In recent months, a group of countries has been negotiating a binding international human rights treaty within the UN framework. This would make companies directly accountable for their human rights actions in the countries in which they operate or where they are headquartered. However, the establishment of such a treaty is not going over well for employers.
Economic consequences for developing countries
The arguments of the employers' organisations, which have also participated in negotiations under the umbrella of the IOE, have been outlined in several documents. They highlight potential economic and social consequences, such as the ability of companies to withdraw from at-risk countries or delay investments in "projects that are vital for the development and pursuit of the UN Sustainable Development Goals (SDGs)”.
In a document released by NGOs, the IOE directly targets countries in support of the treaty: developing countries. It presents graphs showing, country by country, the volumes of products destined for export that could be impacted. For a country like Ecuador that leads the process, billions of dollars would be at stake.
Graph extracted from the IOE document "additional analysis- The United Nation's proposed Treaty imposing corporate liability for human rights violations and the potential economic implications associated with ots ratification" October 2018.
In parallel with the Dodd Frank Act
To support its demonstration, the organisation has put in parallel section 1502 of the Dodd Frank Act. This text requires US listed companies to be fully transparent about their supply of risk minerals, such as gold or cobalt, from the Democratic Republic of Congo (DRC). This 2012 law, drafted to fight against conflict minerals, is currently disputed by certain observers for its harmful socio-economic effects.
Faced with a heavy need for transparency and reporting, some companies simply stopped sourcing from this country, leaving thousands of people out of work. This has had far-reaching consequences from an economic, health and social point of view.
These consequences have been put forward by the Trump administration, which intends to undo this law already weakened by a ruling from the Securities And Exchange Commission (SEC), the US financial markets gendarme. The latter no longer sanctions companies in case of breach of these obligations.
The EU, sensitive to the arguments of employers
Even if NGOs are critical of this law and its effects, they denounce such parallels and underline the importance of this regulation, which allowed for the rise of human rights standards in the industry.
"Section 1502 is very particular. It concerns a very complex country and a single category of products, which has allowed some companies to circumvent the law by going “shopping” in countries with less stringent legislation or those outside radar”, says Juliette Renaud, a representative for the NGO Friends of the Earth, in response to negotiations on the UN treaty. “And it is precisely to avoid such adverse effects that we ask for an international treaty, that includes all business activities".
France, which has already had the right to these types of discussions since the drafting of the French Due Diligence law, is currently pushing for the adoption of an international treaty for the same reasons. Nevertheless, France remains quite lonely in a European Union that is largely sensitive to the arguments of economic actors.
Béatrice Héraud @beatriceheraud