At a time when a number of States are working to accelerate negotiations of international trade and investment agreements, an open-ended intergovernmental working group (IGWG) is working to draft a legally binding instrument (a transnational corporate accountability treaty) to address the legal imbalance between the rights and obligations of global businesses and those of the communities in which they work.
International investment agreements grant transnational corporations unprecedented rights. These agreements expand and strengthen property rights and allow investors to challenge States for perceived violations of their “right” to future profits. In the name of protecting investor rights, governments can be forced to pay millions of dollars to foreign corporations for enacting or enforcing laws or regulations that serve vital public interests, such as protecting workers or preventing environmental harm.
In the face of these inequalities, a transnational corporate accountability treaty (TNC treaty) would help to ensure that businesses operating internationally not only have rights as investors, but also have corresponding obligations to not harm the local communities in which they operate. Such a treaty, as a legally binding instrument, could protect individuals and communities vulnerable to corporate human rights violations. Among many important issues, the treaty could advance the rights to information, participation, and justice, which are essential access rights for environmental democracy. The treaty could also address the disproportionately negative impacts faced by women. Further, it could encourage companies to conduct stronger due diligence in assessing the impacts of their projects and provide a means to hold them responsible when they don’t.
In early March 2018, the IGWG updated the Human Rights Council 37th Session on the treaty’s progress and provided States an opportunity to weigh in.
Ensuring the rights to participation, information, and justice
One important way of rebalancing unmitigated transnational corporate power is eliminating investor-state dispute settlement (ISDS) provisions, which grant corporations the right to sue governments when public interest laws may impose additional costs on the company. By constraining a state’s ability to govern in the public interest, ISDS impedes the ability of states to protect human rights.
Once a case is underway, the process of ISDS also obstructs the rights of access to information, participation, and justice. Details of ISDS proceedings are often withheld from the public, and when government chooses to settle a case outside of court, the terms of the settlement are often kept secret. ISDS procedures do not allow third parties to intervene as full parties in arbitration proceedings, even when the outcome of the case will affect their lives and livelihoods. The public also has no opportunity to appeal decisions made by ISDS arbitration panels and has little or no access to legal remedies in domestic court.
The TNC treaty has the potential to affirm access rights in the context of business activities generally and with respect to ISDS in particular.
Integrating a feminist approach
Corporate activities can create or exacerbate gender discrimination in the communities in which they operate. For example, women and girls face gender-based violence connected to extractive industries. In addition, the negative impacts of company operations, including loss of access to land and livelihoods, water contamination, and worsened working conditions, disproportionately impact women. Women human rights defenders working on corporate accountability often face gender-specific forms of violence and threats as well.
To empower women and end the exacerbated discrimination that women face as a result of TNC human rights violations, the drafting process for the treaty must comprehensively integrate a feminist perspective that addresses the specific impact of corporate abuse on women.
CIEL has worked as part of a coalition united under the hashtag #Feminists4BindingTreaty to highlight the gender-specific dimensions of corporate human rights abuses. The coalition has been a powerful force throughout the negotiations and has made significant progress in helping states understand why it is important to include a gender perspective in the treaty.
Determining due diligence and liability for TNCs
In the current draft of the treaty, there are two elements — due diligence and liability — that could have a huge impact on how TNCs are held accountable for violating human rights obligations. Depending on how these two provisions are defined, they can strengthen a TNC’s accountability for violating human rights obligations.
Due diligence requires a company to assess the potential human rights impacts of its activities and to put procedures in place to avoid or address these impacts. While this requirement improves the company’s and the public’s awareness of the possible harms that can result from business activities, it does not require companies to change their behavior. But by imposing liability on companies that fail to conduct due diligence, the treaty could significantly strengthen the effectiveness of these procedures.
The negotiation process continues
We expect a draft of the transnational corporate accountability treaty by this summer, which will then inform negotiations at the fourth session of the intergovernmental working group in October. CIEL looks forward to continuing to participate in the TNC treaty’s development to ensure it has the strongest possible human rights and environmental protections.
By Olivia Bonner, Geneva-based intern
Originally posted on April 6, 2018