Challenging corporate impunity: First draft of a treaty on corporate human rights obligations

The UN Human Rights Council is negotiating a treaty to end corporate impunity for human rights violations. The open-ended intergovernmental working group on “transnational corporations and other business enterprises with respect to human rights” completed its fourth round of negotiations in October, where they discussed the so-called “Zero Draft” of a treaty on transnational corporations, or “TNC Treaty.” This first official draft of the treaty aims to hold transnational corporations civilly, administratively, and criminally liable for human rights abuses.

Too often, when transnational corporations commit human rights abuses, there are few (if any) ways to hold them accountable, especially if those violations occur when the company is operating abroad. That’s why countries are banding together to create binding human rights obligations for corporations through the TNC Treaty.

What is the Zero Draft of the TNC Treaty?

Four years ago, the Human Rights Council adopted Resolution 26/9, which established an open-ended intergovernmental working group (IGWG) to start developing a legally binding TNC Treaty. After four years of debates and negotiations, the Ecuadorian chair of the IGWG released the first official draft.

The Zero Draft aims to close accountability gaps and provide access to justice for people who have suffered human rights abuses carried out by transnational corporations. These companies would have to conduct a due diligence analysis of all their business activities in countries that ratify the convention. Then, countries would be required to investigate all human rights violations, ensuring the right of victims, individually or as a group, to have access to justice and to adequate, timely, and effective remedies.

Unfortunately, there was little consensus on the Zero Draft. Although some countries participated constructively in the negotiations, some major players like the European Union refused to engage in substantive discussions.

Room for progress: Weaknesses of the Zero Draft

The Zero Draft has the potential to address conflicts between countries’ obligations under trade and investment agreements and their commitments to human rights. However, the draft does not confirm that human rights obligations should take priority over international trade and investment law — a key step toward protecting against corporate human rights violations.

Instead, it requires trade agreements to limit their impacts on human rights as much as possible. The Zero Draft attempts to balance the asymmetry between the “rights” and obligations of businesses by establishing legal consequences for human rights violations in Article 13. However, this provision does not clarify how human rights bodies would contribute to the process of reforming international investment and trade agreements. Several States, such as Bolivia, Indonesia, and the Holy See, called for a new balance between human rights and trade, allowing investments to happen on a level playing field.

However, even a clause that gives primacy to human rights over trade and investment obligations will not eliminate the fundamental problems that remain as long as investor-state dispute settlement (ISDS) is available to companies. ISDS is a provision in many free trade agreements around the world that allows companies to sue governments when they pass public-interest laws that affect the company’s profits. ISDS would undermine countries’ ability to hold transnational corporations accountable for human rights violations they commit abroad and to ensure access to justice by victims of corporate human rights abuses — the central goal of the TNC treaty — because it remove disputes from domestic jurisdiction.

In addition to the concerns surrounding ISDS, it is unclear to what extent the treaty would apply to state-owned enterprises or a state’s economic activities.

The gender perspective

Trade and investment agreements are linked to increasing inequalities in society, across countries, between the rich and poor, and between women and men. From loss of land, to lack of access to food and clean water, to exclusion from decision-making, to sexual violence and intimidation, unsustainable business practices affect women and girls disproportionately and deepen existing gender inequalities.

With the #Feminists4BindingTreaty coalition, CIEL has worked to ensure that the treaty addresses these disproportionate impacts of corporate activities on women. It is essential to recognize and remove the multiple and intersecting barriers to women’s access to justice in the context of human rights violations.

Under that lens, the Zero Draft must include stronger considerations for the lived realities of women and girls. Integrating a gender justice approach into the treaty means acknowledging and addressing how businesses have different, disproportionate, or unanticipated impacts on women and gender non-conforming people. Three elements are crucial to ensuring a meaningful inclusion of a gender perspective in the treaty: mandatory gender impact assessments of business activities, gender-sensitive justice and remedy mechanisms, and protections for women human rights defenders.

A big step

The Zero Draft represents a momentous step toward the end of corporate impunity.

While the European Union failed to support this negotiation process, numerous countries, including Iraq, Namibia, and South Africa, have encouraged the approach taken by the Zero Draft.

Lara Fornabaio, CIEL intern

By Lara Fornabaio, Geneva-based intern

Originally posted on December 20, 2018