UN and OECD Press for Global Governance of Transnational Corporations
ECONOMICS, CORPORATE CITIZENSHIP, HUMAN RIGHTS
Wednesday, July 28, 2010
Recently, at two separate conferences, the United Nations and the Organization for Economic Co-operation and Development announced their strategies for updating their respective efforts for the global governance of corporations. It has become very clear to the leaders of international and non-governmental organizations that national governments no longer have the financial resources to fund ambitious programs for the realization of economic rights for all. Instead, they are seeking to hold large transnational corporations responsible for the realization of all human rights for those living in the countries in which they do business.
Since its inception decades ago, activists have transformed the corporate social responsibility movement from one concerned with making philanthropic contributions in the communities in which businesses conducted business, to one concerned with having businesses work collaboratively with all stakeholders to improve their local communities, to one concerned with having businesses operate in a manner that promotes the environmental sustainability of those communities, and now, to one concerned with realizing the civil, political, economic, social, and cultural rights of all peoples.
The United Nations Global Compact has been at the forefront of the corporate social responsibility movement, which is now often referred to as the environmental, social, and governance (“ESG”) movement or, in a narrower context, as the business and human rights movement. As explained in a recent article on this website, on May 28, 2010, the UN Global Compact reached an agreement with the Global Reporting Initiative to align their efforts. The UN Global Compact’s agreement with the GRI provides a framework for the development, implementation, and disclosure of environmental, social, and governance policies and practices by corporations.
On June 25, 2010, at the UN Global Compact’s Leaders Summit 2010, the theme of which was “Building a New Era of Sustainability” (the “Summit”), corporate leaders from more than 135 countries concluded a two-day conference by approving the so- called New York Declaration by Business (the “Declaration”). In the Declaration, the businesses participating in the Summit agreed to the following:
1. To recommit to the UN Global Compact, and the call to embed ten universal principles—in the areas of human rights, labor, environment and anti-corruption—into their business strategies, operations and culture, as well as to take actions in support of broader United Nations goals and issues, especially the Millennium Development Goals (MDGs).
2. To deepen work to advance the ten principles throughout their organizations, including relevant governance bodies and subsidiaries, and into the supply chain.
3. To strengthen support for critical development goals, particularly the MDGs, through core business activities, social investment, and advocacy and to strive to do so individually and in partnerships with other stakeholders such as civil society and governments.
4. To increase transparency and dialogue, as well as engagement, with civil society and labor organizations in working to advance the ten principles and support development goals.
According to the UN Global Compact’s press release titled “Business and UN Raise the Bar for Corporate Practices in ‘New York Declaration,’” the Declaration also calls for business “to contribute more substantially to peace and development, especially in conflict-affected and high-risk areas.”
The press release did not indicate to what extent the corporations subscribing to the Declaration had secured the approval of their shareholders for the proposed expansion of their business operations into the “peace and development” field.
Meanwhile, from June 30 to July 1, 2010, the Paris, France-based Organization for Economic Co-operation and Development (“OECD”) convened the 10th OECD Roundtable on Corporate Responsibility, the title of which was “Launching an Update of the OECD Guidelines for Multinational Enterprises” (the “Roundtable”).
The OECD provides a forum where the governments of 30 democracies (including the United States) work together to address the economic, social and environmental challenges of globalization. In 2000, the OECD members adopted the OECD Guidelines for Multinational Enterprises (the “Guidelines”). The Guidelines consist of recommended voluntary principles and standards for responsible business conduct consistent with applicable laws. The Guidelines aim:
• to ensure that the operations of business enterprises are in harmony with
• government policies; to strengthen the base of mutual confidence between enterprises and the societies
• in which they operate; to help improve the foreign investment climate; and
• to enhance the contribution to sustainable development made by multinational enterprises.
Because of the radical evolution of the corporate social responsibility movement over the past ten years and the heightened sense of urgency created by the negative economic impacts associated with the global financial crisis, the Roundtable focused on the need to update the Guidelines.
In his speech at the Roundtable, John Morrison, Executive Director of the Institute for Human Rights and Business, provided the following insights:
1. The Roundtable takes place during a period of rapidly expanding activity in the arena of business and human rights.
2. This is the final year of the mandate of Professor John Ruggie, the Special Representative of the UN Secretary-General for business and human rights.
3. A number of processes are underway all of which seek to strengthen the place of human rights in the international architecture.
4. The updating of the OECD Guidelines is an important, perhaps central, piece in the jigsaw of developments in the field of business and human rights, not least because the framework provided by the Guidelines offers the closest thing that exists in the world to an extra-territorial complaints mechanism, albeit a non-binding one.
5. Any update of the Guidelines needs to encompass all internationally recognized human rights.
6. The Guidelines should be updated to focus on “impact” as the main organizing principle for determining corporate responsibility in the area of human rights, not merely the “sphere of influence” of the corporation.
7. As much as possible, the Guidelines should apply universally and not on a country- by-country basis that uses local conditions as an excuse for non-compliance with human rights standards.
8. If legal proceedings are not appropriate or available, the National Contact Points (“NCP”) for implementation of the Guidelines should be prepared to move past mediation as the exclusive remedy for resolving disputes. If an NCP identifies a business as not living up to its responsibilities under the Guidelines, then perhaps OECD governments should take those shortcomings into account when considering whether to grant export credit or provide investment assistance to the identified company.
The adoption of the Declaration and the OECD’s launching of an update to the Guidelines, perhaps along the lines recommended by Mr. Morrison, are two more recent developments that are leading to an unprecedented and questionable level of corporate accountability for achieving “peace and development.”
Jim Kelly is the President of Solidarity Center for Law and Justice, P.C., a public interest civil and human rights law firm based in Atlanta, Georgia. The opinions expressed herein are his own.
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