How the UN pushed to make business more responsible

Civil society groups protest against corruption in multinationals and by government officials outside the G20 summit in Brisbane, Australia on November 8, 2014. Getty Images

For over 50 years, the United Nations has been urging companies to be more respectful of human rights. Political scientist Gilles Carbonnier examines the key UN processes and milestones in the slow acceptance of corporate social responsibility, as Switzerland prepares to vote on the issue in the coming months. 

Corporate social responsibility has been around for years. According to a recent article by French historian Catherine Kikuchi, published on The Conversation websiteExternal link, the concept emerged in the late 13th century with the growth of powerful city states, merchants and international trade. 

But the idea only really gained wider interest in the second half of last century. The creation of the United Nations Conference on Trade and Development (UNCTADExternal link) in 1964 played a key role. UNCTAD provided a forum where developing countries could discuss global efforts to reduce disparities with richer countries and put the spotlight on multinationals’ responsibilities abroad. Despite this, progress was laborious. 

“We were in the middle of the Cold War. A group was set up at UNCTAD to look at transnational companies but very quickly it became clear that the talks were going nowhere and no progress was made on advancing human rights issues linked to transnational companies,” Gilles CarbonnierExternal link, a professor of international economics at the Geneva Graduate Institute, explained. 

With the collapse of the Soviet Union and growth of multinationals, the question of corporate social responsibility returned to the UN and grew in importance in the 1990s through the creation of the UN Global CompactExternal link, a voluntary initiative to encourage businesses to adopt sustainable and socially responsible policies, and to report on their implementation. 

Practical implementation 

‘Responsible business’ initiative 

In Switzerland, a coalition of 85 non-governmental organisations and trade unions is backing a “responsible business” initiative. It aims to make Swiss companies comply with human rights and environmental standards when they operate abroad – or be brought to account before Swiss courts.

It has already gathered 120,000 signatures to force a nationwide vote on the issue, which could take place in late 2018.

The initiative text is currently being examined in Bern. For the government, the initiative goes too far. It fears that extra regulations could hurt Swiss businesses, which may simply move abroad. It says existing rules suffice. The Federal Council says it does not plan to issue a counter-proposal to the campaigners’ text. Parliamentary committees remain divided.

Important work was also carried out by a sub-committee of the Geneva-based UN Commission on Human Rights, the predecessor of the Human Rights Council, resulting in the 2001 Draft Universal Human Rights Guidelines for CompanieExternal links – a code of conduct that governments should apply to multinationals. 

To no great surprise, the proposal was strongly rejected by business and Western states. But it was not a total failure. 

“The representatives of several major multinationals nonetheless declared their willingness to implement the UN sub-committee’s recommendations to test out the theories,” Carbonnier declared. 

This led to the Business Leaders’ Initiative on Human RightsExternal link (2003-2009), a group of 14 companies, including ABB, Coca-Cola and Novartis, who came together to find practical ways of implementing the Universal Declaration of Human Rights in a business context. 

Ruggie principles 

The next important milestone was the appointment in 2005 of Harvard professor John RuggieExternal link as UN Secretary-General Kofi Annan’s Special Representative for Business and Human Rights. 

“As a political scientist, Ruggie adopted a pragmatic approach based on human rights principles, engaging in dialogue with companies, NGOs and states to reach agreement on the respective responsibilities of firms and states, which are the signatories of human rights treaties,” Carbonnier explained. The result was the 2011 UN Guiding Principles on Business and Human Rights.External link 

“As John Ruggie said, it’s up to each state to integrate these principles into their national legislation. National action plans are then built around the two opposing approaches: one based on incentivising and the other legally binding,” Carbonnier said. 

Since then, the Human Rights Council External linkhas been pursuing several related corporate responsibility initiatives. In 2014, it created a working group on transnational corporations and human rights aimed at drawing up an international legally binding instrument to regulate their activities. In parallel the same year, several states tried to launch a more coercive globally binding framework but this was received negatively by firms and Western governments. 

Recent progress

Despite reticence in some circles, the UN Guiding Principles and public opinion are slowly forcing individual Western states to adopt more binding rules. 

“A number of companies have understood the interest for their image and for a much clearer framework which details their responsibilities,” said Carbonnier. “Standards and societies’ expectations are moving rapidly in this area, which is influencing changes to laws.” 

Last year the French parliament adopted a law that imposes due diligence on multinationals’ human rights abuses in supply chains. In Britain, the Modern Slavery Act 2015 introduced the requirement for businesses with an annual global turnover of £36 million (CHF47 million) or more which supply goods or services and which carry out part of their business in the UK to publish an annual “Transparency in Supply Chain” statement. 

“A key question remains whether a plaintiff from a developing country can file a case against a parent company for rights violations committed by the firm’s branch in their country,” said Carbonnier.   

But there are interesting developments in this area. In November 2017, a German court agreed to hear evidence in a closely watched test case involving a Peruvian farmer who is suing German energy utility RWE. The plaintiff argues that greenhouse gas emissions from RWE’s plants are partly to blame for melting an Andean glacier which threatens to flood his village.   

(Adapted from French by Simon Bradley)