Farah Ashraf

Nobel Prize-winning economist Milton Friedman, in 1970 New York Times Magazine article, presented possibly the most famous definition of corporate social responsibility . According to Friedman, the responsibility of a corporation is "to conduct the business in accordance with (owners' or shareholders) desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom."

Corporate social responsibility (CSR) is not a new issue. The social responsibility of business was not widely considered to be a significant problem from Adam Smith's time to the Great Depression. But since the 1930s, and increasingly since the 1960s, social responsibility has become an important issue not only for business but in the theory and practice of law, politics and economics .The concept that corporations bear certain obligations to serve the public interest dates back to the late 19th century, when early industrial enterprises in the United States were kept under state control through the use of corporate charters (Richter, 2001, 6). Since the early 1990s, dozens of Transnational Corporations (TNCs) have been exposed to legal disputes in the United States. For example, Texaco has been sued for alleged violations of human rights in Ecuador. Coca-Cola has been sued for alleged human rights violations in Colombia, Royal Dutch Shell in Nigeria and Unocal has been sued for alleged violations of human rights in Burma.

In all of these cases, TNCs have been sued for alleged violations of human rights taking place in conjunction with their operations in developing countries or in places governed by repressive regimes. In these cases, plaintiffs have tried to focus TNCs to the jurisdiction of American courts in order to overcome their failure to enjoy the protection of the local jurisdictions where the alleged violations occurred. In some of these cases, the allegations concerned "hard-core" infringements on human rights, such as mass murder, rape, and torture. In other cases, the alleged violations concerned issues such as freedom of speech and association. In Kasky v. Nike, Nike was sued under Californian State Law for false advertising. Kasky claimed that information on Nike's social performance was false and did not reflect the poor working conditions in its foreign factories. Nike defended itself based on the First amendment of the US Constitution on freedom of speech, but the Court ruled, in the first instance, against Nike to find that the company statements should be classified as "commercial speech" (and not political). The case was subsequently settled with Nike paying $1.5 million as a donation to the Fair Labour Association in Washington, D.C.

An attempt was made to bring under the umbrella of human rights issues such as ethnic discrimination, environmental damages, and unfair labour practices in some cases. In yet other cases, the alleged violations were based on arguments of "cultural genocide" caused by forced relocation, destruction of a natural habitat, or the spread of health hazards. In other cases, the alleged violations occurred as a result of the corporation benefiting from oppressive practices of military or paramilitary groups or as a direct result of the corporation's business practices.

States are bound by international treaties which they have ratified, and by rules of customary international law. Do international human rights obligations apply also to Transnational Corporations (TNCs)? Some TNCs argue that human rights treaties are signed by states, and as such, obligations to respect, protect and fulfill human rights fall on the state. As non-state actors, TNCs argue, that they have no international legal obligations towards the protection of human rights. They may choose to protect human rights voluntarily, but they have no obligations under international law.

The Universal Declaration of Human Rights (UDHR), however, expands responsibilities to "every individual and every organ of society". "Every organ of society", includes non-state actors, such as companies, public and private. Although the phrase "every organ of society" has not been included in either of the human rights Covenants. The UN Norms on the Responsibilities of TNCs and Other Business Enterprises with Regard to Human Rights are the most recent step in a development towards ensuring corporate accountability for human rights, approved by the Sub-Commission on the Promotion and Protection of Human Rights, under the UN Economic and Social Council (ECOSOC) in its fifty-fifth session. The Norms are based on the principle that although states have the primary responsibility of the protection of human rights, multinational corporations and other business enterprises, as organs of society, including officers and persons working for them are also responsible for promoting and protecting human rights as lay down in the Universal Declaration of Human Rights. The Norms acknowledge various multilateral sets of principles, guidelines, standards and recommendations, such as the UN Global Compact, the OECD Guidelines for TNCs, the ILO Tripartite Declaration of Principles Concerning TNCs as well as the ILO Labour Conventions and Recommendations.

Transnational corporations and other businesses have a responsibility to respect human rights in their own operations. Their employees and other people with whom they work are entitled to rights such as freedom from discrimination, the right to life and security, freedom from slavery, freedom of association (including the right to form trade unions) and fair working conditions.In the context of civil and political rights, for example, companies recognize that their legal responsibilities include proper training of their security staff, and that they must not violate international and national labour laws, regarding the use of forced labour and exploitative child labour. The Tripartite Declaration of the International Labour Organisation also applies to companies. Similarly, companies are covered by sector-specific enforcement mechanisms, such as Responsible Care for the chemical industry, Forest Stewardship Programme in forest management, and the Kimberley Process Certification Scheme to regulate the trade in rough diamonds.

Scrutiny of the activities of corporations led many companies to adopt codes of conduct during the 1980s and 1990s. According to Amnesty International, fewer than 50 companies refer unambiguously to human rights in their codes. Whether unique to the company or adopted sector-wide, voluntary codes too often lack international legitimacy.

Human rights groups such as Amnesty International and Human Rights Watch are sometimes aligned closely with labour groups because a number of human rights principles concern to labour relations and working conditions, demonstrated by some of the recent high-profile cases involving forced labour, child labour, restrictions to freedom of association and the right to collective bargaining, as well as abusive "sweatshop" working conditions. Other human rights issues extend to cases involving political oppression, where the relationship to TNC operations may be indirect rather than causal.

According to some analysts debates relating human rights standards and TNC's social responsibility usually revolve around two fundamental issues. The first concern is who should decide whether and when significant human rights violations are occurring in a specific country. The second issue is determining the appropriate relationship between human rights obligations and the actions that business entities (particularly foreign-based TNCs) might take to influence a host country's domestic political affairs.

Therefore, any negotiation at the international level has to be supervised cautiously with the benefits and costs for both industrialized and developing countries. And the question of whether the agreement should be voluntary or regulatory need further discussion. It is worth mentioning that, since its establishment in 1919, the International Labour Organization (ILO) has not achieved the enactment of any of its Conventions or Recommendations on labour standards into any form of international law. Nevertheless, there is no international obligation on countries to do so.

In its keynote publication of 2001, Beyond Voluntarism, the International Council on Human Rights Policy (ICHRP) argues that: 'If self-regulation and market forces were the best way to ensure respect for human rights, one might expect, since this has been the dominant paradigm, the number of abuses attributable to companies to have diminished. In fact, in many parts of the world, the experience of workers and communities is precisely the opposite.' However, people are becoming more cognizant of human rights. There has been, predominantly over the recent years, a rising appreciation of the need to regulate corporate activity from the human rights perspective. There is a significant need to build up tools to support businesses in implementing their responsibilities for undertaking human rights. Therefore, the fundamental requirement for future corporations will be to demonstrate how to build a better world: not just for shareholders, but also for customers, consumers, employees and communities.

The author is doing her LL.M in UK.