Committing to human rights in Australia’s corporate sector

ABSTRACT

This paper draws on data collected from ASX 50 listed corporations. As the UNGP makes clear a visible and accessible policy commitment is the most basic form of recognition that corporations can afford to human rights under the schema it offers. The paper takes the position that this policy commitment gives corporations a chance to declare a positive relationship with human rights. The presence or not of a policy statement, and the form that the statement takes, tells us much about the relationship between the corporate sector in Australia and human rights. The data reveals a low prevalence of policy commitment across the largest publically listed corporations in Australia. The paper selects a range of variables against which to examine whether commitment occurs or not. The most significant factor that supports policy commitment is membership of human rights engaged global Business and Industry Non-Governmental Organisations (BINGOs). We might expect a rather stronger public commitment to human rights reflecting the position apparently taken by Australian corporations on other ESG standards. However this expectation has to be set against the absence of human rights discourse as a political and cultural artefact at the domestic level.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Professor Sally Wheeler, OBE MRIA FAcSS is the Dean of ANU College of Law and Pro-Vice Chancellor for International strategy. She is the author or co-author of several books on corporate governance, over 80 articles or book chapters, and she has edited or co-edited nine other books.

Notes

1 Office of the High Commissioner for Human Rights (2011), ‘Guiding Principles on Business and Human Rights – Implementing the United Nations “Protect, Respect and Remedy’ Framework’, http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (accessed 3 April 2019).

2 Jerbi (2009).

3 Waddock (2008); Seppala (2009).

4 United Nations (2000), ‘The United Nations Global Compact’, https://www.unglobalcompact.org/ (accessed 6 April 2019).

5 OECD (2011), OECD Guidelines for Multinational Enterprises, OECD Publishing.

6 For a detailed history of interventions in the business and human rights area and a discussion of why progress was not made, see Bernaz (2017), p 164f.

7 Office of the High Commissioner for Human Rights (2011), ‘Guiding Principles on Business and Human Rights – Implementing the United Nations “Protect, Respect and Remedy” Framework’, http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (accessed 3 April 2019): Guiding Principle 12. Muchlinski speculates that the reference in Guiding Principle 12 to ‘core internationally recognised human rights’ could be read as not including some human rights instruments such as the UN Convention on the Elimination of all Forms of Discrimination Against Women, see Muchlinski (2012), p 148.

8 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 4 at para 6.

9 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 3 at para 1.

10 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 4 at para 9.

11 Ruggie’s position can be traced back to the typology of rights and concomitant duties set out by Shue, see Bilchitz (2010), p 205f.

12 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 3 at para 1.

13 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 3 at para 3, p 27 at para 104.

14 Wheeler (2012).

15 Ruggie (2011); Commission on Human Rights (UN 2006), ‘Interim Report of the Special Representative of the Secretary-General on the issue of Human Rights and Transnational Corporations and other Business Enterprises’, https://documents-dds-ny.un.org/doc/UNDOC/GEN/G06/110/27/PDF/G0611027.pdf?OpenElement (accessed 3 April 2019), p 20 at para 81.

16 Dancy and Sikkink (2017).

17 Wettstein (2009); Mikler (2018), pp 1–19.

18 Häberli and Smith (2014).

19 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 5 at para 12; Sheffer (2011).

20 Hardt and Negri (2001), p 31.

21 Meyer et al (2011).

22 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 18 at para 60.

23 Office of the High Commissioner for Human Rights (2011), ‘Guiding Principles on Business and Human Rights – Implementing the United Nations “Protect, Respect and Remedy” Framework’, http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (accessed 3 April 2019), Guiding Principle 14.

24 Office of the High Commissioner for Human Rights (2011), ‘Guiding Principles on Business and Human Rights – Implementing the United Nations “Protect, Respect and Remedy” Framework’, http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (accessed 3 April 2019), Guiding Principle 16.

25 ‘Human rights due diligence’ is the name that Ruggie gives to the process that corporations should undertake to identify, prevent and address human rights infringements that result from their activities, broadly conceived. For an account of the different understandings that the human rights community and the business community have of due diligence as a concept and how a coherent definition of the term for the purposes of the Ruggie Framework might be arrived at, see Bonnitcha and McCorquodale (2017).

26 Office of the High Commissioner for Human Rights (2011), ‘Guiding Principles on Business and Human Rights – Implementing the United Nations “Protect, Respect and Remedy” Framework’, http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (accessed 3 April 2019), Guiding Principle 17.

27 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: a Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 17 at paras 55–56; Office of the High Commissioner for Human Rights (2011), ‘Guiding Principles on Business and Human Rights – Implementing the United Nations “Protect, Respect and Remedy” Framework’, http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (accessed 3 April 2019), Guiding Principle 11.

28 Taylor (2011); Wettstein (2015).

29 For a detailed overview of these differences see Wettstein (2016). Early foundational work on human rights in the corporate sector revealed that corporate executives were not always clear on the difference between voluntary pro-social activities and human rights, see McBeth and Joseph (2006). For evidence that this position still exists see Obara and Peattie (2018).

30 There are numerous definitions of CSR but the most enduring is the pyramid model constructed by Carroll from his four-part definition in 1979. Carroll has recently provided a reprise and reflection of that model, see Carroll (2016).

31 In Indonesia the Company Liability Act 20/2007 Art 74 requires companies engaged in the natural resources field to undertake CSR, see Rinwigati Waagstein (2011). In India, the Companies Act 2013 sec 135 requires companies of a certain size and above determined by net profit, net worth and net turnover to spend 2 per cent of their average net profit in the preceding 3 years on CSR activities chosen from an indicative list contained in the legislation, see Kapoor and Dhamija (2017).

32 For an incisive discussion of the role that CSR plays in the life of the corporation see Fleming et al (2013).

33 Wheeler (2002).

34 Werhane (2016), p 12.

35 Gearty (2006).

36 Most accounts of the impact of corporations on political and social rights are accounts of negative impacts e.g. the activities of Shell in the Niger Delta. For a more positive account see Kim and Trumbore (2010).

37 One of the best articulations of the debates around the construction of the UNHDR can be found in Hogan (2015), pp 14–40.

38 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: a Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 17 at para 55.

39 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: a Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 16 at para 53; p 17 at para 55. For Ruggie corporations are not democratic public institutions and this is what underscores their difference in position from states. As economic actors corporations enjoy a different position to states not one that sees them stand as secondary rights bearers to states.

40 The relevant philosophical arguments centre around whether corporations can be moral agents or not. The best exploration of this is found in Erskine (2001) which takes essentially a Frenchian perspective to the question of the moral agency of collectives. See also Arnold (2016).

41 O’Kelly (2019).

42 Amerson (2011); Amerson (2012).

43 Ruggie sees this appeal to social expectations as creating a polycentric governance model in which the corporate sector stands alongside the state as a co-partner in guaranteeing human rights, see Ruggie (2014).

44 Ruggie is clear that markets, commerce and trade need to be embedded, and in many instances already are, within the community if they are to be effectively regulated. His Framework is an attempt to enforce this connection in relation to transnational corporations, Ruggie (1982); Ruggie (2003).

45 For an overview of the development of ‘social license’ as a concept, see Buhmann (2016).

46 Human Rights Council (UN 2008), ‘Protect, Respect and Remedy: a Framework for Business and Human Rights’, A/HRC/8/5, https://www.business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7-Apr-2008.pdf (accessed 6 April 2019), p 15 at para 54. For a discussion of what this judgment might mean in practice see, Wheeler (2015).

47 Suchman (1995). There are a lot of assumptions made in this appeal to legitimacy theory, which usually is used to explain voluntary reporting or adoption of initiatives in the environmental and social responsibility arena, around how corporations see their relationship to wider society and investor behavior, see Lokuwaduge and Heenetigala (2017).

48 Making corporate actors responsible crowds out of the business and human rights narrative the participation of rights holders and the NGOs that support them. Unsurprisingly this has led to trenchant criticism of Ruggie’s framework from advocates of a more community-based approach to the issue, see Melish (2017).

49 Scheper (2015), pp 740, 746.

50 The Australian and New Zealand Standard Industrial Classification (ANZSIC) lists 19 industry divisions and was updated in 2006. However the selection for ASX 100 is made by a committee from ASX and Standard and Poor’s (S&P). S&P is a joint developer of GICS.

51 This occurs through the trickle down of policies and practices from large corporations to smaller ones, see Wheeler (1991).

52 https://www.asx50list.com/ (accessed 1 January 2019).

53 Websites can be taken as expressing a corporation’s formal position on CSR and human rights, see Bondy et al (2004).

54 Preuss (2010).

55 https://www.corporatebenchmark.org/.

56 Interrater reliability is more commonly used to assess the extent of agreement between data collectors. In this instance it was used to establish that the term ‘publicly available’ had been applied only to those statements of human rights policy that were freestanding and easily locatable and identifiable by stakeholders as an individual corporation’s commitment to human rights, see McHugh (2012).

57 O’Brien and Dhanarajan (2016), pp 548–549.

58 Human Rights Council (2013), ‘Uptake of the Guiding Principles on Business and Human Rights: Practices and Results from Pilot Surveys of Governments and Corporations’, http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/23/32/Add.2 (accessed 9 April 2019) at para 63 reported that in a global cross-sector voluntary survey of 117 corporations 83 per cent of them reported that they had made a public commitment to respect human rights.

59 https://www.business-humanrights.org/en/about-us/about-us (accessed 16 October 2019).

60 Aaronson and Higham (2013), p 357.

61 https://www.business-humanrights.org/en/company-policy-statements-on-human-rights (accessed 9 April 2019).

62 ‘Business and Human Rights: From Principles to Action’ (2016), https://www.wbcsd.org/Programs/People/Social-Impact/Resources/Business-Human-Rights-From-Principles-to-Action (accessed 9 April 2019), p 5.

63 KPMG (2015), ‘Currents of Change: The KPMG Survey of Corporate Responsibility Reporting 2015’, https://assets.kpmg/content/dam/kpmg/pdf/2016/02/kpmg-international-survey-of-corporate-responsibility-reporting-2015.pdf (accessed 11 April 2019).

64 Vigeo Eiris (2017), ‘The Human Rights Responsibilities of Business in a Changing World’, http://www.vigeo-eiris.com/the-human-rights-responsibilities-of-business-in-a-changing-world/ (accessed 12 April 2019), p 26.

65 https://www.corporatebenchmark.org/.

66 Preuss and Brown (2012).

67 A survey undertaken by the law firm Allens on behalf of DFAT in found that 24 of the ASX 50 had ‘public commitments’ to human rights. This was defined broadly as use of the phrase ‘human rights’ so on the schema used in this paper it is probably an amalgamation of groups 1 and 2. See Allens (2017), ‘Stocktake on Business and Human Rights in Australia’, https://dfat.gov.au/international-relations/themes/human-rights/business/Documents/stocktake-on-business-and-human-rights-in-australia.pdf (accessed 16 April 2019), pp 16, 74. This is a very different picture from the one offered by ACSI (2012), ‘Labour and Human Rights Standards in Corporate Australia’, https://www.acsi.org.au/publications-1/research-reports/738-labour-and-human-rights-standards-in-corporate-australia.html (accessed 18 April 2019) which suggested that only 14 per cent of the ASX 200 had a policy on ‘labour and human rights’ (pp 4 and 13) and that very few corporations asserted their support for the Global Compact or ILO Conventions (pp 5 and 14). This survey was a desk survey of publicly available documentation. It was not looking for the general commitment to human rights that this paper is centred on. Nevertheless it demonstrates that a commitment to human rights in ASX listed corporations has not historically been strong.

68 Higgins et al (2014).

69 KPMG (2018), ‘Corporate Reporting: Rebuilding Trust Through Improved Transparency and Insight’, https://home.kpmg/au/en/home/insights/2018/11/asx-200-corporate-reporting-trends-2018.html (accessed 11 April 2019). There is implicit support for integrated reporting in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (4th ed), https://www.asx.com.au/documents/asx-compliance/cgc-principles-and-recommendations-fourth-edn.pdf in the commentary to Recommendation 7.4.

70 Integrated Reporting (2013), ‘The International Framework’, https://integratedreporting.org/resource/international-ir-framework/ (accessed 11 April 2019), p 2.

71 Flower (2015).

72 Eagly and Wood (1991).

73 Jaffee and Hyde (2000); Cook and Glass (2018).

74 Hyun et al (2016).

75 Rao and Tilt (2016); Byron and Post (2016).

76 Boulouta (2013).

77 Francoeur et al (2019).

78 Merry (2011).

79 de Felice (2015).

80 Salcito and Wiegla (2018).

81 This is the case even when independent auditors are appointed and supported by the corporation in question, see Hills and Welford (2006).

82 However the need for disclosure and the consequent focus on measurable and auditable behaviours can mean that potentially more desirable socially grounded but difficult to measure policies are not implemented, see Sinkovics et al (2016).

83 Bell et al (2012).

84 Del Bosco and Misani (2016); Boubakri et al (2016).

85 We know that the converse is true; ASX listed corporations that operate in high human rights risk countries have stronger disclosure practices that those that operate in low human rights risk jurisdictions, see Islam et al (2017).

86 A recent study identified 98 separate ESG standards of which around 20 per cent included the full range of human rights, see Kirkebø and Langford (2018). See also De Felice (2015), pp 513–514.

87 KPMG (2017), ‘The Road Ahead: the KPMG Survey of Corporate Responsibility Reporting 2017’ https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/10/kpmg-survey-of-corporate-responsibility-reporting-2017.pdf (accessed 12 April 2019), pp 27–28. See also Marimon et al (2012).

88 GRI (2018), ‘GRI Standards’, https://www.globalreporting.org/standards/gri-standards-download-center/ (accessed 12 April 2019).

89 Two corporations expressly referred to using the Integrated Reporting Council Standard.

90 There is a suggestion that human rights issues are not well reported within the GRI framework. The data on which this literature is based pre-dates the release of the Guiding Principles, UN (2011) so its validity for the current era of business and human rights is not assured, see Gray and Gray (2011), p 787 and Morhardt (2009).

91 Rajwani et al (2015).

92 Doner and Schneider (2000).

93 Ronit (2018), pp 59, 63.

94 Marques (2017).

95 A further 2 of the 13 corporations in group one have very particular histories and cultural settings deriving from their founders’ interests. Their commitment to human rights and ESG concerns are expressed in these terms.

96 The background narrative to the establishment of the ICCM can be found in Lee (2017).

97 Ruggie (2013), p 28.

98 Ruggie (2013), pp 141–148.

99 MacInnes et al (2017), Owen and Kemp (2013).

100 Meyersfeld (2017).

101 Tienhaara et al (2012), p 49.

102 Callaghan and Wood (2014) and Higgins et al (2015).

103 See for example the Corporations and Markets Advisory Committee (2006), ‘The Social Responsibility of Corporations’, http://www.camac.gov.au/camac/camac.nsf/byheadline/pdffinal±reports±2006/$file/csr_report.pdf and the ‘Annual Review of the State of CSR in Australia and New Zealand 2017’ https://sharedvalue.org.au/wp-content/uploads/2017/06/ACCSR-State-of-CSR-Report-2017.pdf (accessed 8 May 2019) which is now in its tenth year of production.

104 Galbreath (2013), p 533. However even within what are obviously governance structures ESG concerns are not entirely forgotten. Whilst not going as far as the draft for the 4th edition released in 2018 suggested, the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations of February 2019 do in Principle 3 suggest that a corporation ensure that it has a culture of ‘acting lawfully, ethically and responsibly’.

105 KPMG (2017), ‘The Road Ahead: the KPMG Survey of Corporate Responsibility Reporting 2017’ https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/10/kpmg-survey-of-corporate-responsibility-reporting-2017.pdf (accessed 12 April 2019), p 16. The band that above average countries sit in is from 72 to 89 per cent and Australia is well within that band.

106 Modern Slavery Act 2018 (Cth) and the Modern Slavery Act 2015 (UK).

107 https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Legal_and_Constitutional_Affairs/ModernSlavery/Submissions. A full account of the process adopted to establish the legislation can be found at https://www.business-humanrights.org/en/inquiry-into-establishment-of-a-modern-slavery-act-in-australia (accessed 8 May).

108 See for example a speech given by the then Foreign Minister, Julie Bishop, to the Lowy Institute, on 12 December 2016, https://www.lowyinstitute.org/publications/julie-bishop-australia-and-un-human-rights-council (accessed 10 May 2019).

109 Durbach et al (2009).

110 ACCR (2017), ‘Human Rights and Australian Listed Companies’, https://accr.org.au/human-rights-report/ (accessed 8 May 2019).

111 ACCR (2017), ‘Human Rights and Australian Listed Companies’, https://accr.org.au/human-rights-report/ (accessed 8 May 2019), p 30.

112 ACCR (2017), ‘Human Rights and Australian Listed Companies’, https://accr.org.au/human-rights-report/ (accessed 8 May 2019), p 21. Using a scoring system established by the Corporate Human Rights Benchmark which weights corporate performance against 6 distinct measurement themes derived from the Ruggie Framework the average score band of the 23 companies was 20–29 per cent with 8 ASX listed companies scored in the second lowest band of 10–19 per cent.

113 KPMG (2017), ‘The Road Ahead: the KPMG Survey of Corporate Responsibility Reporting 2017’, https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/10/kpmg-survey-of-corporate-responsibility-reporting-2017.pdf (accessed 12 April 2019), p 44.

114 Langlois and Schleglmilch (1990).

115 Welford (2004). Cross listing adds another dimension to this. As explained in the second section ‘Internationalisation of ASX 50 listed corporations’ (a) cross listing has been shown to enhance the ESG performance of corporations above that of sole listed corporations.

116 Esteban et al (2017), p 27.

117 Wood (2000), pp 289 and 297.

118 The different models of corporate governance are the shareholder model (often called the Anglo-US model) and the stakeholder model (often called the European or German model). Their differences are well documented and not infrequently overstated. See for example Jeffers (2005) and Aguilera and Jackson (2010).

119 https://undocs.org/A/HRC/31/14 (accessed 10 May 2019).

120 In 2016 it held a series of roundtables with business, see http://www.unglobalcompact.org.au/new/wp-content/uploads/2016/08/Summary-Towards-Aust-NAP-on-BHR-FINAL.pdf (accessed 10 May 2019).

121 In 2017 it set up a multi-stakeholder group (business, civil society, academia) to consider establishing a NAP, see http://www.unglobalcompact.org.au/2016/11/22/australian-government-invites-eois-for-multi-stakeholder-advisory-group-on-business-and-human-rights (accessed 10 May 2019).

122 https://www.hrlc.org.au/news/2017/10/17/government-ignores-advice-of-expert-group-on-business-and-human-rights (accessed 10 May 2019).

123 https://www.business-humanrights.org/sites/default/files/documents/UNWGLetterAustralia.pdf (accessed 10 May 2019).

124 An NAP would have set out how Australia intended to deal with existing regulatory, legislative and practical gaps in its human rights protection regime in addition to guiding business on their obligations, see General Assembly (2014), ‘Report of the Working Group on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises’, A/69/263, https://www.ohchr.org/Documents/Issues/SRMigrants/ConsultationRecruitment/NationalActionPlansOnBusinessAndHR.pdf (accessed 12 May 2019) at para 33.

125 Charlesworth (1993).

126 Nolan (2007), p 75.

127 Charlesworth (2006).

128 Arcioni and Stone (2016), pp 75–76.

129 Collins (1985).

130 Burridge et al (2014).

131 Michael Howard famously suggested that the proposed preamble to the Australian Constitution (the second question asked in the 1999 Australian republic referendum) should include the statement ‘[w]e value excellence as well as fairness, [and] independence as dearly as mateship’, Howard (1999). For a thorough consideration of the concept of mateship and its obviously gendered overtones see Dyrenfurth (2015).

132 Page (2002).

133 Triggs (2018), p 82.

134 Geiringer (2016).

135 Three Australian states have adopted human rights legislation; the ACT through the Human Rights Act 2004 (ACT), Victoria through the Charter of Human Rights and Responsibilities Act 2006 (Vic) and most recently Queensland through the Human Rights Act 2019 (Qld). Whilst these developments are praiseworthy, they are still a long way from being even the catalyst for human rights discussion and promotion at the Commonwealth level.

136 Corporate human rights engagement could be set as the price for accessing government supported export credit and finance. Public procurement exercises could require evidence of the human rights measures adopted by tenderers.

137 Salcito et al (2015).

138 Cantú Rivera (2018).