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By Bart Mongoven
The International Financial Corp. (IFC) announced recently it is joining forces with the United Nations’ top expert on the business/human rights issue to study the impact of investment agreements on citizens in the developing world. The study suggests the United Nations is at least considering taking a powerful position regarding standards for Western multinational corporations operating in developing countries. It also suggests a tool might be coming to limit the degree to which state-owned enterprises can undo the efforts of these multinationals to protect citizens.
At issue are investment contracts that put a corporation’s rights — to water, for example — above those of the people who live in the vicinity of a major development project. The study could recommend that such contracts include clauses that allow a government to break the deal in order to avoid human rights violations. If the recommendation is implemented, then, governments that might put their citizens’ need for water second to the desire to maintain a lucrative contract no longer would have the excuse that their hands are tied. Such a clause would not directly force changes in what governments do — ultimately governments will do what they are going to do — but it would clarify state and corporate complicity in human rights problems.
Corporations and Human Rights
For more than two decades, major industrial projects in developing countries have been beset by questions of where corporate responsibility regarding human rights begins and ends. Major industrial projects in developing countries often result in massive changes to the landscape and environment — and thus affect the people who live nearby. They also bring labor market changes and changes in social relations. When these changes rise to the level of human rights violations, companies are faced with two questions: First, to what degree are they responsible for either scaling back operations or stopping the violations? Second, under what conditions must they act to stop abuses in their sphere of influence?
In April 2005, then-U.N. Secretary-General Kofi Annan named Harvard professor John Ruggie as the U.N. special representative for business and human rights. Ruggie was tasked with assessing the existing status of rules, norms, codes of conduct and informal agreements on corporate responsibility to human rights globally and to recommend ways of combining these into one clear set of ideas.
Ruggie essentially is calling the bluff of despotic leaders who claim they are powerless to stop human rights abuses by corporations.
The creation of Ruggie’s role was a result of the change in attitude toward globalization during the first half of the 2000s, in which human rights, labor and other activists stopped seeing corporations as villains that needed restraint and began to see them as potential tools for positive change in globalization. The United Nation’s first attempt at addressing this — a document issued in 2003 and referred to as the U.N. Norms — called for corporations to be considered nearly as equally responsible as states in protecting and ensuring human rights.
The Norms were heralded by campaigners as the epitome of the new view of corporations, since they held corporations not only to high standards of behavior, but also assigned them responsibility to act and react to changes on the ground. Governments, however, chaffed at being put on par with corporations — or losing jurisdictional ground to some unknown enforcement mechanism — and corporations cringed at the prospect of being told to ensure human rights in places where they have little control over the actions of local and national governments.
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