Dr. Dalia Palombo, Senior Research Fellow at the Institute for Business Ethics
, University of St.Gallen, Switzerland
In this blog, Dr, Dalia Palombo explains what the British Academy’s ‘Future of the Corporation’ Programme has in common with business and human rights – including mandatory human rights due diligence.
Last week I travelled from the United Nations Business and Human Rights Forum in Geneva to the launch of the Future of the Corporation Programme Principles for Purposeful Business report in London. The British Academy launched the second phase of the Future of the Corporation Programme last Wednesday. I am one of the academic advisors to the Programme and wrote its legal working paper entitled The Future of the Corporation: Avenues for Legal Change.
During these days of travel, some colleagues have asked me: what does the Future of the Corporation Programme have in common with business and human rights?
In order to answer, I shall take a step back to clarify the goal of and background to the Programme.
The Future of the Corporation Programme
The Future of the Corporation aims at investigating and understanding how the corporations of the future should be to address the problems of people and planet. It introduces eight principles that should set the frame for future companies: corporate law, regulation, ownership, corporate governance, measurement, performance, corporate financing and corporate investment.
It also identifies two broad goals that should drive legal change:
- enterprises should aim at producing profitable solutions to the problems of people and planet (Purpose Objective); and
- should not profit from producing problems for people or planet (Do No Harm Objective).
These objectives are broad and include a number of considerations that go beyond business and human rights. However, one could see the interconnections.
Bringing together the ‘Purpose’ and ‘Do No Harm’ objectives
The Purpose Objective aims at reconnecting directors, shareholders and stakeholders in order to ensure that businesses rediscover their original function to serve the needs of society. There is potential for this agenda to find common ground with the corporate social responsibility (CSR) approach aimed at changing companies from within. However, the Purpose Objective aims at addressing the weaknesses of the CSR approach by proposing to go beyond mere voluntarism, traditionally coupled with CSR, and to reconsider the role of stakeholders in corporate governance.
The Do No Harm Objective aims at ensuring that businesses are accountable when they harm the stakeholders affected by their activities. This agenda is shared with the business and human rights rhetoric which argues for the human rights accountability of businesses. The connections between Do No Harm and business and human rights are not evident in mere principles only.
One of the avenues for legal change to meet the Do No Harm Objective could be the adoption of mandatory human rights due diligence laws. A number of NGOs, including CORE, are advocating for the adoption of such a law in the UK, which was also recommended by the Joint Committee on Human Rights of the UK Parliament.
The innovative contribution of the Future of the Corporation is to combine the Purpose and Do No Harm Objectives and find a synthesis between the CSR and business and human rights approaches.
How could this be achieved?
In terms of legal analysis, as argued in the working paper, such a synthesis could be achieved by on the one hand rebalancing corporate governance by taking into account the interests of stakeholders, (internalization of stakeholders’ interests within the company), and on the other, by holding companies to account when they abuse the rights of stakeholders (externalization of stakeholders’ interests in terms of liabilities for companies).
If stakeholders were able to effectively have input on corporate governance, and at the same time hold companies to account, they could become the drivers to reframe the conflict that we are increasingly witnessing between growth and sustainability.
However, such a synthesis is needed not only at the level of ideas and legal reforms, but also in terms of connecting the corporate and human rights worlds, with their various practitioners, scholars and different cultures.
The key question moving forward is no longer if such changes are needed – both in terms of corporate and human rights laws – but how to combine these apparently diverse agendas in a constructive way in order to effectively address the problems of people and planet. The British Academy has taken a first commendable step in this direction.