Corporate social responsibility and abuse of Human Rights by corporations

Text by Frenki Fana

In the past two decades, corporate social responsibility and regulation of corporate liability in cases of abuse of human rights, have gained an ever increasing attention within academic and regulatory discussions around the world. On one hand, legislation of many countries are able to have corporations subject to sanctions for abuse of human rights, by using the agency relationship concept; while on the other hand, some may find some inevitable doubt about the identification of corporate consciousness, when it comes to liability. Corporations, as a creation of law, hamper the traditional way of finding guilty conscience, as they effectively hinder the application of norms, aimed at improvements of a somewhat moral nature. While it remains true that the economic fortunes of many countries, are indeed associated with the business conducted by corporations, there has been an increasingly more evident tendency to foster initiatives for better corporate social responsibility, beyond minimal protective provisions provided by various lexspecialis, such as labor law, environmental law, consumer protection law, etc. One might even argue that it is the duty of corporate law itself to identify and protect corporate stakeholder groups, rather than focus simply on the protection of the interests of shareholders. In this context, there has been an evident shift from conceptualizing corporations as merely profit-maximizing entities that ultimately serve the best interest of shareholders, towards considering them as serving a social function, aimed at maximizing the welfare of other corporate stakeholder groups, such as employees, consumers, creditors, the local community and so on.

As stipulated at the introduction of this paper, one of the most important contemporary debates in the field of corporate governance and social responsibility is protection of human rights by corporations. Relaunched with more force than ever, the debate is often encountered in the US, especially after the onset of the financial crisis in 2008.

The discussions on corporate social responsibility in USA date way back. Since the early twentieth century, in the seminal work of Berle & Means “The Modern Corporation and Private Property,” the discussion about modern corporate ownership was of such nature, as to enable the recognition of the interests of stakeholders, like employees or creditors. American corporations began to apply various measures aimed at treating corporate stakeholder groups in a better way, often causing debate about the very purpose of a corporation. Within this framework, US corporations were also increasingly found liable for abuse of certain fundamental human rights, during their business activity. For instance, when it comes to the principle of non-discrimination, despite the belief that the US is a classic example of a developed democracy, cases of abusive discriminatory corporate behavior have been quite frequent. One such practice referred to in corporate literature as “glass ceiling”, (meaning a policy according to which various categories of employees, such as women, for instance, are stopped by an “invisible” barrier from being promoted, or being given bonuses or other corporate perks,) has been a rather frequent US corporative practice.

Furthermore, with regards to other human rights, such as for instance, guaranteeing freedom of expression, which is protected from the First Constitutional Amendment in the US, there has been a vivid discussion in the US, about cases of corporate violation of freedom of expression of individuals employed in a corporation. One such case refers to the case of A. Smith, a CFO of Vante Corporation, which engaged in some public comments against another corporation, accusing it of homophobic practices. After such public comments, Smith was fired from Vante Corporation, despite the fact that his freedom of expression was guaranteed by the First Constitutional Amendment and this guarantee is applicable even in cases when such violation does not come from abuse by a public authority, but rather by a private entity, such as a typical commercial company.

Another publicized US example of abuse of human rights by corporations, refers to the case of FIFA`s forced evictions of individuals from their homes or commercial stores, its labor rights abuses, as well as infringement of the right to protest. Other companies, such as Gap Inc., for instance have been at the center of attention for refusal to sign a fire safety ordinance, refusal to compensate victims’ families, workers’ rights violations, as well as unsafe building conditions. Meanwhile, another famous corporation, such as McDonald`s, has been accused for limited (and relatively non-transparent) environmental policies, unethical marketing to children and lack of willingness to reform worker wages, while the famous designer company Ralph Lauren has been known for unsustainable sourcing of raw materials in viscose fibers; deforestation; environmental damage; human rights abuses; lack of consumer transparency; increasing CO2 foot-print and cultural appropriation. Lastly, another publicized case refers to the case of  Vattenfall Corporation, accused for destruction of the environment and local communities, political manipulation and legal abuse of international treaties.

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