Don’t wash your hands of human rights obligations - Corporate due diligence in times of COVID-19 and lessons for the future

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"Globalisation is a fact of life. But I believe we have underestimated its fragility." Kofi Annan warned business leaders in Davos in 1999, in a pioneer speech for the development of the business and human rights field. In a world struck by the COVID-19 pandemic, whose effects have been significantly worsened by the structure of the global economy, Annan’s words suddenly taste bitter. Not the least because research suggests that such outbreaks are on the rise, hastened by our destructive, unsustainable development model.

Since Annan’s speech, where he called on companies to take direct action to protect human rights, labour standards and the environment, it has been widely recognised that economic actors have fundamental duties in these areas. International instruments such as the UN Guiding Principles on Business and Human Rights —unanimously adopted by the Human Rights Council in 2011— along with a plethora of statements by political leaders and commitments from companies themselves have reaffirmed, time and again, that businesses must respect human and environmental rights at all times, while domestic, regional and international debatessuggest that it’s time to enact such commitments in law.
At the core of this responsibility is a duty to conduct human rights due diligence, whereby businesses must identify, prevent, mitigate and remedy the negative human rights impacts that they identify in the course of their operations and throughout their supply and value chains.
In past weeks, such responsibilities have been fundamentally challenged. First, because the COVID-19 outbreak and subsequent economic crisis have increased risks of negative impacts of corporate decisions on the human rights of workers and communities. Second, because many businesses are using hard economic times to justify shirking their responsibilities, at a time when even stronger diligence is needed.

Since the beginning of the pandemic, the International Federation for Human Rights, with its network of 192 member organizations in 117 countries, has been tracking business responses to the crisis. This article provides insights from the experiences of FIDH’s members, instances of recent corporate abuses and reflections on lessons learned drawn from the past weeks.

Safety first?

While virtually half of the world’s population is subject to lockdown measures aimed to curb the spread of the virus, some companies are still pressuring their employees to continue working without adequate protection equipment and measures. Human rights defenders in Brazil, partners of FIDH, reported:

"We are under lockdown while the mining companies move forward with their activities, now without any opposition. The justice system has also been paralyzed. Government decrees have closed shops, bars and restaurants but they say nothing about the mining and industrial activities. The workers of these companies and their families do not have any protection but are forced to continue working. It is particularly concerning because the pollution of the mining and steel industry has already created respiratory problems for many, as in Piquiá de Baixo. Besides the health risks, the situation is quite complicated for human rights defenders who cannot voice concerns."

Vale S.A. and other mining companies in Brazil are far from the only examples of this kind of abuse. In Morocco, call-center workers denounced overcrowded environments, absence of personal protective equipment and safety measures; in India, garment workers protested against the inability to take paid leave or to reduce workforce in factories, and in many Western countries, shortages of masks endangered doctorsand health workers most at risk of infection.
Human rights due diligence implies identifying human rights risks linked to companies’ operational context, and enhancing prevention or mitigation measures where risks are identified. The corporate practices mentioned above are in fundamental contradiction with such principles, and further endanger workers’ right to health, but also that of their relatives and communities. Governments also have a duty to protect their citizens’ human rights by ending such corporate practices, and ensuring essential workers have access to adequate protection.

Abuses up and down the supply chain

Another set of concerns regards a surge in massive layoffs and abuses of labour rights, a particularly worrying trend in countries that lack social safety nets and unemployment protection. Businesses must act with particular diligence to protect vulnerable workers, including those of subcontractors linked to their operations, products or services. Yet most actors have adopted the opposite approach. This is particularly true in sectors that rely on complex supply chains such as the garment industry, where a majority of the workforce is employed by suppliers. A Penn State University study documented the appalling situation faced by Bangladeshi garment workers, and how transnational companies neglected the impacts of their actions down the supply chain:

"More than one million garment workers in Bangladesh already have been fired or furloughed ... as a result of order cancellations and the failure of buyers to pay for these cancellations. Suppliers in the survey reported that 98.1% of buyers refused to contribute to the cost of paying the partial wages to furloughed workers that the law requires. 72.4% of furloughed workers were sent home without pay. 97.3% of buyers refused to contribute to severance pay expenses of dismissed workers, also a legal entitlement in Bangladesh. 80.4% of dismissed workers were sent home without their severance pay."

Others have documented similar trends in China, Cambodia, India, Myanmar, and Vietnam, which often have an overwhelming impact on women and migrant workers. More broadly, the COVID-19 outbreak has been wielded as an excuse for businesses to violate labour laws protecting employment, cut wages, increase working hours or hamper freedom of speech and assembly of workers around the world.
These examples must act as a staunch warning: The unchecked use of subcontractor relationships, through complex supply chains and expansion of the gig economy, results in a dangerous phenomenon by which companies benefit from lower costs in times of growth while avoiding responsibility in times of crisis, to the detriment of increasingly vulnerable workers.

Facilitating government crackdowns

The COVID-19 crisis may justify temporary, adequate and necessary suspensions of selected human rights, but not the systemic attacks on human rights, democracy and the rule of lawthat too many governments have launched in past weeks. In several of these cases, businesses are at risk of acting as facilitators of government crackdowns, as has previously been the case of companies providing equipment for mass surveillance in Palestine.

Due diligence obligations posit that regardless of the State’s behavior on the territory where they operate, economic actors have an obligation to respect human rights. This implies refraining from any involvement susceptible to damage human rights, regardless of government practices.

A time for corporate capture?

Moreover, in past weeks, large corporations and lobbies have taken advantage of the singular political context to advocate for a weakening of regulations in a several sectors, including banking, energy, or the automobile industry. The United States government announced sweeping attacks on environmental rules protecting the right to a safe, clean, healthy and sustainable environment, allowing power plants and factories to determine for themselves if they can meet legal requirements on reporting air and water pollution, weakening controls on the release of mercury and other toxic metals and finalising a rollback of climate policies regulating auto emission standards.

In many respects, human rights are what protect people in times of crisis, and our times call for a strengthening of such rights rather than the opposite. Moreover, as many societies have suspended the normal functioning of their institutions and enacted temporary measures to suspend selected human rights, it is unacceptable for governments to use the crisis to chip away at regulatory measures protecting the environment and human rights.

A failed test for existing business regulations

The executive chairman of the World Economic Forum recently called the current crisis a "litmus test" for stakeholder capitalism. It could also be seen as such for our model of corporate regulation. While business responses have been far from homogeneous, and some investors themselves have sought to exercise leverageon companies to ensure they uphold human rights commitments throughout their supply and value chains, the above-mentioned examples show that a model based on self-regulation, voluntary commitments or soft law instruments is simply not robust enough to protect fundamental rights. The time has come for governments to accelerate the implementation of binding domestic and international norms, which would turn human rights due diligence into a set of legal obligations, while ensuring liability for corporate abuses in third countries.

Steps forward

Beyond the current public health crisis, it is obvious that challenges and shocks similar to the COVID-19 outbreak will become more frequent, as the effects of global warming become increasingly palpable. Lessons must be drawn from the outbreak and applied, starting with our immediate response to the crisis. FIDH calls for four priorities to be addressed by different actors of society.

1/ The current context calls for businesses to reinforce human rights due diligence practices to prevent potential harms on workers and communities, including throughout company operations and supply and value chains. Moreover, while moving out of the crisis, companies should implement “a human rights by design” approach, by developing products and services in a way that respects human rights by default.

2/ While some business actors have contributed to the spread of the virus or pressured to weaken environmental regulations, others, including in the automotive sector, have been able to redeploy their resources to produce equipment used to fight COVID-19.With this in mind, governments’ responses to the economic crisis should be used as an opportunity to support sustainable sectors, reconvert dirty industries and halt irresponsible business practices. As governments inject massive amounts of funds into the economy, these packages must be conditioned to such objectives.

3/ Our very global economic model must be revisited. The COVID-19 crisis serves as a painful reminder that human rights must never be jeopardised in the name of economic imperatives. The crisis shows that economic policies of liberalisation and deregulation; structural adjustment loans, privatisations, and austerity measures hurting vital public services and fundamental economic and social rights, as well as delocalisation and broad intellectual property laws, have deeply challenged our societies’ capacities for resilience. It also reveals the limits of applying such orthodoxy without ever ensuring — by efficient, measurable, monitored and enforceable means — that human rights are upheld and that the system benefits all, curbs inequalities and reduces poverty. Innovation is urgently needed to create a model thatmakes international human rights law part of the rules, with efficient means of enforcement—going beyond mere discourse and lip service. Priorities include diversifying the economy and the supply chain, curbing dependency on vital sectors like food, medecine, sanitary equipment, investing in social security nets, and ensuring access to vital public services for all.

4/ Lastly, country-specific responses to the global pandemic have clearly exacerbated cooperation problems, as illustrated by "bidding wars" between wealthy countries to acquire protective equipment. International and regional cooperation are indisputably key to overcoming the current crisis and efficiently protecting the right to health globally, as well as guaranteeing assistance to countries with less robust health care systems.

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