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UNRISD Comments on the “Guiding Principles for the Implementation of the United Nations ‘Protect, Respect and Remedy’ Framework”

31 Jan 2011

Since the 1990s the United Nations Research Institute for Social Development (UNRISD) has carried out extensive research on issues of business regulation, the role of transnational corporations (TNCs) in development, and the potential and limits of corporate social responsibility (CSR). Drawing on this body of research, these comments assess the contribution and limitations of the Protect, Respect and Remedy (PRR) Framework and the Guiding Principles (GPs) with regard to corporate accountability and performance conducive to rights-based development.

1. The PRR Framework and the GPs make a major contribution to thinking and policy in the field of business and human rights by highlighting the respective roles, complementarities and synergies of both broader regulatory approaches involving legalism, voluntarism and active citizenship, as well as more concrete institutional arrangements associated with state capacity, CSR-related due diligence and grievance procedures. Explicitly advocating this mix of institutional conditions represents a major step forward.1

2. The Framework and the GPs promote institutional arrangements that potentially address some of the major limitations of mainstream approaches to CSR. These limitations include, for example, the a) tendency for companies to pick and choose among multiple standards, b) the scale of free-riding and inaction, c) the lack of attention to key issues such as core labour rights, living wages, executive pay and fiscal responsibility, e) corporate incentive structures and lobbying practices that contradict or undermine CSR, and f) promotion of self-regulation as a means of sidelining public policy and law.

3. The GPs importantly call attention to some of the blind spots and contentious issues related to international development policy, notably the potentially contradictory impacts of free trade and investment agreements and donor conditionality on policy space and state capacity in developing countries.

4. In relation to the business responsibility pillar of the PRR Framework, the GPs emphasize that companies should adopt a systematic approach to embed human rights principles throughout their structures. Such an approach includes due diligence procedures, including explicit statements of principles, monitoring and reporting practices, human rights impact assessments, supply chain management and self-remediation measures.

5. In relation to regulation and the strengthening or deepening of voluntary approaches to corporate responsibility, a major contribution of the GPs lies in the considerable emphasis on the role of grievance procedures, both judicial and non-judicial.2

UNRISD research has raised various concerns that merit inclusion or greater attention in the GPs. These include the following:

6. Avoiding adverse development consequences of standards regimes: The design and application of standards may have distributional consequences that can impact negatively on weaker stakeholders, particularly in developing countries. Two types of potential developmental consequences or contradictions need to be acknowledged. First, the tendency for smaller enterprises or producers to be crowded out of some value chains as global processing or retailing firms come to rely on larger suppliers. Second, the capacity of more powerful stakeholders within value chains to transfers costs and risks onto weaker stakeholders. In the real world context where consumers, shareholders and senior management, respectively, are unwilling to pay for higher standards through higher retail prices, lower shareholder returns and lower remuneration, respectively, the costs of raising standards are often born by small enterprises and workers. Similarly corporate due diligence can mean transferring risks along the supply chain. Reflecting the imbalances in power relations within global value chains and global governance, there may be winners and losers in the quest to raise standards, given the skewed distribution of costs and benefits. It is important to explicitly recognize these risks and contradictions, and particularly their implications for stakeholders in developing countries.

7. Casualization of labour: There is a tendency in the GPs to refer to the types of “vulnerable groups” that are usually identified within mainstream development discourse, for example, indigenous peoples, women and children. Attention should also be given to workers more generally who are affected by the increasingly precarious nature of employment, in particular casualization. This is a major trend within global value chains which has significant human rights implications.

8. Acknowledging the power of global corporations: The GPs pay insufficient attention to the power differentials within the global business community and value chains, and to corporate influence in policy making. The tendency in the GPs to focus on business enterprises in general runs the risk of diverting attention from the crucial issue of corporate power. In this regard, it is important to acknowledge what was one of the original ethical points of departure for the corporate responsibility movement in the 1980s, namely that under globalization and liberalization there had emerged a gross imbalance between corporate rights and corporate obligations, which needed to be corrected.3 The key issue at hand was, and largely remains, the issue of corporate power and corporate accountability. Furthermore, the seemingly sensible observation in the GPs that attention should be focused on “raising the performance of laggards” (GP 11, commentary)—presumably in contrast to recognized ‘leaders’—is problematic. Often it is the large global corporations that talk the talk of CSR and have the resources to take selected initiatives that are categorized as leaders in this field. But recognized leaders often err, and when they do, the scale of their operations means that the consequences can be significant. As large complex organizations, which are subject to multiple pressures and objectives, they are prone to practices that may have contradictory impacts.

9. Shared responsibility and corporate policy coherence: To address these development and governance contradictions, it is important to emphasize two principles: ‘shared responsibility’ and ‘corporate policy coherence’. The notion of shared responsibility calls attention to corporate irresponsibility of transferring costs onto weaker stakeholders and also ‘cutting and running’, i.e. abandoning suppliers that have difficulties in meeting standards rather than working with them to improve conditions. As noted in the GPs, the principle of “policy coherence”, generally applied to states to ensure that their policies towards developing countries are not contradictory, can also apply to business. The principle of “corporate policy coherence” could draw attention to the need to deal with tensions between a) pricing and procurement practices, and incentive structures, that contradict policies and practices associated with social responsibility, and b) ‘irresponsible lobbying’ i.e. corporate advocacy for public policies or ‘de-regulation’ that can have perverse social, environmental and human rights consequences.4

10. Effective participation and bargaining: The GPs pay considerable attention to the importance of stakeholder dialogue. Past practice reveals that dialogue and consultation facilitated by powerful institutions is often superficial and does more to legitimize a process rather than afford disadvantaged stakeholders effective voice and influence. The GPs should point out the need to safeguard against cosmetic dialogue, and the importance of effective participation and collective bargaining. If the developmental contradictions of new or strengthened public and private standards regimes are to be minimized, it is crucial to address the issue of the participation of southern stakeholders in processes associated with design, implementation and oversight of such standards. More effective forms of participation might also contribute to overcoming the tendency for processes associated with standards-setting, and the corporate responsibility agenda more generally, to be largely Northern-driven.

11. Reconfiguring power relations: Effective or equitable participation of disadvantaged stakeholders requires reconfiguring power relations. A fundamental institutional misalignment underpinning business irresponsibility for human rights and lack of action and redress in this field relates to gross imbalances in resources and influence among states, companies and citizens, as well as the powerful coalition of interests that often exists between states and corporations. Correcting such an imbalance requires far more than technical adjustments such as enhanced consultation or “improved access to information, advice and expertise” (GP 29.d). It requires political adjustments under which watch-dog, advocacy and other types of civil society organizations can carry more weight, and that involve building coalitions that connect NGOs and trade unions, activists North and South, and civil society organizations or movements and programmatic political parties. It also requires effective background conditions and laws associated with freedom of association, press freedom and right to information laws.

12. An enhanced role for global institutions: The Preface of the GPs usefully begins by pointing to the need to correct the institutional misalignments that have emerged in recent decades under globalization and liberalization (paragraphs 1 & 2). In addition to the roles of national states, business self-regulation and active citizenship, relatively little attention is paid to the fourth institutional pillar of good governance, namely global institutions and regulation. The role specified for multilateral institutions is quite restrictive in the GPs (GP 11). It is essentially limited to the issue of safeguarding policy coherence in relation to state policy and promoting good practice. The role of international institutions in relation to binding regulation, oversight, remediation and critical inquiry need to be considered more fully. Guidance in relation to these roles is essential and should not be sidelined because they may be politically sensitive or because the field of business and human rights is complex. Overcoming the institutional deficit that is a feature of globalization also means it is essential to go beyond an examination of “existing standards and practices” (Preface, paragraph 13). The importance of considering the role of new institutions should also be acknowledged, including the crucial question of follow-up and oversight related to the PRR Framework and the GPs, and the ongoing need for a global focal point in this field. The GPs rightly state that a fundamental reason why the process orchestrated by the Secretary-General’s Special Representative was able to advance related to the fact that for the first time there was an explicit focal point, which operated at the global level. This begs the question what global institutional arrangement can ensure that such a focal point continues to exist. It is to be hoped and expected that the GPs, as operational guidelines, would address this key aspect related to follow-up and oversight.

13. The global crisis and new regulatory imperatives: Regulatory dynamics in the United Nations system reflects the political and ideational context of the time. The PRR Framework and the GPs are a product of the mid 2000s. This was a time when there was growing international recognition that free-market ideology had gone too far and that it was necessary to rebalance the roles of the market and the state. This is precisely what the GPs attempt to do. With the global financial and economic crisis, the political economic context has now changed.5 The crisis has put into sharp relief not only the limits of self-regulation but also the need for global solutions for global problems.6 Today’s solutions must go beyond issues of national state capacity and voluntary initiatives, however, meaningful. The cautious approach that pervades the PRR Framework and the GPs made sense in order to craft the type of consensus needed to advance the normative process related to business and human rights. But having effectively consolidated its legitimacy, and given the new global context, the time appears right to push the regulatory envelope and institutional imagination.


1 See UNRISD, 2010. Combating Poverty and Inequality: Structural Change, Social Policy and Politics, in particular Chapter 9, “Business, Power and Poverty Reduction”, UNRISD, Geneva

2 See UNNGLS/UNRISD, 2002. Voluntary Approaches to Corporate Responsibility, in particular Chapter 2, “Regulating Business via Multistakeholder Initiatives”, NGLS/UNRISD, Geneva.

3 See UNRISD, State of Disarray: The Social Effects of Globalization, UNRISD/Earthscan.

4See Utting, P. 2010, “CSR and Policy Incoherence”, in K. Macdonald and S. Marshall (eds.), Fair Trade, Corporate Accountability and Beyond: Experiments in Global Justice, Ashgate.

5 See UNRISD, 2010, Social and Political Dimensions of the Global Crisis: Implications for Developing Countries, UNRISD Conference News.

6 See United Nations, 2009. Report of the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System, United Nations.