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September 1, 2006 3:00 am

Global companies 'keener to avoid rights scandals'

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Scandals linking global companies with human rights abuses have triggered a rush by businesses to find ways to avoid being sucked into similar crises, according to a survey of Fortune 500 companies.

The survey "shows that companies are thinking: 'what do I have to do not to [have a similar experience]?", according to John Ruggie, the United Nations special representative for business and human rights, who commissioned the poll.

It found that 91 per cent of the transnational companies that responded said they had management practices in place "regarding the human rights implications of [their] operations". Mr Ruggie argued that a similar survey five years ago would not have yielded comparable results.

Yet only 46 per cent of companies had experienced a "significant human rights issue", according to the survey, obtained by the Financial Times and due for publication this month.

Mr Ruggie, a professor of international relations at Harvard University, was appointed last year by Kofi Annan, the UN secretary-general, to clarify standards of corporate responsibility on human rights. He stepped in after years of bitter wrangling over such benchmarks between business and non-governmental groups.

Perhaps surprisingly, non-governmental organisations are the most important "external stakeholders" for companies on human rights issues, with 91 per cent of companies liaising with such groups. Only 54 per cent discussed human rights with governments.

Two-thirds of companies in mining and other extractive industries had experienced human rights problems, the highest sector-specific score, reflecting high-profile incidents in this sector in recent years, for instance in Burma and the Democratic Republic of Congo.

The survey of the world's largest 500 companies by revenue drew only 102 responses, but Mr Ruggie described the result as "a relatively good response rate".

Mr Ruggie, who spoke in Berlin this week at the Hertie School of Governance, a public policy university, said: "The human rights policies [revealed in the survey] are more robust than people give [companies] credit for."

The findings, to be part of Mr Ruggie's final report next March, are likely to fuel already existing concerns among NGOs that theUN envoy will not recommend tough, legally based human rights standards for companies.

In an interim report published in February, Mr Ruggie rejected as unhelpful a set of UN "norms" on human rights and business, proposed by a UN sub-commission and backed by many NGOs.

Irene Khan, Amnesty International general secretary, said at the time she was concerned that Mr Ruggie was "underestimating the need for binding legal principles".

The types of voluntary policies highlighted by the new survey have been criticised by NGOs in the past as failing to deliver firm action on the ground against abuses. Mr Ruggie reassured NGOs his report would focus on clarifying legal benchmarks, such as on "standards of complicity".

"Companies have responsibilities in not, for instance, to employ security forces who then carry out human rights abuses," he said.

Stefano Bertasi, policy director of the Paris-based International Chamber of Commerce, said yesterday his organisation was "very positive" about Mr Ruggie's work to date.

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