Thursday, October 30, 2008

John Ruggie Sees Big Shift in Public Attitude Toward Govt

Harvard Professor John Ruggie spoke at the Carnegie Council this week on the future of his project on business and human rights. Below is a short summary Carnegie Council intern Sheila Oviedo helped me put together. The big points are that Ruggie sees a dramatic shift in public attitudes in favor of government regulation, as a result of the financial crisis. Government is no longer just "the problem," in the public mind.

Also, Ruggie could see a more ethical capitalism emerging not by instilling ethics in people per se but by creating incentives based on an ethical framework. The temptation to be corrupt is too big, for example, and therefore people need the incentives to be good.

(You can listen to the audio of his talk here.)

Business and Human Rights
(Summary of the Ruggie presentation)

This week, John Ruggie, the Special Representative of the Secretary-General on Human Rights and Transnational Corporations and Other Business Enterprises, visited the Carnegie Council and shared insights not only on his mandate, but also on the way forward for business and human rights as well as ethics and capitalism in the post-crisis global economy.

The Framework for Business and Human Rights

Released in April 2008 and unanimously accepted by the Human Rights Council in June, the Ruggie report, "Protect, Respect and Remedy: A Framework for Business and Human Rights" rests on three core principles: the state duty to protect against human rights abuses by third parties, including business; the corporate responsibility to respect human rights; and greater access by victims to effective remedies. In less than a year after its release, the framework rapidly gained traction among business and human rights groups, corporations, and even governments. The Human Rights Council agreed to renew Ruggie's mandate for another three years, which allows him to move forward with operationalizing the framework.

The formulation of the Framework was, according to Ruggie, informed by three broad approaches. First was the pyramid of correlative duties adapted from the work of John Knox. The pyramid suggests that the current international human rights regime is still largely state-centered, but with no specific requirements for state compliance with human rights laws or strict enforcement mechanisms. "Where most cases (of human rights abuses) are, enforcement is weakest," Ruggie noted. The alternative is to "flesh things out at the bottom" by providing states with tools to uphold and enforce human rights law.

The second area that informed the Framework is the "collision of norms" in the international system. The system consists of clusters of laws, codes, and norms that often clash because there is no hierarchy. Human rights law, Ruggie said, does not generally trump other laws. The Framework therefore makes policy arguments rather than legal arguments to integrate human rights into business.

The third area that informed the Framework is what Ruggie calls the "political economy of human rights." There is a "vast misalignment" of corporate activities and government capabilities, which results in governance gaps. "Human rights violations are a result of these governance gaps," Ruggie noted. The Framework prescribes pragmatic measures that can be done to bridge these gaps.

In general, the Framework follows what Ruggie calls an approach of "principled pragmatism." It is guided by the principle to strengthen the current human rights regime and is pragmatic on how to get there, he explained.

The New Mandate

Ruggie's extended mandate from 2008 to 2011, presents an opportunity to operationalize the Framework at both the state and corporate levels. At the state level, he aims to offer governments useful tools to be able to monitor and enforce human rights law through a range of mechanisms such as a country's investment policies and corporate laws.

At the corporate level, Ruggie aims to push companies to carry out their commitment to human rights. Companies say they respect human rights, he said, "but most of them don't have (systems) in place to prove they are respecting human rights." In the next three years, Ruggie's challenge is to inspire companies to operationalize the corporate responsibility to protect human rights to mitigate further rights abuses.

Another key challenge is to improve public access to remedial measures. "The need for judicial remedy is the most problematic," Ruggie acknowledged. Hence, the Framework prescribes alternative non-judicial remedial mechanisms in areas where judicial mechanisms are weak or in cases where companies can deal with complaints in an objective manner.

The Future of Business and Ethics

Ruggie sees the current global financial crisis as a catalyst for a shift in attitudes toward globalization and regulation. He expects increased government regulation in the post-crisis future, and perhaps more acceptance of the significant role of government and the state in the economy.

The post-crisis era has room for ethical financial capitalism, but only if ethics is used as a basis for developing new incentives. Ethics can't be relied upon to balance an incentive structure that encourages excess and irresponsible risk-taking.

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