It's official - US corporations are completely ethical!

“US corporations, whether working at home or abroad, are held to the highest standards of ethical behaviour and respect for human rights”. Sounds too good to be true! Here is the US explanation (pdf file 68.9KB) explaining why it voted against a resolution on human rights and transnational corporations (TNCs) adopted by the UN Commission on Human Rights (CHR).

Before I scrutinise the US explanation, let me briefly describe the context that warranted this explanation. On April 20, 2005, the CHR adopted a resolution on human rights, TNCs and other business enterprises. The resolution requested the UN Secretary General appoint a “special representative” on the issue of human rights and TNCs. The mandate of this special representative is to:

• “Identify and clarify standards” of corporate human rights responsibilities;
• “Elaborate on the role of states in effectively regulating and adjudicating the role” of TNCs with regard to human rights;
• “Research and clarify” the implications that concepts such as “complicity” and “sphere of influence” have for TNCs;
• “Develop materials and methodologies for undertaking human rights impact assessment of the activities” of TNCs; and,
• “Compile a compendium of best practices” of states and TNCs.

The special representative, who is to be appointed for an initial period of two years, will submit a report on the above matters to the CHR. The special representative is expected to consult and liaise closely with institutions as well as other stakeholders that are working towards promoting corporate social responsibility.

Surprisingly, the above resolution makes no specific reference to the UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights (UN Norms). Nevertheless its adoption by the CHR brings us one step closer to the evolution of an effective regulatory regime that could hold corporations to account for their human rights violations.

It seems however, that too many challenges would still have to be overcome. Let us consider one such challenge here. Out of fifty three members of the CHR, the US was one of the only three members (Australia and South Africa being the other two) that voted against the resolution on human rights and TNCs, while Burkina Faso abstained. In the background of Kyoto and Iraq, it is not too surprising to find Australia once again siding with the US to oppose the resolution that represented by and large an international consensus on an important issue.

In fact, the conduct of the US and Australia is consistent with the past stand of the two countries. The Bush administration - in a clear departure from the policy adopted by the Carter and Clinton administrations - has consistently opposed (pdf file 212KB) the use of the Alien Tort Claims Act 1789 (ATCA) for suing US corporations for human rights abuses committed abroad. Among others, the government of Australia (pdf file 2.14KB) had supported this retrograding position of the US government by filing an amicus curiae brief to the US Supreme Court. Additionally, both the US and Australia missed the opportunity of regulating overseas human rights abuses committed by their respective corporations by not enacting into law the Corporate Code of Conduct Bill.

In particular, the US opposition to the evolution of an international regulatory regime of corporate human rights accountability is both ironic and shameful. It is ironic because a majority of corporations that have indulged in human rights abuses abroad are based in the US. This perhaps also explains why the US administration wants to strengthen the impunity of US corporations for overseas human rights violations. But more troublesome is the shameless defence advanced by the US to support its opposition to the CHR’s resolution on human rights and TNCs. A mere cursory look at the US explanation makes this clear.

The US explanation sketches corporate potential for promoting human rights and economic development, that is, from providing employment, education and healthcare, to donating billions of dollars for charitable activities. But it does not even mention widely documented adverse effects of corporate activities on human rights and or development. Moreover, the explanation makes false claims and twists the real issues surrounding the debate on corporate social responsibility.

The explanatory note begins with a misleading assertion that the US has the “strongest business regulatory environment in the world” and its “corporations, whether working at home or abroad, are held to the highest standards of ethical behaviour and respect for human rights”. Numerous legal proceedings, protests and outcries from NGOs and victims, and consumers-shareholders’ activism against US corporations such as Union Carbide, Unocal, Enron, Chevron, Nike, Dow Corning, Shell, and ExxonMobil do not seems to support the US claim.

As well the explanation put forth by the US administration seems to suggest that the instant resolution as well as the UN Norms, which together exemplify an “anti-business agenda”, would adversely affect the “economic and social advancement of developing countries”. But the resolution and the UN Norms, if anything, have only pro-human rights agenda - they seek to ensure, and rightly, that business plays its role in promoting the realisation of human rights. Furthermore the apprehension about these initiatives adversely affecting the interests of developing countries is not only unfounded, it also smacks of an intellectual superiority by suggesting that developing countries, none of which voted against the resolution, are unable to judge what is good for them.

It is also beyond comprehension why the US wanted an explicit assurance that the CHR’s resolution is not intended to establish a “code of conduct for TNCs”. If the US corporations are already made to comply with the “highest” standards of ethical behaviour and respect for human rights, neither the US administration nor its corporations should have anything to fear.

In the past both the US and Australia have wasted the opportunity to enact an extraterritorial law to tame the overseas activities of their corporations and have opposed the innovative use of the ATCA to promote corporate human rights responsibility. Now they are opposing, on unreasonable grounds, the efforts to put in place an international regulatory mechanism to make corporations accountable for human rights abuses.

Apparently, more often than not, human rights become an issue for the US and Australia only when they are likely to promote the interests of their businesses, but not otherwise. Human rights abuses are intolerable and demand a decisive action, even if that means an illegal invasion of a country. It is hypocritical for the US and Australia to decry the abuses of other countries when their own corporations violate these same human rights in the backyards of developing countries. This selective reliance on the slogan of human rights, though unfortunate, is not very surprising. It only demonstrates, as I have argued elsewhere, that there is a difference in how people’s lives are valued across the world, and “whether human rights and their violations are to be taken seriously or not depends on whose human rights are violated and by whom.” Perhaps human rights are still more for “export only”.