Business and Human Rights
The answer: Further than you might think.
Nike was one of the first companies to realize, after repeated lashings by the media, that it did not hold the power to define its own responsibilities. Activists were turning public opinion against the company, and sooner or later Nike had to respond. That response was perhaps later rather than sooner, both for activists and for the company’s own reputation, but it happened in time for the company to survive – and even to turn the issue in its favor by striving for best-practices in this area.
But while the anti-Nike campaigns relied on boycotts and protests to push for corporate action beyond what was legally required, more recently human rights activists have found a legal basis for their demands. The Alien Tort Claims Act of 1789, originally intended as an anti-piracy measure (the old-fashioned kind of piracy, on the high seas), allows non-citizens to seek legal recourse in the US for violations of international law. Yes, that’s right: anyone, anywhere, can use the US court system to uphold the tenets of international law – tenets often based on norms and precedents, rather than deliberate legislation.
This Alien Tort Claims Act (ATCA) remained largely forgotten until the 1980s, but since then it has been used against Chevron, Chiquita, Coca-Cola, Exxon-Mobil, Firestone, Shell, Wal-Mart, and others.
Earlier this month, Drummond coal company won the first Alien Tort Claims case to reach a verdict; the company was ruled non-complicit in the killing of three union leaders of a Colombian mine. According to SocialFunds.com writer Bill Baue, however, the key take-away is not the verdict itself; it’s the fact that the case was taken seriously enough to reach a verdict. In other words, it was not dismissed, and the discovered facts rather than the legal basis gave Drummond its recent sigh of relief. Besides, there are appeals in progress.
And as Baue points out, tobacco legislation was defeated time and time again before it finally became a multi-billion-dollar liability for the corporations involved.
Chiquita is an interesting example, as some activists believe the company to be demonstrating best-practices in its transparency – openly admitting it paid “protection” money to different terrorist groups in Colombia. The company has since paid its fines and withdrawn from the country, but the pressure is not off. Less-friendly activists feel that the company’s actions are insufficient, and accuse it further of selling weapons to the terrorist groups involved. On the bright side, what Chiquita did was arguably to protect its workers; other companies stand accused of having their own workers killed.
One such company, Coca Cola, has been stubbornly (and foolishly) refusing to recognize the campaign against it. The company is the target of the “Killer Coke” campaign which was recently sweeping college campuses. Its alleged crime: failing to speak out when Colombian paramilitaries began killing its workers. A Coke spokeswoman says, "We were not complicit in what happened, so it wouldn't make sense for us to pay reparations. "But according to one of its accusers, Edgar Paez, Coke had another kind of complicity: "If the company had condemned the first death, there probably wouldn't have been any more." Managers take note: lawsuits and activist campaigns can be based on just on your company’s actions, but also on inaction.
An earlier example of high-profile corporate inaction is Shell Oil; a 1999 Harvard Business School case study examines whether the company should have acted to protect indigenous-rights leader and respected author Ken Saro-Wiwa, whose death sentence was eventually carried out despite international protest. Shell never took a stance on the issue, claiming it did not want to be involved in foreign politics – but at the same time, some argue that the Nigerian government suppressed activist campaigns in order to maintain a business environment attractive to Shell, and that failing to speak out made the company complicit.
In my own experience, managers dealing with supply-chain issues want to believe that they have all the answers, or can determine them pretty quickly. But these examples show otherwise. They show that:
- Your company can face not only reputational challenges and boycotts, but also legal challenges, based on human rights violations overseas.
- These challenges do not necessarily distinguish between your own workers and those of your suppliers – and may even extend to activists engaged in campaigns against your company.
- Your company can be accused not only of wrongful actions, but also of wrongful inactions – and of complicity.
- New campaigns spring up quickly, and what could never have been on your radar screen last year might make front-page headlines this year.
Remember: don’t learn the hard way. Keep your antennae out, and be aware of any accusations against your company. Think broadly of how blame might be interpreted, and engage early with your accusers. Listen to them, and show yourself open to finding the right solution. Statements and settlements will be less costly, and their goodwill will go further, if you make them early and proactively.
And always remember, just because you think you’re taking care of your supply chain doesn’t mean other important stakeholders agree – and doesn’t mean the press and the public will agree. Keep trying to do the right thing as you interpret it, but also keep your ears open, and be ready to react quickly even to issues you think are bunk. Human rights issues are growing in visibility and in scope, and it would be a shame to tarnish your reputation over them.
NOTE: In this post we originally misspelled the name of the country of Colombia as "Columbia," like the university. Thanks to reader Shoshana Grossman-Crist for showing us the error of our ways.
Labels: Bill Baue, Chiquita, Coca-Cola, Drummond, Human Rights and Child Labor, Nike, Shell Oil, Supply Chain
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By 
Bill Baue, on
August 28, 2007 10:02 AM
What I always wonder is if there is any thought about potential human rights abuses before global strategies are decided? Obviously there must be some cursory effort to develop monitoring mechanisms, but is there a deep discussion of not only the problems possible in the supply chain but the opportunities? Even with the current prominence of CSR and other associated issues, I doubt corporations more and more every day.
By 
, on
August 28, 2007 10:43 AM
I think that often, well-meaning corporate managers don't want to believe that these abuses are possible within their own supply chain - and are supported in this type of denial by local managers who hide the abuses. It takes a lot of courage to look at your own operations and admit that they may be complicit in human rights abuses.
By MT, on
August 28, 2007 10:53 AM
All:
I also agree with the point about inaction being a basis for accountability. This principle is well supported in the literature on moral responsibility. In his book entitled, "Complicity - Ethics and Law for a Collective Age" (2000), author Christopher Kutz, for example, makes the following statements:
Grave harms occur because of what large numbers of people do or fail to do (p. 6).
…..
Agents are held morally accountable for intentionally threatening or acting indifferently [e.g., through inaction] towards morally protected interests…(p. 26).
…..
…intentional participation in a group’s activities is the primary basis for normative evaluation, both when agents contribute to collective harms, and when they fail to contribute to collective goods (p. 67).
That said, accountability for inaction concerning the harmful actions of others is not the same as accountability held by such others for the same harmful actions. One is accountability for the failure to act by party A, the other is accountability for actions actually taken by party B. I would also caution against applying this standard too narrowly to only issues involving supply chains. Since when is a company's moral responsibility limited to only those with whom it does business?
Regards,
Mark McElroy
By Mark McElroy, on
August 29, 2007 4:20 PM
I've followed the debate about the ATS with great interest. As a
first comment, it is worth noting that ATS claims that have proven to
have more teeth have not extended too far down the supply chain, so
ATS does not open companies up to endless liability for the actions of
their suppliers. Many of the complaints that have gained more
traction have involved companies being accused of complicity, often in
the actions of governments or armed groups, where the companies
allegedly have given support or acquiesced in governmental violations
of the law of nations. The law of nations has been read very
restrictively by US courts.
But companies should have more than ATS on their legal radar. A
recent study by the FAFO Institute notes that domestic incorporation
of the International Criminal Court Statute by many states has,
basically by accident, created new litigation risks for companies.
The potential for litigation arises when states incorporating the ICC
Statute have domestic laws that allow the prosecution of corporations
as legal persons and recognize the crime of complicity. While
substantial procedural hurdles may remain, companies operating in high
risk areas face the possibility of suit for complicity in genocide,
crimes against humanity, war crimes, and the crime of aggression. For
the FAFO study, see http://www.fafo.no/pub/rapp/536/536.pdf
The Chiquita experience is perhaps a good example of conflicting moral
obligations. Companies have a responsibility to respect and protect
the right to life of your workers, but companies also have a
responsibility not to support another entity that violates the right
to life of the broader community. The Chiquita/Coke experience also
is part of a broader question that socially responsible companies must
grapple with regarding the corporate sphere of influence (or, more
accurately, their sphere of responsibility). What are the
responsibilities of companies vis-a-vis human rights? And how far out
do such responsibilities extend? To the factory floor? The
community? New questions of responsibility are arising with dual use
computer programs and servers in authoritarian countries which have
led to the persecution of political dissidents. Clearly, this
discussion will be with us for quite some time.
Amy Lehr
Research Fellow
Mossavar-Rahmani Center for Business and Government
Kennedy School of Government
Harvard University
By , on
September 4, 2007 8:14 PM
Great comment by Amy Lehr. There are so many examples of companies that are wrestling with this issue of where their community responsibilities begin and end, with Google in China near the top of the list.
And there are obviously arguments to be made on both (several?) sides of these issues: Is Google helping to support the Chinese regime by acquiescing in their censorship rules? Or will Google's presence in China help foster the growth of democracy there in the long run?
I think the key responsibilities for any corporate leader faced with these challenges are to think through these issues openly; to come up with a reasonable, responsible policy; to defend it thoughtfully and honestly; and to be prepared to adjust it as circumstances and popular feeling dictate.
If you approach the problem in this spirit, I think you won't go too far wrong. But there's clearly no path that is guaranteed to be trouble-free.
Karl Weber
By KW, on
September 8, 2007 3:10 PM
All:
Amy's very interesting post included the following questions: "What are the responsibilities of companies vis-a-vis human rights? And how far out do such responsibilities extend? To the factory floor? The community?"
In ethics, the Proximity Principle is sometimes offered as an answer, according to which a party's moral responsibilities towards others supposedly diminishes with distance and/or time. It is not a particularly defensible position to take, and so I think that problem, at least, is easily disposed of. Distance and time have nothing to do with moral responsibility.
As for the Google issue in China and cases like it, I think the placement of blame or culpability necessarily revolves around harms resulting from actions taken by the parties involved, and the degree of their respective, intentional participation in such actions. Thus, unless one can show that Google shared China’s intention to commit the harms associated with China’s intended use of Google’s products, then strictly speaking, Google is not (or was not) complicit in the actions that followed and the harms, if any, caused by them. So far as I know, Google had no such participatory intentions. On the other hand, Google could have refused to do business with China. What, though, is more likely to contribute to the development of transparency and open society over the long run, the ubiquitous use of a powerful (albeit censored) search engine, or no search engine at all? I rather think it is the former, and that we can expect China’s censorship to decline over time under the very influence of Google’s use in that country. Thus, even the implementation of a censored version of Google was arguably a step forward for them, when viewed from our own moral perspective.
This issue also raises the more general problem of boundaries for sustainability reporting. If the intent of a sustainability report is to communicate, say, the social sustainability of a company such as Google, then again, strictly speaking, the impacts of actions taken by others who use a company’s products cannot be ascribed to the company, since such others are not part of the reporting company at all. The same goes for customers and suppliers. Indeed, they can and should prepare their own sustainability reports, the content of which, in turn, should not reflect the impacts of activities performed by their customers or suppliers, either. Unless we stick to these principles, double/multi-counting and dubious claims of accountability will abound.
Last, Karl Weber is right on target. There is no certainty in morality, only moral assertions that may or may not be correct, and which are always subject to criticism, reason, and possible improvement. Companies should just strive to take well-reasoned positions and be prepared to defend and/or improve them as required.
Regards,
Mark W. McElroy
By Mark W. McElroy, on
September 10, 2007 4:06 PM
Thanks for citing my article, Andy. Your point on inaction is very interesting. Bill