To the whetstone or the drawing board? Holding Corporations Accountable at State and Multilateral Levels for Cross-border Negative Externalities
Though few would argue that the growth of global trade driven in large part by multi-national enterprises has not had positive effects in terms of the alleviation of poverty and higher levels of development throughout the world, that corporations also exploit limited natural resources, spoil the environment and create unsafe and inequitable conditions of labour in the pursuit of maximizing profits is well known. Many corporate disasters or conditions of abuse have been household news – especially industrial disasters resulting in significant loss of life such as the 1984 Bhopal disaster in India or the 2013 Rana Plaza factory collapse in Bangladesh – and a great many more have managed to avoid the news cycles, especially those actions with effects that are not immediately felt, such as workers developing illnesses from exposure to toxic chemicals due to inadequate safety precautions in the work environment.
While corporate abuse of human and labour rights is not a new phenomenon, holding corporations accountable for such abuses in order to prevent future exploitation has remained an elusive goal and is now, perhaps, more challenging than ever. Ever greater market liberalization is pursued globally, and has coincided with rise of a Lex Mercatoria (transnational private governance) that has in many ways replaced or crowded out more traditional models of governance implemented by states (see Stone Sweet, 2006, "The new Lex Mercatoria and transnational governance", Journal of European Public Policy). In fact, deregulation of businesses is part and parcel of the liberal economic agenda and has been driven in large part by a widely-held belief that businesses should be left to regulate themselves.
The result is that today’s economy is characterized by complex supply chains stringing together multiple states led by large and powerful multi-national enterprises (MNEs) with complicated legal structures, opaque inter-firm relations, and immense political power. Such complexity only intensifies the challenge of governance – rendering existing “hard law” instruments inapplicable and opening up other mechanisms to capture by powerful corporate interests. State and multilateral responses to these challenges have generally fallen into “soft law” categories and have had limited enforcement capacity – whether by design (in order to create breathing room for Lex Mercatoria) or due to inadequacy of the tool or its implementation. To supplement or supplant initiatives at the state and multilateral levels, a surfeit of private initiatives and public-private hybrid initiatives have risen to prominence, but these too have had limited impact on corporate behavior. Indeed, it is clear to most that the state and multilateral levels are still the most appropriate levels at which these governance challenges can be addressed, even though the shortcomings of these existing tools have serious shortcomings.
What remains is a puzzle of global governance that will form the overarching theme of this doctoral research: How can corporations be held accountable for actions which produce a negative effect on society and the environment across borders? In particular, the purpose of this research will be to explore the gaps in the governance of multinational enterprises (MNEs) with regard to labour rights – understanding why such gaps exist and identifying potential avenues for closing them – as well as to look closely at existing instruments at the state and multilateral levels to see, if and when there are instances of effective governance, which conditions are necessary to successfully hold corporations to account for abuses of human and labour rights.
In particular, a series of four papers outlined in section 4 will explore the conditions under which the Organisation for Economic Development (OECD) National Contact Points (NCPs) specific instances have been used to hold MNEs accountable for extra-territorial labour rights abuses as well as a unique court case in a German regional court in which a corporation was convicted for a labour rights violation that occurred in Gabon. By focusing on cases in which the instruments yielded outcomes that go against the grain, we can identify the conditions under which these tools can be effective – pointing to ways such tools can be honed rather than discarded or curtailed.