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The Business and Human Rights Landscape

Moving Forward, Looking Back

Edited by Jena Martin, Karen E. Bravo

Book DOI: http://dx.doi.org/10.1017/CBO9781316155219

Online ISBN: 9781316155219

Hardback ISBN: 9781107095526

Paperback ISBN: 9781107479371

Chapter

13 - From Principles to Practice: Implementing Corporate Responsibilit

y for Human Rights pp. 387-413

Chapter DOI: http://dx.doi.org/10.1017/CBO9781316155219.014

Cambridge University Press

387

13

From Principles to Practice

Implementing Corporate Responsibility for Human Rights

Justine   Nolan

There is a convoluted and complex relationship between human rights and corporations. While it is uncontested that corporations should obey the law in the jurisdictions in which they operate, where the content of rights in such jurisdictions does not meet the standards of international law or the law is not enforced, there is a failure in the legal governance regime for protecting human rights. The steady evolution of a global social expectation that companies should respect international human rights standards, combined with the occasional foray by states in adopting an expansive extraterritorial approach to protecting rights, is changing the nature and possibility of developing a fi rmer basis for corporate legal accountability for human rights. The interplay between national and international law and soft law and state and non-state actors is crucial in establishing both a legal and/or quasi-legal basis for holding corporations accountable for human rights violations.

The responsibility for protecting and advancing respect for human rights has long been assumed to be the duty of the state. It is only quite recently that discussion has shifted to focus on the human rights responsibilities of corporations and how such duties and/or responsibilities might be allocated between state and non-state actors. The adoption by the United Nations (UN) Human Rights Council in 2011 of the Guiding Principles on Business and Human Rights 1 has entrenched the notion of

1 Human Rights Council, “Guiding Principles on Business and Human Rights:  Implementing the United Nations ‘Protect, Respect and Remedy’ Framework: Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises,” A/HRC/17/31 (21 March 2011) (2011 Guiding Principles). The Guiding Principles operationalize the 2008 “Protect, Respect and Remedy Framework for Business and Human Rights” also developed by the Special Representative:  Human Rights Council, “Protect, Respect and Remedy: A Framework for Business and Human Rights: Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises,” A/HRC/8/5 (7 April 2008) (2008 Report).

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the existence of a corporate responsibility to respect human rights, 2 but interpreting and implementing that responsibility on the ground is a longer-term task.

The Guiding Principles , developed by the UN Special Representative on the issue of human rights and transnational corporations and other business enterprises, John Ruggie (the Special Representative), set out a three-pronged framework for delineating between the roles of the state and of business with respect to human rights. First, states have a duty to protect people from human rights violations by corporations. Second, corporations have a responsibility to respect, uphold, and not interfere with human rights. And, third, both states and corporations have a responsibility to ensure that people who are victims of corporate violations have access to an effective remedy. This demarcation between a state’s duty and a corporation’s responsibility explicitly acknowledges the traditional primary role of states in protecting human rights but also recognises the urgent need for the private sector to take a prominent role in advancing respect for rights.

While the Guiding Principles provide a useful foundation for future action, well before their adoption in 2011, many global companies were already involved in establishing or working within private compliance programs that were sometimes complementary to existing national laws and, at other times, superseded state efforts to protect workplace rights. The rise of and reliance on soft-law and private regulation to drive corporate compliance with human rights is symptomatic of the fact that governments in many of the countries where the goods are produced are unable or unwilling to implement improved working conditions. The growth and depth of soft-law mechanisms that have developed around the theme of corporate responsibility is in part an acknowledgement of the sluggish pace at which international (and often national) law develops and the political reality that there is likely to be limited appetite at present among states for the development of a new treaty focused specifi cally on business and human rights concerns. 3 But

2 The Special Representative commented in 2010 that the corporate responsibility to respect rights is a notion that has been gradually emerging and is “acknowledged in virtually every voluntary and soft-law instrument related to corporate responsibility, and now affi rmed by the Human Rights Council itself.” J. Ruggie, The UN “Protect, Respect and Remedy” Framework for Business and Human Rights (September 2010), http://198.170.85.29/Ruggie-protect-respect-remedy-framework.pdf (accessed 24 June 2013). This stands in contrast to earlier views by economist Milton Friedman, who argued that it was a “fundamental misconception of the character and nature of the free economy” for a corporation to have any concern other than maximisation of profi t. Milton Friedman , Capitalism and Freedom ( University of Chicago Press , 1962) , 133 ; and, more recently, David Henderson , Misguided Virtue: False Notions of Corporate Social Responsibility ( Institute of Public Affairs , 2001) ,  147 .

3 J. Ruggie, Treaty road not travelled (May 2008), www.hks.harvard.edu/m-rcbg/news/ruggie/Pages%20 from%20ECM%20May_FINAL_JohnRuggie_may%2010.pdf . However, recent developments and a call by Ecuador in August 2013 at the Regional Forum on Business and Human Rights for Latin America and the Caribbean, and later at UN Human Rights Council session in September 2013, for a legally binding international instrument on business and human rights to be concluded

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From Principles to Practice 389

these soft-law initiatives have become important tools in attempting to prevent and remedy corporate rights violations.

The logical involvement of the non-state sector (including companies, non-government organizations (NGOs), unions, industry bodies, and/or international organisations) has been a useful, if not suffi cient, tool to temper this governance gap. Private intervention alone is unlikely to be suffi cient to develop longevity and consistency around corporate compliance for human rights and, thus, for real change to occur, governments must get involved. Violations occurring in a far-fl ung factory in Bangladesh are not a problem that can simply be isolated or fi xed by focusing on improvements at the factory level. Attention also needs to be directed to the corporate and state policies and practices that are being foisted on the factory from within their borders and beyond, both by states and by the global buyers who place the orders in those factories. A blend of private and public regulation is required to tackle these inherent labor problems . How this unfolds in a world of volatile consumer markets that require increased fl exibility in production, rigid labor markets that do not allow fl exibility, and rising costs that incentivise cost cutting is challenging.

1. Re-Regulating the Business and Human Rights Landscape

As the global business and human rights agenda has evolved in the last three to four decades, we have witnessed the rise of and reliance on private regulation 4 as a means of driving consensus on how corporations should or could advance respect for human rights. International human rights law and its state-centric framework for protecting rights are proving inadequate to stem (or redress) the rise of corporate human rights violations and are proving to be more the backdrop for the development

within the UN system has revived discussion on this point. The instrument envisioned “would clarify the obligations of transnational corporations in the fi eld of human rights” and “provide for the establishment of effective remedies for victims in cases where domestic jurisdiction is clearly unable to” provide them. The declaration was supported by the African Group, the Arabic Group, Pakistan, Sri Lanka, Kyrgyzstan, Cuba, Nicaragua, Bolivia, Venezuela, and Peru. More than a hundred regional and international human rights organizations and social movements welcomed the petition. See:  Statement on behalf of a Group of Countries at the 24th session of the Human Rights Council, General Debate – Item 3 Transnational Corporations and Human Rights , Geneva, September 2013, http://business-humanrights.org/media/documents/statement-unhrc-legally-binding .pdf . Also see a response by John Ruggie, A UN Business and Human Rights Treaty? An Issues Brief , 28 January 2014, http://business-humanrights.org/media/documents/ruggie-on-un-business-human-rights- treaty-jan-2014.pdf and an update of 1 May 2014, http://www.business-humanrights.org/media/un_ business_and_human_rights_treaty_update.pdf .

4 Regulation as referred to in this chapter incorporates both formal and informal, legal and non-legal mechanisms or techniques designed to infl uence or at times coerce corporations to better respect and/ or protect human rights.

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of mechanisms to prevent and protect individuals from corporate human rights violations rather than the prism through which corporate accountability might be fi ltered. The unwillingness and/or inability of many governments to fulfi l their human rights obligations have led to protection gaps . All around the global marketplace, non-state actors have stepped in to fi ll this gap.

This transfer or sharing of regulatory authority from states to non-state actors is not so much ‘deregulation’ but rather what might be termed re-regulation 5 or even a regulatory renaissance. 6 The ongoing reliance on private regulatory mechanisms utilizes a combination of hard and soft laws to establish relevant standards that companies strive to achieve. The source of such hard law tends to be readily accessible international and national legislation focused on defi ning consistent standards for health and safety, wages, hours, and conditions of work. The source of soft-law standards is more diverse. While there is no entrenched defi nition of what constitutes soft law, in this context, it might commonly include instruments as diverse as those internationally formulated (other than a treaty) that contain ‘principles, norms, standards or other statements of expected behaviour’ 7 but also widely accepted codes of conduct that have been developed by a group of stakeholders as a mechanism to prevent corporate rights abuses. The Guiding Principles are the latest (and most authoritative) in a long line of soft regulatory techniques that rely in large part on private regulation that encourages but does not necessarily require a corporation to comply with human rights. 8

5 Peter Utting, Rethinking Business Regulation, from Self-Control to Social Control, United Nations Research Institute for Social Development, Technology, Business and Society Programme Paper Number 15, September 2005, 1 at 14. Available at http://www.unrisd.org/unrisd/website/document.nsf /462fc27bd1fce00880256b4a0060d2af/f02ac3db0ed406e0c12570a10029bec8/$FILE/utting.pdf .

6 Ibid ., 1; Richard M. Locke , The Promise and Limits of Private Power ( Cambridge University Press , 2013) ,  169 .

7 D. Shelton , “ Normative Hierarchy in International Law ,” American Journal of International Law 100 ( 2006 ):  291 , at 319. Also see Jaye Ellis, “ Shades of Grey:  Soft Law and the Validity of Public International Law,” Leiden Journal of International Law 25 . 2 (June 2012) , 313 – 334 . Also see David Vogel , “ Private Global Business Regulation,” Annual Review of Political Science 11 ( 2008) :  261 – 282 at 262, who refers to civil regulation as soft law and defi nes it as “socially focused voluntary global business regulations.”

8 Within the Guiding Principles, there is specifi c reference to legal compliance with national laws (Guiding Principle 23, for example; see n.1 2011 Guiding Principles), but the general principle establishing the corporate responsibility to respect human rights and conduct due diligence as a means of implementing this responsibility does not purport to stem from a legal requirement. For an overview of the challenges of utilizing private regulation and soft law in this fi eld, see Richard M. Locke , The Promise and Limits of Private Power , supra note 6 ; Andre Sobczak , “ Are Codes of Conduct in Global Supply Chains Really Voluntary: From Soft Law Regulation of Labour Relations to Consumer Law ,” Business Ethics Quarterly 16 . 2 ( 2006 ):  167–184; E. Pariotti , “ International Soft Law, Human Rights and Non-State Actors: Towards the Accountability of Transnational Corporations? ” Human Rights Rights Review 10 ( 2009 ):  139 – 155 ; L . Baccaro and V. Mele , “ For Lack of Anything Better? International

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What we are witnessing is a process of re-regulation whereby state and non-state actors are utilizing a combination of public and private regulation to improve the framework for corporate human rights compliance. The pivotal role played by non-state actors in this process is crucial in establishing a regulatory framework that encourages, cajoles, and sometimes threatens companies to comply with human rights standards. The role of the state and the possibilities for it to both complement and supplement private regulation so as to better protect human rights is also vital. Ultimately, this chapter proposes that the regulation of corporate activity with respect to human rights requires a multiplicity of stakeholders and a very nuanced mix of public and private regulation that may be diffi cult to replicate easily across different sectors, states, and cultural boundaries. While, in this fi eld, the state may no longer play the primary protection role ascribed to it in either international human rights law or the Guiding Principles, it remains an essential piece of the human rights enforcement puzzle, and greater attention needs to be paid to analysing what mix of international/domestic, state/non-state, and hard/soft regulatory mechanisms will be most effective in protecting human rights in the workplace.

2. The Rise of and Reliance on Private Regulation

For the last several decades, globalization has posed both challenges and opportunities for advancing the protection of human rights in the global marketplace. Signifi cant developments have been taking place in factories, fi elds, and offi ces all over the world, where a variety of stakeholders have been pushing and prodding corporations to adopt operational changes that will lead to sustained compliance with international human rights standards. Sometimes business has been proactive in seeking such changes; at other times it has been reluctant or simply absent. In today’s global economy, large companies in most industries have come to rely on a series of contractors and suppliers in a range of countries to produce their products. Today’s global supply chains link individual workers with large and small companies across national, political, and cultural boundaries, and ‘in a world of 80,000 transnational corporations, ten times as many subsidiaries and countless national fi rms, many of which are small and medium-sized enterprises,’ 9 any attempt to regulate corporate

Organizations and Global Corporate Codes ,” Public Administration 89 . 2 (2011): 451–470; Surya Deva , Regulating Corporate Human Rights Violations ( Routledge USA, 2012), 64 – 118 ; and Wesley Cragg “Business and Human Rights: A Principle and Value-Based Analysis,” in Business and Human Rights , ed. Wesley Cragg (Edward Elgar, 2012), 3–46.

9 Human Rights Council, Business and Human Rights: Further Steps toward the Operationalization of the “Protect, Respect and Remedy” Framework,” Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises (UN Doc A/HRC/14/27), 9 April 2010, para. 82, available at http://198.170.85.29/ Ruggie-report-2010.pdf [accessed 24 June 2013].

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behaviour will always be a challenge. What is becoming increasingly apparent is that for sustained improvements to occur, a multiplicity of stakeholders must be involved, including but not necessarily relying only on the state. Some of the most powerful global actors today are companies, not governments. 10 Logically, recourse to local laws and a system of enforcement and judicial relief in the host countries where global corporations operate should be the fi rst option for ensuring greater respect for human rights. However, the reality is that in many countries, this simply is not happening. In developing countries (but not exclusively so), laws are sometimes weak but enforcement weaker still, and corruption can be endemic – refl ecting chronic failures in developing a governmental order based on the rule of law. 11 Thus, reliance on the state to ensure human rights are protected remains a long-term proposition.

The development and implementation of private regulatory methods that do not rely on the role of the state as the ‘human rights protector’ include the incremental but now widespread adoption of codes, guidelines, principles – at the micro and macro levels – which are being used as mechanisms to drive corporate compliance with international human rights standards. 12 Such developments have urged and continue to urge a change in corporate culture that recognises that workers, wherever they are located, must be treated with dignity and respect. Slowly but surely, a paradigm shift is taking place that affects the way companies and society are increasingly viewing this issue, with the state being viewed as (possibly) part of the solution but not the solution. Companies, in particular global transnational companies, are ‘required’ to play a signifi cant role in developing a solution. ‘In the recent past, it was suffi cient for vanguard companies to do their best to avoid causing environmental and social damage. Now they are being asked to become a force for

10 For example, in its 2013 World Report, Human Rights Watch noted that “In 2011 alone, oil and gas behemoth ExxonMobil generated revenues of US$467 billion – the size of Norway’s entire economy. Walmart, the world’s third-largest employer with more than 2 million workers, has a workforce that trails only the militaries of the United States and China in size.” Human Rights Watch, World Report 2013 (USA, 2013), at 29.

11 Bangladesh provides a contemporary example of this. See Sarah Labowitz and Dorothée Baumann-Pauly, Business as Usual Is Not an Option: Supply Chains and Sourcing after Rana Plaza, April 2014, http://www.stern.nyu.edu/cons/groups/content/documents/webasset/con_047408.pdf .

12 The rise of private voluntary initiatives aimed at regulating corporate adherence to human rights has a rich but relatively brief history, is well documented, and includes prominent examples such as the Sullivan Principles regulating business conduct in South Africa during the apartheid era to more recent initiatives such as the Fair Labor Association or the Forestry Stewardship Council. See, for example, D. O’Rourke , “ Outsourcing Regulation:  Analyzing Nongovernmental Systems of Labor Standards and Monitoring,” Policy Studies Journal 31 . I ( 2003 ):  1 – 30 ; Elliott J.  Schrage, Promoting International Worker Rights through Private Voluntary Initiatives: Public Relations or Public Policy, A Report to the U.S. Department of State on behalf of The University of Iowa Center for Human Rights (January 2004), available at www.cfr.org/content/. . ./Schrage-DOS.pdf ; and D. Vogel , “ Private Global Business Regulation ,” Annual Review of Political Science 11 ( 2008 ):  261 – 282 .

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good, and discovering they cannot do it alone.’ 13 Thirty to forty years ago, very few companies acknowledged any affi rmative obligation to address workplace conditions in the factories of their foreign suppliers – factories they generally neither owned nor operated – but this concept is no longer anathema to many companies. 14 For many (but not all) companies, the question is no longer ‘Do we have an obligation to address workers’ rights in suppliers’ factories? It is ‘How do we do it, at what cost, and with whom do we collaborate in addressing the problems that exist?’ 15

Take, for example, the different corporate responses to two workplace disasters nearly thirty years apart. In December 1984, fourteen years after Milton Friedman’s acknowledgment of the limited scope of a corporation’s social responsibility, 16 a corporate catastrophe occurred in the Indian city of Bhopal. On the night of 2 December 1984, a massive leakage of toxic gases from a storage tank at a chemical plant resulted in the deaths of more than 3,000 people in its immediate aftermath and injured and subsequently killed thousands of others. 17 Some blame was attributed to the central and state Indian governments and their lax enforcement of safety laws and haphazard planning permissions, 18 but public attention also focused on the plant operator, Union Carbide India Limited, and its U.S.–based parent company, Union Carbide (UCC ). Although UCC exercised extensive control over its Indian subsidiary (evidenced not simply by share ownership or representation on the board of directors but also by involvement in ‘key decisions regarding issues such as, technology, plant design, safety . . . training of employees’ 19 ), UCC started shifting the blame for the accident to its subsidiary. The reaction of the principal companies involved was generally denial, obfuscation, and a lack of responsibility for the calamity that ensued, and liability was strictly defi ned in terms of legal accountability for the disaster. Litigation was pursued in both the American and

13 Ross Tieman, “Supply Chain: Groups Face Rising Concern on Safety,” Financial Times , June 11, 2013, http://www.ft.com/intl/cms/s/0/5bd48c1a-b7e2-11e2-9f1a-00144feabdc0.html#axzz2W3By2VWv .

14 See, for example, the companies profi led in Richard M. Locke , The Promise and Limits of Private Power , supra note 6 ; and the vast number of companies who have (at least in theory) embraced the concept of human rights via their involvement with the UN Global Compact.

15 Michael Posner, President, Human Rights First, Testimony before the United States Congressional Human Rights Caucus, “Human Rights and Brand Accountability: How Multinationals Can Promote Labor Rights,” 8 February, 2006, available at http://digitalcommons.ilr.cornell.edu/cgi/viewcontent .cgi?article=1012&context=codes (accessed 24 June 2013).

16 See note 2 and discussion at  note 30 . 17 According to offi cial government fi gures, 3,000 people died in the immediate aftermath, but this

fi gure was later revised upward: Bhopal Gas Tragedy Relief and Rehabilitation Department, Bhopal, State of Mahdya Pradesh, “Profi le,” available at www.mp.nic.in/bptrrdmp/profi le.htm . However, according to Amnesty International’s estimate, between 7,000 and 10,000 people died within the fi rst three days of the gas leak. Amnesty International, Clouds of Injustice: Bhopal Disaster 20 Years On (UK, 2004), 12.

18 Surya Deva, Regulating Corporate Human Rights Violations , supra note 8 , at 30. 19 Ibid ., 28.

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Indian courts with mixed results. 20 The action against the parent company, UCC, was ultimately dismissed and the Indian case settled. Bhopal remains one of the modern world’s worst industrial accidents, and, as a legal precedent, it is most noteworthy for highlighting the limitations of the law and the lack of justice ultimately delivered to those worst affected. 21 So, in the nearly thirty years since, as corporate violations of human rights have continued to occur, what, if anything, has changed in terms of corporate and public perceptions of a company’s responsibility to act and provide redress in the face of such a tragedy?

In April 2013, the Rana Plaza building in Dhaka, Bangladesh, collapsed. The building housed fi ve garment factories, and more than 1,100 workers were killed. Interest from the world’s media immediately centred on the global companies outsourcing production to the garment workers in that building. Questions focused on the corporate responsibilities of these global buyers  – legal or otherwise  – in both preventing and redressing this workplace disaster. The ease with which modern technology distributed disturbing images of those killed and maimed in these factories no doubt played a key role in capturing corporate attention. 22 In the aftermath of the tragedy, global press reports focused primarily on the role and involvement of the private sector in remedying this problem rather than on the Bangladeshi government and its clearly inadequate regulatory enforcement of human rights and labor standards. 23 The fact that direct legal liability may be very diffi cult to prove in linking the global fi rms with the collapse of the factory was not portrayed in the media as a barrier to responsibility.

In the six months following the Rana Plaza building collapse, three different initiatives formed, all with the stated aim of improving working conditions inside Bangladeshi factories. In May 2013, a group of predominantly European apparel

20 In re: Union Carbide Corporation Gas Plant Disaster at Bhopal, India, in December 1984. MDL Docket No. 626, U.S. District Court, Southern District of New York, Ordered November 8, 1985. Interlocutory Application No. 19, Filed in Court of District Judge, Bhopal, in Regular Suit No. 1113 of 1986, Date, February 4, 1986; Order 05-04-1989 in Civil Appeal Nos. 3187–89, Union Carbide Corporation v. Union of India , Supreme Court of India.

21 Litigation is still ongoing in this matter, and in recent reports, Amnesty International has consistently highlighted that victims are still waiting for justice. See http://www.amnesty.org/en/news/28-ye ars-later-women-bhopal-still-waiting-justice-2012-12-03 and Amnesty International, Press Release, “India: Court Decision Requires Dow Chemical to Respond to Bhopal Gas Tragedy,” July 23, 2013, https://www.amnesty.org/en/for-media/press-releases/india-court-decision-requires-dow-chemic als-respond-bhopal-gas-tragedy-2013 .

22 See Julfi kar Ali Manik, Steven Greenhouse, and Jim Yardley, “Western Firms Feel Pressure as Toll Rises in Bangladesh,” New York Times , April 25, 2013, http://www.nytimes.com/2013/04/26/world/asia/ bangladeshi-collapse-kills-many-garment-workers.html?pagewanted=all&_r=0 ; and Dan Viederman, “Supply Chains and Forced Labor after Rana Plaza: Lessons Learned,” The Guardian, May 30, 2013, http://www.guardian.co.uk/global-development-professionals-network/2013/may/30/rana-plaza -bangladesh-forced-labour-supply-chains and on Twitter:  https://twitter.com/TheRanaPlaza .

23 See Sarah Labowitz and Dorothée Baumann-Pauly, n.11.

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companies developed the Accord on Fire and Building Safety, 24 quickly followed in June by the establishment of the Alliance for Bangladesh Worker Safety, made up of North American retailers including Walmart and Gap. 25 These two initiatives demonstrate ‘regulatory renaissance’ at work by both recognizing the limited governmental capacity to provide a short-term remedy to prevent further disasters and accepting that corporate social responsibilities extend beyond those that can be defi ned in stark legal terms. These initiatives adopt a collective workplace safety standard and auditing plan that essentially privatizes aspects of workplace safety in respect of the remediation of safety threats. Together, the plans ‘encompass fi nancial commitments of almost $250 million, plus up to an additional $100 million in low-cost loans to help pay for building upgrades.’ 26 This utilization of non-state actors to protect human rights builds on state efforts in promulgating human rights standards but also explicitly acknowledges the state’s limited enforcement capacity and outsources the implementation of the proposed protection regime to the non-state sector. 27

Several months later, in October 2013, the International Labour Organization (ILO) announced a three-year initiative to improve Bangladesh’s garment factories. 28 The ILO initiative, co-sponsored by the Bangladesh government, will conduct a fi re and building safety assessment on 1,000 to 1,500 factories and run safety and health awareness training. The $24.1 million project – funded mainly by the British and Dutch governments – also aims to provide skills training to survivors of the Rana Plaza building collapse. This initiative uses government funds to enforce national and international regulations and aims to build the capacity of the Bangladesh government to enforce safety standards across a broad spectrum of local factories. In the interim, the private funds of European and American brands are at work, improving a narrower range of factories that are linked to the companies via their supply chain. 29 While the competing nature of these three initiatives potentially

24 See the Accord at http://www.bangladeshaccord.org/ . 25 See the Alliance at http://www.bangladeshworkersafety.org/ . 26 Sarah Labowitz, “The $250 Million Commitment to Bangladesh’s Factories Misses the

Point,” July 19, 2013, Quartz. Available at http://qz.com/105852/the-250-million-commitment -to-bangladeshs-factories-misses-the-point/ .

27 While schemes such as these predominantly operate in developing countries where governments are more commonly unable or unwilling to regulate corporate compliance with human rights, multistakeholder initiatives operate in a variety of countries largely driven by the location of the manufacturing or resource base of the goods being produced. The Fair Labor Association, for example, monitors factories in Bangladesh along with those in more developed economies such as China and Turkey.

28 See ILO, “Improving Working Conditions in the Ready-Made Garment Sector,” at http://www.ilo.org/ dhaka/Informationresources/Publicinformation/Pressreleases/WCMS_226720/lang–en/index.htm .

29 For a discussion on the benefi ts and shortcomings of these developments in Bangladesh, see Sarah Labowitz and Dorothée Baumann-Pauly,  supra note 11 .

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makes implementation all the more challenging, it also recognizes that potential solutions must be multi-pronged and may need to co-exist, offering workplaces a mix of public and private regulation that has the potential to fi ll gaps that another program may overlook. A sub-contracting factory that does not have direct relationships with Western brands may not garner the attention of either the Accord or the Alliance but may fall within the parameters of the ILO project. This is the essence of re-regulation, utilizing public and private regulation that sources standards from international and national legislation to create real reform of workplace safety that encompasses, in this case, a large proportion of Bangladesh’s garment industry. While it is limited to one country and one sector, one can see the promise of this regulatory renaissance, but it is also not without its challenges.

3. From Principles to Practice

Writing in 1970, economist Milton Friedman argued that a company possesses the social responsibility only ‘to use its resources and engage in activities designed to increase its profi ts so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.’ 30 Writing more than four decades ago, Friedman narrowly defi ned corporate social responsibility in legal terms, but developments since then have seen the emergence of a substantial body of soft law which exemplifi es a broader and less legalistic approach toward the incorporation of and responsibility for human rights by the corporate sector.

As was exemplifi ed by the non-state sector’s response to the Bangladeshi tragedy, the practical protection of human rights is being pursued at the ground level by civil society and international institutions acting in concert with business. The reasons that the various codes, guidelines, and principles have proliferated in the last three to four decades are multifaceted (including an increase in pressure on companies from NGOs and a willingness on the part of some companies to adapt corporate strategies to incorporate such codes), but it is also clear that the development of these initiatives is in part a response to an inadequate legal framework. There remain very few legal obligations dealing with human rights that bind corporations operating transnationally. 31 This lack of clear legal liability has been central to the creation of the permissive international ‘human rights–free’ environment 32 in which some

30 Milton Friedman, New York Times Magazine , September 13, 1970 122. 31 David Kinley and Junko Tadaki , “ From Talk to Walk: The Emergence of Human Rights Responsibilities

for Corporations at International Law ,” Virginia Journal of International Law 44 ( 2003 –2004):  931 , 944 – 947 .

32 Olivier De Schutter, Extraterritorial Jurisdiction as a Tool for Improving the Human Rights Accountability of Transnational Corporations , November 2006. Available at http://www.reports-and-materials.org/ Olivier-de-Schutter-report-for-SRSG-re-extraterritorial-jurisdiction-Dec-2006.pdf .

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corporations now operate and the parallel increase in the development of soft-law mechanisms to regulate corporate behaviour. In spite of this, or more accurately because of this, a plethora of codes and guidelines have been established that, with varying levels of success, seek to take on the role of the state in encouraging adherence to human rights standards. 33

For example, in 2011, after persistent criticism about the working conditions at Foxconn, (one of Apple’s principal suppliers), 34 Apple agreed to allow the non-profi t Fair Labor Association (FLA) access to some Foxconn factories to assess compliance with Chinese legal requirements and the FLA’s Workplace Code. 35 Multi-stakeholder initiatives such as the FLA, which is a collaborative effort of companies, universities and colleges, and civil society organizations, epitomize the private regulatory mechanisms that have developed with the lofty goal of establishing a practical framework for human rights protection. FLA’s subsequent audits of Foxconn revealed multiple labor and human rights violations that violated both Chinese laws and FLA code standards, including infractions relating to hours of work, health and safety, compensation, and industrial relations. 36 The FLA, along with the principal companies involved, then started to develop a plan to remedy these violations. The FLA is only one of a series of multi-stakeholder initiatives that emerged in the 1990s focused on the apparel sector, 37 in which companies work in partnership with civil society to attempt to regulate unregulated jurisdictions. In this form of re-regulation, private actors are delivering public goods such as labor inspections, traditionally a state function; but the assessable standards are a mix of public and private regulations. This acceptance (albeit often reluctantly) by (some) businesses of their human rights responsibilities is indicative of the transformation of the rules of the game and an acknowledgement that the rules can no longer be framed in narrow and legalistic terms.

33 See Utting, supra note 5 , 14–15. 34 For a summation of some of these criticisms, see Aditya Chakrabortty, “The Woman Who Nearly

Died Making Your iPad,” The Guardian, 5 August 2013, available at http://www.theguardian.com/ commentisfree/2013/aug/05/woman-nearly-died-making-ipad ; and China Labor Watch, Beyond Foxconn: Deplorable Working Conditions Characterize Apple’s Entire Supply Chain , June 27, 2012. Available at http://www.chinalaborwatch.org/pdf/2012627-5.pdf .

35 FLA Workplace Code of Conduct, http://www.fairlabor.org/labor-standards . 36 Fair Labor Association, Independent Investigation of Apple Supplier, Foxconn, Report Highlights

(March 2012). Available at http://www.fairlabor.org/sites/default/fi les/documents/reports/foxconn_ investigation_report.pdf .

37 Other multi-stakeholder initiatives include Social Accountability International, the Ethical Trading Initiative, and the Fair Wear Foundation. Worldwide Responsible Apparel Production (WRAP) is an industry grouping. Such voluntary initiatives set up to regulate supply chains or hold companies accountable vary widely, and some have failed to agree on the need for external audits with transparent results. This shortcoming has arguably made them less effective and credible; http://www.wrapapparel.org/ .

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The Guiding Principles on Business and Human Rights, the latest and most authoritative to date of a long line of soft-law standards designed to curb corporate rights violations, unabashedly assert a corporation’s responsibility to respect human rights. 38 This corporate responsibility, the UN Special Representative reasoned, emerged not from law but from the basic expectation society has of business: an expectation that companies will do no harm. 39 The Guiding Principles stipulate that the corporate responsibility to respect human rights ‘means that they [companies] should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.’ 40 The explanatory Commentary accompanying the Principles states that ‘the responsibility to respect human rights is a global standard of expected conduct for all business enterprises wherever they operate [and that] [i] t exists independently of States’ abilities and/or willingness to fulfi l their own human rights obligations, and does not diminish those obligations.’ 41

What does this mean in practice, and how do such top-down announcements from the UN fi lter down to impact workers’ rights on the fl oor of a sub-contracting factory in Bangladesh? To some, the loose language of corporate responsibility rather than obligation implies an acceptance of a ‘world where companies are encouraged, but not obliged, to respect human rights’ 42 and requires few real changes in the way business operates. ‘The soothing promise of responsibility can defl ect public attention from the need for stricter laws and regulations.’ 43 Responsibility is distinguished from accountability, and corporations interpreting these principles in practice may choose to take their cue (or not) from a mix of international standards selectively embodied in a soft-law format.

Following this line of reasoning, some argue that it is illegitimate for private companies to be conducting labor inspections and that resources should rather be devoted to strengthening public labor administration systems. 44 The combination of utilizing soft-law standards and enforcement by private actors while fi lling a governance gap left open by the state attracts reasonable criticism around the selective nature of the standards monitored and the perennial problems of leaving

38 Human Rights Council, 2011 Guiding Principle, supra note 1 Principle 11 [II.A.11]. 39 Human Rights Council, 2008 report, supra note 1 [9] and [24]. 40 Human Rights Council, 2011 Guiding Principles, supra note 1 , Guiding Principle 11 [II.A.11]. 41 Ibid . 42 A. Ganesan, Human Rights Watch, “UN Human Rights Council:  Weak Stance on Business

Standards,” 16 June 2011. Available at www.hrw.org/news/2011/06/16/un-human-rights-council- weak-stance-business-standards . See also AFL-CIO, “Responsibility Outsourced:  Social Audits, Workplace Certifi cation and Twenty Years of Failure to Protect Worker Rights,” April 23, 2013. Available at http://www.afl cio.org/Learn-About-Unions/International-Labor-Movement/ Responsibility-Outsourced-Report .

43 R. B. Reich , Supercapitalism: The Transformation of Business, Democracy and Everyday Life ( Knopf , 2007 ), 170 , quoted in Locke, n.6, 157.

44 AFL-CIO, supra note 42 , 17.

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the ‘fox guarding the henhouse.’ 45 In some cases, the standards monitored by some multi-stakeholder initiatives set a lower bar than that required by local law, 46 and some initiatives lack independent auditing and transparency. 47 Many of the soft-law codes and guidelines that have multiplied in this sector in the last three to four decades exhibit these types of problems.

While some credence can be given to the argument that these codes, guidelines, and principles have emerged simply because there is a lack of anything better and/ or as a tactic for avoiding government regulation, the use of soft law can also be a deliberate strategic choice because it is attractive to the participation of a broad group of stakeholders (particularly business and sometimes government). The attraction of such soft law (to some participants) can be easily understood if the standards are viewed as containing aspirational goals that aim for the best possible scenario with limited constraints if such goals are not met. But soft law is not necessarily commensurate with soft results. Any clear demarcation between hard and soft law is challenging 48 and, while some may argue that ‘the essence of any soft law rule is that it is not binding’ 49 in this particular fi eld, differentiation between soft and so-called hard (or legally binding) law is not binary but one that should be viewed as developing on a continuum. What is legally sanctioned is distinguishable from activities that are not, but reputational sanctions can be crucial to business. 50 The reality is that, not unlike the global framework for enforcing international human rights law, such initiatives are only as strong as their members choose to make them, and they do not apply to those that do not want to join them. The potentially fl exible language of the Guiding Principles’ corporate responsibility to respect principle (that is, it is a principle not ‘law’) was deliberately adopted in contrast to the legal protection duties it ascribes to states that are grounded in international human rights

45 Commission on Human Rights, “Interim Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises,” E/CN.4/2006/97 (22 February 2006), [53].

46 For example, in the Apple-Foxconn case, the FLA Workplace Code required a maximum of 60 hours worked per week (regular and overtime), while Chinese law limits work to 40 hours per week and a maximum of 36 hours overtime per month, potentially meaning a maximum of 49 hours per week. FLA’s audit found both standards had been exceeded. The reality is that the Chinese legal limits are not enforced: Fair Labor Association, n.36, 8.

47 See, for example, the Worldwide Responsible Apparel Production (WRAP):  http://www.wrapapparel .org/ , supra note 37 .

48 A.E. Boyle , “ Some Refl ections on the Relationship of Treaties and Soft Law,” International and Comparative Law Quarterly 48 ( 1999): 901 , at 901–902.

49 A. D’Amato , “ Softness in International Law: A Self-Serving Quest for New Legal Materials: A Reply to Jean d’Aspremont ,” European Journal of International Law 20 ( 2009 ):  897 at 899.

50 Chikako Oka , “ Accounting for the Gaps in Labour Standard Compliance:  The Role of Reputation-Conscious Buyers in the Cambodian Garment Industry,” European Journal of Development Research 22 . I ( 2010 ):  59 – 78 .

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law. What distinguishes the Guiding Principles from earlier UN efforts to regulate corporations with respect to human rights 51 is the deliberate decision to move away from pursuing an explicit legal connection between international human rights law and corporations and rely on a more amorphous but broader societal expectation that attaches to companies. Such looseness in language can affect how consistently the Principles are interpreted, who they attach to, and how compliance is coerced, but it may also allow for participation of a broader set of stakeholders that may be willing to adopt and operationalize the Principles than might otherwise be involved.

One of the many challenges associated with the Guiding Principles is their practical implementation . While, theoretically, emphasis is placed on the primary protective duty of the state to safeguard human rights, it is increasingly obvious, from a practical perspective, that in many markets, this needs to be supplemented by private actors. 52 The Guiding Principles’ recognition of the corporate responsibility to respect as the second (and complementary) pillar of the UN framework is acknowledgement of this. The capacity of many national governments , along with venerable institutions like the ILO, to stem rights violations is limited, and the decline of state-backed labor inspections and the ferocious appetite of the global marketplace have quite simply overwhelmed most national systems of labor market regulation. 53 Even developed market economies have trouble maintaining adequate levels of inspection. 54 The need for private actors to take responsibility for labor inspection remains and will probably grow. Foxconn is China’s largest

51 For example, see United Nations Sub-Commission on the Promotion and Protection of Human Rights, “Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights,” E/CN.4/Sub.2/2003/12/Rev.2 (2003). And more generally on earlier UN efforts, see P. Utting, UN-Business Partnerships: Whose Agenda Counts? Paper presented at a seminar on Partnerships for Development or Privatization of the Multilateral System, Oslo, 8 December 2000, 2.  Available at www.unrisd.org/unrisd/website/document.nsf/d2a23ad2d50cb2a280256eb300385855/ a687857bd5e36114c1256c3600434b5f/$FILE/utting.pdf .

52 Locke, n.6, 157. 53 One positive example of how the synergy between the public and private sectors can work to improve

labor conditions is the ILO’s Better Work program, which is a collaboration between the ILO and the International Finance Corporation (IFC) focused on the application of labor standards in private sector development. The Better Factories Cambodia project, launched in 2001, has often been held up as providing a concrete example of how international standards, together with strong monitoring and trade incentives, can usefully be combined to form a strong and sustainable basis for improving working conditions (see discussion at n.93). However, for a contrary view, see International Human Rights and Confl ict Resolution Clinic Stanford Law School & Worker Rights Consortium, Monitoring in the Dark:  An Evaluation of the International Labour Organization’s Better Factories Cambodia monitoring and reporting program (2013):  http://www.workersrights.org/linkeddocs/Monitoring-In- The-Dark-Stanford-WRC.pdf .

54 Lance A. Compa , Unfair Advantage:  Workers’ Freedom of Association in the United States under International Human Rights Standards ( Cornell University Press , 2004 ). Also Human Rights Watch, Blood, Sweat, and Fear: Workers’ Rights in U.S. Meat and Poultry Plants, 25 January 2005, available at http://www.hrw.org/en/reports/2005/01/24/blood-sweat-and-fear .

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private employer, 55 and, in spite of this, or perhaps because of this, state-regulated labor inspections were inadequate to address the ongoing rights violations in the factories. No socially responsible company wants to be publicly associated with child labor, forced labor, or unsafe working conditions in the production of their goods, so the need to perform due diligence to ensure that labor and human rights standards are respected, even in jurisdictions where labor inspectors are active, is often a necessity.

The ideal situation would be one in which non-state actors complement the work of the state by mobilising resources to protect human rights that are comprehensively defi ned by reference to international standards. The work of the non-state actors is not to relieve states of their duties or selectively determine what workplace standards are relevant to their operations but to assist in building the capacity of governments to assume or resume their obligations to improve working conditions. That synergy has been hard to capture, and in many states where violations are rampant, their public agencies are either in denial or in bad faith about the lamentable state of labor law enforcement in their jurisdictions. 56 Reducing corporate violations of workers’ rights is a process of progressive realisation. While a diverse range of initiatives aimed at curbing violations of workers’ rights has proliferated in recent decades, it is also clear that such initiatives ‘have been unable to stem the fl ow of human rights violations by TNCs.’ 57 This should not be taken as an indication that such measures are altogether devoid of merit. Initiatives that have relied on the development of soft law via such tools as codes of conduct can play a vital role in internalising human rights norms within corporations and solidifying the notion that corporations have duties with respect to shareholders and stakeholders (including workers in their supply chain) alike – a process that in time ‘can shape the standards of care that are legally expected of business.’ 58

55 Fair Labor Association, supra note 36 , 1. 56 Bangladesh is a prime example of this, and the decision by the U.S. government in June 2013 to suspend

Bangladesh’s trade privileges with the United States was an attempt by the U.S.  administration to increase the pressure on the Bangladeshi government to act more quickly to improve workers’ rights. The involvement of the Bangladesh government in the 2013 ILO factory initiative might be interpreted as a sign that such pressure was effective. See Steven Greenhouse, “Obama to Suspend Trade Privileges with Bangladesh,” The New York Times, June 27, 2013; http://www.nytimes.com/2013/06/28/business/ us-to-suspend-trade-privileges-with-bangladesh-offi cials-say.html?emc=edit_na_20130627&_r=0 .

57 David Kinley and Rachel Chambers , “ The UN Human Rights Norms for Corporations: The Private Implications of Public International Law ,” Human Rights Law Review 6 . 3 ( 2006 ):  491 .

58 Halina Ward, Legal Issues in Corporate Citizenship , International Institute for Environment and Development, February 2003, iii, available at http://pubs.iied.org/pdfs/16000IIED.pdf . The much larger issue that cannot be fully explored in this chapter deals with the diversity and variance in codes of conduct and other soft-law standards in this fi eld. It is almost impossible to even compare some of the different multi-stakeholder initiatives, as they operate according to individualistic structures peculiar to their particular sectors. For example, the Voluntary Principles on Security and Human Rights ( http://www.voluntaryprinciples.org/ ) has a high level of state and corporate involvement but has been persistently criticized for its lack of implementation and enforcement mechanisms. Meanwhile, an initiative like the FLA, which operates primarily in the apparel and footwear sector,

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But relying purely on either the blind faith of market forces or the state to curb corporate violations has its challenges and, ultimately, is likely to have limited longevity in bringing about sustained workplace improvements. 59 To move from the development of these soft-law principles to their practical implementation requires articulated regulation by a multiplicity of stakeholders. In essence, re-regulation relies on a form of ‘networked governance’ 60 that places corporate behaviour under the scrutiny of not only states but also NGOs, unions, industry bodies, and international organizations. Private regulatory mechanisms that borrow standards from both hard- and soft-law instruments may transcend but also complement the traditional and formal regulatory role played by states in protecting human rights. This form of regulatory renaissance is not so much ‘governance without government’ 61 but rather governance that recognizes the limitations of government and seeks to supplement those regulatory gaps by directly involving other crucial stakeholders.

4. Blending Public and Private Regulation: The Changing Role of the State

In its 2013 World Report, Human Rights Watch stridently makes the case for a more prominent – practical not just theoretical – role to be played by states in regulating corporate compliance with human rights : ‘[w] e have nearly reached the paltry limits of what can be achieved with the current enforcement-free approach to the human rights problems of global companies. It is time for governments to pull their heads out of the sand, look the problem they face in the eye, and accept their responsibility to oversee and regulate company human rights practices.’ 62 Human Rights Watch’s argument is fortifi ed by the many examples of corporate irresponsibility it has tabulated over the years, 63 including several in which companies have professed to be operating according to a human rights code of conduct. Reasserting the role of the state in improving workplace conditions does not necessarily mean, as one commentator puts it, ‘a return to traditional command control regulation [as] [t]he limits of that approach are well known.’ 64 What is needed is some level

has no governmental involvement (but was formed partly at the behest of government) and is stronger on compliance but has been criticized for its lack of union and broad civil society participation.

59 Locke, supra note 6 , 157. 60 Baccaro and Mele, supra note 7 , 453. 61 Vogel, n.12, 263. 62 Human Rights Watch, supra note 10 , 30. 63 See Human Rights Watch reports at https://www.hrw.org/topic/business . 64 Locke, supra note 6 , 2. Command and control regulation might be loosely defi ned as direct regulation

of a company, industry, or activity by legislation that states what is permitted and what is not.

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of involvement by the state to harden the ‘societal expectations’ foisted on some companies and more readily assumed by others: 65 a blending of public and private regulation or re-regulation.

It is reasonable to argue that compliance by companies with soft-law human rights standards is more likely if some aspects of those initiatives encouraging certain behaviours are mandated in the form of a ‘hard’ law requirement. 66 Such requirements can take various forms, and one obvious area where this might be effective in the current climate is government-imposed human rights due diligence or specifi c reporting requirements on companies. 67 These obligations could be mandated via domestic legislation (operating extraterritorially) to ‘harden’ principles that are currently cast in a soft format.

The Guiding Principles, for example, encourage companies to conduct due diligence as a means by which companies might discharge their responsibility to respect rights. 68 Such due diligence involves companies conducting a human rights risk assessment as part of their business operations, but the parameters of such due diligence are not clearly defi ned. 69 There is no legal obligation in the Guiding Principles either to conduct such an assessment or to publish its results. However, the hope or expectation that some companies might willingly adopt such responsibilities stems from experience over the last few decades of some companies who have been involved in multi-stakeholder initiatives that require companies to integrate human rights responsibilities into their modus operandus . The Guiding

65 The fact that states have a duty to protect from third-party violations is non-controversial. How far that obligation extends and whether it should be applied extra-territorially is far less settled; see Human Rights Council, 2008 report, supra note 1  [18].

66 For example, a recent briefi ng paper by a European NGO (The Center for Research on Multinational Corporations (SOMO) at http://www.somo.nl/ ) examined the due diligence efforts of 186 companies that are listed in Europe and make use of the minerals covered by s. 1502 of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111– 203, H.R. 4173)  (see discussion at n.82). The results indicated that only a small percentage of European Union (EU)– listed companies are directly affected by Dodd Frank 1502 and are therefore required to publicly disclose their use of confl ict minerals, and the large majority of companies that are not required to comply with Dodd Frank 1502 simply do not conduct human rights due diligence on confl ict minerals. SOMO, “Confl ict Due Diligence by European Companies,” November 2013. Available at http://www.somo.nl/publications-en/Publication_4003?utm_source=SOMO+Alert&utm_campaign =e3922a78cd-SOMO_Alert_Conflict_Minerals10_23_2013&utm_medium=email&utm_term =0_20c962ad76-e3922a78cd-318982993 .

67 For a discussion of (now) failed legislative attempts in the United States, Canada, and Australia to impose national human rights standards on companies regardless of where they operate, see Adam McBeth, “ A Look at Corporate Code of Conduct Legislation ,” Common Law World Review 33 ( 2004 ):  222 , 251.

68 Human Rights Council, 2011Guiding Principles, supra note 1 , 17 [II.A.17] and 18 [II.A.18]. 69 For more on this, see J. Nolan , “ The Corporate Responsibility to Respect Human Rights: Soft Law or

Not Law? ” in Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? , eds. S. Deva and D. Bilchitz ( Cambridge University Press , 2013) , 138 – 161 .

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Principles leave a signifi cant amount of ‘wiggle room’ for companies in setting the parameters of due diligence and note that:

Human rights due diligence:

(a) Should cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships . . . 70

The text of this provision is nebulous and open to interpretation. Whether the ope- rations of a sub-contracting factory in Bangladesh can be ‘directly linked’ to its U.S.– based buyer is debatable, and with no legal requirement to conduct due diligence, compliance is likely to be patchy and inconsistent. Selective implementation of this principle is also likely to be furthered by the Commentary attached to the Guiding Principles, which states that ‘[w] here business enterprises have large numbers of entities in their value chains it may be unreasonably diffi cult to conduct due diligence for adverse human rights impacts across them all.’ 71 States, however, could supplement and strengthen this process by legislating to require companies they regulate to carry out such due diligence and set the parameters for what it should incorporate.

Articulating the reach of a state to impose such obligations (and therefore defi ning which companies a state might regulate) opens the proverbial bag of worms. Should (or could) such regulations extend beyond a parent company to its subsidiary operating in India or down its supply chain to its contracted supplier factories? Although, in most jurisdictions, national law regulates corporate activities that affect human rights, including labor rights, anti-discrimination law, environmental protection, and criminal law, domestic legislation typically does not apply extraterritorially. However, several UN bodies have, in the last few decades, taken an expansive approach on who and what a state might regulate in the pursuit of protecting human rights. For example, the UN Committee on Economic, Social and Cultural Rights, when considering how states might protect the right to health , noted that state actions might need to cross national boundaries.

To comply with their international obligations . . . States parties have to respect the enjoyment of the right of health in other countries, and to prevent third parties from violating the right in other countries, if they are able to infl uence these third parties by way of legal or political means . . . 72

Postulating two years later in respect to protecting an individual’s right to water , the same UN Committee called upon states ‘to prevent their own citizens and

70 Human Rights Council, 2011 Guiding Principles, supra note 1 , 17 [II.A.17]. 71 Human Rights Council, 2011 Guiding Principles, supra note 1 , 17 [II.A.17] (Commentary). 72 Committee on Economic, Social and Cultural Rights (CESCR), “General Comment 14, The right to

the highest attainable standard of health (art. 12),” UN Doc E/C.12/2000/4, 11 August 2000 [39].

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companies from violating the right to water of individuals and communities in other countries [w] here States parties can take steps to infl uence other third parties to respect the right, through legal or political means. . . .’ 73

Despite this expansive and pragmatic approach taken by the UN Committee on Economic, Social and Cultural Rights that encourages states to protect individuals from corporate harms wherever they occur, the Guiding Principles adopted a more conservative view as to whether a state might regulate corporate activities that extend beyond its borders and jurisdiction. The Guiding Principles note that ‘States must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises.’ 74 The Commentary attached to Guiding Principle 2 further elaborates on these territorial and jurisdictional limits by noting the possibilities open to states to broaden and deepen the scope of the duty to protect but does not go so far as to suggest states are obliged to act in this regard. 75

The Guiding Principles’ rather limp stance in recognising but not requiring states to regulate companies extraterritorially turns its back on a window of opportunity offered by the UN Committee on Economic, Social and Cultural Rights in recommending an assertive extraterritorial approach to protection. The Maastricht Principles on Extraterritorial Obligations of States in the area of Economic, Social and Cultural Rights 76 developed by a group of experts in September 2011 takes up the challenge of more solidly integrating international human rights law with the realities of the global economy and the transnational operations of business by declaring that “[a] ll States must take necessary measures to ensure that non-State actors which they are in a position to regulate . . . such as transnational corporations and other business enterprises, do not nullify or impair the enjoyment of economic,

73 Committee on Economic, Social and Cultural Rights (CESCR), “General Comment 15: The right to water,” UN Doc. E/C.12/2002/11 (20 February 2003), [31].

74 Human Rights Council, 2011 Guiding Principles, supra note 1 , Guiding Principle 1 (I.A.1). 75 The Commentary attached to the Guiding Principles states:  At present States are not generally

required under international human rights law to regulate the extraterritorial activities of businesses domiciled in their territory and/or jurisdiction. Nor are they generally prohibited from doing so, provided there is a recognized jurisdictional basis. Within these parameters some human rights treaty bodies recommend that home States take steps to prevent abuse abroad by business enterprises within their jurisdiction. There are strong policy reasons for home States to set out clearly the expectation that businesses respect human rights abroad, especially where the State itself is involved in or supports those businesses. The reasons include ensuring predictability for business enterprises by providing coherent and consistent messages, and preserving the State’s own reputation.” Human Rights Council, 2011 Guiding Principles, supra note 1 (I.A.2).

76 Maastricht Principles on Extraterritorial Obligations of States in the area of Economic, Social and Cultural Rights (29 February 2012)  (Maastricht Principles); http://www.lse.ac.uk/humanRights/ articlesAndTranscripts/2011/MaastrichtEcoSoc.pdf ; Olivier De Schutter , Asbjørn Eide , Ashfaq Khalfan , Marcos Orellana , Margot Salomon , and Ian Seiderman , “ Commentary to the Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights ,” Human Rights Quarterly 34 ( 2012 ):  1084 – 1169 at 1135.

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social and cultural rights.” 77 Maastricht Principle 25 then goes on to clarify that states will be in a position to regulate such corporations if the corporation, or its parent or controlling company, has its centre of activity, is registered or domiciled, or has its main place of business or substantial business activities, in the State concerned.” 78

When looking for examples of how a state might reasonably regulate corporate activities beyond its borders, one model of extraterritorial legislation that has had a widespread impact on the private sector is the U.S. Foreign Corrupt Practices Act . 79 Adopted in 1977, it has infl uenced the way in which U.S. businesses operate abroad and has changed the global business environment more generally with respect to corruption. Setting a precedent for how a legislative model can reverberate globally, the U.S. act was followed into operation by the OECD Convention on Combating Bribery of Foreign Public Offi cials in International Business Transactions and the

77 Maastricht Principles, supra note 76 , Principle 24 at 5. 78 Ibid ., Principle 25 at 5 and on a related issue with respect to determining the nationality of a

TNC for the purpose of determining the judicial fora in which claims against a TNC may be heard; see the Barcelona Traction Case (New Application:  1962)  ( Belgium v.  Spain ) [1970] ICJ Rep 3, where the International Court of Justice held that the nationality of a corporation is to be determined by reference to the state in which the TNC is incorporated. This does not, of course, surmount the problems posed by the separation of legal personality recognised throughout the common law world; nor does it dispense of the procedural issues that arise in transnational claims. It does, however, mean that a corporation incorporated, for example, in Australia can in theory be sued in the courts of Australia based on actions committed in another jurisdiction. However, the expansive approach taken in the Maastricht Principles stands in contrast to the approach of the U.S. Supreme Court in a 2013 decision examining the extraterritorial liability of corporations for human rights violations. The decision in Kiobel v. Royal Dutch Petroleum (133 S.Ct. 1659), while focused exclusively on the jurisdictional limits of piece of legislation – the Alien Torts Claims Act (ATCA)  – complicates the territorial question a little further. In Kiobel , a majority of the court further restricted – though did not close the door to – future litigation involving the actions taken by global companies outside the United States, especially for non–U.S.–based companies. The justices split fi ve to four in their reasoning, with the majority relying on the presumption against extraterritoriality arguing that nothing in the wording, logic, or history of the ATCA showed that Congress necessarily meant to sweep into U.S.  courts wholly non–U.S.  claims involving non–U.S. parties. Justice Breyer, however, in a concurrence joined by three others, rejected that the presumption against extraterritoriality applied to the statute and instead advocated an analysis “guided in part by principles and practices of foreign relations law” (at 1) to determine whether an ATCA plaintiff’s allegations involved “suffi cient ties” to the United States to trigger jurisdiction. In Kiobel , with non–U.S. plaintiffs, defendants and conduct surrounding the claims, it was deemed insuffi cient to trigger such potential jurisdiction. Recently the United Kingdom (U.K.) Supreme Court took a more expansive view toward extraterritoriality (albeit not in relation to corporate responsibility) when it considered the extraterritorial application of the European Convention on Human Rights in Smith (and Others) v. MOD [2013] UKSC 41. The Court considered whether the U.K. government had jurisdiction over British soldiers killed while serving in Iraq. The Supreme Court held unanimously that the U.K. exercised extraterritorial jurisdiction based on the authority and control which the U.K., through the chain of military command, had over the individuals despite the U.K. no longer exercising “public powers” in the region.

79 (1977)15 U.S.C. § 78dd-1.

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UN Convention Against Corruption, 80 which established international standards for combating corruption. Companies have responded to these global anti-corruption laws by developing due diligence programs to proactively identify potential risks. The global implementation of laws to combat corruption is a useful model for assessing how more rigor could be brought to bear in applying international human rights standards to business, and the mandated due diligence requirements showcase how the Guiding Principles could be hardened into a national legislative model with extraterritorial reach.

States might also supplement private regulatory mechanisms by mandating increased transparency in global business operations with a view to increasing respect for human rights. For example, the UN Global Compact (a very soft version of soft law in this fi eld) asks companies to commit to issuing an annual ‘Communication on Progress’ 81 as a means of advancing corporate responsibility for human rights. While the Compact can cajole companies (and, as a last resort, threaten companies with expulsion) into complying, states can require companies they regulate to report on their global activities and the steps they are taking to ensure the protection of human rights. For example, Section 1502 of the U.S. Dodd-Frank law requires all listed companies to report on the sources of minerals used in their products that originate from the Democratic Republic of Congo or adjoining countries. 82 The purpose of this provision is to provide greater transparency about how the trade in minerals is potentially fuelling and funding the armed struggle in the Democratic Republic of Congo and relies on the adverse reputational impact of such disclosure rather than mandating penalties for actually sourcing minerals from confl ict-affl icted regions. In addition, as part of the decision to lift certain economic sanctions applicable to Burma/Myanmar, the Obama administration has established new reporting requirements for U.S. companies that are investing more than $500,000 in business in Burma. The reporting requirements include a provision that compels companies to outline the steps they are taking to ensure that their commercial engagements do not contribute to human rights abuses. 83

80 OECD. Convention on Combating Bribery of Foreign Public Offi cials in International Business Transactions (adopted by the Negotiating Conference on 21 November 1997), and the UN, Convention against Corruption , adopted 31 October 2003, A/58/422, entry into force 14 December 2005.

81 The UN Global Compact offers businesses a strategic framework aligning their operations with ten universally accepted principles in the areas of human rights, labor, environment, and anti-corruption. See http://www.unglobalcompact.org/COP/index.html .

82 In addition, s.1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111–203, H.R. 4173) addresses fi nancial transparency. This section requires all listed oil and mining companies to disclose the revenues they pay to governments worldwide.

83 See Burma Responsible Investment Reporting Requirements, http://www.humanrights.gov/wp-content/ uploads/2013/05/Responsible-Investment-Reporting-Requirements-Final.pdf .

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The European Parliament has recently approved a Directive on the disclosure of non-fi nancial information by EU companies. The Directive will require EU public-interest entities with more than 500 employees to provide an annual written report on human rights, environmental issues, and social issues to give an understanding of their impact in each of these areas. 84 The Directive is expected to impact about 6,000 companies and is signifi cant because it ‘is the fi rst time that EU companies will be legally required to report publicly on the human rights, environmental and social impacts of their global operations, as well as their due diligence procedures for identifying, preventing, mitigating, and addressing those impacts.’ 85 These transparency initiatives feed off the earlier efforts of multi-stakeholder initiatives such as the Extractive Industries Transparency Initiative and Publish What You Pay, which have long championed the need to increase transparency as well as the due diligence guidelines set out in the UN Guiding Principles. 86 Such reporting requirements – both state and non-state sanctioned – indelibly link transparency with accountability, and in a fi eld where accountability is arguably pursued by civil society with often greater vigor than states, the more information that is made available on global business operations, the more doable the work of these non-state actors becomes to privately regulate corporate activities. 87

As these examples illustrate, interactions between public and private regulation can take many different forms, and mandating certain aspects of human rights due diligence and reporting is one way in which state regulation can supplement private regulatory efforts to improve corporate compliance with human rights standards . 88 Private regulatory mechanisms might sometimes impose more in-depth transparency requirements that exceed state reporting requirements, but public regulation could

84 Public-interest entities are listed companies, credit institutions, insurance undertakings, and any other entity designated by an EU member state as a public-interest entity (for example, because they are of signifi cant public relevance due to the nature of their business, size, or number of employees). See Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013, Article 2(1).

85 Amnesty International Public Statement, April 29 2014, http://www.amnesty.org/en/library/asset/ IOR61/005/2014/en/b09652a3-b4b3-47db-9949-1bd8ddaa731e/ior610052014en.pdf .

86 Extractive Industries Transparency Initiative, http://eiti.org/ ; http://www.publishwhatyoupay.org/ ; Publish What You Pay, http://www.publishwhatyoupay.org/ ; and 2011 Guiding Principles,” supra , note 1 , Guiding Principle [15].

87 There are those that argue that the costs of such transparency initiatives (including funding the reporting and due diligence requirements and potentially directing trade away from developing countries in need of foreign investment) outweigh any potential benefi ts. For a summary of the pros and cons of such arguments, see a transcript of a discussion held on December 13, 2011, hosted by Brookings and Global Witness, “The Transparency, Confl ict Minerals and Natural Resources: What You Don’t Know About Dodd-Frank,” an event examining Sections 1502 and 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, http://www.brookings.edu/research/opinions/2011/ 12/20-debating-dodd-frank-kaufmann .

88 See Locke, supra note 6 , 156–173, for discussion of other ways in which public regulation can be layered on private mechanisms to strengthen compliance with human rights standards.

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cast a broader net to include companies that have resisted private regulation and also include sanctions for non-compliance that go beyond the reputational sanctions most commonly associated with private regulation. 89

The challenges of relying on soft law and private regulation to enforce human rights compliance can be somewhat mollifi ed by the supplementary involvement of the state. However, like reliance on soft law and private regulatory mechanisms, the involvement of the state in regulating corporate compliance with human rights also has its challenges. While, legally, it is arguable that states have the ability to impose extraterritorial human rights due diligence and reporting requirements on companies, the political willpower to do so is often lacking.

The larger question of how the state might most effectively be involved in this blending of public and private regulation is also signifi cant. For example, the FLA (discussed earlier with regard to the regulation of Apple’s Foxconn factories) was convened by the U.S. government, 90 which provided an important moral imperative that drew together a variety of stakeholders to address the issue of working conditions both in the United States and abroad. But it was probably equally important that the U.S.  government acted only as a convenor then withdrew and let the newly formed not-for-profi t organisation (the FLA) get on with the job. This allowed the FLA to be more agile and creative than it likely could have been had government remained at the table. It also allowed the FLA to operate in exporting countries without being challenged as an agent of U.S. foreign or trade policy. By contrast, another multi-stakeholder initiative, the Voluntary Principles on Security and Human Rights (operating in the extractive sector), has developed with governments assuming a fi rm seat at the table alongside companies and NGOs and taking a lead role in developing this essentially private form of regulation. What is most effective in terms of blending public and private regulation is thus likely to differ sector by sector, which can signifi cantly impact the replicability of such initiatives. What might work to fi rm up commitments on security and human rights for the extractive industry, where companies often operate in a joint venture with government, may not be applicable to the garment sector, where a company’s supply chain is not generally directly or formally linked with the state.

89 As one commentator argues, “A soft-law standard will allow an infraction to be cost-effective: that is, a violator of a norm of soft law may suffer reputational loss, but reputational damage may well be worth the benefi ts that are derived from non-compliance with the norm. By contrast, a hard-law system must, without exception, endeavour to make every violation cost-ineffective.” A. D’Amato “ Softness in International Law: A Self-Serving Quest for New Legal Materials: A Reply to Jean d’Aspremont,” European Journal of International Law 20 ( 2009 ):  897 at 902.

90 President Clinton’s original impetus brought a variety of stakeholders together to form the Apparel Industry Partnership. The U.S.  government generally supported the process but was not directly involved in the governance of the organization. The Apparel Industry Partnership eventually transformed into a non-profi t organization in the form of the FLA.

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Regionally, too, approaches may differ. Civil society movements (with a strong element of consumer support) based in northern Europe and North America have actively prodded and pushed both companies and governments to take action on solidifying the concept and requirements of corporate responsibility for human rights for several decades. 91 Such issues have only fi gured more recently on the regional agenda of South East Asian nations despite the ASEAN 92 population of approximately 600 million having long provided an abundant and often attractively priced labor force. This potential workforce, combined with lands rich in natural resources, have together acted as a compelling incentive for transnational corporations to source their goods from this region. While consumer advocacy movements are becoming more vocal in this region, other state-based compliance triggers, such as trade incentives, are proving to be effective in supplementing private regulation.

One prominent example that showcases regulatory renaissance at work with its mix of public and private regulation is Cambodia’s Better Factory program . 93 The program developed out of the 1999 U.S.–Cambodia bilateral trade agreement in which increased access to the U.S.  market (quota) was linked to tangible improvements in working conditions in Cambodia’s garment factories. 94 The project, launched in 2001, monitors factory performance against international and national labor standards and was established by the ILO in cooperation with the U.S. and Cambodian governments. It is not truly a multi-stakeholder initiative in terms of its governance and structure, but the participation of non-state actors (including business, NGOs, and unions) in the program is crucial. Monitoring reports have been used not just by the U.S. government to assess quota increases but also by global corporate buyers to determine where they should place their orders. Although quotas were eliminated in 2005, the ILO program continues with the ongoing support of the Garment Manufacturers’ Association in Cambodia, international buyers, and unions. The program is jointly funded by the U.S. Department of Labor, USAID, Agence Francaise de Development, the Garment Manufacturers’ Association in Cambodia, the Royal Government of Cambodia, and international buyers. 95 Key

91 See, for example, the campaign against child labor in the soccer ball industry in the 1990s (Foul Ball campaign, http://www.laborrights.org/sites/default/fi les/publications-and-resources/ILRF%20 Soccer%20Balls%20in%20Pakistan%20report%20Feb99.pdf ); or the boycott launched against Nestle in the mid-1970s, http://www.babymilkaction.org/pdfs/babykiller.pdf .

92 The Association of Southeast Asian Nations (ASEAN) is a geopolitical and economic organisation of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam.

93 http://betterfactories.org/ . 94 The U.S.-Cambodia Textile Trade Agreement was the fi rst agreement of its kind to link increased

access to U.S. markets to improved working conditions in an exporting country. Textile and garment quotas were eliminated in January 2005 with the end of the Multi-Fiber Agreement (MFA).

95 http://www.ilo.org/asia/whatwedo/projects/WCMS_099340/lang--en/index.htm .

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to the continuation of the program, are the global reputation-conscious buyers who ‘in the continuing absence of a [local] well-funded labor inspectorate . . . appear to be driving improved compliance with ILO labor standards.’ 96 While international standards, such as those found in ILO and human rights treaties, are the appropriate baselines against which to monitor corporate compliance, they have meaning only if effective remedies and enforcement mechanisms are put in place or if they are taken up by local governments. To date, this has not generally happened, and the ILO with its tri-partite structure (business, labor, and government) is often constrained in its efforts to implement the standards it has created. The Better Factories Cambodia project provides a concrete example of how international standards, together with strong monitoring and trade incentives and encouragement (in the form of orders) by global buyers, can usefully be combined to form a strong and sustainable basis for improving working conditions. 97

A recent study of regional state practices with respect to business and human rights found that while most ASEAN States have substantial legal frameworks governing the rights intersection with business, the key challenge is the weak regulatory effectiveness vis-à-vis corporations, which results in greater reliance being placed on private regulation to encourage corporate rights compliance. 98 In this region, with a less vocal consumer movement to drive corporate respect for human rights, a variety of regulatory techniques that blend public and private measures can complement each other and may lead to improved working conditions.

5. Conclusion

The re-regulatory process highlighted in this chapter is slowly but surely refi ning Friedman’s ‘rules of the game’ so that general principles are being transformed by practices on the ground. The implementation of these principles is raising more questions than answers. More research is needed on what particular aspects of this

96 Locke, supra note 6 , 171. 97 In October 2013, the ILO and the International Finance Corporation (IFC) announced a partnership

to launch Better Work Bangladesh, which will provide factory-level services, including assessments of compliance with national labor laws and international standards:  http://betterwork.org/global/?p=3735 . However, while the ILO program has brought benefi ts to Cambodia’s fl ourishing garment industry, it is a program in process rather than a template for resolving problematic working conditions. Recent labor unrest by Cambodian garment workers demanding an increase in their minimum wage illustrates the temporary nature of any “solution” to improving working conditions. See Gerry Mullany, “Workers Face Police Gunfi re amid Unrest in Cambodia,” The New York Times , January 3, 2014, available at http://www.nytimes.com/2014/01/04/world/asia/cambodia-protests.html?_r=0 .

98 Human Rights Resource Centre Business and Human Rights in ASEAN:  A  Baseline Study 2013, available at http://hrrca.org/data/business-and-human-rights-asean-baseline-study .

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re-regulation process are most effective in providing greater protection for human rights. Is state involvement a necessity in all sectors to maximise human right protection? What lessons can be learned from those initiatives that have been in operation for the last decade? Does reliance on soft law impede efforts to develop global laws to regulate corporate rights adherence? Would the development of such global laws necessarily be effective in tempering rights violations at the ground level? Under what conditions and in what sectors are government-imposed transparency or due diligence regulations likely to be most useful in protecting rights? In what situations should private regulation act as a substitute for state regulations, and are such tactics sustainable in the long term as a rights-protection mechanism? And how can we ensure democratic accountability of private actors’ rule making?

Initiatives that combine elements of public and private regulation , whether in the form of the FLA, the Voluntary Principles on Security and Human Rights, or the Cambodia Better Factory project, are still in their relative infancy, but new forms of private/public regulation are continuing to emerge. The Global Network Initiative, 99 the International Code of Conduct for Private Security Service Providers, 100 the Guiding Principles themselves, and most recently the Bangladeshi garment factory initiatives are all projects that both emulate and, at times, seem to be ‘reinventing the wheel’ of earlier efforts that combine aspects of soft/hard law and private/public regulation to improve adherence to human rights.

Accepting that rights must be respected by corporations wherever in the world they operate is one thing; making it happen is quite another. In practical terms in the last few decades, non-state actors have either deliberately or by default assumed the protective duties of states, while some states have sat by idly and/or powerlessly. 101 Utilizing the involvement of other stakeholders in a re-regulatory manner does not absolve a state from acting but rather recognizes that, at times, a joint regulatory effort may be more effective than simply relying on the command-and-control tactics of yesteryear. The questions raised earlier in this chapter indicate that there is a vast number of unknowns in this fi eld of research. One mechanism that is being experimented with by some states is to legislate extraterritorially to mandate human rights transparency requirements. The information disclosed under such laws can benefi t both state and non-state actors in monitoring the impact of corporate activities on human rights, but whether such laws will require penalties to be attached to ensure compliance remains to be seen, as does the fl ow-on effect from the disclosures themselves.

99 See http://www.globalnetworkinitiative.org/ . 100 See http://www.icoc-psp.org/ . 101 Human Rights Watch, n.10, 30.

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What is clear is that the protective role traditionally assigned to states in international human rights law and as recognised in the Guiding Principles will remain relevant only as long as states act on the duties delegated to them. Non-state actors are not so much usurping the role of states but rather simultaneously fi lling a lacuna and building capacity for governments to get involved and institutionalise the norms being established via soft law. States must not only be able but willing to step up to their duty to protect human rights, and this will likely be done most effectively by working with the non-state actors that are currently carrying the lion’s share of the regulatory burden in this sector.

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