Abstract
Today’s scholarship and policymaking on business and human rights (BHR) urges businesses to better understand their human rights responsibilities and remedy them, when and if abuses do occur. Despite the public discourse about businesses and human rights, the state—as the main duty bearer in international human rights law—plays a fundamental role as the protector and enforcer of human rights obligations. Yet, the existing literature overlooks state involvement as perpetrators of abuse in the corporate context. We develop the term economic complicity to shed light on the state’s role in directly or indirectly abusing human rights within a corporation’s sphere of influence, such as police violence toward nonviolent protesters or granting environmental licenses without adhering to legally required community consultations. We ask: What contributes to the state’s engagement in economic complicity in corporate human rights abuses? We assess hypotheses emergent from the democratic change and development studies literatures with a unique database that includes economic complicity data from Latin America, the Corporations and Human Rights Database (CHRD). This research has important theoretical implications for the business ethics and BHR literatures, as understanding economic complicity highlights the need for business actors to avoid shirking their moral responsibilities to not only ‘do no harm’ but also to protect human rights when they are threatened by the state.
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Notes
Related efforts existed prior to the 2000s but did not mark the groundswell of activity around BHR that we see today (see Olsen, 2023).
The three pillars of the UNGPs, which form the foundation of today’s BHR agenda, are: (1) the state duty to protect human rights; (2) the corporate responsibility to respect human rights; and (3) all actors’ participation in improving victims’ access to remedy for corporate-related abuse.
More recently, global policymakers have been working on creating a binding treaty through the UN on BHR. In 2014, the UN Human Rights Council adopted a resolution to create an open-ended intergovernmental working group (IGWG) on Transnational Corporations and Other Business Enterprises with respect to human rights. The group’s mandate is to elaborate an international legally binding instrument for such organizations. As of 2021, there is now a third revised draft which has lost momentum and support by states as the process advances. For a more detailed account of the current treaty effort see: https://www.bhrrc.org/en/big-issues/binding-treaty/.
The ‘sphere of influence’ allows scholars and practitioners to suggest that business’ human rights responsibilities include the impacts to which they contribute and, more broadly, to those over whom it may have some leverage and thus an ability to influence. With this logic, businesses are held responsible for the actions of its business network, supply chains, but also the actions of the state. In this way, this concept is related to the corporate complicity, as we explain later in the article.
Olsen, T.D. ‘Corporations and Human Rights Database, 2006–2014’ See: www.bhrlab.com.
The pilot project data for Latin America was originally funded by the University of Denver’s PROF Fund, Faculty Research Fund, Internationalization Grant; Dr. Olsen and Dr. Payne (University of Oxford) also received support from British Academy. In 2019, Dr. Olsen was awarded a National Science Foundation grant (Award Number #1921229), 2019–2022, ‘Business and Human Rights: Explaining Variation in Justice and Remedy for Corporate Human Rights Violations’ that facilitated updating the Latin American portion of the CHRD, creating a global database. See www.bhrlab.com.
Note we are offering only a cursory picture of the race to the bottom as it is broadly undrestood. There is a vast literature on its potential ill effects on labor and environmental protections, though others have found that some factors (e.g., social spending) do not discourage increased foreign direct investment (Hecock and Jepsen, 2013). This literature is too broad to cover in its entirety but interested readers should explore the following references: Jensen (2008), Rudra (2008), and Bartley (2018).
Note differences, however, in other areas such as international economic law, where corporations have been gaining rights at the international level and standing to defend those rights—or be held liable for breaching them—before international bodies, including arbitration tribunals managed by the International Chamber of Commerce.
One of the main obstacles that victims face when litigating cases in the Global North relate to issues of jurisdiction and applicable norms. Courts in the US, for example, have repeatedly dismissed claims filed by victims against multinational courts arguing the legal doctrine of forum non conveniens, or that a court of the country where the abuse took place should hear these claims. The Draft Treaty states that courts should avoid imposing these types of legal obstacles and clarifies that courts of the country where the abuse took place or where the abuse produced effects will have jurisdiction over the claim. See https://www.business-humanrights.org/en/big-issues/binding-treaty/summary-third-revised-draft-of-the-binding-treaty-on-business-and-human-rights/.
Olsen, T.D. ‘Corporations and Human Rights Database, 2006–2014’ UniqueID 101BOC0004. www.bhrlab.com.
State-owned companies fall outside of the spectrum of our analysis but would provide an interesting area of inquiry for future studies.
BHRRC, http://business-humanrights.org/.
Corporations and Human Rights Database, https://www.bhrlab.com/.
One might be concerned that the violations included in the database are unsubstantiated or false. First, the BHRRC, to avoid libel lawsuits, vets information about each incident to ensure its validity prior to posting it on their website. BHRRC employees, based around the globe, rely on reputable news sources with high journalistic integrity. If anything, relying on the BHRRC may be a cause of concern about underreporting, due to their rigorous standards. Second, the CHRD team searched for additional information on each incident, again using only reputable news sources (e.g., LexisNexis Academic), thereby triangulating the violations curated by the BHRRC. Finally, it is important to underscore that such incidents are not made public without risk—human rights advocates and victims are often quite vulnerable, especially in developing countries. In 2021 alone, 358 human rights defenders were murdered in 58 countries (Frontline Defenders, 2021). Moreover, Reporters Without Borders highlight the constant threats, some deadly, journalists face across the globe (Reporters Without Borders, 2022). Those who bring such incidents to light, in other words, often take great risks in doing so. This also suggests that underreporting of incidents is more likely than the reporting of unsubstantiated events. Nevertheless, the BHRRC is recognized as a thorough and valuable source for reports of human rights abuses (Giuliani et al., 2014; Wright, 2008).
Note the total number of allegations (1,227) is different above because Costa Rica was included in the maps; it is excluded here because it was already democratic as of 1970 and thus, is not part of this analysis.
While the ARTT database notes that countries may fall into multiple transition types, it is clear that negotiations lead to shared power whereas a clean break or collapse means the democratic opposition has greater control, post-transition (see Reiter, 2009).
Agricultural exports were used, rather than rents, because WDI does not include calculations for rents for this particular sector.
The calculation for mineral rents include tin, gold, lead, zinc, iron, copper, nickel, silver, bauxite, and phosphate; the calculation for oil only includes crude oil.
We have opted to use the standard 0.05 p-value in our tables, which means that when the p-value is greater than 0.05 there is no discernable effect between the independent and dependent variables and thus, those coefficients are not designated with stars.
The gold standard for statistical analysis is randomized controlled trials (RCTs) in which populations are assigned to treatment or control groups randomly, but many important empirical phenomena, like the one at hand, cannot be randomized. Thus, we utilize other well-established techniques to ensure our findings are robust. First, we have carefully constructed, to date, the most comprehensive sample of economic complicity in Latin America to avoid concerns of bias. Second, we include a lagged dependent variable in each of our models to control for possible heteroskedasticity, or when the variation of a variable is inconsistent over time; the Hausman specification test results indicate our variables of interest are exogenous. Finally, we also include theoretically driven controls that are known to shape the relationships we seek to explore, thus avoiding omitted variable bias. These standard techniques help ensure that our empirical results are robust and make valuable contributions to the questions at hand.
Human rights due diligence is comprised of four steps, as described by the UN Working Group on Business and Human Rights: (a) Identifying and assessing actual or potential adverse human rights impacts; (b) Integrating findings from impact assessments across relevant company processes and taking appropriate action according to its involvement in the impact; (c) Tracking the effectiveness of measures and processes to address adverse human rights impacts in order to know if they are working; and (d) Communicating on how impacts are being addressed and showing stakeholders – in particular affected stakeholders – that there are adequate policies and processes in place.
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Acknowledgements
The authors would like to thank the section editor, David Hess, and the anonymous reviewers for their constructive feedback. The manuscript is much stronger as a result. We would also like to thank Dr. Jack Strauss for his willingness to consult with us as the project took shape. Finally, the authors would like to thank Pontificia Universidad Javeriana for supporting the writing process through the international travel fund. Any shortcomings in the paper are, of course, our own.
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Olsen, T.D., Bernal-Bermúdez, L. Uncovering Economic Complicity: Explaining State-Led Human Rights Abuses in the Corporate Context. J Bus Ethics 189, 35–54 (2024). https://doi.org/10.1007/s10551-022-05280-1
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DOI: https://doi.org/10.1007/s10551-022-05280-1