Week of 20 July 2020
The anti-corruption and business and human rights agendas are closely interconnected, with corruption-related human rights abuses occurring in particular in public procurement and concessions, land acquisition, health and pharmaceutical supply chains and the extractive sector. Companies can leverage anti-corruption compliance to embed consideration of risks to people into core business processes (UN Working Group on Business and Human Rights)
The UN Working Group on Business and Human Rights (UNWG) submitted a report to the 44th session of the UN Human Rights Council, Connecting the business and human rights and the anti-corruption agendas. The report “examines how the business and human rights agenda, articulated in the Guiding Principles on Business and Human Rights, and anti-corruption efforts, are interconnected” and provides recommendations to states and companies on aligning anti-corruption and human rights workstreams, including due diligence. The report was developed based on expert interviews and consultations with governments, business associations, civil society organisations and other stakeholders.
Some of the key takeaways from the report below, including concrete recommendations for business:
- The UNWG underscores the link between corruption and human rights abuses, noting that “corruption involving business enterprises can lead to human rights abuses, sometimes with fatal consequences.” For this reason, “a focus on preventing corruption by all actors may prevent and mitigate business-related human rights abuses,” particularly in times of global social and economic crisis like the current COVID-19 pandemic.
- Areas of particular risk for corruption-related human rights abuses include:
- Public procurement and concessions: Unfair government contracting processes may result in the delivery of poor goods and services, or the failure to deliver them in full. This is particular problematic in the case of “vital public services key to the realization of human rights, such as health care, education and housing.”
- Land acquisition: In states where there are weak land and property protections for individuals and communities, companies may be able to unfairly influence the concession of tracts of land or other natural resources, thereby displacing and disenfranchising vulnerable populations such as indigenous peoples.
- Health and pharmaceutical supply chains: Companies may pay bribes to gain access to the market for substandard or counterfeit products, to bypass or accelerate product safety inspections, or to divert food and medicine “from public market supply chains into private hands.”
- Extractive sector: In addition to concerns about weak land governance, companies in the extractive sector may negatively impact human rights by unfairly influencing the concession process, required human rights and environmental impact processes, and other permitting regulations designed to protect individuals and communities from displacement, health issues, livelihood disruption, and other adverse human rights impacts linked to extractive projects.
- Gender dimensions: Corruption can disproportionately impact women and girls and cause them to be economically marginalized. For instance, “[i]n the informal sector, women may be more likely to be asked for bribes and illegally collected tax payments. Corruption enables intersecting forms of discrimination, exclusion, unfairness, prejudice and inequality.”
The report concludes with recommendations for companies to identify the risks and interlinkages between human rights and corruption in their own business, and to ensure that human rights considerations are integrated into internal anti-corruption measures. Per the UNWG, businesses should:
- “Conduct human rights due diligence systematically, as part of their responsibilities under the Guiding Principles;
- Consider how addressing corruption risks and business-related human rights abuses with a risk-to-people approach rather than a risk-to-business approach could help drive a corporate integrity culture;
- Recognize that going beyond anti-corruption compliance and implementing human rights commitments is sound risk management and policy;
- Ensure that commitments to responsible business conduct and business ethics, which exist in corporate reports and partner/supplier contracts, are reinforced by policies, procedures and training focused on, and setting clear expectations regarding, preventing corruption and respecting human rights;
- Ensure that during the pandemic, and in its aftermath, human rights due diligence is used to identify and prevent human rights abuses, and develop tools and mitigation measures to prevent a recurrence of harm.”
Alongside the launch of the report, the UNWG held two live panel discussions to explore the topics raised in the report. Some of the key takeaways from the discussion “Beyond compliance – Drilling down on anti-corruption and human rights due diligence processes” are shared below.
- Bridge governance gaps between policies and actual performance on the ground: Nicole Bigby, Partner and General Counsel – EMEA and Asia, Bryan Cave Leighton Paisner LLP, highlighted an “accountability gap” between corporate policies on human rights and their actual performance on these issues and pointed to the need for companies to go beyond basic regulatory compliance. As human rights impacts often materialize over time, companies are often “judged at the point of exit, not at the point of entry” and so need to ensure that risk mitigation systems are strongly embedded from the start; she also pointed out that this is an area where mandatory human rights due diligence laws can help shape company actions on human rights throughout the lifecycle of their projects and operations.
- Build human rights due diligence into existing compliance and risk mitigation mechanisms to embed them more deeply in the company: Jonathan Drimmer, Partner, Litigation Department, Paul Hastings LLP, suggested that companies just starting out on human rights due diligence may benefit from building their human rights management approach into existing compliance systems, like anti-bribery and anti-money laundering risk management systems; he noted that due diligence and compliance mechanisms often complement and can mutually inform one another. While there are key differences in the way that companies should assess and address human rights risks (risk to people) and compliance risks (risk to the business), he noted that existing company infrastructure around anti-corruption compliance can be leveraged to embed human rights into core business processes. Matthias Thorns, Deputy Secretary-General, International Organisation of Employers, underscored the need for companies to create feedback channels between different functions with visibility into potential corruption and human rights risks, for example by creating cross-functional working groups and building buy-in from senior leadership.
- Recognize the interlinkages and root causes of corruption and human rights abuses to address issues collectively and holistically: Matthias Thorns observed that the synergies that exist between the anti-corruption and human rights agendas mean that companies “can create a vision beyond just compliance” to address human rights concerns at the same time as corruption; for example, if a factory manager bribes an on-site labour inspector, the company needs to treat this as both a corruption issue and a human rights issue. Crucially, he emphasized that corruption and human rights abuses are both systemic issues; in order to solve these problems at the root companies need to work collectively, including with peers, governments, investors, civil society and other stakeholders, to tackle landscape-level challenges. Nicola Bonucci, Managing Director, Investigations & Compliance, Paul Hastings (Europe) LLP, also emphasized that there are many convergences between human rights due diligence and anti-corruption due diligence, and that the most sophisticated companies recognize that these issues must be approached holistically.
- Policymakers should ensure that regulatory approaches to address human rights due diligence and anti-corruption are actionable by companies: Nicola Bonucci emphasized the growing consensus towards regulation for human rights due diligence, mirroring the trajectory of the global movement towards anti-corruption regulation several decades ago. However, he also pointed out that human rights can be a challenging area for businesses to fully address in the same way as anti-corruption, as it can be difficult to define the boundaries of human rights issues. He suggested that policymakers could help mitigate this challenge by focusing on requirements for specific priority areas, as these may require different approaches to due diligence. Nicole Bigby also highlighted that implementing laws as an entry point for human rights due diligence is necessary—but not sufficient alone to address human rights risks. If there is “cultural dissonance” within a company about the responsibility to respect human rights, then its policies will not be effective at protecting human rights.
Nicole Bigby, Partner and General Counsel – EMEA and Asia, Bryan Cave Leighton Paisner LLP, “Beyond compliance – Drilling down on anti-corruption and human rights due diligence processes” panel (23 July 2020)