LWOB: Human Rights & Commercial Law Symposium #1

The LWOB LSE’s third flagship symposium sparks debate between Human Rights experts and Commercial Law and Business representatives, in order to find common ground between two seemingly binary oppositions. In light of this event, the blog post will seek to evaluate Corporate Social Responsibility including how such policies are implemented, what the role of the stakeholder is, and ultimately, blur the binary by highlighting the increasing shift from CSR policy to statute.

In defining Corporate Social Responsibility (‘CSR’), one need look no further than Investopedia – it is “a self-regulating business model that helps a company be socially accountable - to itself, its stakeholders, and the public”, the practice of which ensures “companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.” An example would be the United Nations’ “Protect, Respect, and Remedy” Framework for Business and Human Rights which reiterates the ‘state duty’ to protect against human rights abuses. It urges this be delivered through appropriate policies, regulation, and adjudication, that in-turn address adverse impacts and offer more effective remedies to victims. Some context: Walmart is the 10th largest economic entity in the world and generates revenue that exceeds the Gross Domestic Product of 171 countries (bigger than Russia, Austria, Sweden, and indeed Lithuania), yet in a world in which “top corporations continue to accrue revenues far in excess of most governments” and Multi-National Enterprises (‘MNEs’) have accumulated such vast power (so as to, in some instances, undermine the authority of governments in assessing corporate behaviours) it seems strikingly ineffective that we trust in organisations to act in accordance with a ‘self-regulating’ business model.

By nature of this ‘self-regulating’ model, the way or extent to which such policies or guidelines are actually incorporated vary case by case. Elisa Giuliani distinguishes between ‘low-road’, ‘window-dressing’, and ‘rights-orientated’ firms in ‘developing’ countries. The first do not incorporate Human Rights and are often smaller entities in a tacit agreement, or “devil’s deal”, with local politicians that trade in CSR regulations, for easy votes. ‘Window-dressing’ firms are those guilty of ‘decoupling’ - firms for whom the adoption of CSR is “purely symbolic and aimed at obtaining licences with big global buyers and entering international markets”. Finally, ‘rights-orientated’ firms are those that have either explicitly and substantially adopted CSR policies, or do not have an explicit CSR policy, but engage in ‘silent CSR’, de facto respecting the community and their human rights.

Though Giuliani clusters fundamentally smaller corporations than Walmart, it would be naïve to not draw this ‘symbolic vs substantial’ comparative to the commercial realm at large. I doubt most corporations are actually ever genuinely ‘rights-orientated’ in their adoption of CSR policy. In other words, CSR is, dare I say, an ever-growing trend, in the commercial world - one which primary stakeholders, or shareholders, driven by social pressures and the culture of corporate accountability, now demand and expect. Big businesses, in an effort to distinguish themselves form the competition will subsequently carve CSR-like policies into their portfolios. Here I sympathise with Michael Barnett and the claim that “as firms have honed their stakeholder management strategies, they have largely ignored many of society’s [actual] problems”, and that therefore, fundamentally, “the gap between the interests of business and society may be widening, not shrinking”, despite the trend. However, there are limits to the Giuliani model. By very definition, this, is not a pure rights-orientated approach, but to call it ‘window-dressing’ would likewise mock the otherwise genuinely responsible and socially beneficial work of exemplary MNEs, whatever their influential factors may be. In fact, it may even be easier, for an organisation like Walmart to sincerely engage in voluntary rights-orientated ESG standards, when the next most competitive economic entity is, in fact, a nation state.

This ‘self-regulating’ business model for Social Responsibility and human rights is, however, “increasingly being etched into law, causing a paradigm shift in how the law defines a ‘reasonable business’…(ideally) one with a coherent system of policies, due diligence procedures, and remediation processes to address human rights risks and impacts across its global value chain.” This shift from policy to legislation stems from the recognition that the ‘business case’ CSR-led approach cannot step in for a Human Rights-led approach, the recognition that “Human rights are rooted in law. Respecting and protecting them was never meant to be an optional extra, a matter of choice. It is expected and required. It should be part of the mainstream of any company’s strategy, not only seen as part of its corporate social responsibility strategy.” However, this shift is fragile, and the new definition, “murky”.

In light of the LWOB LSE symposium, I have attempted to further the discussion by defining CSR and discussing the extent to which such policies are implemented into ‘self-regulating’ business models. I have noted the difference between ‘window-dressing’ and ‘rights-orientated’ firms especially, and the ways in which large businesses may fall in-between, with particular attention to the influence of the primary stakeholders, or shareholders. In light of these findings, it is difficult to imagine a world in which we may regulate the implementation of human rights-led policies, since CSR is still very much a self-regulating and greatly voluntary initiative. However, inscribing social responsibility into statutes may indeed be the way forward. The way in which this ought to be done itself invites an entirely new discussion.