Tag Archives: social licence

How to restore the lack of trust

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“The self-preservation society”. Today’s European Union (#Brexit) referendum has exposed deep issues of mistrust 

One of my favourite films growing up was “The Italian Job”. Not the horrible Hollywood makeover but the 1969 British original. A bunch of plucky mainly cockney criminals robbing an Italian bank in Turin and then attempting to escape over the Alps into Switzerland. Criminals yes, but with a touch of Robin Hood. There is something in every British soul that identifies with the under dog even if the film ends with Michael Caine and the other crooks trapped in a bus on the edge of a precipice. They end with the dilemma: should we edge forward to try and collect the gold or retreat safely but let the gold fall. It sounds a bit like today’s referendum.

Whichever way the UK’s EU referendum goes today (and I very much hope we remain in the European Union), the “leave campaign” has been remarkably successful. Led by some of the most privileged people in British public life, they have been able to portray themselves as the under dogs. Today’s vote is very much a vote against the perceived establishment (or establishments). Just about every British organisation (political parties, businesses, trade unions, NGOs, international organisations, global experts) are for “Remain” and yet around 50% of the population will vote against their advice. The more the Remain side marshall a serious organisation to speak, the more it seems to strengthen the “Leave” campaign.

The real revelation of the campaign then has been the depth of this distrust of officialdom within large sections of the population. This seems to have built slowly over many years- in part the result of the 2008 financial crisis but also the wider effects of globalisation felt everywhere in the world: widening the gaps in society between those that benefit and those who do not. Think only of how the Bernie Sanders or Donald Trump campaigns in the USA have exploited this. In the UK, the Leave campaign has been able to tap into this distrust against the elites even though it is a campaign run by an elite of its own. If “Remain” wins today’s referendum – this distrust will not go away, if “Leave” wins the distrust is likely to grow when the disaffected see that the promises made on trade, expenditure and immigration cannot be met.

The irony is that the leaders of both sides of the debate, David Cameron and Boris Johnson, both went to the same elite private school and university – and have been debating room rivals for many years. It seems that their private views on the EU are almost identical – they have (for reasons of political power) picked opposing sides of the debate – as any private school debating society does. The problem is the consequences of this petty rivalry will be profound, not just for the UK but also for the rest of Europe. Perhaps this is just the British way – to follow ‘our betters’ – the fictional Robin Hood himself was no man of the people in most versions of the story, rather he was an Earl looking to reclaim his status. Those that really try to push ideas that will change the lives of working people, such as Thomas Paine, tended to get exiled for sedition and forgotten by many British people – he is more remembered for his role in the French revolution or the US War of Independence.

But the referendum has revealed a deep mistrust in all types of organisation that needs to be rebuilt. This requires some serious thinking. As I debated on the BBC’s Moral Maze a couple of weeks ago – we need to understand the new forms of social contract that are developing in our societies and each organisation needs to be clear about how it relates to specific communities and where its accountability lies. Legal licence to operate is no longer sufficient for business and political licence is no longer sufficient for governments – both need also to develop their social licence. Yes, OK, I have written a book on this (yawn), but now is the time for some though questions about legitimacy, trust and consent whichever way the referendum result goes tonight. Sitting in a bus on the edge of a precipice is not a sustainable option.

“Only real markets have social licence”

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Mark Carney’s speech at the Bank of England’s Open Forum 2015 today

This morning in London, Mark Carney reflected on the progress the Bank of England, and other Central Banks across the G20, have made in reforming financial markets. When using the term “social licence” he is clear that he means legitimacy in the eyes of society – NGOs, trade unions and the wider public. “Finance”, he claims. “must become a true profession… only a third of people believe that markets operate in the interests of society” Drawing on his Mansion House speech earlier in the year, Carney is robust in stating that we “must end this tide of ethical drift”. Misconduct must be met with real (and large) penalties and governments must uphold the highest standards of accountability. Fine words, but words which must be matched by action.

What has already been achieved?

Financial markets are growing. Within the G20, there are now $75 trillion assets under management. Banks must be more resilient because they can no longer rely on the state – in the future private financial institutions must be allowed to fail. Robust market infrastructure is a public good.

In the UK, for example, there has been progress since 2008. Liquid assets of banks increased four times in the UK, the system is more robust. George Osborne, UK Chancellor of the Exchequer, followed Carney in detailing how bad things were in 2008. “For too long too many financial benchmarks were rigged by insiders, banks claimed to be adequately capitalised when they were not, it is now – seven years after the financial crash – that we can be honest about its causes and effects.” Banking regulation is now back in the hands of the financial regulator and UK banks are “much safer”.

What more needs to be done?

It is clear that there is much more work ahead if the UK is indeed to become the financial technology (“FinTech”) centre of the world. London-based financial markets are already six times greater than UK GDP and this is set to grow to fifteen times. This disparity represents a power gradient. How does UK society really feel that it benefits from hosting such vast revenue flows? This question is also one that all Central Banks across the G20 must be prepared to answer.

What is stopping markets from being truly sustainable and benefitting society as a whole? This needs to be the real benchmark for our work ahead across the whole G20. Both Carney and Osborne claim that FinTech will enable greater transparency and accountability. This remains an open question, in particular because of concerns over privacy and encryption that the UK is currently dealing with in other legislation. Another unanswered question is the cultural change needed in the City of London for public trust to be restored. Most people joined the financial sector when the incentives were very different and most of them are still there – very few have been penalised. How will we know that the cultural shift has been achieved? I hope we will hear more from Messrs Carney and Osborne on this issue over the months ahead. Perhaps the creation of a global corporate human rights benchmark for the world’s 500 largest companies will be part of the solution.

The 2015 Nobel Peace Prize: A triumph for the multi-stakeholder approach

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Yesterday in Oslo, the Nobel Committee announced the winner of the 2015 Nobel Peace Prize – the “National Dialogue Quartet” of Tunisia. This sends a powerful message to us all.

This year’s winners of the Nobel Peace Prize – to be honoured in Oslo on 10 December – are not well known, outside of Tunisia that is. Last year’s winners – Malala Yousafzai and Kailash Satyarthi were less surprising: Malala’s win was much anticipated and Kailash’s longstanding work on child labour well known. Previous winners, such as the European Union, Barack Obama. Al Gore or Martti Ahtisaari, need little introduction. Some of names rumoured for the 2015 prize had included Angela Merkel, Pope Francis, Edward Snowden or the organization Médecins Sans Frontières – all would have been worthy winners.

The Nobel Committee put a lot of thought into their decision. It does not just honour the outstanding work of individual(s) or organization(s) but also sends a message about where they think the world is going and essential components for maintaining peace, developing democracy and respecting human rights. The decision to give the 2015 Prize to Tunisian organizations will have been much debated and well thought through. It does indeed make a lot of sense.

Some have hailed the victory of the “National Dialogue Quartet” as a recognition of the bravery of those who fought the Arab Spring and Tunisia which started the wave of popular uprising and arguably has managed the process best (when compared with Egypt, Libya or Syria few would argue this point). Explicitly, the Nobel Committee recognises the Quartet’s “contribution to the building of a pluralistic democracy in Tunisia in the wake of the Jasmine Revolution of 2011”. In particular, it is because the main business, trade union, legal and civil society umbrellas of the country have stood together and were key in safeguarding the democratization process as well as the development of a “vibrant civil society with demands for the respect for basic human rights”. Critical has been the Quartet’s ability to mediate complex dilemmas from the time of the revolution to democratic elections last year. This, despite the attack on tourists by jihadists on two occasions, the second earlier this year in Sousse resulted in the death of 38 people.

So congratulations to the Tunisian General Labour Union (Union Générale Tunisienne du Travail), the Tunisian Confederation of Industry, Trade and Handicrafts (Union Tunisienne de l’Industrie, du Commerce et de l’Artisanat), Tunisian Human Rights League (La Ligue Tunisienne pour la Défense des Droits de l’Homme) and the Tunisian Order of Lawyers (Ordre National des Avocats de Tunisie). And congratulations to what this represents – that multi-stakeholder approaches can really deliver results even in the most pressing of circumstances. It is a reminder that the social contract in most of our societies is no longer an issue for governments alone, as my hero Thomas Paine once said (in 1777) ”Those who expect to reap the blessings of freedom, must undergo the fatigues of supporting it.”

This is unlikely to be the last time that the Nobel Committee recognises the role of non-state actors as key defenders of peace and democracy. In fact, the social licence of all actors is becoming a material concern for us all. As with the recognition of Kailash Satyarthi last year – the world is changing – business can have an increasing impact – for better and for worse. Last month, world leaders called on business to provide $1-4 trillion of annual investment needed to reach the 2015-30 Sustainable Development Goals. The 2014 and 2015 decisions of the Nobel Committee reminds us that the accountability of non-state actors, as well as that of government itself, is a complex issue and that each must hold the other to account; and that both most be accountable to society itself.

How David Cameron learned about refugees

What difference a day makes…

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Two days ago, I watched the UK Prime Minister speak on national television explaining why the UK could not accept any more Syrian refugees. He looked uncomfortable when saying it, not making eye contact with the camera.

Like many British people, I got a little angry about this. My grandmother had taken in a destitute Hungarian refugee in 1956, she had little but had taken him into her home. Surely if the government was not willing to do anything itself, it could at least get out of the way and let the British people step in, as they had in 1956.

So I wrote this letter to The (London) Times newspaper. Surprisingly it was published, perhaps signalling that even conservative newspapers such as The Times were sensing that the government needed a powerful message – a reminder of some moral sense.

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The front page of the Times yesterday, and most other UK newspapers that day, was the shocking image of the little drowned boy Aylan Kurdi. One of those historic images that changes the tide of events.

Partly because of what my grandmother did and other refugees I knew in my early life, I spent most of my 20s and early 30s working on refugee settlement issues in Europe before moving into other areas of human rights.  By lunchtime yesterday, I was with two colleagues reflecting that, as with John Major on Bosnia in 1993, something would need to change quickly in government thinking. At 6pm yesterday, there were the first television reports of some announcement from 10 Downing Street which came this morning.

Most of the details about how the UK will respond have yet to be released. It will be in the single digit thousands (at least initially), refugees for resettlement nominated by UNHCR from the immediate vicinity of Syria itself. There are many unknown answers to complex questions still ahead, but the outpouring of letters and social media throughout the UK today reminds us that there is still a basic humanity underpinning the social contract that all democratic governments must service. They do indeed need social licence.

I end with two of today’s letters in The Times responding to my own and reflecting why ordinary British people  feel compelled to act. I hope that when it matters, a British Prime Minister will not forget this again. My deepest respects to the father of the Kurdi family and all asylum-seekers and refugees wherever they may be – the dispossessed and the desperate but also those closest to the dignity of life itself.

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The privatisation of refugee policy

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Earlier this week, Sweden celebrated “Raoul Wallenberg Day” in memory of the businessman turned diplomat who saved thousands of Jews from Nazi extermination in Hungary by issuing real and then false papers. He was in modern day parlance a “people smuggler” although certainly one on the right side of history, when most in his government and in the wider business world did little, at least initially. We now celebrate the Oscar Schindlers, Nicholas Wintons and Raoul Wallenbergs but at their time they were exceptional – and all breaking the law and in a climate where Jewish refugees were hardly welcome anywhere.

Yesterday, Hungarian police arrested drivers of a lorry abandoned on a motorway in Austria containing the decomposing bodies of 71 migrants and refugees (we might never know which they were). The Dublin Convention (the requirement to claim asylum in the first EU state reached) would have kept these migrants in Greece – safe from persecution perhaps but not destitution. This is why travel documents are routinely destroyed by migrants, their smugglers or traffickers – the unknown are hard to trace. These lorry drivers in Hungary are no heroes, in fact they have committed an unspeakable crime, but the lines of morality on Europe’s current irregular migration crisis are no clearer cut than they were at other times in history. It is not easy for businesses (lorry drivers, shipping, airlines, farmers and so on) to know how to respond in an almost complete vacuum of political leadership (with the very honourable exception of Chancellor Merkel in Germany). Criminal networks move in to exploit the desperate, but with no legal alternatives for refugees aren’t we in fact guaranteeing traffickers an ever-growing market? And in the meantime, should it not be our policy makers and not just lorry drivers upon which we target our anger?

There is no perfect solution to the increasing irregular flows of desperate people, but a common European approach to managing asylum claims if not migration more generally (discussed for decades but never agreed) is not just morally but increasingly practically essential. The problem for some governments at the end of the EU migration chain (e.g. UK, Denmark or Ireland) is that they sense only political downside in agreeing to anything such as this. Even in France, the spectre of the far-right xenophobe Marine Le Pen and the next Presidential election lurks not far off. The UK government, committed to a referendum about its future in Europe and also recommitting to crunching down net migration to an impossible 100,000 a year, any constructive approach to migration across the EU is seen as a vote loser. This of course might change if the sense of moral outrage continues to build, as it did eventually during the 1930s. But in the meantime, it is lorry drivers, ships captains and airline check in staff that have become the de-facto border control of Europe – and required to treat all refugees as illegal migrants.

If you have ever wondered why airlines check your travel documentation before you fly or why lorry drivers or ship captains panic when they discover stowaways aboard, they have good reason for doing so. Carriers’ liability legislation, first brought in during the early 1990s, fines these companies considerable amounts for each migrant – for many lorry drivers this might mean their job. When I looked at how shipping companies and airlines responded to this back then, there were horror stories of stowaways being tossed overboard to avoid such consequences as well as more heroic ones where individuals had taken huge personal risk to protect refugees. If anything, with overloaded boats criss-crossing the Mediterranean or Southeast Asia once again these stories have multiplied. Back in the 1990s, one major airline had a global phone number for check in staff around the world worried about refusing passage to someone obviously in immediate danger. Back then, the airline was willing to take the financial hit for bringing to safety someone who might then go on to be recognised as a refugee, even though they were required to see all such people only as illegal migrants. I know of no airline that still takes such an approach.

At the same time as having to having to block irregular migration flows, governments also want shipping companies to play the role of humanitarians when migrants are encountered en route. Since 1918, and partly as a result of the sinking of the Titanic and then also commercial shipping during the First World War, the Safety of Lives at Sea Convention requires captains to come to the assistance of others in distress. Therefore commercial shipping in the Mediterranean or Southeast Asia should not, under international law, turn a blind eye to sinking ships, even if these overloaded craft hardly meet the definition of ship and are in fact designed to sink. Over recent months there have been too many stories of young Filipino sailors having to drag aboard the bodies of decomposing migrants or comfort the mother who still clutches the dead body of a child.

So in the absence of a coherent plan, companies are getting very mixed messages from governments about how they should respond to the flow of migrants and refugees. To block or to assist? Recent United Nations and OECD standards call on businesses to respect all internationally recognised human rights and, last time I looked, the right to asylum was still one of these.

I suppose one area of clarity is that businesses should not seek to exploit what is already a very desperate situation. Recent standards in the USA and UK require businesses to undertake due diligence to avoid human trafficking in their supply chains, and initiatives such as the Gang-master Licensing Authority works to eliminate such exploitation in high risk sectors such as agriculture. The recently agreed International Labour Organisation Protocol on Forced Labour (updating the 1930 Convention) now suggests all governments to take similar action. And in Australia, the role of the private sector in the detention of migrants and asylum-seekers has become a big political issue resulting in investors divesting from some of these companies.

We can only hope that political leaders will once again re-nationalise refugee policy and work towards a much more coherent approach. It is not easy – it is one of the most challenging questions of our time. But once again, we look to Chancellor Merkel to remind her peers that they too have a moral duty to act.

Business and human rights – do we have the right incentives?

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My keynote speech to the 2015 Australian Dialogue on Business and Human Rights, 19 August 2015, Sydney (reproduced here by kind permission of www.ihrb.org)

“Business and human rights – do we have the right incentives?”

I would like to thank the Australian Human Rights Commission and the UN Global Compact Network Australia for inviting me to join you today. It’s my first time visiting Sydney and I’m delighted to have the opportunity to share a few thoughts on the business and human rights agenda. I do so from my position at the Institute for Human Rights and Business. We’re a global “a think and do tank” with regional centres in Myanmar, Kenya and Colombia as well as a consortium in China. Our thematic research and policy activities focus on the connections between private sector activity and human rights across four global flows of workers, finance, commodities and information.

We should take a moment at the start to reflect on how far the business and human rights agenda has moved in recent years. You will recall that in 2011, the Australian Government supported the UN Human Rights Council resolution that unanimously endorsed the Guiding Principles on Business and Human Rights, the final outcome of John Ruggie’s six-year mandate as the UN Secretary-General’s Special Representative on Business and Human Rights. This was a historic achievement, not only in reaffirming states’ duties to protect their citizens against human rights abuses in which business is implicated, but also in establishing for the first time that business itself has its own responsibility to respect these same rights. The Guiding Principles make clear that the corporate responsibility to respect human rights must be backed up with concrete action through ongoing due diligence processes. The GPs stress as well that both governments and businesses need to provide effective remedies for victims when abuses do occur.

In the years since their endorsement, the focus has rightly been on implementing the GPs in different contexts. This has included efforts by global institutions like the UN and OECD as well as regional bodies such as the European Union, African Union and ASEAN. It has also involved sector-specific initiatives by a range of industry groups and national action plan processes and other initiatives including dialogues like this one.

Four years later, business and human rights is slowly becoming a bigger part of the international policy agenda. We can see this in a number of contexts, but let me point to just a few examples over recent months. The families of the 1,100 victims of the Rana Plaza factory collapse two years ago in Bangladesh have finally received compensation owed them, thanks to the personal intervention of Chancellor Merkel of Germany whose leadership was also critical in the recent G7 statement on responsible business and supply chains. That statement included explicit references to the UN Guiding Principles and the OECD Guidelines on Multinational Enterprises. The International Labour Organization has made responsible business supply chains its focus for 2016. Even sporting bodies such as FIFA have come out with new human rights commitments.

At national level the debate has moved forward as well. For example, the China overseas mining guidelines, launched at the end of 2014, are more explicit in human rights terms than most OECD equivalents although it remains an open question how far China might move on such issues during its chairing of the G20 next year. The Asian Infrastructure Investment Bank has received a good deal of discussion although it is too soon to predict where it will emerge on standard setting. Here in Australia, it is encouraging that more and more companies are developing their own human rights policies and domestic and international supply chain issues have particularly been in the spotlight. An increasing number of companies are joining international multi-stakeholder initiatives like the Voluntary Principles on Security and Human Rights.

It is notable too that Australia is one of the first countries where the concept of “social license to operate” arose, largely in the mining sector. The subject of “The Social License” is one I was foolhardy enough to write a book about last year. My aim was to point out that social license is an increasingly material concept that no longer just relates to mining activities, but to the activities of all businesses and – if we think in social contract terms – to government and civil society as well.

There is nothing new about the idea of social license but it is re-emerging today as a way of expressing new forms of social relationships between non-state actors principally. Don’t take my word for it. Just read the recent Mansion House speech given by the Governor of the Bank of England, Mark Carney – a Canadian – in which he uses the term five times in relation to the need to reform financial markets. Carney is making our work much easier – he is connecting the dots and beginning to create space for much greater financial incentives for businesses that do the right thing. I should also add that Mark Carney chairs the G20 Finance Committee.

I think we would all agree that communities expect more of businesses today, indeed, society expects more. The idea that shareholders are the beginning and the end for incentivizing publicly listed companies is an increasingly redundant concept, as is the notion that shareholders do not see longer-term value in minimizing risk by acting responsibly. Some contend the short-term concept of shareholder value is actually destroying business. For me, the concept of “stakeholder” does not cut it as a replacement however. The people upon which businesses have their greatest impacts – workers, communities, consumers – they are not merely stakeholders. They are “rights-holders” to whom businesses have clear responsibilities as set out in the UN GPs.

What then is the nature of the social contract between business and the rights-holders upon which they have the most significant impacts? This is the fundamental social license question in my mind. And there will be big advantages for those businesses that can figure it out. Investors are important stakeholders for most companies, but if business can build greater trust, consent and legitimacy with all those whose rights they may affect – positively and negatively – then the rewards will be far greater still.

So there is much happening – perhaps more than at any time in the past 15-20 years when I first worked on these issues for Anita Roddick at The Body Shop. But will business and human rights ever become a truly mainstream issue in the way that discussions about health and safety, climate change or anti-corruption have? I think it might, but for that to happen we need to be honest about the real incentives and disincentives at play, and how we might scale up from where we are today. Let me turn briefly now to five business and human rights trends that in my view are key to determining how this agenda will unfold over the coming years.

(1) Aligning government policies and opening pre-competitive space for business to act responsibly

First to the role of government – fundamental in human rights terms and also as the first pillar of the UN’s “Protect, Respect, Remedy” framework – that is, the state duty to protect human rights. There are currently 19 governments that have undertaken or are undertaking National Action Plans on Business and Human Rights. These are no longer restricted to European Union member states, as the list now also includes countries such as the US, Colombia, Chile, Mexico, Mozambique and Kenya. These processes vary significantly in their ambition and scope. But what they have in common is a focus on implementation of the UN Guiding Principles including the need for policy coherence across government departments and also making business and human rights a permanent area of policy. They also, in my opinion, perform a deeper function – which is important to how seriously business can and should take this whole agenda: that of where the line can be drawn between competitive and pre-competitive action.

One example is the issue of Corporate Social Responsibility or CSR. CSR has many definitions around the world. Sometimes when I am teaching I challenge students to marry up national CSR definitions of G20 countries with their owners. CSR is generally seen as a competitive space – part of the way businesses can compete against each other through reputational benefits or in substantive terms (particularly when we consider climate change adaptations, or micro-finance for example). But does business and human rights fit here? Well yes to some extent above the baseline of the corporate responsibility to respect human rights (that is, beyond the minimum requirement that businesses “do no harm”) and into activities aimed at supporting human rights – in other words – voluntary positive actions that advance and promote rights. In GPs terms, the corporate responsibility to respect is now an international norm of expected conduct and therefore should be understood as a pre-competitive issue for all businesses. Does business understand this? Some do. Do governments communicate this clearly? Not many.

So National Action Plans, and with them government policies relating to trade, development, investment, public procurement and different aspects of law are very important tools in signaling and creating pre-competitive space in which businesses can work together, with government and other stakeholders to find the best ways of responding to human rights dilemmas. The process of drafting these plans too can be helpful in and of itself to build networks and partnerships between different stakeholder groups.

Through its participation in the Voluntary Principles on Security and Human Rights, Australia is no stranger to multi-stakeholder dialogue in this area and the benefits of collaboration for government policy coherence, clarification for business and other stakeholders of government expectations and support for companies trying to do the right thing. I understand Australia does not yet have a national action plan though progress is being made in specific areas. I hope we can discuss today whether a more holistic approach through a national action plan type vehicle would help in further supporting all stakeholders in this area. And in particular, whether you think a National Action Plan on business and human rights for Australia could help signal other national priorities, at home and overseas, where business, governments, trade unions and civil society can and should collaborate for better human rights outcomes.

(2) Implementing the UN Sustainable Development Goals (SDGs)

The Sustainable Development Goals to be signed off at the UN in New York next month represent the pathway forward for us all over the next 15 years on some of the world’s most pressing developmental and environmental concerns. The role of business has been factored in much more than for the Millennium Development Goals in 2000. Arguably many of the SDGs are unachievable without active business engagement. Take for example SDG 8 to “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. There are very few economies where work can be provided for the majority without a vibrant and competitive private sector. But how will this be done? Full employment for all by 2030 is one heck of a goal in its own right. Ensuring these jobs meet the ILO’s definition of decent work is even more ambitious. It is interesting how far debates on living wages have progressed over recent years in many parts of the world. Yes, it took the factory collapse in Rana Plaza for the Bangladeshi minimum wage to be increased by 60% and many would argue it is still far below what a decent wage should be. But interesting also that the right of centre new British Government also committed itself to a living wage a few weeks ago.

But decent work is about more than wages. It is also about the fundamental rights of workers themselves, to organize, assemble, bargain collectively and so on and also in a wider human rights context where trade unionists and human rights defenders are not at risk, and where the families of workers can live with dignity. Perhaps the most widespread of business and human rights issues around the world is the use of third party labour providers – labour agencies have become a powerful adaptation to the flexible nature of global labour markets. Most of these agencies do a good job, but there is the unregulated bottom end of the market, which relies on coercion, exploitation and – at times – forced labour and human trafficking.

Whether it be berry pickers in Scandinavia, fruit and vegetable pickers in Florida, farm workers in the UK (or Australia), Burmese fisherman in Thailand, Serbian construction workers in Russia, internal migrants in China, domestic workers going to the Gulf – the issues are remarkably the same. Anyone with a global supply chain should know these issues – and recent legislation in the USA and UK require full disclosure for business on this issue. I understand recent legislative changes create obligations on business here regarding the worst forms of labour exploitation and also that the Attorney-General’s department is convening an expert group to look at other policy responses including disclosure.

It is clear that SDG 8 will not be reached if we don’t understand how domestic labour markets respond to international pressures and global supply chains, not least through labour migration. It is also the case that economic growth no longer creates the same number of jobs and technology is intervening – therefore entrepreneurs are essential, in particular those that create local sustainable jobs within communities. We should also recognise that human rights are central to many more of the SDGs – ending poverty and hunger, addressing inequality, ensuring healthy lives, inclusive education, gender equality, access to water, sanitation, energy, making cities safe, peace and good governance. Human rights sit at the heart of these, and there are significant opportunities for businesses that contribute. Next month we at IHRB will be releasing our own take on the business role in fostering sustainable development and encouraging implementation of the SDGs as part of our ongoing State of Play report series. These reports look at how the business and human rights agenda is influencing different issues of policy and practice and we look forward to engaging on the important links between responsible business, sustainable development and respect for human rights.

(3) Shaping real market incentives for greater transparency

The UN Guiding Principles – in elaborating the second pillar of the “Protect, Respect, Remedy” framework – the corporate responsibility to respect human rights – ask companies to “know and show” in relation to their most salient human rights impacts. The question always comes then – well how much knowledge of potential adverse impacts should my company actively acquire? Gaining knowledge of human rights risks clearly takes time, resources and might embody short-term risk for the business. Likewise, just how transparent are companies expected to be about such information? On some issues, governments are starting to introduce much needed regulation, which moves us towards a more level playing field. For example, the due diligence guidance in the US and elsewhere on conflict minerals, the US reporting requirements on Myanmar, that in the UK and US on trafficking and forced labour in global supply chains, the recently agreed EU reporting requirement for the largest 6,000 companies and due diligence legislation currently being debated in the French Parliament all suggest new state action in this area. Added to this, the important work and public statements of National Contact Points within the OECD system. All of these examples suggest we are slowly getting to greater clarity on “knowing and showing”.

One important development in this area is the UN Guiding Principles Reporting Framework providing guidance to companies on how to report their salient human rights risks in line with the GPs. You will see a growing number of companies follow the lead of Unilever and Ericsson both of which are using this new reporting tool. Another important initiative we are involved in is developing a Corporate Human Rights Benchmark, eventually for the top 500 globally listed companies, which will rank companies not just on intent but also actual human rights performance. More locally, our Myanmar Centre for Responsible Business now ranks the 100 largest Myanmar companies on basic human rights practices and other criteria – an important tool for international companies seeking responsible local partners.

So slowly, and sometimes on the back of the anti-corruption movement, we are seeing the case for greater human rights transparency being made and won, partly on high impact human rights issues such as trafficking, forced labour or conflict and partly in the context of high human rights risk countries such as Myanmar. Let’s see what gets developed for the rush of international investment into Iran that we expect to see over the years ahead, and to a smaller extent in Cuba. My own organisation, through the Corporate Human Rights Benchmark project and other tools, believes this greater transparency should lead to firmer penalties for abusers but also greater rewards for companies trying to do the right thing, and sometimes succeeding. We hope the ranking of corporate human rights performance will start to move investors and eventually consumer behavior. We think governments, including the Government of Australia, might find such disclosure and comparison important in terms of its own public procurement decisions.

(4) “Striving for excellence” – Mega-Sporting Events and human rights

There is no better metaphor for human rights than sport. When sport has gotten behind particular human rights issues – be it the Para-Olympics, kicking racism out of football or gender equality in events – the results have been significant. Without equality of treatment on the field, sports do not work. This same understanding is now beginning to affect the way we think about sports off the field as well, in particular in relation to the tendering, delivery and legacy of Mega-Sporting Events. If you think about it, the 7-9 year life cycle of such an event is the microcosm for just about every business and human rights issue, from land acquisition and resettlement, to construction and infrastructure, security, supply chain to freedom of expression in relation to the event itself.

One of Australia’s next major international sporting events is the Commonwealth Games on the Gold Coast in 2018 and it is the Commonwealth Games Federation, more than any other international sports bodies, that has led the way on committing itself to human rights due diligence as we saw in Glasgow 2014. So we have high expectations for the Gold Coast and then for Durban in 2022.

We expect that by the end of 2015, many of the world’s major sporting bodies – including the International Olympic Committee and FIFA, will join the Commonwealth Games Federation in making human rights statements. Major sponsors and broadcast companies will need to do the same. We have a golden opportunity but only if we can show tangible results. This means more transparent and accountable processes in how Mega-Sporting Events are bid for and awarded, and events that deliver real value to the communities and societies in which they are hosted. There is much that needs to be done in relation to Qatar 2022 and Russia 2018 to rehabilitate the world’s trust in FIFA. You will all be aware of the significant human rights concerns that have surrounded both events. Similarly, the learning between London 2012 and then on to Rio 2016 and Tokyo 2020 has been stronger within the Olympic tradition but human rights concerns have all too easily been relegated to a less prominent position. For example, the role of an independent oversight committee, so important in London 2012, has not been replicated in Rio and has not yet been confirmed for Tokyo. We also hope the Gold Coast Games in Australia will be one that many learn from including in human rights terms. Many of you in this room can help whether in the capacity of sponsors, investors, suppliers or civil society members encouraging greater accountability.

(5) Tracking the potential for new developments in international law

A final trend worth watching concerns UN discussions on the potential for a new international legal instrument on business and human rights. A range of governments led by Ecuador and South Africa met last month in Geneva to begin consideration of this question. Key so called “home country” governments including Australia, the US and the EU declined to participate, suggesting significant hurdles to implementation of any eventual outcome of this process.

The evidence suggests there might well be a need for binding international rules in this area. We are all aware of cases when businesses have operated with a sense of impunity, taking advantage of different legal jurisdictions to try and lessen the risk of being sued for alleged human rights abuses. This would be one driver for new international law – to try and control some of the perceived governance gaps associated with global business activity, in particular when operating in weaker jurisdictions. But this is not the same as a Treaty focused on what are already international crimes (the very worst forms of human rights violation), which is different again than focusing on the most widespread of negative impacts relating to business activity.

Until there is agreement on the governance gaps that need to be addressed at international level, it is hard to be specific about what the scope of a new instrument should be in terms of the type of company, range of human rights or even the category of law it targets. In our submission on the new UN process, we reiterated our support for binding rules that might really reduce human rights related harm. Of much greater concern to me, however, is how the focus on a proposed Treaty distracts from much more immediate legal opportunities. For example, how many civil society organisations are pressing for the effective ratification and implementation of the 2014 ILO Forced Labour Protocol, which looks to business to undertake human rights due diligence relating to forced labour, human trafficking and modern day slavery. Where do countries currently stand on the ratification of this historic protocol? What forms of human rights due diligence could help businesses comply with the Protocol through their global operations and supply chains?

All of these debates matter because ongoing global attention concerning business and human rights issues can drive momentum for policy and regulatory changes at home. So I would encourage you to get involved in increasingly public consultations around these issues to ensure your views are heard.

Conclusion

I conclude by saying how much I welcome this opportunity for us all to take stock of what is happening here in Australia on the business and human rights front, and in relation to developments in other countries as well. I am particularly interested to hear from you about domestic business and human rights related issues including what I understand to be important work around indigenous reconciliation as well as issues concerning migrant workers. I hope we can also share ideas about what is working well and what more the Government of Australia, business, civil society, investors and trade unions can actually do to harness national opportunities for better human rights outcomes while engaging effectively in different partnerships aimed at creating real and lasting change.

Thank you again for the invitation to join you today. I look forward to our conversation.

δημοκρατία: Democracy remains a Greek word

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Are referenda back in fashion?

The quip or blunder about whether or not the French know the meaning of the word “entrepreneur” is often attributed to George W. Bush (like so much else). By comparison, there can be less ambiguity about whether “democracy” is still a Greek word – especially after the result of last Sunday’s referendum.  European heads of state will meet tomorrow (12 July) in Brussels to negotiate over whether Greece remains in the Eurozone. Last Sunday’s referendum gave the Greek Prime Minister, Alexis Tsipras, the political capital he needed to gain the backing of the Greek parliament last night – having delivered a decisive “No” (60%) to the previous terms from Eurozone. 12 hours ago, the Athens Parliament gave Tsipras the authority to negotiate a new bailout by 250 votes to 32. Such a mandate would have been inconceivable only a week ago.

It is still anyones guess whether tomorrow will see the emergence of any new bailout offer between the Eurozone and Greece, or even whether it is in either’s interests to do so. But the referendum has unquestionably given Tsipras much greater authority – strengthening his social contract with the Greek people. The referendum was a gamble, but clearly one worth taking whatever the outcome of the bailout negotiations and Greece’s future in the Eurozone or even European Union. A deal that Tsipras could never have sold back at home would have been in no one’s interests, so the referendum is actually in the interests of his country’s creditors too – even if they did not express this sentiment at the time.

There have been plenty of other referenda in Europe over recent years, one of the most recent, before the Greek vote, being Scotland’s 2014 vote on whether it remained part of the United Kingdom (the Catalonian unofficial referendum a few months later was not recognised by the Madrid government). Recently the UK Government has confirmed that another referendum will be held in the next two years, this time about the UK’s ongoing membership of the European Union. Previously, Scandinavian countries have had referenda about whether or not to join the European Union (EU), and Ireland, France and the Netherlands have also held referenda on specific EU treaty requirements. Sometimes referenda have led to de facto changes in international boundaries – such as those in Kosovo in 1991 or Crimea in 2014 – or to legitimise existing territorial claims – such as in the Falkland Islands in 2013. In countries where referenda are a regular occurrence, such as Switzerland, they seem to be becoming more frequent with up to 10 a year now; likewise in many US states such as California and Arizona.

There are two schools of thought. Those following the social contract theories of Locke or Rousseau tend to see them as a valuable extension of democracy – in fact Rousseau’s ideal “Republic” would have a referendum on every issue (each of us would be so well informed that we could vote before coffee each morning). Others despise them, such as the former British politician and European Commissioner, Chris Patten, who stated in an interview:

“I think referendums are awful. The late and great Julian Critchley used to say that, not very surprisingly, they were the favourite form of plebiscitary democracy of Mussolini and Hitler. They undermine Westminster. What they ensure, as we saw in the last election, is if you have a referendum on an issue politicians during an election campaign say oh we’re not going to talk about that, we don’t need to talk about that, that’s all for the referendum. So during the last election campaign the Euro was hardly debated. I think referendums are fundamentally anti-democratic in our system and I wouldn’t have anything to do with them. On the whole, governments only concede them when governments are weak.”

It should be noted that Chris Patten was also Britain’s last Governor to Hong Kong which was returned to China in 1997 – without a referendum. One can expect him to have strong feelings on the subject, as do many residents in Hong Kong to this day as it happens (as demonstrated during the 2014 protests). It is true that referenda have been the ally of despots to legitimise their annexation of territory but perhaps there is now more evidence, over recent years, that referenda are becoming part of the social licence of democratically elected and accountable governments – winning an election every four or five years is essential but not always sufficient when it comes to major issues of identity or self-determination. The important caveat, and it is an important one, is that law matters and when referenda run against the fundamental values of a nation, then constitutional courts can override such popular expression – as we have seen in the USA on the issue of gay marriage.

So, referenda are no silver bullet, but perhaps they are making a come back as an essential addition to the legitimacy of governments. Perhaps Rousseau was right all along.

“Beyond Governments” – Do transparency initiatives work?

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My review of “Beyond Governments: Making Collective Governance Work” by Eddie Rich and Jonas Moberg (2015)

“Beyond Governments” is a rare thing – a book written on collective governance by practitioners who are still in the midst of practicing the art. In some ways, it is an autobiography of the Extractive Industries Transparency Initiative (EITI) by two of its leading protagonists, and given the endorsements at the start of the book, it is very much an authorized one. The fact that the EITI’s final chapters have yet to be written makes the book more compelling and timely – there is a lot to learn for anyone engaged in collective governance initiatives. This is very timely as we approach the launch of the 2015-30 UN Sustainable Development Goals with governments, business and civil society far from agreeing how they should cooperate in their governance.

As a reader, I found myself banging the table in violent agreement on some of the early key points: that collective governance is irresistible and that accountability has to be a three-way process between governments, business and civil society. There is some openness on the real motivations behind why some governments, businesses and civil society join such initiatives – the fear of ‘resource nationalism’ being high amongst these. My favorite is Chapter 4: “Build Trust through Building Momentum: Just Get on with It” should be on T-shirts and handed out to all collective governance entrepreneurs. There are some real gems here that often never see the light of day in more politically correct writing: voting represents weakness not strength, the voluntary/mandatory divide is a major distraction and that power imbalances need to be accepted. Essentially forward momentum is gold dust for collective governance work, endless years of discussing governance whilst not rolling up collective sleeves to work together on the ground (which has blighted some other multi-stakeholder initiatives) results in few benefits for rights-holders and communities.

Another stand out for me is Chapter 8 on Sunset Clauses – there should be no in-built assumption that new models of collective governance should be permanent. Rich and Moberg are very open about the degree of experimentation that is going on and some of the dangers of co-option or decline, as well as the vigor of having time-bound objectives. “Initiatives need to dismantle themselves or reinvent themselves” – a key point that so many other others have overlooked. Planning for redundancy used to be the mantra of the voluntary sector, before NGOs became part of the status quo, and it is a good default for collective governance initiatives. They might become the “new norm” but we, and especially they, must not assume that they will.

The book raises many questions but cannot fully answer all (because each would need a book in their own right). Firstly, I wonder how much collective governance is an art and how much it is a science. The book gives ample bullet points for those hungry to learn. These are good. But some of the dark arts of collective governance, and the authors are clearly practitioners, are harder to describe in text boxes. John Ruggie, another who practices and analyses in real time (although in his case he is a thinker turned practitioner – the reverse direction), often quotes Bismarck when asked how he achieved what he did with the MDGs, UN Global Compact or the UN Guiding Principles on Business and Human Rights: “If you like the sausage don’t ask how it is made”. There must be a lot the authors had to leave out.

I also wonder if the “Beyond Governments” title is the right one. The content of the book does not suggest this: rather it is more “Helping National Governments and Other Actors to Do Their Jobs Better in a Complex Globalizing World” – but this is a less catchy title. Any sense of moving beyond governments will raise the hackles of many said governments, as well as many in civil society (who are oxymoronic on this point – governments are the main abusers of human rights yet UN Conventions further legitimize them); some of whom are also closing down space for civil society and in particular those that might receive international funding – an important component of how EITI works. Similarly, I wonder if EITI is really an alternative to regulation (as suggested in Recommendation 9). The Dodd Frank Act in the USA would not suggest that initiatives such as EITI delay binding laws, but rather they might make such legislation effective when it comes.

A final thought would be my predicable point on human rights. I guess I see the interrelationship between transparency and human rights to be much closer than the book suggests, or than that Clare Short inferred when Ethiopia joined EITI. The downgrade of Azerbaijan (on Page 60) was a brave move by EITI but the section really still fudges the relationship between freedom of expression, the right to privacy and the right to information (i.e. transparency). This alignment remains a central challenge for EITI moving forward, and is not one that has hindered transparency NGOs such as Global Witness and their recent work with the global Chinese mining sector.

I would like to congratulate Eddie and Jonas on the book and for taking the time to write it. It is a unique book in many ways and there is a reason that EITI is amongst the most successful of all multi-stakeholder initiatives. So read it.

The book is available from   www.greenleaf-publishing.com

* John Morrison is the Executive Director of the Institute for Human Rights and Business and author of “The Social License” (Palgrave MacMillan, 2014). The views expressed here are his own.

 

The social licence and the Bank of England

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Mansion House speech, City of London, 10 June 2015

Inspiring to hear the Governor of the Bank of England, Mark Carney, use the term “social licence” so much in his Mansion House speech in London tonight when making the case for greater accountability. Excellent. Lets hope his audience were listening.  Here are some quotes:

On Markets:

“Markets are not ends in themselves, but powerful means for prosperity and security for all.  As such they need to retain the consent of society – a social licence – to be allowed to operate, innovate and grow.  Repeated episodes of misconduct have called that social licence into question.”

… “Real markets are resilient, fair and effective.  They maintain their social licence.”

On Financial Reform:

“This reform agenda has increased the effectiveness of FICC [fixed income, commodities and currencies] markets and reinforced their social licence.  It is frustrating for us all that such major progress risks being overshadowed by misconduct problems.”

On the Governance of the Bank of England:

“The Bank’s arcane governance blurred the Bank’s accountability and, by extension, weakened the social licence of markets.”

Mark Carney’s full speech can be found here. For more on the social licence.

 

The 7 May 2015 “British” election

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“Those who expect to reap the blessings of freedom, must undergo the fatigues of supporting it.”    - Thomas Paine (1777)

Thursday 7 May 2015 is the date of the UK election. It  is more than a British election in a number of ways. The fact that there is no adjective for “United Kingdom” – you are either British (i.e. English, Scottish or Welsh) or Irish – is a linguistic clue to a deeper force at work once again. Being of the United Kingdom of Great Britain and Northern Ireland seems to be diminishing still further as a collective identity.

For the first time in over 300 years of union, Scotland might (just might) return only pro-independence nationalist representatives to the Westminster Parliament – something Wales or Northern Ireland have never done (nor for that matter the rest of Ireland before its independence). Even if the Scottish Nationalists fall slightly short of winning all 59 Scottish seats, it is likely to be a historic achievement. The 2015 election looks like being not just about the respective number of Members of Parliament (MPs) but also about the legitimacy of different parties to be part of a government given that none is likely to command an overall majority.

The arithmetic itself highlights what is wrong with the current British democratic system. It maps very poorly onto the new political allegiances that have emerged across the UK over recent years, partly due to our “first past the post” electoral system (in Britain) but also due to how concentrated some votes are. The United Kingdom Independence Party (UKIP) – who despite the name are de facto English Nationalists – looks like gaining 10-14% of the overall UK vote, but perhaps only one or two seats in Parliament. Nationalists in Wales and Northern Ireland will gain more MPs than UKIP but with a much smaller percentage of the overall UK vote (largely because they are concentrated in a few seats each) and it should be noted, that Sinn Fein (part of Irish Nationalist community) will not take their seats in Westminster anyhow.

But the Scottish Nationalists (SNP) will command perhaps only 4-5% of the overall UK electorate but might win 54 or more of the 59 Scottish seats in Westminster. The 50% of Scotts who do not vote SNP tomorrow might not see many or any Scottish Labour, Liberal or Conservative MPs in Westminster. Apart from being a bit weird it is huge drain of talent from the Labour and Liberal Parties and from Westminster as a whole.

But I am not blaming Plaid Cymru or the Scottish Nationalists for this state of affairs – both have advocated for proportional representation. As commentator and satirist Armando Iannucci points out, it is the system itself that is rotten and for this we must blame the two parties that have dominated UK politics for too long: Labour and the Conservatives – for not reforming it. Whilst the de facto English nationalists – UKIP – also claim to be a reaction against the status quo – unlike the Irish, Welsh or Scottish nationalists they cannot credibly claim to be progressive with their anti-immigration and anti-European rhetoric. Intriguingly, if the UK does start to pull apart, even only through greater devolution, it will open political space for any progressive English nationalist party should they ever choose to be labeled such terms given hegemonic problems of being labeled “English”. I am not a nationalist – so I leave this bone for those that think nationalism is a legitimate dogma in the twenty first century.

What makes the May 7th result particularly interesting is that the two main parties are neck and neck at around 33% of the popular vote between them across the UK. In terms of seats, however, this favours the Conservatives in terms of numbers of MPs as their vote is concentrated in England (and particular the South of England). But even this advantage looks as if it will not give the Conservatives enough seats to rule on their own – another coalition will be essential but their partners of the past five years, the Liberal Democrats, will be the biggest losers on May 7th in loss of vote – as were the Liberals in Germany after their first coalition with Chancellor Merkel. There might not be enough Liberal Democrat MPs in the new Parliament to give the Conservatives what they need.

What the colour combination of the next UK coalition will look like is a matter for those who like to set bets and gamble. Unlike Germany, a Red-Blue (Social Democrat – Conservative) “grand coalition” is impossible in UK terms. It happened unofficially last year in Scotland during the referendum on independence and many Scottish voters still resent it. As much as nationalism is emerging as a powerful force in UK politics, it does not trump the much deeper class divide anywhere with the possible exception of Northern Ireland. British politics remains tribal on class grounds, much less so than it was, but the two main parties still have their core votes determined more by genetics than manifestos. What is truly radical about what is happening in Scotland, is that this might be shifting to a new model (albeit an independent Scotland could not be governed by a spirit of nationalism forever and would revert to left-right divisions).

What we will see in the next few days is a hint of a new style of politics in the UK – and one in which legitimacy places an increasing role. Not all the permutations for building a 326 MP coalition in the Westminster are easily legitimate in representative terms – given the imbalances I have outlined above. Until the voting system is reformed (replaced by proportional representation) and we move to a more permanent multi-party system, Westminster will feel its social licence draining away. Its political licence might be cobbled together for another five years, it might have legal licence in constitutional terms, but the social license – the result of the social contract between the peoples of the United Kingdom and their representatives in Westminster is increasingly badly damaged and must be repaired before democracy can once again thrive on these isles west of France.

To end with the words of a British man, in fact an Englishman who perhaps gave the world more in democratic ideas than just about any other. The democracies of France and the USA both owe much to Thomas Paine, but he was never much liked by the elite back at home – in fact he was wanted for sedition: to be hanged for his dangerous thinking. But Paine reminds us in his quote from 1777 (that starts this commentary) that democracy itself is a lot of hard work.