How Business Can Boost Human Rights in 2021
Few will regret the passing of 2020, a year headlined by a global health crisis, profound economic distress, and high-profile examples of racial inequality. From my vantage point, working on human rights in a business school, the past year has underscored the need for global business leaders and government officials to take a more deliberate, ambitious, and ethical approach to address these and other core challenges facing American society and the world. Companies that do so will develop more sustainable and successful businesses in the long term.
Looking to 2021, I’ve compiled a checklist of 10 areas where business executives have an opportunity to lead, and where the incoming Biden Administration also needs to play a significant role.
1. Address economic inequality
The pandemic has laid bare our dramatic economic inequality. In 2020, almost 8 million Americans have descended into poverty, and almost a quarter of U.S. households are food insecure. By contrast, stock prices have reached near-record highs. This growing inequality is the central social problem facing our society and the world, which the government alone cannot solve. The largest companies need to reassess their business models and, among other things, better manage their global engagements. While outsourcing production often improves productivity and creates jobs in developing countries, businesses need to undertake these engagements in ways that protect those workers and do not unnecessarily exacerbate economic inequality.
2. Reform buyer-supplier relations in post-COVID supply chains
In the spring of 2020, as their revenues plummeted, global clothing and other consumer-goods companies unilaterally changed the terms of their contractual relations with their suppliers, in some cases refusing to pay them at all for goods already produced. By invoking the force majeure clauses in contracts, these large companies made clear the imbalance in their relationships with local factory owners. Their unethical conduct underscored the need for reform of the norms governing purchasing practices and shared standards governing buyer-supplier relations.
Over the long haul, strong, independent unions will empower workers and enable them to advocate most effectively for their own best interests.
3. Make racial and gender diversity a priority, not just in the workforce at large, but on corporate boards and in the C-Suite
George Floyd’s death drew renewed attention to racial discrimination and inequality and led to calls for greater diversity. While more African Americans are going to college and getting advanced degrees, relatively few have climbed to the highest reaches of the corporate sector, where there are only four African American CEOs of Fortune 500 companies. A third of those companies have no Black board members at all. Studies show that companies with more diverse workers and leadership teams are stronger and perform better over the long term.
4. Challenge short-term investment orthodoxy and ill-advised legal restraints on public investors
The ghost of Milton Friedman still haunts corporate America and his outdated model, which holds that for investors maximizing short-term stock returns is the only game in town. In late 2020, Trump’s Labor Department has doubled down on Friedman’s mantra, issuing an ill-advised rule aimed at preventing public pension funds from considering environmental and social considerations when making investment decisions. It needs to be reversed by the new administration. In 2019, CEOs of many of the largest companies, through the Business Roundtable, called for a reimagination of the role of the corporation to better serve society. In 2021, they should further develop this model with respect to human rights and social considerations.
5. Improve the moderation of harmful content on social media platforms to help restore informed civic discourse
Even as disputes over the November 2020 election have begun to fade, political disinformation continues to swirl online, undermining informed debates about important political and social issues. The government should use a combination of regulatory leverage and available incentives to persuade the social-media giants to do much more. But the internet companies themselves bear the greatest responsibility, because they alone control the algorithms, have access to the harmful content in real time, and the ability to demote it or take it down before it goes viral.
6. Oppose mass detentions by the Chinese government in Xinjiang and the roll-back of rights in Hong Kong
U.S.-China relations are dangerously damaged. The mass detention of more than 1 million Uyghurs in Xinjiang and the roll-back of democratic guarantees in Hong Kong are a key part of the problem. And while the Trump administration called out these abuses, Trump’s go-it-alone approach undermined cooperation with strategic allies. Many global businesses rely on China, both as a manufacturing hub and a massive market for their goods and services. But these businesses are denied access to Xinjiang to monitor working conditions and rebuffed by Chinese authorities when they question government actions. The new administration should work closely with European allies to raise human-rights issues in various international fora, and to adopt a common approach to trade, one that keeps human rights concerns on the table. On a parallel track, those who do business in China should exercise due diligence to ensure that their operations do not contribute to discrimination or mistreatment of the Uighur population in Xinjiang and in other parts of China.
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7. Give greater attention to the plight of migrant workers in the Arabian Gulf, among the most vulnerable people on our planet
There are more than 180 million migrant workers around the world, most performing jobs that local citizens are either unable or unwilling to do. They are taking low-paying jobs, including 10 million who are construction workers in the Arabian Gulf. Most come from South Asia, where poor families are desperate to send their sons to make money to send home. Construction project managers demand that these workers pay their own recruitment costs, often in excess of a year’s wage. Businesses engaged in the Gulf, such those involved with 2021 Expo in Dubai or the World Cup in Qatar in 2022, need to join forces with governments to end worker-paid recruitment fees. The expansion of the U.S. al Udeid airbase in Qatar offers an opportunity for the U.S. government to adopt an affirmative commitment to paying for recruitment and rejecting the practice of foisting these fees on poor workers.
8. Redouble global efforts to combat child- and forced-labor, especially on farms and in mining operations in Africa
According to UNICEF, there are almost 170 million child laborers in the world, some as young as six years old. Child labor is common in agriculture, especially on small family farms, such as those in West Africa producing cocoa. Children also work at informal mining sites in various African states. According to a recent report from the U.S. Department of Labor, for example, there are an estimated 25,000 children mining cobalt in the Democratic Republic of Congo. Cobalt is an essential battery component that propels electric cars and powers our computers and cell phones. In 2021, companies throughout the battery supply chain should work with local communities and the DRC government to develop an effective system for preventing child labor and to ensure safety for those working in these informal mining sites.
9. Deploy the purchasing power of the government to improve working conditions in global supply chains
The U.S. government is an enormous buyer of many goods and services. Federal procurement relies on global supply chains where serious human-rights violations frequently occur. Despite efforts to increase domestic production, including to create more jobs for U.S. workers, inevitably the government will continue to rely heavily on goods produced elsewhere. The new administration should adopt stronger rules and oversight mechanisms to ensure responsible sourcing. Through these efforts, workers globally can enjoy greater rights protections, American companies can compete on a more-level playing field, and Americans can feel confident that their government is making the world safer and fairer for all.
10. Empower workers by challenging debilitating restrictions on freedom of association
Freedom of association, the right of workers to organize and press for fair wages and decent working conditions, is one of five fundamental labor rights, according to the International Labor Organization. While the U.S. has an uneven track record with respect to this right, in most of the world it is honored in the breach. In some countries, like China and Vietnam, governments establish official unions, which are part of a government or party apparatus and in practice, deny workers the opportunity to organize themselves. In many other countries, while unions are technically allowed to organize, their ability to do so is severely constrained by hostile governments, crippling their effectiveness. Over the long haul, strong, independent unions will empower workers and enable them to advocate most effectively for their own best interests. Democratic governments, like the U.S., need to support these efforts and help to ensure that businesses do not interfere.
Michael Posner is the Jerome Kohlberg professor of ethics and finance at NYU Stern School of Business and director of the Center for Business and Human Rights. Follow him on Twitter @mikehposner.
Reprinted with permission from Forbes.
