The Zero Draft Legally Binding Instrument on Business and Human Rights: Small Steps along the Irresistible Path to Corporate Accountability

Charlie Holt, Shira Stanton and Daniel Simons, Greenpeace

This blog is part of the Reflections on the Zero Draft blog series on the proposed binding treaty on business and human rights. We present this series as part of our work to highlight key developments and opportunities for change, with the aim of empowering advocates in civil society, governments and businesses with the evidence and guidance to help define their position and engagement in the treaty process. We believe this initiative is complementary to the implementation of the UN Guiding Principles, and that an inclusive and open debate is crucial to ensure these initiatives deliver for everyone, and that the business & human rights movement continues its 'unity in diversity'.

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This is a story about power; who has it and how they use it. The growth of corporate power over the decades has changed how governments make policy and what they prioritise. Corporate power has guided states’ involvement in the international sphere, including how international human rights law is agreed upon and how it’s implemented (or not).

The discussion around a legally binding instrument on business and human rights are part of this power play. Civil society’s tireless efforts to get it on the public agenda, campaigning for states to constructively debate it, and ideally to come to an agreement that can be effectively implemented is an inspiring example of people power.

Greenpeace has been calling for such an instrument since 2002, to which governments committed in principle. Harm to the environment and to human rights are often two sides of the same coin; like when forests are cleared without the consent of Indigenous People, when illegal fishing operations depend on slave labour, or when extreme weather fuelled by climate change threatens basic rights to food, water and shelter.  We welcome the arrival of the zero draft of the instrument, even as it serves to underscore just how far we are from an international agreement that fully addresses the gaps in human rights and environmental protection caused by corporate power.

The governance gap caused by corporate power has been well-documented, with an unfortunate number of examples to choose from. At Greenpeace, we often see examples of businesses avoiding enforcement because of their transnational character, the imbalance of power with the host state where they operate, or because international rules, such as trade and investment treaties, tie policymakers’ hands. A well-known example is the failure to hold Trafigura to account for dumping toxic waste in the Côte d’IvoireClosing this governance gap through legally binding measures is the only way forward.

The zero draft version of the treaty, to be discussed in the fourth session of the open-ended intergovernmental working group, goes some way to address this gap. For example, it requires companies to undertake due diligence to prevent human rights violations within their business; it opens parent companies up to liability for what their subsidiaries and even suppliers do; and it allows corporations to be sued both where they operate and where they are based.

Looking at the zero draft through the lens of how such an instrument can contribute to a green and peaceful future, there are still limitations that must be addressed.

The most obvious is that it only applies to transnational corporations (TNCs), though this extends to any business activity of a "transnational character" (which is defined broadly as activities involving actions, persons or impacts in two or more jurisdictions).

More significant, however, is that the treaty does not prescribe direct obligations for businesses corporations, failing to genuinely innovate beyond existing principles of public international law, contrary to suggestions made during earlier consultations. This is a testament to the power struggles at play, and how the private sector has so far succeeded at changing the original idea. This draft does not significantly depart from the UN Guiding Principle framework of a state’s duty to protect, a corporate responsibility to respect, and access to remedy. It does not even attempt to define exactly which human rights corporations must respect.

What this would mean in practice is unclear. With direct obligations, corporations could no longer hide their failure to act behind the alleged shortcomings of states”. The way it is currently framed displaces or distorts corporations’ responsibility for human rights abuses. It also addresses the reality of states unwilling to do something about such abuses, but does not address those states unable to - those, for example, with weak or non-functioning legal systems. The fight for parent company liability, for example, is driven as much by the inability of the state to hold local subsidiaries to account as it is by the inability of those subsidiaries to adequately compensate victims. Take the efforts of the federal high court of Nigeria, which in 2005 declared Shell’s gas flaring to be a violation of human rights and ordered the company to stop the practice. Shell has still not complied with the order, and legal counsel for the plaintiffs reported in the following year that the judge had been removed and the file of the case could not be located.

It also completely ignores the power that transnational corporations already have as actors in international law, for example via investor-to-state dispute settlement (ISDS) mechanisms. Their disproportionate rights must be countered with clear human rights obligations commensurate with their role and influence in the world. This is not unprecedented; the 1969 International Convention on Civil Liability for Oil Pollution Damage holds ship owners (including companies) liable for oil pollution damage. The 1982 UN Convention on the Law of the Sea forbids not only states, but all natural and juridical persons, from appropriating the seabed and/or associated resources.

Greenpeace, our supporters, and our allies use the law to take action to hold our governments and corporations to account. Whether the treaty in its current form advances the movement towards global corporate accountability remains to be seen. So much will depend on how States engage in October in Geneva around discussions of this zero draft. Will they use their power to not only acknowledge the power corporations already have and the destructive outcomes this can lead to? Will they engage around the shortcomings in the human rights system and constructively work together to address them?

If all this seems like a tall order we should take stock and remember how far we’ve come. That we’re discussing a draft treaty to regulate TNCs at all is impressive: in a 1992 report to the General Assembly, for example, UN Secretary-General Boutros Boutros-Ghali declared that “no consensus was possible” on a code framework on TNC activities and hence “the final nail was driven into the code’s coffin”.

However much corporations resist, it’s inevitable that global rules for global players will eventually be agreed upon.

Patience is wearing thin and pressure for legal reform on both an international and domestic level is building. We should feel emboldened by the progress we’ve made to lobby governments, join local coalitions, and help accelerate the movement for change. At times, the strength and power of corporations can seem overwhelming; but if this draft treaty shows anything, it’s that by raising our collective voice, our power can rival theirs.