Regulating Business Reporting to Protect Human Rights
Erika George, Professor of Law, University of Utah College of Law
The second session of the Open-Ended Intergovernmental Working Group to elaborate an international legally binding instrument to regulate the activities of transnational corporations and other business enterprises concluded on October 28, 2016. As in the first session, participants primarily emphasized the imperative of ensuring that victims of business-related rights violations have access to remedy. Because the movement for a treaty was motivated in large part by the perceived failure of states and business enterprises to repair injuries sustained by victims of violations related to irresponsible or unethical business conduct remedy will remain a central theme of treaty talks.
The Treaty Initiative, a project of ESCR Net and FIDH which represents over 400 human rights organizations released a document containing key proposals for the treaty. While reference to the right to remedy features prominently, the Treaty Initiative presents several proposals that should garner greater attention going forward. In particular, regulation of access to information merits more discussion in future treaty talks.
The treaty offers an opportunity to improve business and human rights outcomes by reducing the risk of abuses occurring in the first instance through mandating disclosure of information on business policies and practices that place human rights at risk. It could regulate the reporting of information relevant to assessing human rights impacts that are likely to be of interest to affected communities, investors, and consumers.
The right to receive information and the responsibility to make information available are widely recognized norms in international law and policy. The Universal Declaration of Human Rights (UDHR) in Article 19 protects the right “to seek, receive and impart information and ideas,” and Article 19 of the International Covenant on Civil and Political Rights obligates governments to protect the freedom to seek information, subject to certain limited exceptions.
The critical role of access to information in fair and just governance is acknowledged beyond the fundamental international human rights instruments. The 2004 United Nations Convention on Corruption calls on governments to take transparency enhancing measures to promote participation in the prevention of corruption through “ensuring the public has effective access to information.” The 1998 Aarhus Convention sets detailed standards for access to information in environmental matters.
Historically, human rights advocacy emphasized the obligations of government agencies and public authorities to provide information to the public and refrain from censorship. One proposal of the Treaty Initiative posits that: “to ensure the enjoyment of human rights in a way that recognizes the increasing influence and power of corporations, it may be necessary to take more concrete steps to ensure that members of the public have the right to request information directly from corporations.”
Information regulation is necessary. The 2011 United Nations Guiding Principles on Business and Human Rights contain provisions recognizing the importance of information in ensuring that States protect human rights and that businesses respect human rights. Principle 3(d) provides that States should “encourage, and where appropriate require, business enterprises to communicate how they address their human rights impacts.” Principle 21 explains that businesses should communicate their human rights impacts and report on how they will address impacts especially in instances where stakeholders raise concerns. The inability to access information compromises the ability of victims of business-related human rights violations to seek remedy.
The 2011 OECD Guidelines for Multinational Enterprises devote an entire section to disclosure, explaining that: “enterprises should ensure that timely and accurate information is disclosed on all material maters regarding their activities, structure, financial situation, performance, ownership and governance.” Relevant for avoiding complicity in human rights abuses, the OECD Guidelines do not limit disclosure to financial results; rather disclosures provided to the public should also include “foreseeable risk factors” and could include “information on relationships with workers and other stakeholders.”
There is a general trend favoring greater transparency. There are growing demands for disclosures beyond the customary financial information business enterprises usually provide. A range of different constituencies are increasingly seeking information from businesses; not just about the quality of products but about the conditions of production as well. Consumers are calling for information on product labels to facilitate consumption choices consistent with their moral or ethical commitments. Investors are increasingly interested in information about risks associated with the environmental and social impacts of a business. Global exchanges are entertaining integrated reporting systems combining social and financial information. Communities and individuals adversely affected by business activities also need accurate information about the governance structure of the business enterprises involved. Victims often do not have sufficient information about the governance structure of business enterprises connected to their concerns making it difficult to determine where to bring a complaint or grievance.
To be sure, some States are not convinced that a binding international instrument is necessary to address the risks to human rights presented by commercial activity. Yet, treaties are coordinated exercises in consensus. International legal instruments are most effective where capacity exists or can be built to comply with agreed commitments to address common problems. It could be possible to create consensus around the need to regulate and mandate standard disclosures of issues relevant to potentially adverse human rights impacts. The present patchwork of different domestic legislation on business reporting related to social impacts are important advances, divergent reporting requirements could prove problematic overtime. Properly crafted treaty provisions could contribute to the creation of an effective system of information regulation needed by a range of interested constituencies.
Treaty provisions regulating the collection and dissemination of information could be beneficial for business, investors, consumers and affected communities. Presently, some states do require certain forms of social and environmental reporting, increasingly others states are recommending reporting. The Treaty could serve to codify and clarify the rights of those seeking information and strengthen the standards on disclosure already agreed as set forth in the OECD Guidelines and the UN Guiding Principles. Information about human rights impacts could be used by the public to help shape priorities. It could enable interested observers to encourage businesses to adhere to commitments to respect human rights. It could benefit businesses interested in avoiding complicity in human rights abuses. Regulating business reporting could promote human rights protection.
Erika George is a Professor of Law and former Co-Director of the Center for Global Justice at the University of Utah S.J. Quinney College of Law in the USA. She is lead representative to University’s Master of Science in International Affairs and Global Enterprise program.