By Tara Van Ho. Tara Van Ho is a post-doctoral research fellow with the INTRALaw Centre at the University of Aarhus’s Department of Law, and a project associate with the Essex Business & Human Rights Project here at Essex. She was formerly a corporate lawyer and now provides human rights research, trainings, and consultancies for NGOs, states, and IGOs. You can follow her on twitter: @TaraVanHo
In a resource-rich Southeast Asian country, a foreign corporation laid an oil pipeline on the outskirts of a town. The assumption by the corporation and the state was that their chosen location for the pipeline wouldn’t cause a disruption to nearby houses and was therefore fine from a human rights perspective. What they didn’t know was that the chosen location required the destruction of trees considered sacred to the local population, a minority ethnic group with specific local traditions.
Removing the trees negatively impacted the right of community members to practice their religion. The destruction of the sacred trees was followed by a condescending attempt at “planting new sacred trees.” This led to significant resentment of the corporation and the loss of any hope at a positive relationship between the community and the business.
This didn’t need to happen. The community understood the need for the oil pipeline, and for its proximity to their community; but they resented the choice of location. The situation could have been alleviated by effective due diligence, the means by which businesses operationalize their responsibility to respect human rights.
Human rights due diligence is called for in the UN Guiding Principles (“UNGPs”) on business and human rights as a means of realizing the business responsibility to respect human rights, i.e., to refrain from impinging on their realisation. If the business fails in this regard, and negatively impacts human rights, it has a responsibility to remedy the harm.
It’s important to distinguish the business responsibility to operationalize human rights from the common notion of Corporate Social Responsibility (“CSR”). CSR is principally about creating good relationships with communities by doing more than what’s normally expected of a corporate actor. The responsibility to respect human rights is the new minimum and it is targeted at ensuring international human rights obligations – as defined by relevant treaties – are realised.
A business that claims it’s “operationalizing human rights” by giving to children’s hospitals or hosting a 5K run for cancer research, is misguided. It’s engaging in CSR, but not in operationalizing human rights. To operationalise human rights, businesses need targeted human rights inquiries and processes, starting with appropriate due diligence.
Respecting Human Rights: This is Not Your Father’s Due Diligence
The notion of “due diligence” was specifically chosen for the UNGPs because it’s a term corporations and corporate leaders understand. But if corporations think they can use their traditional approach to due diligence for human rights, they risk undermining the purpose of the process and increasing the likelihood that they will breach their responsibilities.
As I’ve written in Human Rights and Business: Direct Corporate Accountability for Human Rights (co-edited with Jernej Letnar Cernic), the traditional purpose of corporate due diligence – particularly in areas like mergers & acquisition – is to gather information necessary to protect the business from adverse risks. This creates an internalized nexus to the due diligence: inquiries and decisions are centred on the intersection of the corporation’s risk and opportunity. The business gathers information to determine short-, medium-, and long-term threats. The decisions are based on the corporation’s interests alone, and those making the decision are responsible only to the business’s shareholders.
Human rights due diligence, on the other hand, requires an externalized nexus. It is not the protection of the corporation, but of the individuals who could be harmed, that needs to be at the centre of decisions. Changing the nexus necessarily entails other changes to the due diligence process. There are numerous changes that need to be made, but two are particularly worth noting.
1. Businesses must be transparent to a wide audience early in the process.
In order to adequately identify real risks to human rights, corporations need to disclose their operations to a wide group of people right from the start. Affected individuals and communities cannot provide adequate information and insight for considering human rights impacts unless they have a clear picture of what the business wants to do and how they want to do it.
Consider the “sacred trees” story: had the community been consulted early and transparently, they could have identified appropriate areas for their needs and been clear about which areas would constitute an unreasonable harm for them. They also could have indicated which sacrifices they were willing to make, perhaps trading the sacred trees for something else that the corporation would have perceived as “more important.”
A corporation may feel it’s asking the “right” questions, but without adequate transparency to the affected community, it might not be getting the right answers.
2. Human rights due diligence must include more decision-makers when assessing the appropriate balance between risk and opportunity.
The “sacred tree” story indicates another needed change when operationalizing human rights: the corporation cannot decide on its own what constitutes an “acceptable risk” to others’ human rights. Traditional due diligence allows corporate managers and Boards of Directors to do this on their own because they have been granted the autonomy to represent the interests of shareholders by the business’s shareholders themselves. Corporations haven’t been given this license by the communities or individuals whose human rights are at risk. Even with strong due diligence, the business needs to engage the community in determining which risks are acceptable not for the corporation’s bottom line but for the community and individuals’ human rights.
As corporations are familiar with the notion of due diligence, it can be easy for them to adapt the process and operationalize human rights. In doing so, though, they need to be aware that their old due diligence is not sufficient for the new system. Appropriately adapting the system is one of the biggest hurdles the business will be face.
Operationalising Human Rights: A Minimum Expectation for Businesses
Businesses that want to ensure long-term sustainability need to learn to operationalize human rights well. States are increasingly relying on the UNGPs in developing new legal standards. Last year, France considered making all parent companies legally responsible for due diligence throughout their operations, and while the measure was not adopted, similar laws likely will be soon. Additionally, Ecuador and South Africa have proposed a binding treaty that will firmly address corporations’ responsibilities. This means that operationalizing human rights is no longer a thing “nice” companies do, but is increasingly something all companies must do.
To operationalize human rights well, businesses need to undertake targeted, specific inquiries through due diligence and robust remedial processes. Unfortunately, a blog post is too short a space to meaningfully assist businesses, NGOs, states, or IGOs in understanding how to do this well. Those in need of assistance in designing or evaluating due diligence processes can contact me and the Essex Business & Human Rights Project to identify clear training, research, or consulting needs.