Thursday, September 7, 2017
Several recent reports advance the conversation about corporate accountability.
Amnesty International and the Business & Human Rights Resource Centre released the report Creating a paradigm shift: Legal solutions to improve access to remedy for corporate human rights abuse on September 4. The report, which follows up the proposals contained in Amnesty’s 2014 report Injustice incorporated: Corporate abuses and the human right to remedy, sets out an agenda for legislative reform, focusing on parent company liability, Forum non conveniens and the Mandatory Collection and Disclosure of Information. The study explains that “A number of significant legislative initiatives in the last two years point to the beginning of a paradigm shift. Those driving legal reform must keep this momentum going and capitalise on the various legislative advances by tailoring proposals to their particular legal system, even if change is achieved through incremental steps over time. The aim of this publication is to highlight those legislative developments and fuel further legislative solutions to improve access to remedy for corporate abuses.”
In August, a report commissioned by a group of NGOs was published, Removing Barriers to Justice: How a treaty on business and human rights could improve access to remedy for victims. The report is aimed at supporting the mission of the Inter-Governmental Working Group on business and human rights, established by the Human Rights Council in 2014 “to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.” The report examines five case studies that document the challenges facing victims and identifies areas for reform. It concludes that “There are fundamentally two levels at which the Treaty can deliver change. The first recognizes that the majority of the barriers identified in this report exist at the national level, that is, within domestic law. Therefore change needs to happen at the level of domestic law reform in multiple countries if these barriers are to be effectively removed. The second approach calls for something more radical, by placing binding obligations on businesses, and backing that up with some form of monitoring, supervisory or judicial body at the global level. There are good arguments in favour of either approach. It is possible, and may be desirable, to pursue both strategies under the Treaty, calling upon States that ratify it to both amend their domestic law and to pave the way to an international supervisory regime.”
And a timely study reported in the journal Climate Change on September 7 traces the connection between climate change and specific fossil fuel producers. Study co-author and professor of geosystem science at the University of Oxford Myles Allen explains the importance of the findings: “This study provides a framework for linking fossil fuel companies’ product-related emissions to a range of impacts, including increases in ocean acidification and deaths caused by heat waves, wildfires and other extreme weather-related events. We hope that the results of this study will inform policy and civil society debates over how best to hold major carbon producers accountable for their contributions to the problem.”
Sunday, May 7, 2017
By Guest Blogger Professor Christyne Vachon, UMass Law
I am a professor of business organizations. I teach students about business law – how businesses are formed, governed and closed down. Part of that instruction includes, necessarily, an explanation of how owners of a corporation, shareholders, vote to appoint directors to the board to govern the company. Often have I heard the question, “Is this like how we vote for the president or our congressional representatives?” For many business law professors, they may cringe to think that the possible answer may be “Kind of” or “In a way.” But for those students who have never heard of a “shareholder” or “director” before they stepped into my classroom, the analogy may be a helpful starting point. So, mea culpa, I have said on a rare occasion, “in a limited way, yes”.
In light of our recent presidential election, however, I keep coming back to this premise in my mind. I wonder if, in fact, the governance processes to ensure proper election of directors to the board (and recourse, if not) may be stronger protection for shareholders than we have in place for voters in a presidential election. Directors hold a fiduciary obligation to the company and the shareholders. Where is that in our presidential election? Why vote for someone who is intentionally withholding key material information that relates to your rights and laws applicable to you?
In a simplistic explanation, the law applicable to shareholders’ decisions, including voting and whether to buy/keep the company shares, requires directors’ disclosure of all material information that a reasonable investor would think important in making the decision. The relevant information varies from circumstance to circumstance. But it most definitely includes disclosure of any conflicts. Directors should disclose conflicts and seek waiver of the conflict from the shareholder(s). If the information is not disclosed or is inaccurate, the shareholders have recourse. In some cases, the vote may be unwound. This may, actually, include unwinding a merger of one company into another. This is no small thing.
Voting is one of those essential rights granted to us. Voters would be interested to know if that right is compromised by, for instance, lack of material information. As with a vote for directors to the board of a company, information provide to the voters from potential candidates should be all relevant, accurate information that a reasonable voter would want to know. This includes conflicts. For instance, if a candidate or, say, a president has done his taxes in a certain way, shouldn’t the voters be entitled to know? Since, among other things, the president will be able to greatly influence our tax laws and policies and may have conflicts weighing in favor of or against certain tax decisions that may not align with the majority of the population, let alone those who voted for him. Why isn’t it required that the candidate for public office disclose all materially relevant information? Given the option to choose not to buy shares in a company that didn’t provide adequate information, shareholders still bought shares. This is why the regulations for full disclosure have been created. Why shouldn’t we protect voters for their fundamental right the way market regulators protect investors?
And why shouldn’t the default approach be to unwind a vote, like appointment of a director or a merger, when the voters weren’t provided all the materially relevant information?
Are there more legal protections for our rights as investors in companies than those upheld for proper election of public officials? Certainly, we have seen a public official or two at some point in their private capacities assert their rights as investors for breach of duties owed to them.
Sunday, March 5, 2017
The Business & Human Rights Resource Centre have partnered with Liberty Asia to develop a legal case map of all human rights litigation against corporations. This valuable resource is available here and enables readers to search by topic, company, and legislation relied upon. The project covers a broad range of cases including labor rights violations, human trafficking, climate change and environmental degradation, crimes against humanity, child labor and more. It’s worth a look for anything interested in these issues or human rights litigation generally.
Monday, October 10, 2016
contract images - Google Search
The recent release of 3 pages of presidential candidate Donald Trump’s 1995 tax returns, showing—as he would claim it—how “smart” he was in averting taxes by claiming a $916 million dollar loss reminds me of how he dodged his mortgage default suit with Deutsche Bank during the Great Recession: by attempting to excuse himself against his creditors on a $640 million construction loan obligation for a Chicago high-rise through a commercial impracticability argument likened the Great Recession to a force majeur—essentially to an act of God. Thus, in his argument, it would not be commercially practicable for him to complete his mortgage obligations because he could not have anticipated that such a world-wide economic downtown would have impaired his ability to honor those obligations to pay back the loans. In contract law, breaching parties on a contract, who usually try to excuse themselves based on a reasoning that bad economic market conditions are like acts of God, get laughed out of court. Even during bad market conditions, if you break it, you still have to pay for it.
But the court here bought his argument. Trump was excused. What about all of the defaulting homeowners who would not and could not have been allowed to use the same impracticability excuse and same argument of the Great Recession to get themselves out of terrible mortgage obligations that they took on in homeownership? Or even the individual consumers who bought real estate from Trump during that time and could not repay? Likely they would not have been able to take advantage of Trump’s reasoning and excuse themselves from defaulting because their individual mortgage agreements for condos or apartments were not near the gargantuan worth of $640 million. Trump got away with it because of the commercial aspects of his agreement and because of the money involved. But why should the size of someone’s purse-strings shut them out from possibly a just recourse? It’s interesting that in the eyes of contract law, often there is so little room for economic and human dignity.
In a “change election,” in which both presidential candidates have talked about economic disparity, my hope is our candidates do mean to both act with economic integrity and not with the leveraging power of their bank accounts. That is not always the “smart” way in the long run.
Wednesday, June 22, 2016
In June of 2011, the UN Human Rights Council endorsed a set of global standards to articulate and operationalize the tripartite human right based "respect, protect, and remedy" framework to prevent and address human rights violations that result from business operations. These UN Guiding Principles on Business and Human Rights (“The Ruggie Principles”) constitute the first comprehensive guidelines that define the state duty to protect against human rights abuses, the corporate responsibility to respect human rights, and the right to access effective remedies when human rights abuses do occur.
While the adoption of the Principles was surely a step in the right direction, they were criticized by some human rights advocates, including Human Rights Watch, early on as setting too low a bar for corporations. This criticism raised concerns about three core aspects of the Principles. First, that the standards themselves do not mirror what human rights require in terms of accountability and remedies. Second, because the Principles are voluntary, they lack the requisite carrot and stick to ensure compliance. Third, the rules do little to address the reality that there is often a massive power imbalance between multinational corporations that commit (or turn a blind eye towards) rights violations and the countries in which they operate.
Last week saw the five year anniversary of the Guiding Principles, and happily, they have led to some positive action. There has been an uptick in the number of companies developing publicly available human rights statements. Volvo Group and Caterpillar are among the hundreds of companies that have developed a statement of policy on human rights, in line with Guiding Principle 16. Several companies, including Adidas and Barrick Gold have also set up remedy mechanisms, though their effectiveness is a subject of fierce disagreement between advocates and the companies themselves. And, as we know, corporate human rights abuses continue to wreak havoc in communities around the world, with the tragedies of Rana Plaza in India and the deaths at Marikana mine in South Africa as just two examples.
Of course, no one said progress would be easy. Yet what is laudable is that the Business & Human Rights Resource Centre used the 5 year anniversary to capture both the trends and challenges in implementing the Principles, and to highlight opportunities to make progress moving forward. This effort includes accessible infographics for each pillar of the Guiding Principles: the state duty to protect human rights; the corporate responsibility to respect human rights, and the individual’s right to a remedy. Stakeholder reflections on key benefits and challenges are also available on the Centre’s website. The 5th anniversary of the Guiding Principles offers an important moment to reflect on what has been accomplished and what is left to be done. While there is certainly more of the latter than the former, marking progress has served as an opportunity to breathe new life into the focus on improving compliance with human rights in the corporate context.
Indeed, on the eve of the 5th anniversary, a coalition of global businesses announced a new initiative to measure and report on corporate respect for human rights and increase transparency around how the top 500 globally listed companies measure up in terms of “human rights policy, process and performance” through the Corporate Human Rights Benchmark. The ranking system is illustrated here:
The indicators, which are admittedly limited in scope, were rolled out over the past year and shared with an array of stakeholders around the world. The Corporate Human Rights Benchmark as a whole, though, was developed in large part by private sector investment entities and funded by the UK and Dutch governments. So while there was broader stakeholder engagement, the primary drivers are businesses and governments, who have vested interests in the outcomes (to say the least). Indeed, just a bit of cursory research uncovered concerns that the baseline indicators are inconsistent with the international human rights framework, and the focus on companies’ commitments, rather than outcomes fails to capture the true human rights impacts and costs of doing business. Undoubtedly, as the first reviews are completed, further critiques will emerge.
Nevertheless, this new Corporate Human Rights Benchmark can be viewed as a positive step. The metrics are meant to serve as the carrot to incentivize further progress in promoting and protecting human rights. As the Chair of Ben & Jerry’s Board of Directors noted, the Benchmark “should drive a change in corporate behavior. This performance ranking is built on what the companies do rather than their rhetoric. Those who truly support and deliver on high labor, environmental and human rights standards will be recognized and those that do not will have their records exposed to investors, customers, civil society, and home governments. The expectation is that this ranking system will drive a race to the top and a competition to benefit people, the planet, and the bottom line.”
2016 will serve as a pilot year for the Benchmark, and 100 publicly listed companies have been selected for review, based on publicly available data. A large subset of these companies are based in the United States, including extractives, as well as more familiar retail outfits, such as Costco, Target, Coach, the Gap and Under Armour. The full list of companies is available here. It remains to be seen what level of rigor will be applied to the benchmarking process but this is surely something to watch.
Even if it the progress made to implement the UN Guiding Principles since 2011 is imperfect, it is noteworthy. The next five years will offer us a more nuanced understanding of how the commitments made on paper play out in corporate practice. It will also offer new insights into how U.S. companies operationalize human rights and respond to evaluations framed in human rights terms.
(As a notable aside, Ben & Jerry’s has been a target of the Migrant Justice Milk with Dignity Campaign, which is fighting to secure rights for migrant dairy workers, and signed a commitment to work with Migrant Justice last year).
Thursday, August 20, 2015
18 states have done it. Over 100 cities and counties have done it. Walmart has done it. Koch Industries has done it. The critical question is: will the federal government be next to “ban the box”?
On July 20th, the US Department of State convened a human rights townhall as part of its engagement in the UPR process – an opportunity for advocates to discuss how the US federal government should respond to the more than 300 recommendations made to the US in May. The Leadership Conference on Civil and Human Rights kicked off civil society interventions, urging the federal government to join the growing ranks of employers that have agreed to remove the question “Do you have a prior arrest or conviction record?” from employment applications.
The Leadership Conference’s recommendation echoes a growing call for the Administration to issue an executive order banning the box for federal agencies and federal contractors. The national “Ban the Box” movement emerged from grassroots organizing by All of US or None to address the problem of “lifelong discrimination and exclusion because of a past arrest or conviction record.”
All of US or None considers itself a civil and human rights organization and this is clearly a human rights issue. Most obviously, banning the box is responsive to UPR recommendation 274, which calls on the US to develop a national strategy to reintegrate “former detainees and to prevent recidivism.” The practice of asking job applicants whether they have an arrest or criminal record has deeper human rights implications as well. It runs afoul of the general prohibition of discrimination and places undue restrictions on the right to work as well. Importantly, human rights not only place on obligation on governments not to discriminate, they require action to prevent discrimination by private actors, bolstering the call to ban the box across employment sectors.
The fact that increasing levels of incarceration have a disproportionately negative impact on communities of color is clear. (According to DOJ statistics from 2012, Black men were 6 times more likely to go to prison than White men, while Hispanic males were two times as likely. Black females ages 18 to 19 were three times more likely to be imprisoned than white females of the same age, while Hispanic 18-19 year olds had imprisonment rates almost double that of white women.
Placing a question about criminal records on employment applications exacerbates this inequity and severely restricts the opportunity for a second chance. Indeed, when instituting “ban the box” protections in Virginia earlier this year, Governor McAuliffe highlighted that “[w]e all know this box has a disparate impact on communities of color.” We all know, as well, that limiting access to gainful employment is a surefire way to ensure financial insecurity for individuals with criminal records in all communities.
Just asking the question about criminal records can deter an individual from finishing a job application. Applicants that do take the steps to complete an application, and check the box, run the risk of being dismissed from consideration with no assessment of their individual skills, character, and qualifications. The NY Times has reported that disclosing a criminal record has a clear negative impact, reducing the likelihood of a callback or job offer by fifty percent. (To clarify, banning the box does not mean that a background check can’t take place –it means eliminating the threshold question of criminal records from the interview and screening stage).
By removing the criminal record question, government employers foster equality and opportunity in the public sector. While banning the box does not address the underlying factors that perpetuate mass incarceration, it chips away at the stigma that millions of Americans face as a result of coming into contact with the criminal justice system. As others have reported, there is also evidence that keeping people with criminal records out of the labor market hurts the economy. Notably, by increasing employment opportunities for those who have been arrested or convicted, governments can reduce the factors that lead to recidivism.
When governments “ban the box” in public employment, they strengthen respect for the human right to be free from discrimination. When governments go further and restrict questions about criminal records in private employment, they bolster human rights by protecting against discrimination by third parties. San Francisco’s ordinance does just that, it prohibits public and private employers from asking about criminal records. Minnesota revised its law in 2013 to do the same. (Massachusetts, Rhode Island. Buffalo, Seattle, Philadelphia, Newark, and Rochester also “ban the box” for certain categories of private employers).
Obama signaled support for banning the box in his speech at the NAACP conference last month. His support builds on recommendations from the My Brother’s Keeper Taskforce, which called for hiring schemes that “give applicants a fair chance and allows employers the opportunity to judge individual job candidates on their merits.” Guidance issued by the EEOC in 2012 on consideration of arrest and employment records also supports banning the box. This Title VII guidance notes that it is a best practice for employers to “eliminate policies or practices that exclude people from employment based on any criminal record” and counsels towards “limit[ing] inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity.“
As the Leadership Conference recently stated: “By eliminating the litmus test that denies all applicants who have been in prison the opportunity to work, we ensure that … we are 'a nation that believes in second chances.'”
It is not often that human rights advocates and the Koch brothers agree. The ever-growing bipartisan support for banning the box should be a call to action – its fair, its smart, and it's a critical way to foster opportunity for the more than sixty five million Americans who have an arrest or conviction record.
[Want to know more? The National Employment Law Project tracks state-level efforts, as well as city and county legislation . In 2010, NELP and the National League of Cities jointly developed a resource on promising reentry policies at the city level, which can spark further innovation at the local level.]
Tuesday, June 2, 2015
This week, the Supreme Court of the United States issued its opinion in Elonis v. United States. Mr. Elonis was convicted of making threats under 18 U.S.C. 875(c), which criminalizes threats to harm another person. On Facebook, Mr. Elonis had posted statements interpreted as seeking to kill his estranged wife. He referenced an elementary school as well as harm to former co-workers. Before these writings were posted, Mr. Elonis' wife had left him along with their children. Following the postings, Mr. Elonis was fired from his job and Mrs. Elonis obtained a civil protection order.
The Supreme Court reversed Mr. Elonis' conviction.
In an opinion which eight of the nine justices joined or concurred, discussion centered on the level of proof the government must show to demonstrate the defendant's intent. The statute under which Mr. Elonis was charged was silent on this issue, and therein was the problem.
The Court acknowledged that absence of a standard does not invalidate the section of the statute under which Mr. Elonis was convicted; what that standard should be was a source of disagreement. The government argued that only two elements need be proved: that the person making the statements understood the context and content of the words and that a reasonable person understood those words as a threat.
If the reasonable person standard brings you back to first year law classes, then you remember its use in civil litigation. The reasonable person properly belongs on the civil side of the law. Prosecutorial introduction of the reasonable person standard to determine criminal culpability is inappropriate. Some evidence of the defendant's mental state must be proved. Just what level of proof that is remains unaddressed.
The court neither defined what the standard should be nor gave instructions to lower courts on how to divine the proper standard. We do not know where this decision leaves Mr. Elonis and others who may be charged criminally for cyber threats, but we do have a good sense of where this leaves Mrs. Elonis and other survivors.
Mrs. Elonis was afraid when she saw references to her death in her estranged husband's postings. Her fears were all the more understandable when he posted a diagram of her residence and discussed the best direction from which to send a mortar shell into her house.
There are other signs that Mrs. Elonis was in danger. Mr. Elonis newly claimed that he was a "rapper" and such status gave him license (and cover) for any words he posted. If Mr. Elonis had a long history of rapping, the argument might be credible. But abusive partners often claim new interests (for example, in the children) once separation occurs as a way of continuing control of the partner. Mr. Elonis' claim of being a rap artist was a ruse. To the unfamiliar, this may not indicate danger. But to a survivor, a partner morphing identities to adapt to circumstances that will enhance the partner's goals is alarming.
Mr. Elonis may have had no intention of killing his estranged wife, or of having another person kill her. The emotional upheaval that perceived threats of harm cause would be sufficient satisfaction for most abusers, even if that satisfaction was temporary. Mr. Elonis would be not guilty of a threat to do physical harm. But what Mrs. Elonis knows is that the posted messages emotionally control her. For her, this was a "true threat".
Mrs. Elonis sought the civil remedy of a protection order. There is no evidence that she initiated prosecution. Her husband's co-worker brought the postings to the FBI's attention. Yet she is now in the mix of those whose state protection may change following entry of the the Elonis decision. The case ought not deter local prosecutions where state statutes are more artfully crafted in determining intent and other standards. Nonetheless, prosecution vehicles may shift. Disguised threats occurring after entry of a protection order can be prosecuted as a violation of that portion of an order prohibiting a partner from abusing the petitioner and from communicating with her.
While violation of protection order may be perceived as a safer prosecution route, what prosecution vehicle will be available should the target not wish to seek a protection order is unclear.
Even more serious difficulties for survivors will result from the interpretation that civil trial courts are likely to assign to the case. Civil courts routinely conflate the "beyond a reasonable doubt" standard with the more common "preponderance of the evidence" standard when hearing civil domestic abuse matters. This is particularly so where collateral criminal cases exist. The Elonis decision inadvertently enhances this confusion. Civil courts are influenced by criminal findings and decisions even where the application of those findings is not relevant in the civil matter.
First amendment concerns may similarly compound civil courts' confusion. While the Elonis court did not reach free speech arguments, survivors can expect constitutional concerns to be raised in hearings involving internet posts. Some states are beginning to address those concerns. No doubt an internet free speech defense to threats charges will present to the Supreme Court soon, most likely in the criminal context.
Domestic abuse survivors can expect to be caught again in the civil/criminal crossfire.
Friday, March 20, 2015
The State Department reports that on March 18, 2015, the United States became the Chair of the Voluntary Principles on Security and Human Rights Initiative. The United States' annual report under the Principles is available here.
The U.S. Report particularly touts the Administration's progress toward development of a National Action Plan on responsible business conduct -- a culmination of significant advocacy by the International Corporate Accountability Roundtable and others. Among other things, the US Government reports that it will "hold several dialogues with stakeholders throughout the year to provide input into the NAP process," including an upcoming dialogue on April 2 at the University of Oklahoma College of Law in Norman, Oklahoma focused, in part, on the extractives sector. Another dialogue will be held in Washington, D.C. on April 16. Earlier dialogues were conducted at Berkeley, California and New York University. The dialogues are open to the public, but discussions are not otherwise publicized.
In 2013, Oxfam withdrew from the Voluntary Principles Initiative, citing its frustration “at the lack of meaningful progress in independent assurance, despite more than ten years of deliberation and discussion — and notwithstanding the commendable efforts of some companies to develop relevant indicators on the margins of the VPs."
Two years after Oxfam's move, the US term as Voluntary Principles chair, coinciding with the development of the US National Action Plan, provides a strategic opportunity to press for more progress in these areas, both from within the Voluntary Principles group and, like Oxfam, from the outside.