Author: Rachna Gautam, 2nd year student at M.M.H College, Ghaziabad.
In the Contemporary world, there is an alarming demand for laws introducing human rights and environmental consciousness across the Supply Chain. From Corporation undoubtedly we harness so many of the benefits that flow out of a vibrant and bountiful economy, but at the same time there is a need of regulating such vibrancy through enactments of Laws when it forgets the degradation of the environment or dismiss the plight of the human beings its enterprise affects. This article emphasizes the need for legal accountability of Corporations in regard to Human Rights, and Environment.
Corporations are the legal entity formed by a relation between different individuals, Share holders, with the purpose of Profit Generation through its operations. The legal position of a corporation gives it the right to enter into a contract, to sue and be sued by someone, to own assets, remit taxes and borrow finances from others. A corporation in business focuses on satisfying the needs of its customers and generates profit out of this relationship. In pursuance of which a supply chain works, A supply chain is the series of steps involved moving, transformation of raw material into finished goods, transporting the product and distributing it among the end Users which include producers, vendors, warehouses, transportation companies, distribution centers, and retailers. Corporate accountability is the act of holding a company liable for the acts done by them in non-financial areas having certain impact on people and Planet. Corporate accountability is different to what is called Corporate social responsibility. Corporate Social Responsibility is a belief within any Corporation that it holds some responsibility towards the society at large. This is a voluntary action which any company can change and relax according to itself or not at all care about it. Non- Obligation of its commitment doesn’t bring it in court and impose any legal liability on it. Whereas any deviation to the behaviour assigned under corporate accountability makes u a subject of being sued.
Capitalism and derogation of Human Rights and Environment
Modern day corporations still work on the concept of Laissez faire in which a society runs out of any governmental control and the operations of the economy are directed by the invisible hand ( Term given to Money by Adam Smith in his famous book “Wealth of Nation ”). Capitalist Society is a profit-oriented mechanism where the prime importance is given to profit. This perspective render an ignoring effect and ignorant attitude towards other aspects of economy such as holistic development, sustainability, society, and protection of the factors which contributes to the earning of Profit – the environment that is the ultimate Source of all Raw materials, Human Beings who are the main actors in Transformation of Raw material into products and Later into Profit.
Famous economist Adam Smith has believed Untrammelled Self-interest delivers Satisfaction not only to merchants but also to the people with whom they trade, thereby, through a multiplicity of transactions to society at Large. No less famous, Milton Friedman argued the same point when he proclaimed that:
. . business social responsibility is to use its resources in multiplying its profit and following rules of the game which is to engage in open and free market competition without free or deception.
Nobody denies the factors controlling the market or denying the market altogether. But Shouldnt be their more legal liabilities of state other than anti-trust, anti-corruption, fraud, misrepresentation, etc such as anti-discrimination, anti-pollution Laws, and the laws which protect people from infringements of privacy, bodily integrity, free association, movement or speech, or from the degradation of their standards of living, health, and education, in short, Shouldn’t protecting the basic Standard of humans are also the important rules of the games as stated by Friedmann or theses can be compromised on the path of profit generation if anytime they stand in Contrary of It.
In addition to that, Corporate sees every individual related to it with the same spectacles as a performing unit denying the varying situation, problems, conditions, and liability. For example, the capitalist world has always promoted the phrase that every person has 24 hours in a day and it wholly depends on that person how productively he or she can use it. Which carelessly rejects that women are still equipped with domestic and traditional workloads and responsibilities. In which the same work as that of men increases their workload to such an extent where the right of enjoying life, and expectation of living up to a healthy and happy standard dies. Similarly, neglect of anyone’s historical position and other non- financial responsibility where it becomes hard for a Person to perform like the one without them. It is necessary for the Corporates to address such diversities.
Globalisation has caused the incorporation of Powerful Multinational corporations from developed home countries within the territory of Developing Countries seeking cheap labour and easy Laws. Which are always welcomed as an employment generating and an agent of development in developing countries. Such companies with the power and strength are always seen exploiting the people and environment of developing Countries. The difference in position of home and host country in international politics can influence the labour laws and environmental laws of the host country. The developing Countries are not much technologically advanced to mitigate the deprivation caused by such Corporations.
In addition to that the inherent racism, gender discrimination, caste, class, religion, and place of birth differences worsen the situation within the corporation as the extensive regulatory powers are in the hands of the boss not in any law and system which renders some people a privileged position over others and these discriminations directs the politics within corporations due to which some people are subject to heavy workload and getting recognition and promotion becomes very hard.
In a Corporate framework, there is a relation of master and slave between the employee and employers, making employees dependent on the employers which weaken the economic position of many employers to take a stand against the infringement of human rights at the workplace thus there is a requirement of framing laws which are framed after addressing all the legal, social, economical and political problems related and a person is free to choose between whether to hold the corporate accountable or not for any sort of violation of rights without putting his job and economic securities in danger.
Stand of International bodies on Corporation accountability towards Human Rights and Environment Degradation
The Concern to blunt the sharper edges of Capitalism, recognition, and incorporation of social and more human rights has grown over the last 30 years. There are a lot of interrelated reasons:
- The rapid expansion of Corporations during this period of the Global Economy and the multiplication of trade and commercial relations.
- Growth in importance, impact, and appeal of universal human rights standards, especially in the form of international law.
- As well as the extraordinary capacity to exchange information, to form personal and professional interconnection and coalition- building on a Global Scale facilitated by the internet
All the above three lead to the growth of the Corporate world along with the development of human rights standards. owing to the efforts of civil right movements and civil Activist the world has recognised the duty of State and Corporate in protecting the right of any individual.
The Guiding Principles of International Law on Business and Human Rights confirmed the international legal duty of all states to protect the human rights of an individual and environment against the abuses of the state itself or the third Person. Which is called “States duty to Protect” which includes states’ duty to take appropriate steps through effective Policies, legislation, regulation, and adjudication to prevent, investigate and Punish.
Challenges to the domestic laws imparting corporate accountability
The Present “territorial system” regulation by states in which the state has the responsibility to regulate the human rights impact of Corporates within its territorial boundaries is ill-equipped in dealing with cross-border economies. Victims of a human right violation face considerable legal and procedural barriers such as matters related to jurisdiction, the definition of offenses, method of determining sanctions, and Compensation. Following are the most publicized cases related to the failure of state operations in providing justice :
- operations of Shell in Ogoniland – there is a upsurge among the minorities because of the human rights violation in a Oil Producing Corporation in Nigerian state’
- BP in Colombia – BP was accused of Funding Colonial Death Squad.
- Unocal in Burma (Myanmar) – Claim against Unocal rejected: judges have evidence to prove the claims but it doesn’t have jurisdiction to pass the judgement.
There is undoubtedly a need to assure the functioning of all the countries on the direction of United Nations sustainable development Goals and to meet G7 Commitments and to stop forced labour and Should focus on eradicating the modern Slaveries. There is a need to address the role of all actors that work behind a corporation’s root cause of degradation of human rights and environment and frame laws which are sustainable and can bring Positive Peace.
 Haroon Siddique, Rights groups join forces to call for UK corporate accountability laws, The Guardian (Jul. 4, 2021, 1:30 pm), https://www.theguardian.com/environment/2021/jul/04/rights-groups-join-forces-to-call-for-uk-corporate-accountability-laws.
 Corporation, CFI, https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-corporation-overview/.
 Will kenton, Investopedia (Jul 7, 2020), https://www.investopedia.com/terms/s/supplychain.asp.
 Jacqueline Goodwin, What Is Corporate Accountability and How Is It Being Enforced?, Grow ensemble (Oct. 20, 2020), https://growensemble.com/corporate-accountability/.
 David Kinley, Human Rights and Corporations, pg.13, (1st ed.,2009).
 Jennifer Zerk, Corporate liability for gross human rights abuses, UN High Commission for Human rights, https://www.ohchr.org/documents/issues/business/domesticlawremedies/studydomesticelawremedies.pdf.
 Jennifer supra note 5.
 David supra note 4.