact assessment. (U.S.-NAP, pp. 17).
Yet this facilitation role might well be powerful in its own way--not as a direct manifestation of state power through law, but of regulatory governance that enhances the use of market levers to manage preferred behaviors  (on regulatory governance here). By managing information and transparency on critical data, the state effectively makes it easier for other stakeholders in markets --consumers and investors--to assert accountability power. It also reduces the transaction costs of company compliance and if used correctly might also reduce human rights risks. Yet it does so by deploying state power indirectly.  Combined with mandatory projects of disclosure--not part of the U.S.-NAP and a great omission--enterprises might better undertake their own responsibility to respect human rights, even as the state recedes from its role of protecting human rights directly through law (discussed here).  

Beyond the omission of mandatory programs of disclosure, of which the U.S. has a few (e.g., here), the U.S.-NAP might have profited from a discussion of coordination of information gathering and availability.  In the absence of coordination, coherence is lost.  Data becomes more effective when gathered for a purpose.  Purpose does not change the character of data but it does affect the sort of data gathered and the way it is arranged and made available.  The failure to consider this in a core area of U.S. government activity is a significant drag on the value of the efforts. Part of that may be that the data gathering is for purposes other than the RBC program.  If that is the case, then it would be important to develop an administrative mechanism that makes RBC targeted data harvesting more effective.  

(4) Recognizing Positive Performance (U.S.-NAP, pp. 22).
And indeed, this suggestion of privatization of the legal project mandated under the state duty to protect human rights is made stronger by the centering of the facilitation mechanisms within the U.S.-NAP.  Here the U.S.-NAP suggests a form of potentially effective regulatory governance (on regulatory governance here):
As the U.S. government seeks to promote RBC tools and best practices, it is important to recognize and highlight when companies achieve high standards and put these tools into action, with meaningful results for workers, communities, and the company itself. U.S. government agencies recognize specific companies that maintain high standards or have positive development impacts. Rewarding activities helps affirm and draw attention to the significant efforts of deserving companies, and serves to reinforce how the U.S. government and U.S. firms work together to leverage comparative advantages to accomplish shared objectives, whether it be in environmental sustainability, labor rights and human rights, or anti-corruption measures. (U.S.-NAP, pp. 22).
 And yet despite the potential, the U.S.-NAP points to two awards and the promotion of human rights in the ICT sector. That is an aspect of U.S. practice that could do with some improvement.  Ironically, it is in this area that the incoming U.S: administration might be most receptive to advancing cooperation in this area. 

(5) Providing Access to Remedy (U.S.-NAP, pp. 23).

This last seciton of the U.S.-NAP is disappointingly thin.  There is a reference both to facilitation of the OECD's NCP specific instance process and the UNGP.   There is a reference as well to the internationalization of judicial remedies mechanisms through U.S. efforts to seek reform of the judicial mechanisms of other states.
As to remedies in the United States, the U.S. government will continue to help provide access to a grievance mechanism and the potential for remedy through its active USNCP for the OECD’s Specific Instance process and through the World Bank’s Stolen Asset Recovery Initiative. The U.S.government will also seek to strengthen judicial systems in other countries through its foreign assistance programs; to build consensus internationally for strong remedy mechanisms through its participation in the UN, OECD, ILO, and other multinational organizations and fora; and to advance its agenda on remedy through consultations at home with relevant stakeholders. (Ibid).
Yet the U.S. has a less than aggressive history of using its NCP for anything other than technical assistance.  And, indeed, it would not be unexpected to see the use of Special Instance procedures be reduced under the incoming administration, especially if it appeared to seek to burden U.S. operations with non-U.S. normative standards. With respect to judicial mechanisms, it completely ignores any effort to assess the availability of remedies within the United States.It would have been useful to see in the U.S.-NAP a commitment ton broaden the scope and the use of NCPs as a mechanism for enhancing actions against enterprises that breach their responsibilities under the OECD Guidelines (which include the UNGP).  It might have merited some effort to consider the way in which U.S. courts are available as a remedial mechanism for the vindication of the rights embedded in RBC.  That none of this was undertaken underlines the strict separation between the hortatory and discretionary activities of the Executive branch detailed in most of the U.S.-NAP, and the legal sphere in the United States, including the rights to access courts to vindicate rights under a domestic legal order that doe snot recognize anything but its own law.

Annex II: Key Domestic Executive Orders and Regulatory Efforts (U.S.-NAP, pp. 26-29).

The Annex is useful both for the information it provides and for evidencing, without discussion, the extent of the U.S. legal and administrative commitment to RBC. Altogether the list is neither long, nor does it suggest any comprehensive approach to the legalization of RBC within the United States. The connection between the human rights project and U.S: constitutional law is untouched. The consideration of a plan for legislation to domesticate international norm within the United States (and not just beyond our borders) is nowhere to be seen. Instead, the fragility of the RBC project, and its dependence on the Executive Branch and its administrative organs is made manifest. That perhaps, is the greatest insight produced by the U.S.-NAP, though one that might well be regretted.

That said, the United States has not done much worse than other developed states, nor has it shown an unwillingness to consider RBC to some extent. The U.S.-NAP suggests the difficulty of the business and human rights project as a project of legalization. It suggests as well the difficulties, not of elaborating a comprehensive treaty with respect to these issues, but to ensure its implementation. It also underlines the great insight of John Ruggie that the RBC project within globalization, especially in its human rights dimensions, will not be effective unless it is grounded in a strong social pillars (e.g., here).



The DIHR-ICAR Toolkit concludes:  "While business entities themselves must take responsibility for their impacts and amend their policies and practices to better respect human rights, it is ultimately up to States, individually and collectively, to protect the human rights of individuals and communities." (Ibid., pp. 56). States continue to fail to fully realize this obligation. Like other NAPS, the U.S.-NAP exhibits the usual weaknesses of these plans. (Assessments of Existing National Action Plans pp. 3-5). It fails to conduct the sort of national baseline assessment essential for forward looking plans; it focuses on current triumphs and offers little by way of a roadmap forward; and it is ed, in the first instance beyond the borders of the United States. The last point is perhaps the greatest indictment of the U.S.-NAP. As Oxfam noted in its reaction to the U.S. NAP,
Take the case of farmworkers in the United States. Many of these workers are undocumented but even those who are citizens are excluded from the National Labor Relations Act which provides for overtime and other important worker protections. This is a significant gap in US law and fails to protect a whole class of workers that are particularly vulnerable to corporate abuse and experience it on a daily basis. This and the many other gaps in our laws are not mentioned or discussed in the US National Action Plan. (Oxfam, Obama’s missed opportunity to rein in corporate abuses (22 Dec. 2016))
 But perhaps the greatest weakness is the inability of the US.-NAP to develop national measures that are not dependent on the predilections of the current executive administration, that are effectively written into the law of the United States and embedded within its domestic legal-judicial orders. The national measures at the heart of the NAPs, especially evident in the U.S.-NAP are soft measures.  These are measures that are grounded in the prerogatives of the Executive--and as ephemeral as the term of office and whims of the Executive.  Indeed, the "No Safe Haven Initiative," the "Kleptocracy Asset Recovery" Initiative, the key Executive Orders, and approaches to transparency may not survive the change in Administration.  Even more perilous for the authority and value of the U.S.-NAP, each of these executive initiatives may be changed in significant way that leaves the regulated community subject to shifting expectations and little legal recourse against the state.  On the other hand, these continue to be projected outward from the United States, rather than universally.  While this pattern has been embraced by many states, including the People's Republic of China, the bifurcation of human rights and RBC regimes can only enhance strategic decisionmaking and confusion for enterprises. For the objects of these programs it only adds to the difficulties--and expense--of vindicating rights.

Indeed, an NAP that suggests that dependence of measures on Executive action also poses the risk that rule of law elements of state action--that is of the democracy enhancing development of measures within the domestic legal orders of states--may be weakened by regimes grounded in administrative fiat, even fiat within the discretionary authority of an elected official. Like other NAPs,, the U.S.-NAP the "most significant weaknesses of the NAPs thus far, in terms of content, is that they all do not sufficiently explore regulatory options to ensure adequate human rights protection nor the issue of access to remedy." (Assessments of Existing National Action Plans pp. 4). The failure of the U.S.-NAP to put forward any sort of legislative or regulatory agenda, beyond those for which it encourages enterprises to develop, would seem to weaken the role of the state in the RBC project.  It reduces the effectiveness of legalization of norms through Executive action to provide legal certainty and predictability in the way in which the state will support and manage RBC.  And the substantial avoidance of putting forward measures touching on remedy makes even the fragile executive actions substantially difficult to vindicate. 

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