Did you know that 51% of the top revenue-generating organizations in the world are private companies?
There is no doubt that business has the potential to generate investment, jobs and economic growth, and can play a vital role in reducing poverty by promoting respect for the law and democratic processes. They can also provide high quality work, equal opportunity, non-discrimination and access to knowledge and technology through the market, expanding political, economic and social opportunities for people, thereby contributing to the realization of various human rights.
There may also be market failures or gaps, and companies are not always willing to respect human rights. For example, they may pay less than the legal wage, endanger the health and safety of their workers, violate freedom of association or participate in the forced displacement of indigenous communities in certain countries.
For example, according to Amnesty Internationalmore than 20,000 people died from a toxic gas leak from a Union Carbide chemical plant in India in 1984. 100,000 people received medical treatment for various health problems following the dumping of toxic waste at various sites in Abidjan, Ivory Coast, in August 2006. The waste was generated by the multinational oil company Trafigura.
Although the issue of the relationship between business and human rights is not new, it has become increasingly important due to the rapid expansion of transnational economic activities and the consequent failure of governance world. Therefore, the question arises: is it possible to hold companies accountable for human rights violations in the international human rights protection system?
To address this issue, the United Nations endorsed the Guiding Principles on Business and Human Rights in 2011, the first global framework to promote business respect for human rights. This document enshrines the responsibility of States to remedy the commercial impacts suffered on their territories and establishes the responsibility of companies to respect human rights. It should be noted that for private companies this is not a legally binding liability. However, this pact offers a global standard of conduct that applies to all companies, regardless of where they operate (Isea, 2011).
Generally, the state has the greatest obligations under international human rights law. Similarly, States cannot waive these international obligations by privatizing the provision of services. Suppose the state cannot ensure that the companies providing these services comply with its human rights obligations. In this case, the consequences can damage the reputation of the country and generate serious legal consequences.
According to Ruggie (2007), when the state controls a company, or its behavior can be attributed to the state for other reasons, the violation of human rights by the company can mean a violation of the obligations arising from international law, because the closer a company is to the state, or the more it depends on the support of public institutions or taxpayers, the more reason the state has to ensure that it respects human rights .
In this sense, because States are signatories to legal instruments that oblige them to respect human rights, their violation can only be committed by them. Thus, the possibility of appealing to the Inter-American Commission on Human Rights (IACHR) for human rights violations committed by transnational corporations is excluded since States would be legally responsible at the international level for the actions of individuals.
However, this does not mean that transnational corporations are exempt from responsibility; companies have a domestic legal obligation to respect human rights based on legal human rights instruments.
The United Nations Resolution 17/4 (2011) stressed that transnational corporations and other business enterprises have a responsibility to respect human rights, and that States should ensure appropriate regulation through national legislation, as the responsible operation of these can contribute to the respect for human rights and help channel the benefits they derive therefrom towards the enjoyment of human rights and fundamental freedoms.
There has been much debate about the customary nature of human rights. Recently, the Supreme Court of Canada in Nevsun Resources v Araya argued that the customary nature of international law tacitly implies the domestic application of international human rights law as domestic law applicable to corporations. Newsun is a compelling case to point to as an appellant; a Vancouver-based mining company could be held directly liable for violations of customary international law norms against slavery, forced labor and cruel treatment in connection with the operation of a mine in Eritrea.
This is why it is important to analyze the organization’s value chain and understand where a company’s operations begin and end to calculate its impacts on human rights and social responsibility.
Today, people are more aware of the role of business in human rights and, on this basis, they demand that their social, economic and cultural rights be respected and guaranteed. Public opinion is crucial in this regard. On the one hand, society is demanding changes in the way companies conduct business. On the other hand, the legislation increases the tax burden weighing on companies, the State being unable to assume all of its administrative and public missions.
It is not only morally and legally necessary for companies to be the source of positive effects for people. Corporate social responsibility (CSR) is a strategic element of business, and it is not a matter of philanthropy since companies are oriented to make social investments in the areas of their business activity, to mitigate the risks associated with their parties stakeholders and maintain a positive reputation with the public. notice that gives them their “permit to operate”.
Companies must innovate in the way they produce, manufacture and distribute their products or services. It is no longer about being an entrepreneur just to make a profit; businesses need to add value to consumers’ lives.
For some, the dilemma posed by corporate social responsibility is the crossroads between competitiveness and the goal of a fairer society. The answer is clear: respect for human rights and social responsibility does not make one company less financially competitive than another. CSR and human rights represent opportunities that companies should exploit for the benefit of all, because only a responsible company can do truly meaningful business in today’s world.
Isea, R. (2011). Las Empresas y los Derechos Humanos. IESE Business School: University of Navarre.
Nevsun Resources Ltd. vs. Gize Yebeyo Araya, et al., award of February 28, 2020: https://decisions.scc-csc.ca/scccsc/scc-csc/en/item/18169/index.do.
Organización de las Naciones Unidas. (2011). Principios Rectores sobre las Empresas y Derechos Humanos. Ginebra.
Organización de las Naciones Unidas. (2016). Principles of responsible contracting: integration of the management of the related risks with the human resources in the negotiations between Estados and inversores: orientation for the negotiators. Ginebra.
Ruggie, J. (2007). Business and human rights: the evolving international agenda. John F. Kennedy School of Government, Harvard University: Cambridge.
Tangarife Pedraza, M. (2010). The legal structure of the international responsibility of transnational companies and other commercial companies in casos de violaciones a los Derechos Humanos.
Michelle Bernier is a lawyer specializing in international law and commercial law. She is studying a master’s degree in law and international business with a double degree from the Universidad Internacional Iberoamericana in Mexico and the Universidad Europea del Atlántico. She is also part of the inaugural cohort of Students for Liberty’s Fellowship for Freedom in India.