02 Apr COVID-19 Symposium: A Time to Kill ‘Business as Usual’–Centring Human Rights in a Frustrated Economy (Part 2)
[Tara Van Ho is a Lecturer at the School of Law at the University of Essex.]
In the first part, I set out how ‘business as usual’ with regard to shareholder primacy has exacerbated human rights concerns associated with COVID-19. In this post, I want to set out a path forward for a more sustainable and appropriate approach. Before I do, I want to briefly address the title of these posts.
Over 21,000 people have died from the COVID-19. Talking about killing anything or anyone during this time should be undertaken with seriousness; it must not be a throw-away joke but a serious call to arms for the benefit of humanity. But ‘kill’ is also the correct term here. Corporate cultures are living organisms that influence and change those who work for them, often much more than most individuals themselves (including corporate leaders) will change the culture. What we have now is not individual organizational cultures that are broken but an entire system that is. The global business culture creates priorities and influences decision-making. ‘Infrastructures of knowledge’ (Celine Tan min 41:30) have largely replicated orthodox approaches to shareholder primacy that are dangerous for human rights and that have proven destructive during the COVID-19 crisis. ‘Business as usual’ is therefore an organism that threatens us, individually and communally. The title of these posts are not a joke; they are a plea to recognize ‘business as usual’ as parasitic and dangerous to our health, individually and communally, and to work to protect ourselves from reproducing this crisis in the future
Some will inevitably argue that I am being unfair to business leaders and shareholders. Traditional orthodoxy tells us that shareholders are ‘risk takers’ who help foster economic growth (p 201), which is why they should be rewarded with hefty benefits. If this were actually true, then we would not be looking at our second major global corporate bailout in twelve years. States insulate risk for businesses, and it is time that states insulate us from toxic business approaches. Additionally, my critique is not aimed at individual business leaders; I am targeting structures of beliefs, and the institutional inheritance of those beliefs, not the individuals who believe in them or even those that benefit from them.
But if I am sincere that we need to replace our current approach to corporate purpose, the next question is obviously: what should we replace it with? Where should we be going from here? Business and human rights provides us with some answers, but it also requires us to address other systems within international law.
What ‘Business and Human Rights’ Offers
The UN Guiding Principles on Business and Human Rights (UNGPs) remind states that they have a primary obligation to regulate businesses to ensure their operations, practices, policies, and products do not negatively ‘impact’ on human rights. David Birchall rightfully argues that the notion of an ‘impact’ used by the UNGPs is broader than that of a ‘violation.’ The legal approach to ‘violations’ suggests action + direct causation = violation, but by focusing on ‘negative impacts’ the UNGPs embrace a wider range of harms. Both the OHCHR and Birchall use an example of a business ‘[t]argeting high-sugar foods and drinks at children, with an impact on childhood obesity’. The impact is neither direct nor immediate, but it does negatively affect the right to health of children in the short, medium and long term. States are to use due diligence to identify the risks posed by business activities so as to guard the human rights of their populations. Extrapolating to COVID-19 and the impact of the shareholder primacy rule, the rule has shown itself to pose significant short- and long-term threats to human rights. While the impact will not always be direct, it is still there and needs to be addressed through regulation that requires managers and directors to evidence a more holistic approach to corporate purpose. Progressive reforms that would tax shareholders at greater rates could help ensure that individuals have access to the realisation of all their human rights.
According to the UNGPs, businesses also need to assess the risks they pose and work to mitigate or remediate any harms. This responsibility exists independently of any state’s ability or willingness to hold the business accountable. Independent business assessment, for instance, proved important during the period in which the UK government promoted an ill-conceived and ill-fated ‘herd immunity’ approach to combatting COVID-19. While the state was promoting a ‘business as usual’ mentality, responsible employers moved to a work-from-home approach, and in doing so did a better job of protecting vulnerable employees and the public at large than the state was doing. Their motives likely varied, and some may not have understood or considered the human rights implications of their decision, but to those businesses who made this decision: thank you. And congratulations – you just successfully performed human rights due diligence!
Now, expand that out to other rights and other situations. It is easy to identify risks posed by particular events or activities. It is often harder to take a step back and assess how underlying cultures, policies, and inherited orthodoxies threaten human rights. But this is the work that is needed; businesses need to move away from a narrow understanding of corporate purpose. We have seen some progress on this issue. Last summer, Business Roundtable released a statement on revising the corporate purpose to recognize the need for businesses to serve all stakeholders. The next day, the Council of Institutional Investors objected to this new corporate purpose, calling for businesses to ‘sustain a focus on long-term shareholder value’. Institutional investors have their own human rights responsibilities, and should be partnering with businesses to provide a sustained change in our corporate culture. Businesses on their own need to adopt policies and practices and mainstream those throughout their operations; they also need to provide a means by which they can solicit genuine feedback from employees on how the corporate culture is harming them. They need to consider not merely violations, but the wide range of ways in which they negatively impact human rights through policies and practices and respond to those with sustained change.
Finally, the UNGPs also have a ‘third pillar’: businesses and states need to ensure victims have access to effective remedies. We need effective mechanisms by which corporate decisions harmful to individuals and communities can be challenged.
What Else Do We Need?
Merely implementing the UNGPs domestically or in individual corporations is not enough, however. We also need structural reform in other areas of international economic law. If international investment law continues to provide a shield to bad corporate activity while providing those same actors with a sword that can defeat progressive legislation aimed at protecting human rights, then changed corporate culture will simply continue to reward bad actors with greater profits and protect them from greater accountability. COVID-19 offers an opportunity, and perhaps the impetus, for the international community to push forward on these reforms. In light of new pressures related to COVID-19, the European Commission has recognised the need for states to have greater policy space when regulating foreign direct investment to protect national interests. In doing so, they are challenging rules and expectations that have long been used to abuse developing and emerging economies. The EC is right to ensure control over its public policy space, but it also needs to lead by example, rather than hypocrisy, and ensure developing and emerging economies are given that same control. We need new international developments—including but not limited to a treaty on business and human rights—that foster long-term and sustainable change in our understanding of corporate purpose, and that provide effective protection for human rights.
Returning to ‘business as usual’ after this COVID-19 pandemic will simply mask the threats that the current system poses to individuals and communities. We deserve better, and we have an obligation to recognize this crisis as the warning it is and undertake the widespread reforms we need to protect ourselves and our communities in the future – properly equipped for the crises to come.