Let Sweatshop Workers Eat Cake

In a revealing statement on what corporations should do in reaction to human rights violations in developing countries where they ply their trade, a major business group has come up with a cynical recommendation: Basically, do nothing.

The International Organization of Employers (IOE) sponsored a study on how businesses might deal with “dilemma situations encountered in weak governance zones.” Its findings were toothlessly politically correct, amounting to a mild-mannered endorsement of the status quo.

The report on the group’s investigation, issued last month and now available on the Web site of the Business & Human Rights Resource Center , goes into detail on what seems to be the problem, echoing the stale dialogue among business groups, social justice advocates, and the multilateral human rights bureaucracy.

Predictably vapid are the study’s suggestions on what a well-intentioned company might do to mitigate the shame of complicity with human rights and labor abuses.

Under the heading of “Speaking Out,” it has this pearl of wisdom: “Remain politically neutral to avoid risks of accusations of complicit behavior.” Also in this section is a reiteration of the slippery principle of constructive engagement: “Seek advice on the national political situation and how to dialogue with government.”

The report says “there is much that business has done and will continue to do to help promote respect for human rights” and adds that business has a place in “complementing the role of States in implementing and enforcing national laws on human rights.”

But it fails to give examples of what exactly business has done or plans to do to influence local governments. By saying there’s complimentary role in enforcing local laws, it condones the double standard of adhering to local legal standards that fall far short of international norms. Claiming umbrage in dubi0us and unenforced local laws allows a campany to enhance its global competitiveness at the expense of workers' welfare. And it violates the ethics of practicing of responsible global outsourcing.

Let’s not forget that one of the fundamental principles enshrined in the UN's Universal Declaration of Human is that the responsibilities of protecting human freedom and dignity transcends borders and prevails over local laws and customary practices. The promotion of human rights for people who live and work under conditions that are unacceptable in developed societies demands persuasive advocacy in rogue states with “weak governance” -- not passive complicity.

The study was a response to an “invitation” from John Ruggie, the Special Representative of the UN Secretary-General, to provide “business proposals for effective ways of addressing dilemma situations in weak governance zones.” The resulting document states that “no company should look to take advantage of operating in a weak zone of governance.”

But it qualifies the responsibility by adding: “a company will not of itself resolve the problems . . . only governments have the ability to achieve that.”

Hey, wait a minute. How can a government be expected to achieve anything when it’s by definition “weak.” Even the mighty US government has real troubles handling complex issues, and it defies external criticism of our own dirty human rights laundry – the international condemnation of meting out the death penalty with racial bias, for example.

The report itself defines so-called weak government zones as “those states, as well as regions or sub-regions within states, in which governments cannot or will not assume their roles in protecting rights - including human rights - providing basic public services and ensuring that public sector management is efficient and effective.”

Let’s come right out and say it. These government “zones” are corrupt, they flagrantly undermine the rule of law, and they are ready and willing to compromise the ethics of foreign investors in a honey trap of tax breaks, low wages, and mushy labor regulations.

Companies should “speak out publicly on behalf of their constituents, so as to raise awareness of the human rights dilemmas faced by business,” says the study, which was done in collaboration with the International Chamber of Commerce and the Business and Industry Advisory Committee of the OECD.

Yet it’s perfectly clear that this notion has proved to be a fantasy, a figment of wishful human rights theory. Corporations by nature go out of their way to avoid publicly embarrassing their host countries by raising the entrepreneurial taboo of human rights because this act could seriously compromise their vested interests in developing markets.

There’s another logical flaw in the report’s lofty recommendation that companies “perform due diligence, which should include a human rights assessment and impact project to determine the national human rights situation.”

Who could object to that idea? But execution is another matter. Companies that exist to stay alive as going concerns, make profits, and benefit their core stakeholders, are yoked in a paramount fiduciary responsibility to their shareholders. Due diligence scours a business plan for potential risks, but business behavior is guided ultimately by the risk-benefit analysis.

The risks of operating in an irrational environment like China, where operations are challenged by a feeble rule of law, systemic corruption, and intractable intellectual property violations – not to mention political repression and labor abuse – can be rationalized. All you need is a sound business plan that promises a return on investment of 20 percent or 30 percent or higher. Any “due diligence” on human rights is easily subordinated to the fig leaf of constructive engagement in the mega-market of the future.

The IOE’s response to the inquiry by the UN's Ruggie deserve credit, however, for mentioning one of the few practical measures that a socially responsible company can employ in “weak government zones,’’ should it wish to do more than pay lip service to the idea of doing the right thing.

It doesn’t come right out and concede that multinational corporations should adhere to and enforce compliance with binding codes of conduct. But it offers a nudge in the right direction.

“Dialogue with suppliers over the company’s human rights expectations,” it says. “Gain a commitment to reflect the company’s policies and practices.” Companies should “involve suppliers in monitoring respect for human rights within their operations and own supply chain.”

This is a great idea, assuming the parent company that benefits from its complex, multiple and often internally opaque web of global suppliers is sincere about promoting human rights – and believes corporate responsibility is good for business.

#