A New Responsibility in the Making: Business Companies and Human Rights

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There is a global struggle going on, and it is not going to end soon. This struggle concerns the question, to what extent transnational companies are or should be responsible for human rights. In plenty of countries worldwide, lawsuits, civil society campaigns, political and legislative initiatives address companies’ involvement in human rights violations. Rana Plaza, Shell, Nestlé, Daimler or KiK represent just a few out of numerous examples.

Given its global relevance, the issue is also being addressed in the United Nations and other international institutions and global initiatives. While most actors share the feeling that something needs to be done, there is a lot of disagreement on the forms and scope of business responsibility for human rights. One of the major disagreements concerns the divide between non-binding, voluntary principles, norms and soft law, on the one hand, and binding principles and hard law, on the other. This divide strongly resonates with another divide inherent to human rights law. This is the divide between states and non-state actors, or public and private actors. Ultimately, it triggers the question whether private actors should assume apparently public responsibilities for human rights. But there are ways of reconciling this divide. One of those ways is a new approach to conceptualizing responsibility as hybrid – containing and simultaneously transcending public and private roles.

 

How binding should international law be?

Opponents of binding international law requiring business responsibility for human rights fear an equalization of companies with states. They refer to the state-based character of international human rights law, which can only be violated by states and which also must be protected and fulfilled by states. States also are responsible for actions of non-state actors, including companies. According to this view, companies might be held responsible by law on the national level. On the global level, in contrast, it is only incentives and norms that should be guiding companies’ behavior, but not international law. A popular proponent of this approach favoring non-binding principles is John Ruggie, author of the state-of-the-art of non-binding, normatively highly relevant principles: the UN Guiding Principles on Business and Human Rights.

Proponents of binding international law, on the other hand, are in favor of a more encompassing, effective and obligatory global business responsibility in order to balance their global power. They argue that the power of transnational companies has outgrown the power of certain states, but without corresponding duties and obligations when it comes to human rights. Due to globalization, the rise of transnational business agency partly escapes the legal and political realm of states, and it enables business companies to benefit from different levels of human rights implementation in different states (“forum shopping”). Additionally, major business actors are participating in global governance mechanisms, thereby being able to form, interpret, implement and monitor global norms and rules. These companies are not only endowed with global agency, but also with the authority and legitimacy to act accordingly. Faced with these challenges, the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights is currently taking up the task of drafting a binding international treaty for transnational companies. Initiated by Ecuador, South Africa and other states mainly from the global South, it was launched by the United Nations Human Rights Council in 2014.

The demand for a global business responsibility for human rights does not only relate to companies as violators of human rights, but also to their potential to positively contribute to human rights. Yet again, this touches the most controversial point: To which extent can private companies be responsible for human rights measures in the public international human rights system, without simply equalizing the two realms?

 

Business between the Private and the Public

One solution is to take the characteristics of business companies seriously in that they transcend the dual constellation of public (state) and private (non-state). An extensive scholarship in political science, philosophy, law and economics is dedicated to carving out this hybrid role. As early as 1953, renowned economist Howard R. Bowen fuels the discussion about business responsibility, emphasizing their role for the public interest and the public well-being. Far away from striving to nationalize companies, and acknowledging liberal rules of free markets, Bowen resumes: “We can support freedom and private control of enterprise only if it is conducive to the general welfare […]. Business, like government, is basically ‘of the people, by the people, and for the people.’”

Building on this scholarship, business companies can be said to assume a hybrid role beyond the public and the private. Business actors exhibit public as well as private dimensions, for example when contributing to the public well-being while pursuing their self-interest. What is more, they boost characteristics that transcend this duality at the outset. A case in point is their participation in global governance, in self-governance, and their perceived legitimacy to do so. This legitimacy and authority exceeds that of private actors by far: It is not private. At the same time, due to lacking mechanisms of democratic accountability (among other reasons), it does not simply mirror state legitimacy and authority: It is not public. Rather, it is hybrid, transcending the dual relation between public and private into a tripolar constellation.

The hybrid role of business companies can lay the groundwork for the development of an equally hybrid responsibility for human rights. The task of shaping such a hybrid responsibility comes with several challenges and questions. It needs to define which types of companies shall resume responsibility, and to what extent. It has to address the huge spectrum between transnational companies and small or medium-sized companies, as well as the relation between international law and state jurisdiction. Then again, these questions are to be dealt with in any form of business responsibility for human rights. It is the hybrid model that offers the major advantage of keeping up the differences between companies and states, while at the same time acknowledging the magnitude of business power and legitimacy. It takes into account business agency beyond the private sphere, without simply reallocating it in the public.

The UN-based treaty process, if treated and supported properly, might be just the place to carve out the political and legal measures and challenges for such a hybrid responsibility of business enterprises for human rights.

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