The Diverging Worlds of Human Rights and the Environment

"Corporate responsibility" has become a flavour of the millenium- and - as several recent analyses have demonstrated - not just among NGOs but also businesses and their advisers, such as STRATFOR

The Diverging Worlds of Human Rights and the Environment

Source: STRATOR

January 30, 2004

Summary

Human rights issues are becoming a bigger challenge for business while environmental ones are becoming more manageable for most sectors. As nongovernmental organizations focus their strategy on pushing for binding international rules on business activity, more confrontation with major Western firms over human rights is likely.

Analysis

The influential British humanitarian lobby, Christian Aid, called Jan. 21 for binding international rules concerning business and human rights. The call coincided with the finalized deal between Citigroup and Rainforest Action Network, a U.S. environmental pressure group. The timing suggests that human rights will become the bigger challenge for business while environmental issues, or "sustainable development," will become progressively more manageable for all but a few sectors. As human rights groups focus on pushing for binding international rules on business activity, more confrontations with major Western firms over human rights issues are likely.

The current debate over what business owes society -- beyond jobs and returns for investors -- has tended to bundle social and environmental issues. Partly, this is due to the evolution of the debate itself. In the early phases of direct engagements, environmental and human rights nongovernmental organizations (NGO) had more in common with each other than with the corporate executives they were meeting for the first time.

Also, this commonality was partly due to one high-profile company in particular: Shell(now Royal Dutch-Shell) in the 1990s. The oil company was pushed to embrace corporate social responsibility after the Abacha regime executed ethnic Ogoni campaigners in Nigeria. Separately, Greenpeace applied pressure over the Brent Spar drilling platform. Shell responded with the revised Shell Group Business Principles in 1997, broadly designed to address both crises. To some extent, this has shaped other companies' handling of social and environmental issues; most "corporate citizenship" reports -- nonfinancial reports that convey the corporation side in the debate -- cover both issue areas.

But human rights and environmental issues are about to diverge, and that will have wide-ranging effects on the universe of corporate-NGO engagements -- ultimately affecting how NGOs exert leverage over governments.

Two underlying factors explain the divergence.

First, there is a basic difference between businesses' ability to accommodate environmental demands versus social ones. Environmental pressures tend to relate to companies' own products and processes. At their most strategic, environmental NGOs seek to eliminate a particular practice or market for a particular input (for example, certain flame-retardant substances that U.S. environmentalists have succeeded in pushing off the market in recent months).

Social and human rights pressures, in contrast, tend to demand that businesses go beyond their own operations to become social and political actors wherever they are. Oil companies, notably Shell, have responded to social unrest in Nigeria and elsewhere by providing some basic social services -- although Christian Aid recently reported that several Shell-funded schools and hospitals in the Niger Delta are not functioning. The Sullivan Principles, a code of conduct for U.S. firms operating in apartheid-era South Africa, explicitly encouraged companies "to support economic, social and political justice wherever they do business." In March, the full U.N. Human Rights Commission will vote on the U.N. Human Rights Norms for Business, a code on corporations' putative human rights responsibilities. The code tellingly refers to businesses as "organs of society" whose responsibilities are comparable in some ways to those of governments.

Businesses have proven relatively adept at handling environmental pressures in a variety of ways since the early 1990s. In addition to growing direct engagement with environmental NGOs, businesses have carved out a role in the sustainable development debate and won governmental support for a voluntary "partnership" approach, epitomized by the "Type II" agreements that emerged from the 2002 World Summit on Sustainable Development. Across-the-board opposition to binding treaties such as the Kyoto Protocol has been replaced by governmental-NGO collaborations such as the World Resources Institute to catalog hydrocarbon emissions -- a tacit acceptance that some form of mandatory cuts in emissions will be imposed in the future.

This stands in stark contrast to business lobbies' attitude toward binding human rights rules. While a number of company- and sector-specific vehicles exist to handle human rights issues -- e.g., the Kimberly Process for so-called "blood diamonds" and various HIV/AIDS initiatives -- businesses remain highly skeptical of being globally held to broad human rights requirements.

Moreover, despite the Sullivan Principles' success, many high-profile firms get defensive when the Principles are used to pressure despotic regimes. British American Tobacco acceded to the U.K. government's request to leave Myanmar late last year, but said it was doing so "with regret" and defended itself as "one of Burma's best employers." Total, a major energy-sector investor in Myanmar, has begun talks with NGOs such as Greenpeace and Global Witness, but it insists that its presence in Myanmar is defensible because no U.N. sanctions exist against the military regime. The U.S. Council for International Business, one of the most vocal business lobbies opposing the new U.N. norms, says a binding international treaty would "circumvent national legal frameworks and establish international legal obligations for multinational companies that do not exist at the national level -- or apply to domestic companies."

The second underlying factor driving social and environmental issues divergence is that the field of human rights is changing. In 2001, Amnesty International's leaders voted to expand its mandate to include economic, social and cultural rights -- among other things, putative rights to housing, food, decent wages and health care.

It is difficult to overstate the importance of this change. Amnesty spent the first part of its existence focused on civil and political rights such as individual freedom from arbitrary detention and torture. It is now becoming a force on a much broader range of economic and social issues, targeting businesses as well as governments. Indeed, Amnesty has expanded its direct engagement with big companies, recruiting two former BP executives to head its business relations group and filing its first-ever shareholder resolution in the United States in 2001 with ExxonMobil.

Human Rights Watch (HWR), another major human rights group, has become more active on issues directly related to businesses. Late last year, HRW called for a halt on all oil operations in Sudan, the first time that it has taken such a position. More recently, the group has defined nontransparent handling of resource revenues -- particularly in Angola -- in human rights terms, sending a clear signal to investors in Angola's energy sector. Elsewhere, humanitarian groups, including the U.K.-based Catholic Agency for Overseas Development, are beginning to pressure the electronics sector on working conditions in its Chinese contractors' facilities.

A major test of this newly defined human rights agenda will be an NGO push for binding international human rights rules for business. Christian Aid's proposal Jan. 21 for binding rules based on the Organization for Economic Cooperation and Development's anti-bribery instrument came within days of Amnesty Secretary-General Irene Khan's speech insisting,"Voluntary initiatives by themselves are not enough S The historical reality is that some form of legal framework is necessary to restrain abuses."

Businesses clearly are not prepared to accept such a regime, however, as evidenced by the reaction to the U.N. norms. Most governments are unlikely to support a binding international treaty on corporate human rights obligations, either because it would threaten income from foreign investment, as with developing countries whose labor or resource-management policies give NGOs pause, or because business lobbies will convince them that a treaty is not in their economic interests, as with big companies' home-country governments. In response, NGOs might pressure even harder to tie major corporate names to human rights abuses so as to push business lobbies into advocacy for global rules.

There is a precedent for this, perhaps unsurprisingly, in the environmental arena. At the 2002 Johannesburg summit, Greenpeace and the World Business Council on Sustainable Development issued a joint statement criticizing governments for sending "mixed and often contradictory signals ... on the environment, especially on greenhouse gas emission reductions" and the Kyoto Protocol. These mixed signals, the two sides agreed, were "creating a political environment which is not good for business."

NGOs recognize that while they have little or no leverage with governments like China or Myanmar, they can exert pressure on Western companies that invest in such countries. If NGOs can create sufficient concern about human-rights-related business risk, Western businesses will in turn demand some kind of certainty from their home governments.

Copyright 2004 Strategic Forecasting Inc.