Tuesday, November 27, 2018

2018 UN Forum for Business and Human Rights--Speaking to Coherence, Convergence, and Alignment in Open Markets for Human Rights Due Diligence

The 2018 U.N. Forum for Business and Human Rights has as its central theme: "Business respect for human rights – building on what works." That theme is realized through a focus on the central element of the UN Working Group's 2018 General Assembly Report on the role of the United Nation's Guiding Principles for Business and Human Rights (2011) Second Pillar (corporate responsibility to respect human rights) "human rights due diligence" mechanism (UNGP ¶¶ 17-22).  Many of the sessions at its program have been built around this theme.

This brief post considers the issues raised around a consequential issue of human rights due diligence underlined in the Forum through the opening statement of the High Commissioner for Human Rights ("The movement to ensure businesses uphold human rights is gaining momentum"), and highlighted panels on the 2nd day of the Forum")--the issue of coherence and alignment in business of standards for human rights due diligence.

The Working Group brought out its "biggest guns" to push its objectives of emphasizing human rights due diligence as a central element of the Second Pillar corporate responsibility to respect human rights,  and the value of using human rights due diligence as a means of achieving policy and practice coherence through  measures designed to bring convergence and alignment across the quite variegated approaches to the manifestation of the UNGP through human rights due diligence.  In the process, the Working Group appeared to emphasize the guiding authority of major international organization actors, and the key role of states in  managing the societal sphere through the extension of regulatory authority over human rights due diligence directly or indirectly.

The initial discussion focusing on the work at an operational level of civil society thought leaders and international organizations, set the stage for the 27 November plenary session involving senior leaders from international organizations charged with the task of promoting corporate responsibility and responsible business, with business respect for human rights as a bedrock. The formal descriptions of both panels follow revealing through their summaries and the list of spokespeople, the nature and character of the "learning" meant to be disseminated to those expected to follow the developing line.

Building coherence on essential elements of human rights due diligence.   Organized by the UN Working Group on Business and Human Rights in collaboration with the OECD

Short description of the session:
The UN Guiding Principles on Business and Human Rights clarify that all business enterprises have an independent responsibility to respect human rights, and that in order to do so they are required to exercise human rights due diligence to identify, prevent, mitigate and account for how they address impacts on human rights. The introduction of this concept was one of the major contributions of the Guiding Principles.

The 2018 release of the OECD Due Diligence Guidance for Responsible Business Conduct provided another important step forward in helping clarify what human rights due diligence involves in practical steps. As it is in full alignment with the UN Guiding Principles, these two frameworks together provide a solid foundation promoting and scaling up responsible business conduct in a coherent and effective way. Also issued in 2018, a report by the UN Working Group on Business and Human Rights on to the UN General Assembly further highlights key features of human rights due diligence and why it matters; gaps and challenges in current business and Government practice; emerging good practices; and how key stakeholders — States and the investment community, in particular — can contribute to the scaling-up of effective human rights due diligence.

Session objectives
This Forum session takes place against this background with a view to:
  • Highlight the essential elements of human rights due diligence set out in the UN Guiding Principles and the OECD Due Diligence Guidance.
  • Demonstrate the close alignment between these two frameworks.
  • Engage stakeholders in a discussion on the way forward for achieving wider and comprehensive uptake of human rights due diligence in standard business practice.
  Plenary II: Building coherence and reaching scale on human rights due diligence – International organizations' leadership perspectives.

Under the title “Building coherence and reaching scale on human rights due diligence – International organizations' leadership perspectives”, the plenary convenes senior leaders from the UN and international organizations working to promote responsible business conduct and sustainability.

The high-level plenary provides an opportunity for signaling alignment of international standards and action to promote corporate respect for human rights, as well as for reinforcing the message that business respect for human rights must be at the heart of corporate contributions to the 2030 Agenda for Sustainable Development.

A central aim is to signal alignment on the importance of corporate human rights due diligence to enable business enterprises meet their responsibility to respect human rights.

Moderator/ Introductory Remark...
avatar for Dante Pesce

Dante Pesce

Chairperson, UN Working Group on Business and Human Rights
Mr. Dante Pesce holds a Masters in Political Science from the Catholic University of Chile and a Masters in Public Administration from Harvard University. He is the Founder and Executive Director of the VINCULAR Center for Social Responsibility and Sustainable Development at the... Read More →

avatar for Michelle Bachelet

Michelle Bachelet

United Nations High Commissioner for Human Rights, Office of the High Commissioner for Human Rights
On September 1, 2018 Michelle Bachelet assumed her functions as the United Nations High Commissioner for Human Rights.  The Office of the High Commissioner for Human Rights was established in 1993 and Ms. Bachelet is the seventh Commissioner.Ms. Bachelet was elected President of... Read More →
avatar for Lise Kingo

Lise Kingo

CEO & Executive Director, UN Global Compact
Lise Kingo is the CEO and Executive Director of the United Nations Global Compact, which is the world’s largest corporate sustainability initiative with more than 13,500 signatories from 170 countries that have committed to aligning strategies and operations with universal principles... Read More →
avatar for Masamichi Kono

Masamichi Kono

Deputy Secretary-General, The Organisation for Economic Co-operation and Development (OECD)
Mr. Masamichi Kono was appointed Deputy Secretary-General of the OECD in August 2017. His portfolio includes the strategic direction of OECD policy on Environment, Development, Green Growth, Science and Technology Policy and Innovation, Financial and Enterprise Affairs and Anti-C... Read More →
avatar for Guy Ryder

Guy Ryder

Director-General, International Labour Organization (ILO)
ILO Director-General Guy Ryder took office on 1 October 2012. Guy Ryder sees the ILO as absolutely central to the questions of the day: jobs, social protection, the fight against poverty, and equality. For this reason, he wants to reinforce the ILO's place at the centre of international... Read More →
avatar for Haoliang Xu

Haoliang Xu

Assistant Administrator and Director for the Regional Bureau for Asia and the Pacific, United Nations Development Programme (UNDP)
Haoliang Xu was appointed Assistant Administrator and Director for the Regional Bureau for Asia and the Pacific by the United Nations Secretary-General in September 2013. Previously, Mr. Xu was Deputy Regional Director of the Regional Bureau for Europe and the Commonwealth of Independent... Read More →

The objectives of the sessions were quite clear, and equally worthy.  They intend to underline the central importance of the mechanics of human rights due diligence as the vessel through which the normative elements of the UNGP could be made coherent and the variegated approaches to its realization aligned both among enterprises and between states and enterprises. To that end, in ways that brought to mind the forms of vanguard party leadership organized on Leninist principles, international organizations ought to play a leadership role whose guidance might be tinged with a mandatory character built on an extended premises of the hierarchy of law in which international law and norms must be treated as superior to and binding on the domestic legal orders of participating states.  None of this is new; though much of this remains contentious.

There were, however, several profoundly interesting insights.

The first was on the development of additional mechanisms around the UNGP for the purpose of glossing the UNGP, but in a way that suggests elements of implementation.  The object appears to be, at some higher level of generality, to bring unity to diversity through instruments like the OECD Due Diligence Guidance for Responsible Business Conduct around which portions of one of the programs focused.

The second was the invitation to states to engage more positively in the management of the responsibilities of business within the Second Pillar through law. Domestic lawmaking, of course, ought to be guided by the leadership of key international organs (the representatives of which populated the plenary panel). Yet it is to the state the international organizations appear to turn to discipline and manage the otherwise wild zone of the societal sphere which marks the territory of the Second Pillar responsibility to respect.

The third was the conflicting messages delivered about this Second Pillar wild zone. On the one hand, the influence leaders recognize the foundational premise of the UNGP that envisions the development of context-related approaches to human rights due diligence and the glosses on the normative provisions of the UNGP these then produce. On the other hand, they also worry that such variegation opens the door to incoherence and abuse. They worry that variegation produces robust markets for regulation that, beyond the firm leadership of the international community (principally) and states (consequentially), these robust markets will produce anarchy (order without a center) at best and chaos (and incoherence) at worst. To mediate, it is necessary, in the words of the program, to firmly engage in "signaling alignment of international standards" to be undertaken by leading institutions driving processes of alignment and coherence by encouraging convergence through these markets for standards and regulation. That alignment, in turn, ought to constrain market exuberance in the production and operationalization of regulatory packages.

The fourth was that the object of convergence and alignment is directed toward those international organizations that view themselves as driving the global discourse of business and human rights, generally, and human rights due diligence in particular.  The "Working Group will bring together leaders from key UN organizations and OECD, for the first time, in a dedicated panel to highlight alignment in our respective efforts to promote responsible business conduct. . . . joined by our common purpose and emphasis on the importance of rules-based global governance for solving the problems we are here to discuss" (Opening Remarks by Mr. Dante Pesce).

The fifth was the malleable character of human rights due diligence itself. It appears now to serve not just as the incarnation of the substantive principles of the UNGP, but as well, as the instrument through which a human rights based system of managing enterprise behavior may confront the potential threat posed by an approach that centers a larger set of sustainability development goals for the specific objectives of human rights.  One the one hand, human rights is viewed as embedded within specific SDGs; on the other hand, the SDGs may be understood as specific expressions of human rights in economic activity.  The choice of lens will tend to re-frame the approaches and analysis that follows.  But using human rights due diligence as a common basis for operationalization provides a mediating mechanics through which, perhaps either human rights and SDGs may converge, or their distinct goals my be aligned, or through which the SGDs may be re-cast in human rights related terms. Already there is a move in that direction as notions of rights to a safe environment, rights to be free of the constraints of poverty and others have begun to be cast as elements of a human rights centered discourse.  On that basis, and with human rights as the analytical baseline for understanding and regulating human activity, human rights might lose its specificity as a set of specific norms and rights, and instead assume a role of ordering principle  rather than of duties and responsibilities or rights.  

And the sixth, was based on a tentative embrace in some quarters of the view that human rights becomes the baseline for gauging and managing all human activity. The consequences were noted. Some noted that  a fundamental refocus of human rights due diligence was necessary--from a focus on risk to the enterprises (compliance and risk management approach traditional to business) to a focus on risk to rights holders, including internal stakeholders who presumably were not connected to the enterprise leadership group (parent companies, shareholders, and the like). In doing so, of course, a subtle change in the objectives of corporate governance are also achieved--from an orientation grounded in the institutional welfare of the institutions through which economic activities are undertaken, to an orientation on the welfare of those who are affected by undertaking economic activity.  In effect, the change re-orients economic activity from a private enterprise to one with a principal public (social) purpose. 

I will leave the issue of the legalization of the corporate responsibility to respect human rights for another day. Its perverse effects, at least at the limit, are well known, though embraced by adherents of this approach. These include issues around the continuing trend to governmentalize the private sector, a regulatory trajectory that is unlikely to be changed soon (e.g., here, and here). Legalization both empowers states as the authoritative source for regulatory policy, while at the same time devolving effective authority of the management of that regulation to private enterprises that serve as both the object of regulation and as the administrative organ through which it is enforced. Major actors involved in pushing this approach tend either to dismiss this as an issue worth spending resources on, or where recognized, have applied the well worn patterns of 20th century cultures of public administrative regulation to "solve" the problem.   The result just augments the issue--for if enterprises are, with respect to human rights, to be treated as an administrative agency of the state, then to what extent have we erased the distinction between state owned enterprises (or the state itself) and private enterprises. In so doing, of course, is the core question--to what extent does this trajectory erase the difference between the first and second pillars of the UNGP, and reduce the second pillar to an aspirational standard for national legislation? 

But, beyond these questions left hanging, two points appear to have eluded recognition. The first include a cluster of issues around accountability and assessment.  The second include the tensions between convergence, coherence, and alignment.  Each is worth brief unpacking.  Lamentably, in the brief time available for presentation, neither was.

1.  Accountability and assessment.  One of the most remarkable aspects of discussion of the UNGP in the context of human rights due diligence is the difficulty of approaching issues of accountability and assessment. There are two aspects to this problem.  One focuses on the accountability of standards themselves in light of their objectives.  While many are happy enough examining this by reference to enterprise compliance (e.g., how many enterprises are using the standards, or the effectiveness of enterprise deployment of those standards), few worry about generating robust measures of standards effectiveness itself. Yet in a context in which a number of standards vie for authority and inter-mesh in as yet only partially recognized ways, assessment of such standards appears only at the margins.

If assessment is a marginal element of the discussion, accountability of institutions advancing standards is almost entirely absent. One might wonder why it is that those in the business of generating standards ought not themselves to be subject to the human rights due diligence obligations of the UNGP.  That due diligence ought to focus on the impacts of their standards in relation to their objectives and the consequential effects of standards--and the activities around their implementation--on rights holders, including individuals and communities.  Within regulatory systems, especially those tied to human rights, it would seem that the UNGP themselves would point to regime sin which all critical actors in that systems ought to be held to standards of duty to protect or responsibility to respect human rights in respect of their actions. These are issues that still elude.

Within enterprises, the problem of assessment is both more banal and even more acute. First, it is not clear what is to be assessed in the context of human rights due diligence.  Should it be focused on results? Should it be focused on effectiveness measures, or efficiency measures? If efficiency or effectiveness serves as the core of assessment what performance measures serve as useful proxies for these notions? Should human rights due diligence measures be centered on maximizing its value to rights holders, or to the enterprise (rights versus risk based assessment).  And lastly, of course, how are data to be generated in ways that in the West at least, are human rights compatible with respect to principles of privacy and the like. To speak merely of construction and alignment and convergence without a focus on these issues may compound rather than reduce the problemmatique posed by human rights due diligence within the increasingly diverse range of regulatory product.

These questions, in turn, serve as the prelude to the more fundamental one--of accountability. Here one encounters issues from multiple angles.  The corporation must be accountable to itself for its human rights due diligence.  That, of course, is clear form the UNGP, though the measures required to make that happen are not. But the enterprise is also accountable to others for the consequences of the systems of human rights due diligence undertaken, as well as for the actions undertaken in light of the products of such exercises of human rights due diligence. This, too, is clear enough form the UNGP. Much less clear is the nature of the accountability of other actors human rights due diligence obligations.  The UNGP are silent more or less on these points.  And yet they remain quite relevant.  If diligence is expected of those with responsibility whose actions have an effect on the position of human rights holders, then it might be worth considering the extent to which a measure of accountability based on a related duty of diligence ought to extent to all actors as well. It is in this sense that the issue of coherence and alignment at last moves beyond surface level efforts to convergence of text, the level at which influential actors, for the moment, remain focused.  

2.  Alignment and convergence.

Alignment issues focused on standards.  Yet this alignment is merely part of a larger matrix of alignment related issues.  One that was mentioned was that between production chains.  Unmentioned, however, was alignment within enterprises operating in production chains.  That element of alignment is compounded where enterprises operate in multiple streams of production, each grounded in a distinct set of standards. What this produces is the likelihood of compliance anarchy within enterprises. That compliance anarchy resonates negatively with assessment and accountability efforts within an enterprise.  But it also substantially raises the costs of operating compliance systems within enterprises. All of this is further compounded where normative standards may criss-cross with the almost 60 due diligence laws or regulatory structures emerging globally.  These legally mandatory regimes may require disclosures of one kind or another but are generally specifically targeted, each is distinct ways.  Within this complex matrix, alignment and convergence of portions of the regulatory ecology of due diligence remains important, but cannot be undertaken as a self contained element of due diligence.

Sometimes lost in the movement toward convergence and alignment are the UNGPs themselves. Rather than anchor the process of alignment and convergence, the UNGPs are sometimes treated as a starting point, not as an alignment or convergence point.  That is a pity.  But there are strong pressures that push in this direction. First is that, beyond action through the OECD's National Contact Points, there is no facility for the glossing and application of the UNGPs in either developing or applying their systems of due diligence.  There are also powerful culturally embedded approaches to due diligence drawn from other areas of corporate compliance. much of which is derived from law.  Principal among these are the laws of securities regulation and the laws of mergers and acquisitions (apart from their securities implications). In the face of this culture, now almost a century old in places like the United States for example, it is difficult to speak of alignment through the UNGP where such talk is reduced to often sidelined exhortation or storytelling. Elaboration of UNGP glosses are a start, but as the contributions suggested, they may not be sufficient to displace old habits.

3. Markets.

Lastly, a word about markets. Lurking around the edges of the discussion are the issues of the relationship between markets and regulation. Convergence and alignment of regulatory standards gas become more complex since, a century ago at the dawn of the age of comparative law, the challenge appeared to be one of translation and of a convergence of the effects if not the forms of regularity expression within autonomous domestic legal orders.  In that age, markets for legislation were limited reflecting the transaction costs of projecting integrated production beyond a state, or a group of closely aligned states. But that age has passed, though the vapors left by its passing continue to be inhaled in many quarters. In this new era of transnational activity and of governance gaps, regulatory measures have ceased to nestle solely within the protective embrace of states. Regulatory production has escaped that state. Virtually anyone can regulate now, as long as there are those willing to treat the proffered regulation as authoritative. More importantly, it may have also escaped the forms of command, of the traditional forms of law and administrative regulation,  and is now embedded in everything from certification, benchmarking and ranking, disclosure, and process oriented rules.

It is in this context that the issues of alignment, convergence and coherence emerge.  But markets tend to treat those issues in a way quite distinct from regulatory or administrative approaches to alignment, coherence, and convergence.  Markets effectively shift power over those objectives from those who produce or "sell" regulation to those who "purchase" or consume it.  But who is consuming human rights due diligence standards?  Companies, certainly are the principal targets of consumption. Yet it is also possible to see markets for regulation in a broader way. That requires one to consider what factors companies consider in deciding both which standards to consume, and the way in which such consumption is tailored for their operation. It is in that consideration that the power of stakeholders become more interesting. And yet these are largely either taken for granted or are unexplored. It is in this context that peripheral regulatory mechanisms--benchmarking, ranking, and the like--become important in driving choice.  As well, the discipline of accountability also drives choice and implementation approaches. Thus when one speaks to alignment, convergence, and coherence, moving from the formalist analysis of text becomes a central element of a more robust approach to the issue of standards and human rights due diligence. And in this context, as well, it is altogether to easy to reduce the UNGP to starting point. A pity indeed.

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