Human rights: Year of the watchdog

It’s barely February, and it already looks to be a busy year for human rights in business. More precisely, impulses and developments that will compel businesses worldwide to keep a sharper eye on corporate social responsibility and human rights violations. Or else, suffer the increasing attention of watchdogs and risk losses on account of negative publicity, even lawsuits.

Alongside ongoing and increasingly emphatic moves at the United Nations Human Rights Council by some African, South American and Asian countries to bring about a binding treaty on human rights, I would put efforts by the International Corporate Accountability Roundtable (ICAR) at the top of the list of learn-and-apply.

ICAR is an influential coalition of nearly three dozen human rights and corporate accountability organizations with global bandwidth. Based in Washington DC, the organization’s steering committee includes Amnesty International, EarthRights International, Global Witness and Human Rights Watch. The coalition had earlier this week kicked off a new programme, the Parent Company Accountability Project.

“One of the largest barriers to remedy for victims of human rights violations by business is the limitation of liability of parent companies for the actions of their subsidiaries,” ICAR’s project parameter states. Structuring businesses as a network of distinct entities, maintains ICAR, “gives corporate groups access to tax and financial benefits, but it also allows them to avoid liability for the harmful and illegal actions of their subsidiaries”. The project that runs until June 2015 seeks to explore ways in which US law, both federal and state, can be applied “for holding parent corporations (or the entire enterprise) liable for actions for their subsidiaries and/or business partners”.

As interesting as this exercise is in the context of ongoing and future corporate behaviour—besides what corporate jargon terms legacy issues—this year will see the cohesion of another ICAR project (at accountabilityroundtable.org). Launched in 2014 and titled Commerce, Crime and Human Rights: Closing the Prosecution Gaps, the rationale for the project seeking to bring transnational corporations to accountability is blunt: “When businesses engage in illegal conduct that results in serious human rights abuse, they rarely, if ever, are held to account. This problem is particularly acute in the context of business activity involving multiple jurisdictions.” They mean different countries, and they mean such corporate crimes that require prevention, investigation, punishment and redress to victims. A team of top legal experts expect to publish a final framework this September.

Accountability is on the map in Africa too. A high-level panel, a joint effort of the African Union and the United Nations Economic Commission for Africa has released a report titled Illicit Financial Flows, with a catchy tagline: “Track it. Stop it. Get it”. The report of the panel (available at uneca.org), chaired by former South African president Thabo Mbeki, focuses on how businesses—hydrocarbons and mining to accountancy and legal—funnel substantially more than $50 billion a year that could otherwise be used for economic development across the continent. Such processes identified on a country-by-country basis involve, among dozens more, transfer pricing, profit-shifting, and plain old money laundering. Then there are flows, as the report puts it, that “by nature are secret and cannot be properly estimated, such as proceeds of bribery and trafficking of drugs, people and firearms”.

The work of such panels, including that of proposing policy to remedy situations seeking to reduce the suborning of governments by businesses—the necessary first step to using, misusing or entirely bypassing the law of a land—is really in the nature of advocacy. Of proposing changes and leaving the players to sort matters out. But it is important that a major regional institution (equivalents closer to home would be South Asian Association for Regional Cooperation, or Saarc; and the Association of Southeast Asian Nations, or Asean) has undertaken to shine the spotlight on dirty, open secrets. This makes it less easy for business and governments to dismiss it than, say, the work of a human rights organization as being detrimental to the interest of a country—the current situation in India.

But watchdogs will be watchdogs. This year’s Vedanta, as it were, is likely to be Rio Tinto Plc., the British-Australian mining and metals behemoth. Activists and some media are pressuring the Greater Manchester Pension Fund to pull out an estimated £170 million worth of investment in Rio Tinto. The immediate trigger is several deaths at a Rio Tinto-operated mine in Indonesia and alleged uranium pollution at its mines in Australia and Namibia.

As I mentioned earlier: a busy year.

Sudeep Chakravarti’s latest book is Clear.Hold.Build: Hard Lessons of Business and Human Rights in India. His earlier books include Red Sun: Travels in Naxalite Country and Highway 39: Journeys through a Fractured Land. This column, which focuses on conflict situations in South Asia that directly affect business, runs on Fridays.

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