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Corporations and Human Rights Obligations

  • Denis G ARNOLD

Abstract

The claim that corporations have human rights obligations remains contentious and can be fraught with confusion. This article synthesizes existing corporate human rights theory and responds to objections to the idea that transnational corporations (TNCs) have human rights obligations. The argument proceeds in three stages. The first section describes the different forms TNCs take and explains why TNCs are properly understood as moral agents responsible for their policies and practices. The second section reviews and explains different philosophical theories of corporate human rights obligations. The third section articulates and responds to objections to the idea that corporations have human rights obligations. The main conclusion of this article is that there are multiple, compelling and overlapping justifications of corporate human rights obligations.

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Jule and Marguerite Surtman Distinguished Professor of Business Ethics and Professor of Management, Belk College of Business, University of North Carolina at Charlotte; Editor in Chief, Business Ethics Quarterly (2011–2016) [denisarnold@uncc.edu]. Thanks to Florian Wettstein and Wesley Cragg for helpful written comments on earlier drafts. I am grateful to the Surtman Foundation for financial support of this research.

Footnotes

References

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1 Donaldson, Thomas, Corporations and Morality (Englewood Cliffs: NJ: Prentice-Hall, 1982); French, Peter A, ‘Integrity, Intentions, and Corporations’ (1996) 34:2 American Business Law Journal 141156 ; Arnold, Denis G, ‘Corporate Moral Agency’ (2006) 30 Midwest Studies in Philosophy 279291 .

2 Sepinwall, Amy J, ‘Denying Corporate Rights and Punishing Corporate Wrongs’ (2015) 24:4 Business Ethics Quarterly 517534 .

3 French, note 1; Arnold, note 1.

4 Discussions of the ontological status of corporations and moral responsibility are distinct from discussions of the legally granted artificial personhood that allow the corporation to be legally distinct from its shareholders and to have certain legal rights such as property ownership. In the U.S., corporations have been recognized as legal persons since the Supreme Court’s decision in Santa Clara County v Southern Pacific Railroad Company, 118 U.S. 394, 397 (1886). For a discussion of the current legal status of corporate persons, including corporate rights, see Blair, Margaret M, ‘Of Corporations, Courts, Personhood, and Morality’ (2015) 25:4 Business Ethics Quarterly 415431 .

5 Bartlett, Christopher A and Ghoshal, Sumantra, Managing across Borders: The Transnational Solution, 2nd edn. (Cambridge: Harvard Business School Press, 2002).

6 Ibid, 16–18.

7 French, Peter A, ‘The Corporation as a Moral Person’ (1979) 16:3 American Philosophical Quarterly 207215 .

8 Tenbrunsel, Ann E, Smith-Crowe, Kristin and Umphress, Elizabeth E, ‘Building Houses on Rocks: The Role of the Ethical Infrastructure in Organizations’ (2003) 16:3 Social Justice Research 285307 ; Treviño, Linda K and Nelson, Katherine A, Managing Business Ethics (New York: John Wiley & Sons, 2010).

9 French, note 1; Arnold, note 1.

10 Bratman, Michael, Intention, Plans, and Practical Reason (Cambridge: Harvard University Press, 1987); and Bratman, Michael, Faces of Intention: Selected Essays on Intention and Agency (Cambridge: Harvard University Press, 1999).

11 Arnold, note 1, 285–8.

12 Transparency International, ‘Mission and History’, http://www.transparency-usa.org/archive/who/mission.html (accessed 17 October 2015).

13 Transparency International, Global Corruption Report (London: Pluto Press, 2004) 7.

14 The account of Walmart’s alleged actions in this section is based on the Pulitzer Prize winning investigative reporting of David Barstow and Alejandra Xanic von Bertrab. The U.S. Department of Justice has not yet determined Walmart’s culpability. However, regardless of its accuracy the account presented by Barstow and von Bertrab can be used to illustrate the account of corporate agency that is our concern here. See David Barstow, ‘Vast Mexico Bribery Case Hushed up by Wal-Mart after Top-Level Struggle’, The New York Times (22 April 2012), A1; David Barstow and A Xanic von Bertrab (2012). ‘The Bribery Aisle: How Wal-Mart Got its Way in Mexico’, The New York Times (18 December 2012), A1.

15 Hess, David, ‘Partnering against Corruption Initiative and the Business Principles for Countering Bribery’ in Thomas Hale and David Held (eds.), The Handbook of Transnational Governance: Institutions and Innovations (Cambridge: Polity Press, 2011) 322327 .

16 Harris, Elizabeth A, ‘After Bribery Scandal, High-Level Departures at Walmart’, The New York Times (5 June 2014) B1 .

17 Bishop, John D, ‘The Limits of Corporate Human Rights Obligations and the Rights of for-Profit Corporations’ (2012) 22:1 Business Ethics Quarterly 119144 .

18 These characteristics of human persons are explained in detail in Section II. A. below. Amy Sepinwall (note 2, 523–44) uses human rights theory to argue against the idea that corporate moral agency is philosophically distinct from corporate moral personhood, and thereby susceptible to the criticisms levelled against corporate moral personhood. However, in doing so she ignores each of these features of moral accounts of human rights. It is only because she ignores these essential features of moral accounts of human rights that her use of human rights theory to deny the possibility of a distinction between agency and personhood may seem plausible. But the account of human rights theory she presents is partial and incomplete. Once this mistake is recognized and a full account is provided, her argument for denying the distinction fails. Nonetheless, she provides pragmatic moral and political reasons for thinking that corporations should be regarded as morally and legally responsible agents that are compatible with the ontological argument provided here.

19 For the classic analysis of right as claims see Feinberg, Joel, ‘Duties, Rights, and Claims’ (1966) 3:2 American Philosophical Quarterly 137144 ; see also Arnold, Denis G, Audi, Robert and Zwolinski, Matt, ‘Recent Work in Ethical Theory and its Implications for Business Ethics’ (2010) 20:4 Business Ethics Quarterly 559581 ; Beitz, Charles R, The Idea of Human Rights (New York: Oxford University Press, 2009); Wenar, Leif, ‘The Nature of Rights’ (2005) 33:3 Philosophy & Public Affairs 223252 . Wenar defends a framework for understanding the nature of all rights that is divided into four basic types and two categories. The two categories are first-order rights over one’s mind and body and second-order rights over first-order rights. The four types of rights are privileges, claims, powers and immunities.

20 Kant, Immanuel, Foundations of the Metaphysics of Morals (New York: Macmillan, 1990 (1785)); Nagel, Thomas, ‘Personal Rights and Public Space’ (1995) 24:2 Philosophy & Public Affairs 83107 ; Nozick, Robert, Anarchy, State, and Utopia (New York: Basic Books, 1974); and Gewirth, Alan, Human Rights: Essays on Justification and Applications (Chicago: University of Chicago Press, 1982).

21 Nagel, note 19, 25.

22 Griffin, James, On Human Rights (New York: Oxford University Press, 2008); Lomasky, Loren E, Persons, Rights, and the Moral Community (New York: Oxford University Press, 1987).

23 Nagel, note 19, 86.

24 Arnold, Denis G, ‘Transnational Corporations and the Duty to Respect Basic Human Rights’ (2010) 20:3 Business Ethics Quarterly 371399 ; Arnold, Denis G, ‘Global Justice and International Business’ (2013) 32:1 Business Ethics Quarterly 125143 ; Arnold, Denis G and Valentin, Andrew, ‘CSR at the Base of the Pyramid: Exploitation, Empowerment, and Poverty Alleviation’ (2013) 66:10 Journal of Business Research 19041914 .

25 Shue, Henry, Basic Rights: Subsistence, Affluence, and U.S. Foreign Policy, 2nd edn. (Princeton, NJ: Princeton University Press, 1996).

26 Muchlinski, Peter T, Multinational Enterprises and the Law (Oxford: Oxford University Press, 2007) 507536 .

27 Cragg, Wesley, ‘Human Rights, Globalisation and the Modern Stakeholder Corporation’ in Tom Campbell and Seumas Miller (eds.), Human rights and the Moral Responsibilities of Corporate and Public Sector Organisations (Dordrecht: Kluwer Academic Publishers, 2004); Cragg, Wesley, ‘Business and Human Rights: A Principle and Value Based Analysis’ in George Brenkert and Tom Beauchamp (eds.), The Oxford Handbook of Business Ethics (New York: Oxford University Press, 2009); Donaldson, Thomas, The Ethics of International Business (Oxford: Oxford University Press, 1991).

28 Cragg (2004), note 26, 124.

29 Ibid, 124.

30 Beitz, note 18; Buchanan, Allen E, The Heart of Human Rights (New York: Oxford University Press, 2013); Rawls, John, Law of Peoples (Cambridge, MA: Harvard University Press, 1999).

31 While the ILO Conventions are not a part of the International Bill of Human Rights, they are an important element of the international human rights legal system and are particularly important to discussions of corporate human rights obligations because employers’ representatives (along with workers’ representatives and government representatives) are a formal component of the ILO governance structure. The United Nations ‘Protect, Respect and Remedy’ Framework expressly refers to both the International Bill of Rights and the ILO Conventions.

32 Buchanan provides a compelling argument for the conclusion that the international legal system of human rights can be provided with a robust, pluralistic moral justification (that includes, among many other elements, the normative justification of the institutions and practices that create the system). Buchanan, Allen E, Human Rights, Legitimacy, and the Use of Force (New York: Oxford University Press, 2009); Buchanan (2013), note 29, 14–22.

33 Clapham, Andrew, Human Rights in the Private Sphere (Oxford: Clarendon Press, 1993) 138 .

34 Conference on Trade and Development (UNCTAD), World Investment Report (New York/Geneva: United Nations, 2001) 2 .

35 Conference on Trade and Development (UNCTAD), World Investment Report (New York/Geneva: United Nations, 2012) 16 ; Conference on Trade and Development (UNCTAD), World Investment Report (New York/Geneva: United Nations, 2015) 2 .

36 For helpful reviews see Cragg (2009), note 26; Santoro, Michael A, ‘Post-Westphalia and its Discontents: Business, Globalization, and Human Rights in Political and Moral Perspective’ (2010) 20:2 Business Ethics Quarterly 285297 .

37 Kobrin, Stephen J, ‘Private Political Authority and Public Responsibility: Transnational Politics, Transnational Firms, and Human Rights’ (2009) 19:3 Business Ethics Quarterly 353 .

38 The United Nations ‘Protect, Respect and Remedy’ Framework, summarized by the Guiding Principles, was developed by the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises and endorsed by the Human Rights Council in its resolution 17/4 of 16 June 2011.

39 Human Rights Council, Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework A/HRC/17/31 (21 March 2011) 13.

40 The ‘Draft Norms’, produced between 1999 and 2003 by the United Nations Sub-Commission on the Promotion and Protection of Human Rights, Working Group on the Methods and Activities of Transnational Corporations, were an earlier effort to establish legally binding human rights norms for corporations. For a discussion of the project and the reasons for its failure see Arnold (2010), note 23, 373–76.

41 Muchlinski, Peter, ‘Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance, and Regulation’ (2012) 22:1 Business Ethics Quarterly 145177 .

42 Jones, Thomas M and Felps, Will, (2013) ‘Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique’ (2013) 23:2 Business Ethics Quarterly 207238 ; Stout, Lynn A, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (San Francisco: Berrett-Koehler Publishers, 2012).

43 Arnold, Denis G, ‘Libertarian Theories of the Corporation and Global Capitalism’ (2003) 48:2 Journal of Business Ethics 155173 .

44 McWilliams, Abagail and Siegel, Donald S, ‘Corporate Social Responsibility: A Theory of the Firm Perspective’ (2001) 26:1 Academy of Management Review 117127 ; McWilliams, Abagail, Siegel, Donald S and Wright, Patrick M, ‘Corporate Social Responsibility: Strategic Implications’ (2006) 43:1 Journal of Management Studies 118 . For criticism of this view see Gond, Jean-Pascal, Palazzo, Guido, and Basu, Kaushik, ‘Reconsidering Instrumental Corporate Social Responsibility through the Mafia Metaphor’ (2009) 19:1 Business Ethics Quarterly 5785 .

45 Ghoshal, Sumantra, ‘Bad Management Theories are Destroying Good Management Practices’ (2005) 4:1 Academy of Management Learning & Education 7591 ; Jones and Felps, note 41; Stout, note 41.

46 Wettstein, Florian, ‘CSR and the Debate on Business and Human Rights: Bridging the Great Divide’ (2012) 22:4 Business Ethics Quarterly 739770 .

47 Stout, note 41.

48 United Kingdom, Companies Act 2006, sec 172(1).

49 European Union Commission, A Renewed EU Strategy 2011-14 for Corporate Social Responsibility (Brussels: EU Commission, 2011).

50 Freedom House, ‘Freedom in the World’ (2016), https://freedomhouse.org/report/freedom-world/freedom-world-2016 (accessed 28 January 2016).

51 Arnold, note 42.

52 Ibid; Cragg (2009), note 26.

53 Human Rights Council, ‘Promotion and Protection of Human Rights’, E/CN.4/2006/97 (22 February 2006); Human Rights Council, ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’, A/HRC/8/5 (7 April 2008).

54 Arnold, note 42.

55 Gond et al, note 43.

56 Hsieh, Nien-hê, ‘Should Business have Human Rights Obligations?’ (2015) 14:2 Journal of Human Rights 218236 .

57 Buchanan (2013), note 29, 30.

58 Hsieh, note 55, 219, italics in original.

59 Buchanan (2013), note 29, 27, italics in original.

60 Ibid, 30.

61 Hsieh, note 55, 226.

62 Ibid.

63 Human Rights Council, note 38, 1.

64 Ibid, 15, italics added.

65 Wettstein, Florian, Multinational Corporations and Global Justice: Human Rights Obligations of a Quasi-Governmental Institution (Stanford, CA: Stanford University Press, 2009).

66 Arnold (2010), note 23; Bishop, note 16; Cragg (2004), note 26; Cragg (2009), note 26; Donaldson (1991), note 26; Kobrin, note 36.

67 Human Rights Council, note 38, 13.

68 Buchanan (2013), note 29, 284.

69 Rawls, note 29, 268–9.

70 For a critique of this conception of the basic structure of society, see Arnold (2013), note 23, 131–4. For a general critique of the use of Rawlsian theory in business ethics scholarship see Norman, Wayne, ‘Rawls on Markets and Corporate Governance’ (2015) 25:1 Business Ethics Quarterly 2964 ; Singer, Abraham, ‘There is no Rawlsian Theory of Corporate Governance’ (2015) 25:1 Business Ethics Quarterly 6592 .

71 Hsieh, Nien-hê, ‘The Obligations of Transnational Corporations: Rawlsian Justice and the Duty of Assistance’ (2004) 14:4 Business Ethics Quarterly 643661 ; and Hsieh, , ‘Does Global Business have a Responsibility to Promote Just Institutions?’ (2009) 19:1 Business Ethics Quarterly 251273 .

72 Cragg (2009), note 26.

73 Cragg (2009), note 26; Donaldson (1991), note 26.

74 Kobrin, note 36; Santoro, note 35.

* Jule and Marguerite Surtman Distinguished Professor of Business Ethics and Professor of Management, Belk College of Business, University of North Carolina at Charlotte; Editor in Chief, Business Ethics Quarterly (2011–2016) []. Thanks to Florian Wettstein and Wesley Cragg for helpful written comments on earlier drafts. I am grateful to the Surtman Foundation for financial support of this research.

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