BUSINESS AND HUMAN RIGHTS: TOWARDS BINDING LEGAL OBLIGATIONS

PRESENTATION BY DR DAVID BILCHITZ

SOUTH AFRICAN INSTITUTE FOR ADVANCED CONSTITUTIONAL, PUBLIC, HUMAN RIGHTS AND INTERNATIONAL LAW

davidb@saifac.org.zawww.saifac.org.za

PRESENTATION OUTLINE The Impact of Corporations on Fundamental

Rights The Voluntaristic Framework Problems with Voluntarism International Developments Towards

Binding Obligations The South African Constitutional Paradigm Implications: Reform of Corporate Law

Voluntary Approaches

International Initiatives OECD Guidelines Tripartite Declaration The United Nations Global Compact Individual Company Codes of ConductIn South Africa: Corporate Social Investment King II Report: non-financial reporting JSE Sustainability Index

The Problems With Voluntarism Conceptual Problems

Fundamental rights obligations are not voluntary

• Content of Norms Vague and lack specificity Variable

• Enforcement Mechanisms Self-regulation No remedies for non-compliance

Towards Binding Obligations: International Developments

Transnational Human Rights Litigation UN Draft Norms on Responsibilities of

Multi-National Corporations and Other Business Enterprises

The Ruggie Framework State duty to protect individuals from

corporate violations

The South African Context: The Impact of the Constitution

Company law and Constitutional Law regarded as separate

Express Application of Bill of Rights to natural and juristic persons

Focus has been on corporate rights rather than obligations Hyundai: privacy FNB: property Primacy though of natural persons

What are Corporate Obligations?

Section 8(2) of the Constitution: “A provision of the Bill of Rights binds a natural or a juristic person if, and to the extent that, it is applicable, taking into account the nature of the right and the nature of any duty imposed by the right”.

Features that render rights applicable to corporations

Which features render rights applicable?

What are Corporate Obligations?

Constitutional Court (Khumalo) Intensity of Constitutional Right Potential Invasion of Right Nature of the party before it and role in

democracy(media) Two main factors:

Recipient perspective: Impact of Corporations on HR Agency Perspective: the Capabilities of Corporations

• Need to apply factors to specific rights to determine more concrete obligations

Implications for Reform of Corporate Structure and Law

What are implications of horizontality for reform of corporate law?

Focus of corporations has been on realizing profit for shareholders

At times, realisation of economic profit is in tension with some of ideas surrounding wider social/environmental responsibilities

Requiring Reform of Corporate Structure

As with public structures, all private structures subject to constraints of constitution

Creation of structure that can pursue profit at expense of HR is not meaningful

Inherent in structure of company is now demand it respect HR to extent applicable

Change of nature of corporation

Requiring Reform of Corporate Law Memorandum of Association of Company

should require respect and promotion of HR to extent applicable to Company

Add fiduciary duty of director to realise fundamental rights to the extent they are required to.

Impose personal liability on directors for decisions that violate human rights

Impose mandatory, standardised non-financial reporting obligations with compliance office to monitor

Conclusion Constitutional Framework moves us beyond

voluntarism Implications of framework have not yet

impacted largely on corporate law Need for law reform Continuation of parallel voluntary initiatives Power of corporation placed within

constraints such that do not harm fundamental interests of persons and often actively promote their development