Wednesday, November 8, 2017

Martin: Hiding in the Light: The Misuse of Disclosure to Advance a Business and Human Rights Agenda

My friend and colleague at West Virginia University, Jena Martin, has posted her new paper, Hiding in the Light: The Misuse of Disclosure to Advance a Business and Human Rights Agenda. The paper is forthcoming in the Columbia Journal of Transnational Law and can be accessed at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3028826 

It's worth a read. Here's the abstract:

In June 2017, Waitrose, a top UK supermarket, pulled its cans of corned beef off the shelves after an investigation revealed that the meat might have been produced with slave labor. At the time of the recall, Waitrose was in compliance with the UK Modern Slavery Act (MSA), a 2015 law enacted to prevent human trafficking and modern-day slavery. Under the MSA, corporations are required to file annual reports disclosing what action they had taken to eradicate slavery and human trafficking in their supply chains. The Modern Slavery Act, in turn, was a much-lauded law that is part of the growing trend of States to move the international business and human rights agenda forward. A key component of that agenda involves disseminating the UN’s Protect, Respect and Remedy Framework and implementing the UN Guiding Principles, which have been praised by States around the world as a framing mechanism for issues of corporate accountability for negative human rights impacts in a corporation’s operations and relationships with its suppliers.

The aim of this article is to analyze whether the business and human rights agenda (as embodied by the Three Pillar Framework and UN Guiding Principles) is well served with national laws that focus on disclosure. The article will focus primarily on rules being implemented in the United States at both the subnational and national level, however, it will also discuss approaches being used in European jurisdictions such as the United Kingdom and France and the overall trend towards a transparency model for human rights protection from business activities. The increased use of disclosure-based regulation (and the resulting compliance efforts by corporations) seems to come, at least in part, as a result of the efforts by States to address the duties laid out for them in the UN Guiding Principles. As such, it seems appropriate to undertake an analysis regarding whether these laws are in fact effective at implementing the Guiding Principles.

For decades now, disclosure has been held out as the ultimate curative for every corporate woe. The expansion of disclosure initiatives from mere investment-related issues to increasingly social policy issues would indicate that this trend will continue. Yet as this article demonstrates, disclosure to right now is at best a temporary stop gap measure that can lead to limited corporate change on the issue of business and human rights. At worst, disclosure is being used by corporations as a way to obtain a reputational advantage without actually making substantive changes – by simply hiding in the light.

http://lawprofessors.typepad.com/business_law/2017/11/martin-hiding-in-the-light-the-misuse-of-disclosure-to-advance-a-business-and-human-rights-agenda.html

Corporations, Ethics, International Business, International Law, Joshua P. Fershee | Permalink

Comments

Forty years ago, a young SEC staff attorney (me) assigned to analyze public comments on a rulemaking release concerning environmental and employment discrimination disclosures tallied a list of other subjects someone thought appropriate for the SEC-mandated disclosure. The list totaled, as I recall, 107 subjects that ranged from the inane to the quite serious. The Director of Corporation Finance, the late Alan B. Levenson, and I went through the list and determined that none of the subjects merited disclosure on the basis of materiality to investment or voting decisions. I was and remain persuaded that for SEC-mandated disclosures materiality must remain the standard. Otherwise, our disclosure documents will continue to grow in length and continue to obscure what is important in that realm.

Posted by: Craig Sparks | Nov 8, 2017 9:04:00 AM

I’m a huge fan of Jena Martin’s work. A few years ago, I presented at WVU on business and human rights and it shaped my future research agenda. As she notes in the article, I’ve been a strong critic of disclosure just for the sake of disclosure. I believe disclosure on ESG issues should be material and meaningful for stakeholders and must have teeth/penalties so that companies must comply. In the coming weeks, I plan to post on a panel discussion I saw at the ABA International Law meeting where investors and others talked about how important these issues are to them. It’s a complex area, and I’m glad Jena is looking at reform.

Posted by: Marcia L. Narine Weldon | Nov 8, 2017 10:44:29 PM

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