Every Cloud Has a Silver Lining: COVID-19 as a Catalyst for Human Rights in Business

[Sâ Benjamin Traoré holds an LLM from Geneva Academy, a PhD from University of Neuchâtel and is currently a postdoctoral research fellow and project coordinator at the Centre for Human Rights, University of Pretoria.]

Besides its health-related consequences, the novel Coronavirus Disease (COVID-19) has exposed the extreme fragility of the global economy, and the long-overdue need to rethink globalization and make it work more sustainably. The economic crisis deriving from the current pandemic has brought into focus the neglected topic of business and human rights the purpose of which is to ensure that corporations respect human rights and the environment and are held accountable for violations.

This short paper analyses how the current pandemic speaks to the business and human rights programme. It highlights the human rights accountability gap in business activities and discuss how the dominant business model has failed to provide resilience for the majority in our societies. It advocates, more generally, the need for imposing on corporations, direct human rights and environmental obligations. This does not mean that state obligations are suppressed or even diluted.

Critical flaws in the current business and human rights regime

Most of these initiatives aiming at regulating the conduct of corporates rely on self-regulation and voluntary commitments giving an unreasonable leeway to companies to adhere to, or ignore them at will. By succeeding in building a broad consensus, UN Guiding Principles on Business and Human Rights (UNGPs) are the most authoritative framework ever reached in the field. While reaffirming the duty of states to protect human rights they provide for a ‘responsibility’ of businesses to respect human rights as well as a remedy for victims of human rights violations caused by business activities. Human rights’ due diligence principle is a critical element of this “responsibility”.

However, the UNGPs bear critical flaws and have failed to fill the accountability gap in this field adequately. First, they are not legally binding. Secondly, they do not impose explicit human rights duties on businesses. Last but not least, some states have shown reluctance to adopt the due diligence principle in their domestic laws. Powerful countries and conservative multinational corporations are still promoting a ‘voluntary obligations approach’ and have shown little, if any, support to any process envisioning internationally binding obligations on corporates. It is against this background that in June 2014, the UN Human Rights Council adopted Ecuador and South Africa’s resolution calling for the elaboration of an internationally legally binding instrument on business and human rights. The call has found support in the global south, which is the host to the majority of multinational enterprises, but western countries, which owns many of these companies, have opposed it. While the treaty process has been ongoing for the last six years, there is no clue that a positive outcome will be reached soon.  

Covid-19 and the need for rethinking economic globalization

The current pandemic has revealed the extreme fragility of the global economy and its profit-at-any-cost model. The globalization of the world economy have expanded the power of large corporations and the lack of human rights accountability vis-à-vis their operations. The dominant capitalist system is built on the neo-liberal cult of the free market, which prioritizes profits over the wellbeing of the majority of people. Successive decades of neo-liberal policies imposed mainly by international financial institutions such as the International Monetary Fund (IMF) and the World Bank have caused havoc in many parts of the world. Austerity measures, including massive policies of wholesale privatization and structural adjustment, have weakened social services. These policies have led to the denial of minimum socio-economic rights, such as the basic right to health, to millions of individuals across the globe, exacerbating inequalities in an unprecedented way. As pointed out by the Special Rapporteur on extreme poverty and human rights, austerity and privatisation often involve the systematic elimination of human rights protections and further marginalisation of the interests of low-income earners.

Covid-19 has put on display how considerable gaps in the social protection systems has left our societies in a dramatic state of unpreparedness and how this challenges our capacities for resilience. As recently acknowledged by the African Commission on Human and Peoples’ Rights, the involvement of private actors in the provision of social services has contributed to the low level of enjoyment of economic, social and cultural rights.  

Moreover, the model is not only socially and economically unfair, but it is also environmentally unsustainable. It privatizes profits for a few while pooling risks on the majority. It has led to global warming and climate change that threatens biodiversity. Studies have suggested that zoonotic diseases, such as Covid-19, are linked to deforestation, climate change and biodiversity loss.

Corporate Human rights due diligence  

According to the UNGPs, corporates must conduct human rights due diligence in identifying, preventing, mitigating and, very importantly, remedying the adverse human rights impacts occurring in their operations and throughout their supply and value chains. Covid-19 and its economic effects have increased the risk of negative impacts of corporate decisions on the human rights of workers and communities. As the next section will show, workers have particularly been affected by the pandemic. Corporates due diligence in the times of Covid-19 refers, for instance, to the duty to provide for appropriate working conditions to mitigate the risks of contracting the virus. It implies, more generally, the responsibility for corporates to take proactive steps in limiting the spread of the virus. In this context, human rights due diligence requires taking measures to facilitate working from home. Another prototypical example of human rights due diligence in this context is securing the right to water. A key recommendation provided by the World Health Organisation (WHO) and governments has been thorough and regular hand washing to prevent the spread of COVID-19. Hence, the need for clean water is more prevalent than ever. As recommended by the WHO, businesses must provide clean water for staff, contractors, and customers. They must provide places for the washing of hands and put hands sanitizers in prominent places.

Furthermore, due diligence implies the need for better risk management in supply chains, the extreme precarity of which has dramatically exposed millions of workers during the pandemic. UNGPs, as well as OECD guidance, provide for the precise contours of corporate human rights due diligence when it comes to the supply chains. In any event, a critical element of due diligence when assessing the impacts of business activities is to engage significantly with potentially affected groups, and stakeholders as recently pointed out by ILO and other international organizations. This implicates a dialogue with unions and worker representatives.

Labour conditions and workers’ rights in the age of Covid-19

Over the last three decades, working conditions and workers’ rights have been degraded systematically. For instance, many enterprises have generalized the practice of outsourcing manufacturing chain, by relying on subcontractors all over the world. Similarly, low-income countries are continuously called to open their economies to business through foreign direct investments. This has resulted in pressure on labour rights with poor regulation or control over employer practices.

The shockwave caused by Covid-19 has only exposed the dark facets of this reality that has been one of the core subjects to the business and human rights movement. As the International Labour Organisation indicated, Covid-19 has had a devastating impact on millions of workers, especially those in the supply value chains. Millions of workers, especially in the garment sector, that were on temporary or precarious contracts, with low wages, have been laid off without a social safety net. Despite the slowdown of the economy, due to general lockdowns, some companies have been operating without proper protective equipment. Some of them failed to reduce workforces in factories; increasing the risk of infection has happened in Ghana recently where massive infections occurred in a fish factory. The above situation highlights the urgent need to impose decent working standards on corporations, especially in business supply chains. In a historic decision rendered on the 1^st of May 2020, the Labour Court of South Africa underscored the obligation of protecting mine workers and affected communities in the context of Covid-19.  According to the Court, the Covid-19 pandemic presents particular risks, and “requires particular responses in workplaces generally, and in mines in particular.”  The vulnerability of mineworkers, in turn, renders the communities in which they live vulnerable to Covid-19. The Labour Court’s approach is entirely in line with the due diligence principle, which binds not only the state but also the mining companies. More generally, the Covid-19 crisis should call for addressing the issue of worker vulnerability, especially in the supply chain model, where millions of workers from lower-income countries produce goods for export to the wealthiest parts of the world.

Are we taking the right path?

Is the current crisis raising enough awareness around the need for reinventing business practices that promote and respect human rights and protect the environment? The answer to this question is twofold. While some actions taken by some stakeholders are somewhat worrisome, as they stick to regressive practices, others have stepped forward more progressively.  Indeed, some states and companies are using Covid-19 as an excuse to relax their human rights and environmental obligations. For instance, as part of its response, the US government has announced measures that are openly in contravention with ecological rules. Corporates in sectors such as banking, automobile or energy are also taking advantage of the situation. Many brands and retailers are invoking force majeure to cancel orders and payments, putting millions of vulnerable workers in the supply chains at risk of losing their livelihood. As opposed to this trend, other corporates have embraced a more responsible-business approach, announcing, for instance, donations and support for suppliers to help reduce the impact of the Coronavirus crisis.

Even so, we can no longer afford to rely on the goodwill of businesses to put people and human rights in the centre of their activities. More than ever, the time has come to go beyond self-commitment and other forms of extra soft law such as UNGPs and place clear binding human rights obligations on corporates including in demonstrating fruitful engagement in the treaty process. In that regard, it is worth noting that some essential stakeholders have recalled these obligations in the light of the ongoing crisis. In a recent resolution, the European Parliament has pointed out that corporate human rights and environmental due diligence are necessary conditions to prevent and mitigate future disasters and ensure sustainable value chains. Similarly, states like Denmark, Poland, and France have announced that they are refusing to bail out companies registered in offshore tax havens. Speaking economic recovery measures taken by states and international financial institutions to support businesses, transparency should be the keyword. Clarity on who is being given what, under which conditions and for what? Lending by international financial institutions to states and corporates has long involved a high degree of opacity in a way that has defeated its very purpose to the detriment of the majority of the people. States and corporations should not abuse the relaxation of lending processes as supposed to provide quick response to the crisis. Here as well, it is time for even greater transparency and accountability as they condition any resilient recovery.

The Coronavirus crisis should act as a catalyst to raise awareness about the profound deficiencies of the global economy. As long as it remains pure discourse and its importance only appears during an isolated catastrophe, the fight for a human rights-centred approach to business does not generate sufficient interest. However, COVID-19 has placed compelling evidence before us that calls for quick and practical actions.  More than ever, it constrains us to change our approach to business and to put the wellbeing of the majority (humans and all living beings) at the heart of any economic project.