By Bart Mongoven
In his first report on issues relating to the human-rights obligations of businesses, U.N. Special Representative John Ruggie effectively negated three years of work on a code of conduct by the U.N. Human Rights Commission — and simultaneously carved out a conceptual role for the United Nations in regulating the activities of multinational corporations. Ruggie's role
was created in April 2005 in order to help break an impasse between the international business community and activist groups about how best to approach the issue of corporations' human-rights obligations around the world. In essence, his job was to find a way to implement a set of standards known as Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights. As drafted, the Norms were intended to take the human rights obligations of nation-states and impose them directly, in a legally binding fashion, on businesses. Rather than filing a report with recommendations on how to implement the Norms, however, Ruggie essentially killed them on March 6 and offered up a striking counterproposal. If implemented as a treaty, the Norms would mean that a company could be sued for failing to provide extensive benefits to its employees and local communities, or for failing to prevent localized violations of human rights. Ruggie has scrapped that framework and recommended another approach to the issue, consisting of several parts. First, the regulations applied to corporations would focus on egregious violations of human rights, probably applying recognized standards developed by other international bodies. Second, and more important, nation-states would be the venue through which multinational corporations are called to account. A treaty following this approach would not be easily weakened by rogue countries that simply do not enforce human-rights standards; the decision to enforce the standards would rest with the governments of the corporations' home countries. In other words, under this structure, a company like Yahoo!
, which faces difficult ethical and operational considerations in countries like China, would be able to point to U.S. enforcement of the human rights treaty, and legitimately tell Beijing that the company cannot comply with certain demands. Ruggie's New Mission
The draft of the Norms had been the center of the debate over a new treaty, and it was this document that was thought to be the subject of Ruggie's work. Ruggie's decision to kill off the Norms seems at first glance to be mission suicide; he was hired, in part, to find a way to implement a treaty governing the human-rights obligations of business, and this presumably entailed using the Norms at least roughly as a map. The truth of the matter, however, is that despite pilot attempts by businesses to implement them, the Norms were entirely unworkable in practice and progress toward a treaty was completely stalled. Everyone involved in these debates had grown used to the stalemate, and the strategies pursued by the various players assumed a long period of back-and-forth was coming. For example, human rights groups have been attempting to place corporate abuses of human rights at the forefront of public attention, seeking to build broad support for a Norms-based treaty. Companies, meanwhile, were set in their strategy of trying to make voluntary codes of conduct as successful as possible. This, they believe, is the best way to demonstrate binding regulation would be unnecessary and ineffective. As long as the focus of the debate was on the Norms, consensus was nearly impossible. What Ruggie has done is create a space in which the tug-of-war can end and a different game can begin. Terms of the New Game
The report that Ruggie presented March 6 is clearly written, logical and realistic — a rarity among U.N. documents. Among its key premises is the suggestion that inattention to corporations' human-rights obligations leaves a void that the public will demand be filled. In order to fill this void, Ruggie says, the United Nations must lead efforts to gain global agreement on standards and definitions of human rights and on ways to measure compliance. With that in mind, and having killed the Norms, Ruggie now must establish a set of standards for human rights, or else leave in place a process for doing so. The first step will to be to examine ways of applying the U.S. Alien Tort Claims Act (ATCA) globally. Under ATCA, corporations can be sued in U.S. courts for human-rights violations committed abroad. Ruggie believes that U.S. courts have outlined workable criteria for applying ATCA, and that this standard can be used globally to identify egregious human-rights violations. Another key consideration is finding ways to measure what effect a company's operations have on human rights. This effort well might be aided by the International Finance Corporation (IFC), which will soon unveil its own guidelines for assessing impacts to human rights. These guidelines would dictate ways companies measure their social performance, both before operations are launched in a given location and while operations are under way. Companies will have to comply with the IFC standards in order to qualify for World Bank loans. These guidelines will also be embedded in the Equator Principles, the framework that major private banks use to manage social issues in project finance. Pragmatism
Ruggie characterizes his approach to the problem as "principled pragmatism" — clearly differentiating his work from the principled idealism of the Norms. Western governments and businesses are not likely to pass on his framework; from their perspective, the offer is too good. And if these interests do indeed come on board, it will solidify the concept that the United Nations has a role to play in monitoring and regulating business. Additional regulatory mechanisms are not things most businesses relish, but the alternative — returning to debate over the Norms — could be much riskier, especially if NGOs are able to generate public demand for a treaty. The supporters of the Norms, on the other hand, must decide two things: First, what is their position on Ruggie and the United Nations? And second, what approach should they use with corporations in the wake of Ruggie's report? Nongovernmental organizations that deal with human rights must quickly decide whether to oppose Ruggie's work entirely and promote the Norms in parallel, or whether to accept the loss of the Norms and move forward within the space Ruggie has created. The latter is the more likely case. If the major human-rights groups choose to oppose Ruggie and promote the Norms, their arguments are most likely to be dismissed by the others at the table and they would risk losing their effectiveness as the debates continue. Instead, they would be left to focus efforts more directly against a select few companies that in their estimation could be brought to support a binding code of conduct, based on the Norms, that would exist beyond the realms of U.N. oversight. Initial targets of such campaigns probably would be companies that can be swayed by public pressure tactics and that like to view themselves (and often present themselves) as leaders on corporate social responsibility issues. Regardless of whether they decide to work with Ruggie or against him, activists will seek to pepper the global media with stories of corporate complicity in human rights violations for the foreseeable future in an attempt to build the public's demand for regulation of business. The Road Forward
For the past 15 years, the United Nations has sought ways to become a counterbalance to the World Trade Organization, which has become a sort of global regulator of business. The question now emerging is how far the United Nations would go in time, once it has this power. The strength of a treaty based on Ruggie's approach would lie in the member states' willingness to enforce penalties against their own companies for egregious human rights violations. States likely would accept such a treaty if business generally accepts it and the United Nations demonstrates that it can be judicious in setting global human-rights standards. With that in mind, the United Nations could be expected to tie its human-rights standards for businesses to existing norms: decisions of international jurisprudence, such as those expressed through the ATCA, and the norms established by standard-setting organizations such as the International Labor Organization and International Organization for Standards. Under Ruggie's approach, the IFC could also emerge as another important standard-setting organization. If the United Nations were to reach beyond existing norms and begin to define human rights according to some other, internal logic, it could quickly lose credibility and influence. Ruggie likely realizes this, which is why he has placed the responsibility for standard-setting within other organizations, rather than U.N. commissions and subcommissions.