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The Way Forward

Social responsibility is not the first issue for which corporations have begun to recognize the advantage of enforceable standards with broad reach. A similar dynamic emerged after the U.S. government’s adoption in 1977 of the Foreign Corrupt Practices Act, which made it illegal for companies operating in the United States to bribe foreign officials. The U.S. law was adopted in the wake of a domestic corporate scandal but, once in place, put U.S. companies at a competitive disadvantage because their foreign competitors remained free to continue securing business through bribery. In response, U.S. firms pressed for—and got—a multilateral treaty to even out the competitive environment.

After years of complaints, the Organization for Economic Cooperation and Development (OECD) in 1997 adopted a treaty requiring all its member states to criminalize such bribery. The OECD’s thirty members account for some two-thirds of the world’s goods and services and 90 percent of global private capital flows. China remains outside the treaty, but as its companies increasingly operate overseas its exclusion will become legally less tenable.

The OECD already has set out corporate social responsibility standards. Its Guidelines for Multinational Enterprises have been endorsed by a total of thirty-nine countries, including nine non-OECD members. The adhering countries are home to ninety-seven of the world’s top one hundred multinational companies. The OECD Guidelines are voluntary but do have an implementation process run by governments, and are widely used to judge corporate conduct. For example, a U.N. expert panel publicly chastised a number of Western companies operating in Congo for failing to comply with the OECD Guidelines. In addition, NGOs have lodged formal complaints against some of these companies under OECD procedures.

OECD member countries, following on the anti-bribery effort, should move to make their CSR standards binding. They should adopt a treaty under which they agree to enact laws similar to the OECD Guidelines that would be enforceable under national criminal or civil codes, carrying penalties such as fines or, in extreme cases, imprisonment. Like anti-bribery laws, this national legislation would bind any company operating in that nation’s jurisdiction.

In addition, the United Nations, which has already drafted non-binding norms on corporate conduct, might provide a forum to negotiate a universally applicable treaty. U.N. discussions on business and human rights have tended to be highly polarized, but a new approach may emerge. In 2005 the United Nations’ human rights body launched a two-year process to examine these issues. The Commission on Human Rights created a mandate for a high-level expert, appointed in July 2005 by the U.N. Secretary-General, to raise awareness of the human rights responsibilities of companies, look at the tough issues that have blocked progress to date, and map a way forward. An advantage of this U.N.-led process is that it is explicitly focused on human rights and brings together governments, companies, and concerned civil society groups from around the world.

The U.N. mandate—if focused appropriately—has the potential to move beyond a purely voluntary approach toward effective human rights protection that combines elements of voluntarism with enforcement potential on core rights issues. It carries risks as well. Unless human rights are taken as the point of departure, the process could degenerate into a consensus around weak “standards” that are lower than those derived from human rights law and principles.

Though any such agreements or treaties will take time, it is crucial to begin to move down that road. The next few years offer a valuable opportunity to break the current impasse on the corporate accountability debate. Already, many corporations are engaged with other stakeholders in various processes to debate and refine CSR standards. These companies are working on several fronts to develop CSR standards and widen their application within and across different industries.

Given the momentum behind the CSR movement, the continuing proliferation of different standards, and the problem of an unequal playing field, it is clear that business has a vital interest in helping to define human rights norms. By doing so, it can help ensure that the resulting requirements are clear, practicable, and fair. Industry also has a direct stake in seeing that these requirements are applied to all companies, regardless of where they are based, and that they are effectively implemented and enforced. Ultimately, that means making the rules universal and mandatory.

Sometimes it pays to take the initiative. For hard-headed businesspeople, the smart move is to face up to global human rights standards early and make them work by making them stick.

Lisa Misol is a researcher with the Business and Human Rights Program at Human Rights Watch.

Some of the arguments and language used in this essay first appeared in a Financial Times opinion article (“Rules on Corporate Ethics Could Help, Not Hinder, Multinationals,” June 21, 2005) by Human Rights Watch Executive Director Kenneth Roth.  Anneke Van Woudenberg, senior researcher in Human Rights Watch’s Africa Division, contributed material for the Congo case study.

<<previous  |  indexJanuary 2006