1. Introduction
Human rights legal regimes were originally thought to limit abuses committed by States against individuals. Their legal roots were International Law treaties or declaration, where the actors used to be only national states, and member states, in case of an agreement within an international organization (Abbott & Snidal, 2000). The increasingly global presence of companies has altered this equation, since the 1970s and on an upward direction in the current global chain production economy.
According to data systematized by Global Justice Now, companies are in the position of tilting the balance of power in many ways (“Global Justice Now,” 2018). From a direct comparison between the annual revenues of the companies and the annual revenues of the countries, among the 100 largest economies in the world, 69 were companies in the year 2017 (“Global Justice Now,” 2018). The tenth economy of the world would be Walmart if companies would count with countries, being ahead of countries like Spain and Australia for example.
The digital revolution has the misfortune of unfolding in a neo-liberal era that has been shredding the social contract. In such context, simply pledging to leave no one behind like Agenda 2030 did (UN, 2015) appealing to the goodwill of corporations or the charity of the super-rich is, “at best, hopeful pleas for a more civic world and, at worst, willful attempts to deflect from serious discussion of the real factors driving growing inequality, indebtedness and insecurity” (UNCTAD, 2018: p. 26).
The inequality of the system is one of the main points of distress. The five largest exporting firms accounted for around 30 percent of a country’s total exports, and the 10 largest exporting firms for 42 percent (UNCTAD, 2018: p. 5). These economic titans, one can suppose, tend to be above social and political accountability, because national constituencies and labour force praise them around the world as wealth creators.
But the strategies of transnational corporations to capture value in global value chains (GVCs) are designed on their own terms, with high value-added inputs and protected intellectual property content sold at high prices to processing exporters (UNCTAD, 2018: p. 5). Developing countries, if successful to attract those titans, account for only a tiny fraction of the value of exported final goods. One rare exception has been China which unique path in promoting economic development “has made outstanding contributions to safeguarding a just world order” (Ren, 2018).
This asymmetrical power of some companies means, in practice, the potentiality both of causing positive impacts and of causing profound negative impacts. What is expected is that, through tools such as due diligence in human rights, companies can be led to maximize the positive effects.
One guideline to be following in this direction is the Guiding Principles on Business and Human Rights (HRC, Human Rights Council, 2011), approved by the United Nations Human Rights Council in 2011. It comprised 31 principles that establish it is mandatory to respect human rights in all commercial relations and business operations, whether conducted by private or public agents.
Under the legal perspective, the main innovation brought by the Guiding Principles was to establish that what was international law, materialized in declarations and treaties were also applied to companies. Countries were adamant about human rights in many opportunities such as the Universal Declaration of Human Rights (UN, 1948), the International Covenant on Civil and Political Rights (UN, 1966a), the International Covenant on Economic, Social and Cultural Rights (UN, 1966b).
Also the formations of the international system for protecting these rights were designed by and to states. There is a legal gap to companies to act and assume responsibilities in these systems. Therefore, what can be expected from them is that through tools such as due diligence in human rights, companies can prevent the risks and adverse impacts of human rights and remedy violations related to operations, products or services, including along their international supply chain.
The Brazilian Decree No. 9571 (Brasil, 2018), published on November 21st, 2018 was in this direction. It established the National Guidelines on Business and Human Rights, to operationalize the protection and respect for human rights in business, establishing commitments for the State and for companies, as well as forms to access repair and remediation mechanisms for those who have their rights violated.
In this sense, there are some good initiatives such as, the obligation of the State to develop public policies and changes in the legal system to consider the impacts of companies in supply chains, as well as prioritize reparations and compensation for vulnerable groups; the encouragement of the adoption of risk prevention tools by companies; or the improvement of mechanisms of transparency and social participation that can guarantee access to remediation (Brasil, 2018).
If, on the one hand, the content of the Decree could take Brazil a step further in the application of human rights to companies, and this is what is expected of the states that have committed themselves to adopt the Agenda 2030 (UN, 2015), on the other hand, its art. 1st, §§ 1 and 2 inserted a way of minimizing corporate responsibility. The bill clearly states that the guidelines will be implemented voluntarily by companies and also assigns a stamp, a prize, to companies that fulfil their obligation to respect human rights.
But the human rights discourse suggests that deprivations must be ended right away with top priority remedial attention, this does not fit in a voluntary and incremental approach (Pogge & Sengupta, 2016; Pogge, Kaul, Kim, Västfjäll, & Slovic, 2015). Human rights brook no delay, once we recognize a human right we must initiate the necessary institutional reforms right away (Pogge & Sengupta, 2016: p. 85). Supranational rule making is not a morality-free zone in which it is acceptable for government representatives to strike bargains for mutual advantage, those rules, notably in the economic sphere, have profound effects on human rights fulfillment around the world (Pogge et al., 2015: p. 38).
2. UN Guiding Principles and the First Draft
The UN Guiding Principles on Business and Human Rights (HRC, Human Rights Council, 2011) is one of the international documents1 that inspired the Brazilian decree.
Article 5 Companies shall be responsible for:
1) monitor respect for human rights in the production chain linked to the company;
2) internally disseminate the international instruments of social responsibility and human rights, such as:
a) the United Nations Organization Guiding Principles on Business and Human Rights;
b) the Guidelines for Multinationals of the Organization for Economic Cooperation and Development; and
c) the Conventions of the International Labor Organization.
3) implement educational activities in human rights for its human resources and its collaborators, with dissemination of national legislation and international parameters, focusing on norms relevant to the practice of individuals and risks to human rights;
4) use education, awareness and training mechanisms, such as courses, lectures and appraisals of learning, so that its managers, employees, employees, distributors, business partners and third parties know the values, norms and policies of the company and know their role for the success of the programs; and
5) draw up a publicly accessible code of conduct approved by the company’s senior management, which will contain its commitments and its human rights implementation policies in business activity.2
Also known as Ruggie Principles, because of the UN Special Representative, John Ruggie, who proposed the framework. They were drafted in a context in which the United Nations sought to respond to the demands of member states and also of various social movements and civil society organizations representing the interests of who were affected by human rights violations and who suffered from a lack of adequate protection to confront the power transnational corporations had in their countries.
There was recognized promiscuous relations between companies and states, which made the latter often connive with corporations, creating a “space of exception”, conducive to violations of the rights of local populations (Homa et al., 2018). If regulation do not intervene the liberal logic characteristic of transnational capital tend to lead to the association between companies and states in order to generate greater advantages for cross-border investments.
There is an expression to this sort of deleterious association: “race to the bottom”, which defines a tendency of States, especially in the global south, to grant certain incentives to transnational corporations to have established in their territories as a way to obtain economic benefits or competitive advantages (Homa et al., 2018). This means, they grant from tax exemptions to advantageous sources of financing, which, to a great extent, are linked to the weakening of instruments for the exercise of the monitoring role of the State on the performance of business activity and also the direct easing of human rights protection standards (Homa et al., 2018). Companies, on the other hand, are attracted to locations where profits will be greater, and the risk of being held accountable for human rights violations will be lower.
In terms of competition, ethical companies suffer with the lack of fair play, when competing with those that practices an artificially cheaper price because they neglect their social and environmental responsibilities; this misconduct can be defined as social environmental dumping (Kessie & UNCTAD, 2003; UNCTAD, 2003). Because of that, many companies themselves demand for stringent international regulations (Denny, 2018b). “High performance with high integrity” (Baumann-Pauly & Nolan, 2016: p. 88) can be the key to global business success