RISKY BUSINESS: INTEGRATING TRANSNATIONAL CORPORATIONS INTO THE HUMAN RIGHTS ARENA

Jeff Aguero May 17, 2006 History 1917 Elkins

Aguero 2 Imagine a world where oil companies work with governments in Africa to promote sustainable environmental policies for refinement. Imagine a world where clothing and show manufacturers ensure wages for workers in developing nations in Asia that will allow them to pay their bills and buy food without having to work ninety hours per week. Imagine a world where investment firms voluntarily withdraw funds from countries if they refuse to provide necessary medicine from their ailing populations. All of these scenes are few and far between in our modern world, because corporations rarely involve themselves in protecting human rights beyond the minimal responsibilities which normative or regulatory structures mandate. At the same time, such a world is not all that far off, assuming that changes in how the relationship between corporations and human rights is conceptualized. The corporation is at the same time extremely dangerous and infinitely valuable when it comes to protecting human rights; in today’s world, where globalization rules, the corporation is arguably the most influential structure in affecting situations around the globe. Corporations make up for many of the deficiencies that the nation-state and NGOs exhibit in dealing with human rights, and have tremendous power to right many wrongs, though such influence remains largely untapped. In order to change this, we must seek to change the nature of the corporation in the regulatory and normative spheres of society. Fundamentally, such changes must make it beneficial and good business practice for the corporation to be a champion and defender of human rights. Plenty of examples that show while such transfigurations will undoubtedly be painstakingly difficult, the benefit is far too great to ignore. Both opportunity and necessity to protect all of the world’s

Aguero 3 citizens dictate that efforts to bring about this change must be undertaken – and soon at that.

The Corporation, the Nation-State, and the NGO Creating a synthesis of private business and human rights seems quite contradictory at first sight. Business actively searches to maximize profit – often at whatever cost – and create the greatest amount of economic value; human rights on the other hand seeks to optimize the conditions of the survival and protect against infringements upon basic guarantees or safety and protection. Fundamentally, the profit motive and the rights motive should be polar opposites, with virtually no overlap. Why then would the thought of ever combining these two concepts ever be plausible? The discourse on the relationship and need to combine human rights discourse and private corporations derives first and foremost in the obsolescence of the nation-state in the modern world. It has become clear that as globalization increases, that the problems of inter-state hostility that plague the nation-state must be addressed in a new form. The suggestion to turn to international political organizations such as the United Nations is a clear one, and yet when looking at the evolution of our prior social structures, there is still something lacking. In looking at where the level of social organization is headed, the past has shown that the next level will encompass more than just a compilation of units of the same level. To quote Alvin Wolfe: “A tribe is not a federation of families; a nation is not a federation of tribes; neither is it likely that man’s present problem will be solved by a federation of states.” 1 There are additional structures,

1

Wolfe, Alvin W. “The African Mineral Industry: Evolution of Supranational Level of Integration.” Social Problems, Vol. 11, No. 2 (Autumn, 1963), pp 153-164.

Aguero 4 institutions, and entities that make up each higher level and in doing so transcend a mere amalgamation of the individual units. So too, as Wolfe suggests, will be the case with the new order to succeed the nation-state. If we are not to turn only to organizations such as the United Nations as the successor to the nation-state for social organization, the corporation and private enterprise arises as a logical contender. To fully evaluate the benefits of the corporation in this realm it is necessary to understand how the transnational corporation (TNC) makes up for deficiencies of the nation-state. First, the modern international community is plagued by issues of national sovereignty and boundaries of power. The concept of national sovereignty is both the pride and the plague of the nation-state; it allows for great amounts of power and origination within a given space, but at the same time complicates and effectively prohibits any other nation from interacting within another nation’s boundaries. Nationstates are seen to have direct and complete control over their physical borders and any attempts by another nation to meddle in the affairs within that space are seen as hostile interference, and in many cases a direct act of war. So, while nations that behave appropriately and maintain human rights accords pose no problem, other nations, who do infringe upon human rights, raise the question of how to bring about legitimate change and rectify the situation in those countries. Should it be the realm of an international body made up of many nations – such as NATO or the UN Security Council – to regulate such issues? Should individual states – such as the United States in Iraq – be able to take on individual countries? Should the punishments be legal, military, or economics? All of these are questions with no clear answer and lack a feasible, long-term solution. No clear mandate exists on how to address the tricky balance between national sovereignty and

Aguero 5 human rights protection. This is even more complicated by the ever-more global environment of the present day, as quite often the events in one nation have direct and indirect effects on the consequences of other nations, both on a regional and global scale. Compare the problems faced by the nation-state on this issue with the position of the corporation. Unlike nation-states, modern corporations are rarely limited by physical constraints on space. In fact, most corporations not only have flexible locations and multiple offices within a given country or region, but often have personnel and employees throughout the world. The desire of the corporation to reach new markets of consumers and new sources of resources has led to mass diffusion of employees across the globe. These long arms of the corporation allow for a vast web of influence that not only is global in scope, but can be redirected and reallocated relatively easily. Take a large company such as Procter and Gamble, with offices in over a hundred countries worldwide, ranging form Argentina to Yemen and Norway to Vietnam. Not only does Procter and Gamble have offices on the ground in each of these locales, with local experts who are familiar with the in and outs of each specific country, but they also have the ability to shift resources and power between different offices and countries with relative ease. If a new product in Peru generates the need for added personnel or additional funds, then the corporate headquarters in the United States can easily reallocate resources to that office. Likewise, if a new plant is to be constructed in Indonesia, and they need machinery from a Russian refinery then it can easily be moved there on request. Clearly, these may be oversimplification of the issues faced by TNCs on a daily basis, but it does make the point that companies are far easily to negotiate international boundaries and move resources between them than nation-states in their

Aguero 6 present form are able to. In this way, the TNC substantially makes up for the inadequacies of the nation-state. Additionally, in many areas of the world, services previously managed by the government – such as healthcare – have been privatized and are now under control by private enterprises.2 Because of this, and the investment that private corporations already have in certain aspects of social services that were previously run by government, it is a natural progression for them not only to be concerned with the manufacturing and providing of those services, but also to ensure that the rights related to those services are protected. A second issue that arises with the form of the nation-state in dealing with human rights abuses and protection focuses on the availability of and accessibility to resources. While many Western nation states have plentiful economic resources at their disposal, nations in the developing world often lack financial power and clout, and it is more often in developing nations, such as those in Africa, where the vast majority of human rights abuses and violations occur. The fact that these abuses occur in the countries that are most often ill-equipped in terms of resources to deal with them presents an extremely dangerous predicament. Without more resources human rights abuses may continue, but it may difficult to acquire more resources if human rights abuses also hamper economic production. Turning again to the TNC, we see that this issue is more easily handled by a private entity with more accessibility to resources; in fact, in many cases, the annual gross income of many TNCs is equivalent to or greater than some developing countries.3 Transnational corporations, unlike nation states, must generally be fiscally solvent and profitable in order to remain in business. While there are certainly examples of
2

Kinsley, David and McBeth, Adam. “Human Rights, trade, and multinational corporations.” In Business and Human Rights. Rory Sullivan, ed. Sheffield, UK: Greenleaf Publishing, 2003. 3 This evidence is based on Caribbean nations and some other nations. It comes from the Kowalewski article that is cited in full later.

Aguero 7 companies that exist and function even while unprofitable – whether through government intervention or some other method – in most cases, the TNC, in order to effectively function and be considered alive, can be seen to be considered a profitable entity. If a company ceases to be financially viable, then it will soon cease to exist, meaning that the TNCs that do exist are generally profitable in the long term. Compare this to the nationstate, which even if it does go bankrupt or run out of funds, does not go cease to function, but can just inject more money into the economy or run on a deficit, often leading to fiscally insolvent governments in existence. The de-facto profitability of the nation-state in turn means that the nation-state will have financial resources that can be used to augment human rights protection and enact change to promote the protection of human rights. While clearly a company cannot spend all of its funding on protecting human rights, the fact remains that TNCs are often in far better positions to offer funding for human rights protection than governments. Likewise, the sheer volume of TNCs in the world means that there will be a greater degree of capital accessible as a whole. Again, in this way, TNCs are better equipped to deal with the human rights issue in the global world. A final area to consider in relation to the applicability of corporations in the human rights arena, concerns not the nation-state, but rather another private entity that has sought to assist in the area of human rights protection – the non-governmental organization (NGO). NGOs are extremely important actors in the fight for ensuring human rights as their sole purpose is often dedicated to this specific cause. Furthermore, they employees or volunteers are highly committed and have a genuine interest in bringing about change as their primary goal. Despite the good intentions and well-

Aguero 8 aligned motives, NGOs face major impediments in their quest. First, NGOs are chronically and drastically under funded and always are in search of more financial resources. Few and far between (if at all) are there NGOs that have adequate funding for the programs or initiatives they seek to advance. Whether healthcare rights, stopping genocide, or ensuring food and drinking water, NGOs constantly struggle to acquire more funding from private donors, grants, gifts, governmental assistance, and the like. The small economic profile of these organizations also directly affects the second problem they face – their low status position in the society’s power hierarchy. While NGOs clearly gain high status from their motives and goals, quite often their low economic stature leads them to have little clout when it comes to advancing their positions. The requisite societal actors on who NGOs rely on to help further their organization often give little credence to their demands as serious threats or requests, and instead only deal with them when convenient. The high esteem with which these NGOs are held is often hampered in its effectiveness by their lack of financial resources, which when considered in a social context, limits their organizational effectiveness in the environment. Again, comparing the problems faced by NGOs to the form of the TNC, many of these difficulties disappear. Unlike the NGO, the TNC does not suffer from lack of resources or funding, as the very nature of the organization is aimed at making a profit. Likewise, because of the importance of TNCs to the national economy of a nation, especially in developing countries anxious for injections of capital, the TNC holds a position as a highstatus actor; national leaders, scared of losing investment by the TNC are far more likely to consider demands and give support to programs proposed by a TNC rather than an NGO. From these two instances, it again becomes clear as to the superior nature of the

Aguero 9 TNC in dealing with human rights abuses on a global scale.

Dangers and Challenges of the Corporation as a Human Rights Actor While the corporation clearly retains advantages in some aspects of being able to protect human rights in the international arena, that does not preclude its own difficulties as well. One major problem with trying to move corporations into the arena of human rights lies in how to realign an organization which has traditionally had motives based purely on profit to be concerned with defending human rights practices of individuals not directly connected directly with the company. Companies have always been focused on generating profits and retaining fiscal profitability as their primary goal, by default of the nature of the corporation as an organizational actor. The formation of a TNC by nature has a desire to make money and so it is necessary to adjust and realign this goal if one is to move TNCs into the role of human rights defenders. But because of the nature of the TNC in relation to capitalism, one simply cannot tell a company that it must protect human rights and expect it to comply. Peter Muchlinski writes: “…TNCs and other business enterprises are in business. Their only social responsibility is to make profits for their shareholders. It is not for them to act as moral arbiters in relation to the wider issues arising in the communities in which they operate.”4 Muchlinksi’s point is well taken, and this presents a major obstacle to any discussion on TNCs and human rights. Closely related to this is the great power that corporations have to negatively impact human rights as well. As discussed in the previous section, TNCs have an extremely influential position when it comes to being able to influence human rights.

4

Muchlinski, Peter. “The Development of Human Rights Responsibilities for MNEs.” In Business and Human Rights. Rory Sullivan, ed. Sheffield, UK: Greenleaf Publishing, 2003.

Aguero 10 However, quite often corporations utilize their unique position to achieve their own goals at the cost of human rights. Consider the role that TNCs play in providing food for developing nations, such as the island states of the Caribbean, where the economic growth generated by the TNCs has often been withheld from the lower social and economic classes; on this, David Kowalewski writes: “An increase in wealth does not necessarily imply an increase in the enjoyment of rights.”5 Because of there small size and lack of abundant soil for production in Caribbean nations, as well as there large population growth over the past few decades, there is considerable strain on the environments of these small island nations. Further contributing to the problem is that even where there is good soil, most of the land is taken up by commercial export farms rather than domestic foodstuff production. Many TNCs from the United States, Britain, Canada, and the Netherlands have established operations in the Caribbean. The unique situation of being close to the United States, disunited from each other (which thus allow one island to be played off another), controlling vast resources, and low labor wages makes them especially attractive for Western TNCs. General evidence suggests (though in aggregate form) that TNCs contribute to inequality in Caribbean nations and thus exacerbate hunger problems. The fact that many TNCs have annual incomes close or equal the entire national income of some countries signals the strength of the impact of these corporations in the micro-environments of these nations. TNCs control a great deal of land for agricultural, tourist, or natural resource extraction, and generally the land they control is among the highest quality on the islands. For example, sugar magnates such as Tate and Lyle control a high percentage

5

Kowalewski, David. “Transnational Corporations and the Third World’s Right to Eat.” In Human Rights Quarterly, Vol. 3, No. 4. (1981) pp 45-64.

Aguero 11 of the most desirable and profitable land in Puerto Rico and Trinidad and Tobago. Additionally, TNCs will often not make the most publicly and socially responsible use of the land they hold. In Puerto Rico, a number of companies hold huge masses of land idle for real estate speculation purposes while keeping it undeveloped – whereas it could be used for food production. Similar things occur with southern Caribbean islands and oil companies who wish to keep the reserves untapped and prohibit other types of development on the land. These TNCs also introduce high quality goods into the environment (food included) that are either 1) out of reach economically for much of the population, or 2) do not increase the nutrition level or health of the population relative to the increased cost. This goes back to the TNCs ability, especially in economically developing countries, to drastically impact consumer choice and preferences. One prime example of this is commercially marketed infant formula, which consumes up a much higher proportion of income of poorer families than richer families. In turn, these poorer families want to get the most efficiency from what little formula they have and dilute the formula, to levels that negate its value or even may cause problems for the infants.6 Not only does this provide higher health costs for the family as a whole, but it also diverts resources from providing for care other family members. These highlight some of the way in which TNCs can do harm in developing nations. Consider however, that each of these situations could also easily be pivoted in a positive way, also do to the TNC. It is essential that TNCs use their resources and unique positions towards positive ends, and in order to promote such aims it is necessary to evaluate both regulatory and normative aspects of changing the nature of the corporation, with regards to affecting human rights.
6

Ibid.

Aguero 12

Changing the Regulatory Environment Perhaps the most clear and easily comprehendible way of making corporations relevant actors in the global human rights arena is to change regulations that govern the conduct of corporations. Such changes can take many forms and affect TNCs in a variety of ways, both directly and indirectly impacting their behavior in regards to human rights. The most clear and distinct approach is to directly legislate that corporations act to stop or prevent human rights abuses. This is clearly a very radical approach and is something that has not been tested or applied in modern society, because it is tantamount to restricting the free market and imposing state ideals and beliefs directly on the company. Additionally, the degree of specificity required for an action such as this would be so much as to hamper human rights protection in the long run. If governments and other regulatory agencies or institutions passed direct legislation or rule changes every time they saw a specific human rights abuse, it would clearly be a waste of time and resources. Imagine a world where governments and the UN passed regulations forcing corporations to act on behalf of them as proxies to stop human rights abuses in Darfur, Rwanda, Yugoslavia, Zaire, and the list goes on. These regulatory agencies would be spending so much time and money legitimating to tell TNCs to go and stop these abuses that they could stop them on their own. Therefore, this type of direct, individual eventbased regulation relating to TNCs and human rights is clearly not feasible. Another method seen with more frequency for regulating the relationship between TNCs and human rights is to only change the regulatory environment in extreme, standout cases. The most clear and well-recognized example of this is seen in combating

Aguero 13 apartheid in South Africa, when certain governments of developed nations – most notably Japan and Sweden – forced their companies to divest from South Africa and South African companies. Japan’s government prohibited all investment and required companies to withdraw their funding, whereas Sweden prohibited new investment. Japan’s ban required an essential liquidation of all commercial assets, and Sweden’s legislation froze it at current levels. Other countries such as the United States and Germany took less aggressive steps, such as removing credits or insurance on investments in South Africa and halted programs that previously aimed to foster growth.7 Sentiments against the situation in South African had been building for many years and people from around the world had expressed disdain for the actions of the apartheid regime. This extraordinary case of human rights of abuse definitely created a unique environment that was exceptionally amendable to regulatory changes and shifts and for the direct intervention of governments in forcing companies to withdraw. The issue with instances such as South Africa (or more recently to a lesser degree in Darfur), is that it takes such a large and coordinated effort on a tremendous scale in order to bring about such a large change in the regulatory atmosphere. For the government to directly force companies to refrain from doing business or stop human rights in a specific country due to a specific violation is far from the norm and requires such a horrific event that it does not happen often. Because of this, such action on behalf of the government to regulate companies in such a direct way on a specific circumstance are extremely rare and difficult to maintain and this type of governmental regulation should be considered the exception rather than the rule.
7

Franck, Thomas M., Padgett, Anthony, et.al. “An Investment Boycott by the Developing Countries against South Africa: A Rationale and Preliminary Assessment of Feasibility.” In Human Rights Quarterly, Vol. 4., No. 3., (Autumn, 1982), pp. 309-332.

Aguero 14 So, if it is difficult for governments to directly regulate TNCs on specific actions or standout episodes, it is necessary to evaluate alternative methods of changing the regulatory structure. Rather than direct regulation on specific instances, governments are much more well-equipped at changing the behavior of TNCs with respect to human right by imposing indirect regulations on companies that make them more responsible in general to protect human rights, rather than focus on specific instances. These indirect regulations need not be abstract and removed from concrete understanding, but instead can be grounded in realistic mechanisms. Governments in developed nations where TNCs are headquartered or largely based out of can require companies to report their holdings and financial transactions with overseas entities to the public. This would allow transparency of assets and allow for greater public knowledge of where firms’ funds are located and in which countries they are working; if norms are present (which will be discussed later in more depth) that view corporate presence in countries that violate human rights is unacceptable, then knowing where companies are invested will clearly help pressure companies to divest. Another and more direct form would be to develop some type of objective criteria that would prohibit companies from investing in rights violating countries at all. While the specific type of criteria for determining what would characterize a “rights violating regime” is up for discussion, the fact that governments could develop a criteria at all is not at issue. If such legislation were passed (whether by domestic or international standards) then companies could either be directly prohibited from engaging in business with regimes or within countries that perpetuate human rights violations, or could face penalties for engaging in such business. It would clearly be more valuable to have an international standard for rating human rights records of all

Aguero 15 nations so that international standardization could occur and that TNCs would be held to the same standard globally. Such actions to generally change the way that governments deal with corporations on human rights would be contrary to what has largely happened historically thus far. During the Carter and Reagan administrations, the Treasury department – which controls how the U.S. representative vote in all international monetary and economic institutions – discouraged any linkage between votes to give aid to a country and the governments of that country’s human rights record. Even if the country in question had a poor human rights record, if the project promoted “basic human needs,” then funding went ahead as scheduled – even if the funding that was allocated by institutions such as the IMF directly or indirectly benefit the oppressive regimes. The Harkin Amendment was a major enabler of this, and the Treasury department lobbied against it under Carter. This amendment allows the U.S. to voice its opposition to loans or grants to violating countries but does not require them to vote against it. Similar circumstances occurred in the Commerce department under Reagan which also generally was against any binding and direct linkages between trade policy and human rights. While the Commerce department did receive information and recommendations from the State Department on human rights abuses, before granting licenses that involved certain foreign governments, they were only recommendations and the Commerce Department was not under any obligation to abide by them. Furthermore, even when the U.S. has voted against funding to other nations, the Treasury Department has been reluctant to lobby other nations to join us in voting against such funding.8 Such actions demonstrate the need to change the regulatory

8

Maynard, Edwin S. “The Bureaucracy and Implementation of U.S. Human Rights Policy.” Human Rights Quarterly, Vol. 11, No. 2. (May 1989) . pp. 175-248.

Aguero 16 environment to advocate more strongly in favor of protecting human rights, and against those who perpetuate their abuse. Another, more concrete example of how governments can alter the regulatory environment is in regards to the World Trade Organization (WTO). The signing of the United States to the global treaty in 1994 (and subsequently the North American Free Trade Agreement a few years later) ushered in a new era that had been slowly building in free trade to our world and swiftly increased the pace of globalization. The WTO creates a global trade environment that effectively puts restrictions higher than any domestic laws on TNCs and international trade. Under the WTO, countries can bring each other to a dispute resolution process – held in secret by non-democratically elected technocrats – when one country feels that it is being shortchanged by another on a trade issue or by a policy within that country. Because in the United States (and many other countries treaties are binding in nature once they have been signed, the findings and decisions of the WTO and NAFTA are required to be adhered to – even if they go against current laws in the United States (with some constitutional protections exempt). The most shocking portion of this treaty however, and the most relevant to our current discussion, is that TNCs can also bring charges or disputes against nation-states under the WTO rules. For example, if a TNC that refines oil has been forced to improve its refinement techniques due to a state or federal law, and it wants to challenge that law, it can bring the dispute to the WTO in the same way a nation-state could.9 Clearly, such developments have led to the tremendous increase in the power of TNCs to influence the environment and skirt rules they formerly had to abide by. While this power is not always a negative thing for

9

Hartmann, Thom. Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights. New York: Rodale, 2002.

Aguero 17 TNCs, in respect to human rights protection it clearly presents a major threat, in that TNCs have greater abilities to go around legislation that may have previously stopped them from operating in countries that violate human rights as well as using practices or processes that may endanger human rights. Consider that large transnational pharmaceutical companies can use the WTO to move around local drug testing, treatment, quality control, and distribution regulations in specific locales. Thus, a clear and defined way that governmental actors can change the regulatory environment to better protect human rights would be to modify the terms of the WTO to protect people from being taken advantage of by TNCs who may choose to use the WTO to engage in practices or do business with entities that perpetuate human rights abuses. Surely, such

action will generate strong criticism and steps will need to be small at first, but even the institution of small safeguards can go a long way in helping to curve the degree of human rights abuses. The WTO can also be used to bring about great positive result and defend the poorest citizens of the world by ensuring they receive a fair price and equitable access in international markets for their goods, but change is necessary.10

Changing the Normative Environment While regulatory changes are often easier to visualize concretely and to use to convince people of the need for changes in the human rights protections, an equally, if not more, powerful realm of helping to protect human rights lies in changing the

10

Kinsley, David and McBeth, Adam. “Human Rights, trade, and multinational corporations.” In Business and Human Rights. Rory Sullivan, ed. Sheffield, UK: Greenleaf Publishing, 2003.

Aguero 18 normative environment and the culture of human rights discourse in society. Normative changes do not necessarily focus on changing the codified and mechanical processes that relate to human right sin the way that regulatory changes do, but instead changing cultural attitudes, social feelings, and generally the way that human rights is conceptualized in society. Rather than work to bring about legal changes that specifically prohibit corporations from doing business in countries that violate human rights routinely, or from engaging in practices that violate human rights, normative changes focus on making it socially unacceptable for companies to violate human rights, and even necessary for them to help protect human rights. Normative changes involve changing the collective attitudes of society as to what the relationship is between the TNC and human rights; some evidence supporting a normative shift exists, as seen in the inclusion of this passage in the Preamble to the UN Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights: “…transnational corporations and other business enterprises, as organs of society, are also responsible for promoting and securing the human rights set forth in the Universal Declaration of Human Rights.”11 There are a number of ways to achieve this and a number of results that can occur, the most relevant of which will be discussed here. As discussed above, the primary goal of TNCs is to earn financial profit – that is, to make money. In most cases TNCs make money by providing a service or selling a product, for which there is adequate demand in the marketplace. In most cases, the process by which that product is made – as long as it is safe, clean, and at the expected degree of quality – is of little concern to the average consumer. Companies sell a product
11

Accessible here: (http://www1.umn.edu/humanrts/links/norms-Aug2003.html). Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, U.N. Doc. E/CN.4/Sub.2/2003/12/Rev.2 (2003).

Aguero 19 or service, and consumers buy the product or service if it meets the need at the time; as much media attention may be focused on a given standout case at a time – such as Kathie Lee Gifford’s slave-made clothes or the average wages of Nike workers in Indonesia – there is little if any concern by the consumer as to the conditions under which that product or service was manufactured. While there are cases such as those mentioned above of consumer uproar regarding the human rights behind their clothes or other goods, by and large there is little routine concern over such issues, and human rights is generally absent from the consumer product market. It is not that individuals who buy these goods necessarily condone human rights abuses for their own sake – for in many cases, champions of human rights in one arena can be found wearing Nikes or Polo shirts – but instead that, 1) they are too ignorant and ill-informed about many of the processes behind their goods, and 2) they are more concerned with paying the lowest possible price for the said good, while retaining the highest possible quality. These two key issues provide enough of a distraction for the consumer that human rights, even when considered, is the tertiary concern, at best. And because of this preference by consumers, companies have no impetus to integrate human rights into the popular fold of their production or manufacturing processes. Thus, in order to bring about companies – whose primary goal is profit – we must work to make it profitable for companies to promote human rights (as well as unprofitable for them to promote behavior that violates human rights). This change can be aided by regulatory alternations and modifications, but at its heart must come from changes in consumer preferences and market dynamics that govern the way that the consumer behaves.

Aguero 20 Changes to the normative environment, just as with changes to the regulatory environment, can come in a number of forms, and work with different rates of success in different nations. One key way to bring about normative change focuses on addressing the ignorance and lack of knowledge of most people as to the practices and processes by which their goods are made or their services are rendered. Greater education on the way that goods are made and the conditions which workers who make them must endure are essential in raising the stature of human rights in relation to TNCs. Raising awareness of human rights issues can be done in a number of ways: television specials (that are quite common today) on the production methods of many popular items, shifting education to include greater sections on the modern economies of other nations (including those that produce manufactured goods), and increasing forums available for discourse on such issues. Another example, in part utilizing regulatory measures, would be to require companies to attached labels or ratings on the method of production o their goods. This manifests itself more clearly as creating and establishing unofficial rating systems and disseminating publicly, knowledge about the strip cubs. And as illuminating and insightful as the CNN Special Report on Malaysian children who work for one dollar per day can be, in many cases it is only a fleeting glimpse and the flavor the week, with little lasting impact on the average person. Once the sources and pathways of information are available, and people are able to access them, it is equally important to ensure that the information “sticks” and that it will not disappear as soon as a new issue appears. This requires a more challenging structural adjustment in our society as it necessitates reprioritizing human rights on the scale of relative importance; to raise the stature of human rights it will be necessary to integrate it into the education system as a key

Aguero 21 element of basic learning and understanding. Also useful in this portion of the task is utilizing mainstream cultural elements to integrate human rights discourse into everyday life. Popular movies, cartoons, musicians, art, and the like are very valuable tools in working to entrench the concept of global human rights in the American and Western psyche, to the same degree that liberty, freedom, and democracy are. Once people begin to understand concretely more about the processes by which their goods are produced, such knowledge will surely begin to seep over to their considerations when purchasing these goods; with the proper techniques for a human rights education campaign, one can easily imagine a consumer force armed with the knowledge of how their sweatshirts and tennis shoes are made, using this knowledge as part of the equation when deciding on which brand to purchase. It would be foolish to think that individuals would blatantly choose buying a shirt from a company that does not even pay its Indonesian workers who make the shirts enough money to afford safe water. This is not to say that consumers will make purchase decision solely on the basis of human rights (without a consideration of costs or other issues), but that the humane production of goods by a company could achieve the same importance in purchasing decision as a factor such as brand loyalty. Once the normative changes begin to affect consumer buying preferences, companies will soon be forced to adjust their mechanism to be in line with what consumers are purchasing, lest they begin to lose money. If consumers begin to decide to purchase only human rights friendly goods then companies necessarily must change their production methods to align with human rights friendly practices. As far as how successful normative changes in terms of increasing public knowledge and scrutiny of business practices have been, one need only to look to the

Aguero 22 businesses themselves. Businesses are well aware of this increased scrutiny that has come their way in recent years, from the media, government, NGOs, and even private citizens, and have taken steps to be more proactive in such circumstances. Moreover, literature on the subject that is read by management executives and other influential makers of corporate policy stress the importance of human rights in Africa, and are careful to advise companies not to underestimate the costs of not developing successful human rights policies. One such manual, distributed by Amnesty International at the Prince of Wales International Business Forum writes: “TNCs operating in countries with repressive and corrupt regimes are at particular risk of criticism from a wide array of stakeholders for complicity…it is naïve and risky for companies not to take their human rights responsibilities very seriously.”12 Additionally, companies ranging from Starbucks to Dell Computers to Microsoft have established campaigns and foundations that work to address human rights issues on a global scale, whether directly through their own work or through philanthropic efforts. The Bill and Melinda Gates Foundation is perhaps the most famous of such organizations, as it commands a huge endowment dedicated to combating health and social crises worldwide through means ranging from direct funding and grants to sponsoring research in underrepresented areas. Starbucks, among other coffee companies, promotes the growing of “fair trade” coffee, where farmers receive a decent and fair wage for their crops – so that they can live off of it.13 In its “Coffee Social Responsibility” brochure, Starbucks writes that it takes steps, including: “paying
12

Taken from Human Rights: Is It Any of Your Business?, a manual that was distributed by Amnesty International at the Prince of Wales International Business Leaders Forum. The book focuses on establishing the responsibility of corporations in human rights as well as the benefits and repercussions of having both successful and unsuccessful human rights policies. While clearly Amnesty International is a group with a proclivity towards protecting human rights, this does not devalue the fact that such literature was indeed distributed. 13 Taken from “Starbucks, Fair Trade, and Coffee Social Responsibility.” Available online at : (www.starbucks.com/aboutus/StarbucksAndFairTrade.pdf)

Aguero 23 substantial premiums for all coffee purchases, long term contracts and affordable credit for farmers, direct purchasing, investing in social projects in coffee communities, and C.A.F.E. Practices buying guidelines.” Additionally, Starbucks claims to be the largest North American purchaser of fair trade certified coffee. The company also works projects on water development (ETHOS) and wildlife and natural resource preservation in Africa.14 Such practices are also in effect at Harvard, where signs advertising “fair trade coffee” are present throughout dining halls on campus. These efforts by corporations can be seen as evidence of larger scale changes in the normative environment so that companies have needed to pay larger attention to integrating human rights into their corporate plans. Surely there are still plenty of companies who have not adopted such policies, but by major companies such as Starbucks and Microsoft taking the lead, it shows that such changes are at least on the way. As consumers continue to demand more out of corporate actors in terms of promoting basic human rights, the degree to which the corporate world on the whole embraces such efforts will increase as well. Another success story in the normative realm has been the changes that have taken place in the business education field over the past two decades. Major advancements and developments in the field of business ethics and corporate responsibility have taken hold in MBA and undergraduate business programs across the country (and to a lesser extent, the world) and in doing so have provided a natural, new avenue for human rights discussion in the academy. Though the specific inclusion of what these curriculum areas entail and to what degree they are stressed at each particular

14

Taken from the “Starbucks in Our Communities” brochure, available in Starbucks worldwide. The brochure claims that the ETHOS project “manages humanitarian water projects around the world.”

Aguero 24 school, there is a common thread that runs between them – the focus on the responsibility of the corporation as a social actor. Whether the specific program focuses on making the corporation accountable to its stakeholders (to avoid another Enron or WorldCom debacle) or on the need to protect natural resources or the environment as a manger, the fact that corporations are even being discussed as having a legitimate responsibility as social actors, with social responsibilities is a clear step forwards. We can surely hope that as this program develops, schools will further develop programs that explicitly work to educate manager business leaders on the need for international protections on human rights through the corporation as a vehicle; this development may be many years off, but the promising developments in this general field as of late are quite promising. And even if, as some critic suggest, that the inclusion of such required courses on ethics and social responsibility of TNCs is simply paying lip service to the issue, while not generating any real change, it still has benefits in bringing about a discourse and forum for which more discussion on the social responsibility of TNCs can be debated and discussed. Such discourse will inevitably provide some degree of normative shifts in how people perceive the relationship between the company and the state. A final method of normative change of view of the human rights and business relationship simply takes some of the previously discussed strategies and focuses them on a single event – much in the same way that regulatory schemas can be used to achieve a similar purpose. Drawing attention to an individualized and horrendous example of human rights abuse and mobilizing public sentiment to pressure companies who are involved in or complicit with such actions has been successfully used a number of times. Generally, movements at the grassroots level will begin a campaign of education of

Aguero 25 Company A’s involvement in a country or region that is suffering human rights abuses, or their business dealings with a regime or group that begins such violence. After and during the education of the public to the company’s relationship to the abuses, a movement of action to pressure company leaders to withdraw or divest from human rights violating activities begins. The normative change that occurs in individualized cases such as these are generally very finely directed at specific companies, industries, or regions, and the changes are short-lived; generally, when companies are pressured by public sentiment to alter their behavior in cases such as these, they are not forced to alter their activities across the board, but instead divest or disengage from specific countries or regimes. In other cases the entire activities one company may come under scrutiny, leaving other companies (at least temporarily) out of the spotlight. Whether focus is directed on one company (such as on Wal-Mart) or on the activities of many companies in a specific country (such as with Darfur), it is often relatively short-lived and eventually declines in popularity and importance. Beyond ending to relieving the human rights abuses that are occurring at the present time in these sensationalized cases, these localized normative changes and pressure also contribute to the long-term macro level changes in norms of the relationship between business and human rights. As more and more cases of pressure on companies to help stop (or at least not perpetrate) human rights abuses, the nature of business’ role and the expectations of business in regards to human rights begins to shift. The amalgamation of many different individual cases where normative values have shifted to pressure companies to change their practices will eventually lead to larger scale social change, and in many ways makes larger scale changes easier to implement because some percent already exists. This is not to say that

Aguero 26 larger scale efforts to implement more sweeping changes in how corporations deal with human rights should be abandoned, but just that individual campaigns such as those in Darfur, Angola, and of course South African can be used to assist larger shifts.

Using Positive Incentives to Bring About Corporate Change The most important point to remember when looking at how to change both regulatory and normative elements of the environment for the corporation and human rights is to make greater positive corporate intervention in human rights issues seem lucrative to the corporations themselves. The previous models to bring about such change have stressed showing the negative repercussions to corporations should they continue to violate human rights or perpetuate such abuses – namely that they will face governmental sanctions or consumer backlash. But equally valuable, is developing positive incentives that will make companies want to change their behavior proactively. In terms of regulatory efforts in this area, the most clear and distinct example would be to give some sort of benefit to corporations who proactively work to promote human rights. Such promotion of human rights by the corporations themselves can take many forms and will surely vary by locale. In some cases, it may be that corporations who actively change their actions to promote human rights will be the threshold to receive a benefit, but in other cases it may simply by corporations who voluntarily stop violating human rights. The normative atmospheres of each community will determine the degree to which the corporation must act to receive the slated benefit. Equally so, the benefits themselves will also vary between each society. Certain societies may provide financial rewards – in the form of direct payment or of some sort of tax break – to

Aguero 27 companies who promote human rights, while others may allow participating companies to have better access to new markets or earn exceptions to other, non-related operational laws. An example of possible incentives can be seen in a somewhat tangential example – the introduction of hybrid cars in the United States. While the governmental authorities in the United States far hardly require hybrid vehicles for every citizen, they do offer benefits to those who voluntarily drive the lower emission, higher efficiency vehicles. Such incentives have come in the form of tax-credits to first-time buyers as well as the ability for drivers of such vehicles to park and drive in special lanes. Such incentives contribute to the list of reasons why one would buy a hybrid car. In addition to positive regulatory incentives, similar changes can also occur in the normative environment. Like their business counterparts, normative changes that provide positive incentives for companies to voluntarily act positive with regards to human rights can take many forms. One clear example of such normative changes would be to have businesses that do promote human rights seen as leaders in the field and thus attractive companies to buy from. More concretely, if companies who go out of their way to implement concern for human rights into their processes and structures can align themselves as industry leaders and pathfinders, then it will allow them to use that as a marketing tool when selling their products. Consider the current campaign of British Petroleum with its campaign slogan of “BP. Beyond Petroleum.” British Petroleum has made a conscious effort to sell its environmentally friendly and innovative image as part o f its marketing campaign; because of recent concerns and emphasis on protecting the environment, British Petroleum’s shift towards moving beyond traditional fuel sources such as gasoline and diesel to explore new methods of power as well as their emphasis on

Aguero 28 reducing the dependency on oil while developing these new technologies is a pristine example of a company taking advantage of changes in norms governing consumer views. In taking this direction, British Petroleum hopes to take advantage of a market of consumers who understand the need to move off oil and into new fuel sources, as well as to deal with fuel in an environmentally friendly way. Companies in other industries should be able to follow a similar model in regards to human rights, by using it as a marketing tool to show their forward thinking and desire to incorporate popular normative views. Another normative aspect of enticing companies to adopt positivelyoriented human rights principles into their operations and organization focuses on hiring employees. Human rights will surely continue to gain traction in its importance in society, and much like areas such as diversity and philanthropy have grown into important factors when job candidates are deciding between companies, a corporation’s record on human rights and the degree to which protection and promotion of human rights are integral to their business will increase in relevance in the job market. Thus, companies who want to attract the best workers will find it in their own best interest to make sure their business practices reflect a strong desire in promoting human rights. Employers who are able to integrate comprehensive policies that promote human rights earlier and more extensively will be better placed to attract the most talented employees – whatever the industry may be. Headway has already been made in this area as many companies – including those in the consulting industry – have begun to stress the work that they do to promote human rights. For example, the Boston Consulting Group, a management consulting firm, has a large international practice of pro-bono work that focuses on providing advice and recommendations for global healthcare development in

Aguero 29 Africa, Asia, and Latin America. This information is touted proudly on their website and as a main part of their recruitment materials for potential employees. As human rights continues to increase as a decisive issue in the job markets, those companies that take increase their focus on human rights may be able to use this to hire more talented candidates. A further positive incentive for corporations to protect human rights – specifically political and civil rights – involves the environment of the country itself. In areas that have violations of political and civil rights, such as war-torn regions, the area is often unstable and not ideal for business operations to occur. Companies must pay for additional security forces to protect their assets, deal with corrupt regimes, and deal with stoppages of work or shortages on resources. If corporations assist in ensuring democratic institutions that promote civil and political rights protection, stabilization of the environment is likely to occur and it will be better suited for business to occur. Additionally, once the civil and political rights are resorted, if the corporation contributed to their restoration, that company will likely be looked upon favorably by much of the citizenry in that country and the rest the world, and in turn cultivate a better positive image that may draw more consumers to purchase goods or services from that company.

Conclusions and Future Directions There is little disagreement that we face a human rights crisis in the modern world of unparalleled proportions and that the dominant current mechanism of the nation-state is ill-equipped to address the systemic problems of continual abuse. We need a new structure to effectively stop human rights abuses and promote the welfare of people in

Aguero 30 countries around the world. This paper has explored the role that the private corporation can play in addressing these problems, the related benefits and challenges, and some possible means to achieve this. The size and degree of the human rights crisis however extends well beyond the reach of this paper, and a great deal of further research and policy-work must be undertaken in order to even begin to address the problems. That said, some sort of synthesis between the modern nation-state and the TNC provides a promising schematic for a new system of addressing human rights needs, but such a model can only be realized if there is genuine and unfettered commitment to change the regulatory and normative realms so as to make such collaboration both feasible and enticing to TNCs and governmental entities – as well as to the general public. My hope is that in coming years, the value of combining the best elements of the nation-state and the TNC will be more widely recognized and that future research and efforts to address human rights will begin to incorporate these