Ending corporate impunity is at the heart of a sustainable post-pandemic recovery – that’s why we need a strong Binding Treaty

The Covid-19 pandemic has once again exposed the fragility of global supply chains and business models built on non-standard forms of employment and informality. Following the global drop in demand as a result of the pandemic, many companies resorted to abruptly ending the procurement of goods and services and even to defaulting on prior commitments made – with the consequence of a disastrous impact for workers in global supply chains. Simultaneously, others designated as key workers in the crisis, including seafarers and workers in packing and distribution centres, continue to work tirelessly to keep global supply chains afloat at huge personal risk of exposure and often without adequate personal protective equipment.

Not for the first time, workers have learnt the hard way that our global economy is not governed by the rule of law. It is therefore unsurprising that a recent Global Poll conducted by the International Trade Union Confederation found that almost three-quarters (71 per cent) of people believe that their country’s economic system favours the wealthy. Sixty-one per cent of people surveyed said that they would trust governments more if they held companies to account for how they treat workers and the environment. And a whopping 66 per cent said they want their governments to adopt new rules for multinationals to end abuse through their supply chains.

To ensure that the global economy is not only resilient but also conducive to social progress, governments must restore the social contract by rebuilding trust in democracy and a fair and equitable economy. This has to start with the regulation of highly exploitative global supply chains – the heartbeat of our current trading system. Indications are that governments and business are starting to listen.

The European Commission, for example, has conceded that voluntary measures are insufficient to change the way businesses manage their human rights and environmental impacts. Large multinational enterprises are now also openly calling for human rights due diligence (HRDD) legislation.

The next round of negotiations for a UN Binding Treaty on Business and Human Rights later this month provides a critical opportunity for governments and business to finally demonstrate their expressed commitment to responsible business conduct.

The latest draft of the proposed Binding Treaty provides a strong basis for an instrument that is both politically viable and effective in addressing accountability gaps in international human rights law. Indeed, the new text has introduced further conceptual clarity, alignment with the UN Guiding Principles on Business and Human Rights, and a more coherent structure.

Unions welcome, among other things, the strengthening of the gender dimension throughout the text, which will help ensure that states effectively discharge their obligations to protect and fulfil women’s, including women workers’, human rights in the context of business activities.

While HRDD rightly takes centre stage in the revised article on preventive measures, it is encouraging to see that the duty to prevent adverse human rights impacts does not stop at due diligence.

From the outset, trade unions have campaigned for a Binding Treaty that holds transnational companies liable for human rights violations throughout their activities, including those by supply chain entities, irrespective of the mode of creation, ownership, or control. This latest draft does just that by providing a sound basis for addressing existing accountability and liability gaps arising from the complex corporate structures of multinational companies and their supply chains.

Another significant improvement is the inclusion of a provision that explicitly requires states to ensure that any existing or new trade and investment agreements are compatible with the human rights obligations under the Binding Treaty.

Strengthening priorities for the next round of negotiations

While the latest draft captures many trade union demands, there are still significant improvements that can be made to the text. During the next round of negotiations, the global trade union movement will continue to call for the following priorities to be strengthened:

  • A broad substantive scope covering all internationally recognised human rights, including fundamental workers’ and trade union rights, as defined by relevant international labour standards
  • The coverage of all business enterprises regardless of size, sector, operational context, ownership and structure
  • Parent company-based extraterritorial regulation and access to justice for victims of transnational corporate human rights violations in the home state of transnational corporations
  • Regulatory measures that require business to adopt and apply human rights due diligence policies and procedures
  • Reaffirmation of the applicability of human rights obligations to the operations of companies and their obligation to respect human rights
  • A strong international monitoring and enforcement mechanism

In particular, we would like to see trade unionists explicitly recognised as human rights defenders and trade unions acknowledged as being an integral part of HRDD processes. The next draft will also benefit from more clarity on the relationship between liability for failing to conduct mandatory HRDD and liability for human rights abuses. We firmly believe that the requirement to practice human rights due diligence and the requirement to remedy any harm resulting from human rights violations should be treated as separate and complementary obligations. In terms of enforcement, the framework envisaged in the latest draft continues to fall well below our expectations. It is imperative that the Binding Treaty is supported by a complementary international mechanism to oversee compliance.

The failure of many lead firms to clearly demonstrate their respect for human rights during the Covid-19 pandemic not only highlights the limitations of voluntary corporate social responsibility standards, but flaws in the global supply chain model itself. A Binding Treaty that genuinely realigns the normative asymmetry between the legally enforceable rules that protect business and the soft law approaches to corporate accountability is what the post-pandemic world needs. Ending the impunity for corporate human rights abuses must be at the heart of a sustainable recovery.

It’s time for governments and the business community to step up.

The joint trade union statement on the second revised draft of the proposed Binding Treaty can be found here.