A powerful corporate alliance is poised to block a contentious United Nations charter that would make multinational corporations more accountable for their actions - especially in labor rights, working conditions and personal liberties - for their employees in the Third World, including Asia.
The UN Commission on Human Rights (UNCHR), currently holding its annual meeting in Geneva, is expected to avoid any vote and instead to return the "Norms on Business and Human Rights" to its drafting committee because political leaders are unwilling to take a strong - and financially costly - stand in favor of it. Sponsors have admitted that intense lobbying by the International Chamber of Commerce (ICC) and the International Employers Organization (IEO) has made it unlikely the charter will get beyond the committee stage, at least for now.
"There is ... a real risk that governments meeting in Geneva will decide not to endorse the proposed norms, but instead send them back to the UN sub-commission for the protection and promotion of human rights. This would mean a major blow, if not the end of the process," said Corporate Europe Observatory, a business advocacy group.
Known formally as the UN Norms on Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, the charter was approved by the sub-commission in April after four years of work. It sets out the obligations of multinationals under international treaties governing such areas as labor rights and working conditions, and encourages foreign investors to advance the general concept of personal liberties as they decide where and how to invest.
Corporate critics say they are comfortable with these ideals, which are already pursued by many companies on an individual basis. What they reject is the notion that there should be any international compulsion. While the charter would not have the force of a formal UN treaty, it has taken the rare step of including an enforcement lever that might force negligent firms to pay compensation to their alleged victims - if they are convicted in local courts.
Another clause if adopted might commit governments to pursue legal action at home for violations that were committed by their corporations abroad.
"We don't have a problem at all with efforts that seek to encourage companies to do what they can to protect human rights. We have a problem with the premise and the principle that the norms are based on," ICC spokesman Stefano Bertasi stated in a paper outlining the chamber's objections.
"These norms clearly seek to move away from the realm of voluntary initiatives ... and we see them as conflicting with the approach taken by other parts of the UN that seek to promote voluntary initiatives."
ICC's most vocal members and opponents of the charter, such as energy giant Shell, contend that multinationals already have sufficient avenues to safeguard the interests of their local employees. Foremost among these is the Global Compact, initiated in 2000 by UN Secretary General Kofi Annan in consultation with the ICC and other global business associations, which encourages companies to meet conduct guidelines on human rights - labor rights, working conditions and personal liberties.
Other protocols have been drawn up by the Organization for Economic Cooperation and Development, which groups the most advanced economic powers, and the International Labor Organization.
Non-government organizations say the problem is that few firms have bothered to sign voluntary codes, in essence because they are voluntary. A handful of multinationals agree, putting them at odds with the ICC and the IEO.
In December, a group that includes Novartis, Novo Nordisk, Nokia and Barclays Bank set up a coalition with the express intention of advancing the proposed labor and human rights norms within the business community.
"It has become a tradition for [the ICC and IEO] to oppose any kind of legislation or regulation that limits the behavior of companies," said Sune Skadegard Thorsen, senior adviser on corporate responsibility at Novo Nordisk.
Nokia's chief legal officer, Chip Pitts, who is also a UNCHR delegate, said that "for all the good done thus far by the Global Compact, fair observers must admit that the uptake by businesses has not been what it could. Recurring significant problems of corporate social responsibility demonstrate the need for even more helpful and effective approaches to build upon the foundation already laid by the Global Compact while - frankly - moving beyond its limitations," he added.
Not so, said Shell, which has been singled out for particular criticism by the loose alliance of NGOs, human rights groups, corporations and judicial organizations that is backing the charter.
In a rebuttal of the criticism, the British-Dutch multinational maintained that its position on the charter had no bearing on Shell's own approach to the protection of human rights. "We have been working hard over several years, within the company and with others, to ensure human rights issues are taken properly into account in carrying out our day-to-day business operations and have been progressively building these considerations into our processes and management systems for what we call social performance - ie, all the ways in which we impact on or contribute to the communities that surround our operations and the societies in which we work," the company stated.
Caught between a hostile human rights lobby and the ambivalent corporate sector, the political leaders who will decide the fate of the transnational norms on employee treatment are mostly unenthusiastic, even though the charter would be the first to shift responsibility in international law away from governments.
Third World nations fear an exodus of foreign investment if the charter is implemented. Governing parties in advanced countries such as the US and the United Kingdom depend heavily on campaign contributions from multinationals.
In Asia, only China and Japan have spoken out forcefully on the subject, but Indonesia, Thailand, Malaysia and most of the South Asian sub-continent are known to have strong reservations. Some, including South Korea, are expected to abstain from voting, helping to consign the norms on fair treatment of employees to the UN's out tray.
The region has taken little heed of warnings by the human rights lobby that working conditions in factories run by foreign investors are deteriorating, either through neglect by regulators or indifference by multinationals.
A study released this week by British-based charity Oxfam reported that women working in global supply chains had become progressively disadvantaged, as the legal rights of corporations were "dramatically deepened and extended" though the auspices of the World Trade Organization and other trade agreements.
One development had been a shift toward more flexible working conditions, such as short-term employment without contracts, that did not offer the same legal protections under domestic labor statutes.
According to Oxfam, fewer than half of the women employed in Bangladesh's textile and garment exports sectors now have contracts, while most get no maternity or health coverage. About of 80 percent of workers interviewed feared dismissal if they complained.
In China's Guangdong province, young women were expected to work 150 hours of overtime each month in garment factories owned by foreign firms, but 60 percent had no written contracts and 90 percent had no access to social insurance.
"The pressure of competition from low-cost imports is clearly one reason [for abuses], but so too is the pressure inherent in being employed at the end of a major company's global supply chain, whether it is sourcing overseas or domestically," the study concluded.
"Under such pressures, factory and farm managers typically pass on the costs and risks to the weakest links in the chain: the workers they employ. For many producers, their labor strategy is simple: make it flexible and make it cheap," the charity reported.
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