Research Categories: Business and Human Rights

Corporations try to convince us that they are good global citizens: “Brands take stands” by engaging in cause philanthropy; CEOs of prominent corporations tackle a variety of issues; and social values drive marketing strategies for goods and services. But despite this rhetoric, corporations regularly fall short in their conduct. This is especially true in supply chains where a number of human rights abuses frequently occur. One solution is for corporations to engage in meaningful human rights due diligence that involves monitoring human rights, reporting on social and environmental performance, undertaking impact assessments, and consulting with groups whose human rights they can harm. The challenge is how to encourage corporations to make these changes.

We often rely on two types of tools to improve corporate compliance: legal institutions and reputational mechanisms. However, each of these faces significant limitations when it comes to human rights compliance in the supply chain. This Article develops a strategy based on complementarity between the two so that each compensates for the limitations of the other. Specifically, reputational mechanisms can help create incentives for compliance with international legal institutions with weak or absent enforcement mechanisms. Alternatively, legal institutions can create “focal points” regarding corporate best practices that can improve reputational markets for corporate social responsibility.

The reputational typology developed in this Article offers three important contributions to policy and academic discussions concerning corporate misconduct. First, it allows us to create better human rights institutions by revealing the types of “carrots and sticks” that we should include to encourage corporate cooperation; this lesson is particularly timely because an international treaty on business and human rights is in development. Second, this typology illustrates how corporations may voluntarily undertake organizational change in response to a reputational crisis. Finally, this typology identifies drivers of cross-border compliance for transnational corporations.

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Global governance has not yet caught up with the globalization of business. As a result, our headlines provide daily accounts of the extent and consequences of these “governance gaps.” The ability of corporations to evade state control has also contributed to an unusual, even frightening, phenomenon: corporations are governing like states. Some public governance functions traditionally delivered by state actors are now increasingly undertaken by transnational corporate actors. One area that is experiencing this substitution is dispute resolution of human rights. Corporations and other business enterprises, individually or collectively, are creating a variety of grievance mechanisms to address human rights and other conflicts associated – even caused – by their business activities.

When these roles are fulfilled by state actors, we rely on procedural fairness to guide, even discipline, decision-makers. Procedural fairness improves our faith in decision-makers and their institutions even if we might disagree with the outcomes reached. What does procedural fairness mean when it is undertaken by a corporation in relation to quasi-public governance? What factors might improve its disciplining potential on decision-makers and increase the likelihood that the watching public, local and global, might accept the outcomes reached? This Article addresses this challenge by developing a framework for procedural fairness that is based upon human rights research and contract law. The result is a strategy for trust-building that can improve the quality of governance performed by the transnational business sector.

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One of the biggest challenges with international law remains its enforcement. This challenge grows when it comes to enforcing international law norms against corporations and other business organizations. The United Nations Guiding Principles recognizes the “corporate responsibility to respect human rights,” which includes human rights due diligence practices that are adequate for “assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.” Unfortunately, many corporations around the world are failing to implement adequate human rights due diligence practices in their supply chains. This inattention leads to significant harms for the victims of these human rights abuses and a variety of risks – legal, reputational, business, and regulatory – for the companies involved. Over the years, lawsuits have been brought against Walmart, JC Penney, Hershey, Nestle, Purina, Tesla, Google, Chevron, and many others regarding their human rights practices.

This Article explores how shareholders have attempted to change the human rights due diligence practices of companies by submitting shareholder proposals requesting information on a company’s human rights policies, assessments, and implementation strategies. While many of these resolutions are filed by faith based organizations and other members of the Interfaith Center on Corporate Responsibility (ICCR), recent proposals have also received support from actors such as BlackRock and Vanguard. This Article provides a descriptive account of the proposals submitted, evaluates the various shareholder reasons for proposing and supporting these proposals, discusses the outcomes of these proposals (such as approval, exclusion, and withdrawal), and analyzes the possibilities and limitations of enforcing international human rights norms through the mechanism of shareholder proposals.

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This Article addresses the problem of preventing human rights violations abroad that result from the globalization of business. It specifically explores the challenge of promoting corporate social responsibility in global value chains. The modern business has changed dramatically and has “gone global” in order to court foreign markets and secure resources, including labor. Familiar household names, such as Nike and Apple, have “outsourced” many of their functions to suppliers overseas. As multinational buyers, they dominate one end of the global value chain. At the opposite end of the value chain are the local managers and owners of the factories and workhouses where tablets are assembled, running shoes are made, and gowns are sown. These facilities are often the sites of serious human rights violations, such as forced labor and child labor.

Some actors have attempted to rein in transnational corporate misconduct through litigation in domestic courts regarding the corporation’s actions abroad. However, after Kiobel v. Royal Dutch Petroleum, it is unclear how successful such strategies will prove in the future. This Article takes a different approach and focuses on preventing these human rights violations by strengthening corporate social responsibility (CSR) practices. Unfortunately, current CSR approaches focus on encouraging better corporate due diligence regarding the behavior of their suppliers. These approaches rely on auditing, monitoring, and disclosures and have dominated international (UN’s Protect, Respect, and Remedy Framework), national (Danish Act on Financial Statement) and sub-state (California’s Transparency in Supply Chains Act of 2010) efforts to combat human rights violations. However, this Article explains that these and similar efforts will be limited in their effects because of the problem of misaligned incentives between buyers and suppliers in global value chains. Suppliers have different business profiles, interests, and constraints compared to their multinational buyers. Therefore, conventional drivers for CSR that rely on reputational risks and consumer boycotts will not work for suppliers. Instead, public actors and other stakeholders must identify incentives that are appropriate for suppliers. Second, they must also adopt a reflexive law governance approach in order to transmit these incentives effectively in global value chains. This Article concludes by offering examples of CSR strategies that public actors should adopt in order to prevent another Foxconn or Rana Plaza tragedy.

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