Corporations’ Duty to Promote Human Rights Includes Fighting Corruption

In the last two decades, anti-corruption has become a global norm, as the OECD and the United Nations have made clear in adopting anti-corruption conventions. As a result, combatting corruption in international business has joined upholding human and labor rights and protecting the environment as major aims of  corporate social responsibility. Currently, however, anti-corruption responsibilities only require corporations to think about avoiding direct involvement in a corrupt transaction. In an article forthcoming in the Wisconsin Law Review, I argue that corporations’ responsibility to combat corruption extends beyond a duty to avoid paying bribes and requires corporations to fight corruption in the regions where their supply chains are located. I reach this conclusion by integrating a corporation’s responsibility to combat corruption into its responsibility to respect human rights.

The United Nations Guiding Principles on Business and Human Rights obligate corporations to respect human rights by  identifying and then mitigating and preventing any harm that their operations (including their supply chain) inflict on such rights.. I argue that the impact of corruption on current and potential human rights violations should be included in this due diligence process. The recent Rana Plaza tragedy illustrates why.

Rana Plaza was a building that housed garment factories in Bangladesh. In April 2013, the building collapsed and caused the death of over 1,100 workers. Subsequent reports showed that the building was several stories higher than allowed by the building code, was made with substandard materials, and was designed for retail space rather than factories. Although management should not have allowed workers into the building on that day, corruption clearly played a significant role in permitting Rana Plaza to remain open and pass inspections while in violation of building codes.

To avoid another Rana Plaza tragedy, or any human rights violation, corporations rely heavily on social audits of their suppliers’ factories. The audits are intended to identify safety violations in the factories and other violations of corporations’ human rights policies. Unfortunately, in countries with high levels of corruption, there are reports of bribery leading to only cursory audits and passing grades for non-compliant factories. As this example shows, corruption not only facilitates human rights violations but impedes social initiatives designed to prevent them. It is easy to see that corporations must often combat corruption to respect human rights.

A new responsibility to fight corruption emerges from businesses’ dual responsibility to combat corruption and respect human rights, with an emphasis on local corruption. The moral justification for and scope of this new responsibility are based on political philosopher Iris Marion Young’s concept of a social connection model of responsibility.

According to Young, corporations are responsible for any injustice that results from a larger system within which they operate and benefit – even if they do not directly cause the injustice. . For example, corporate buyers in the ready-made garment industry are connected to an unjust system that causes human rights violations because corruption allows local factories to avoid labor laws, safety regulations, and building codes. Everyone that participates in that particular system bears some level of responsibility for the unjust outcome it generates.

This means that corporations have a political responsibility to engage in public discourse and work with others to improve the system. Because this is a responsibility shared with others that participate in the system causing the injustice, the necessary interventions are collective rather than individual. This places an obligation on corporations to help raise awareness of the negative impacts of corruption in a specific region or industry, build the capacity of various actors in society to resist corruption, and implement solutions. In short, business has an obligation help build the political will to fight corruption at the local level.

Corporations cannot successfully uphold human rights without addressing corruption that affects their supply chain. This requires a new understanding of what it means for corporations to combat corruption. They cannot focus only on avoiding legal liability, and business and human rights initiatives should not treat corruption as a separate issue.

This post comes to us from Professor David Hess at the University of Michigan’s Ross School of Business. It is based on his recent article, “Business, Corruption, and Human Rights: Towards a New Responsibility for Corporations to Combat Corruption,” available here.