Voluntary Measures: Overreliance on MSIs in the U.S. National Action Plan on Responsible Business Conduct

This blog is designed to provoke thoughts and encourage debate about the function, effectiveness and role of MSIs. The views expressed here are the personal views of the author and are not the institutional positions or views of MSI Integrity. We welcome critiques and responses on the ideas below. If you would like to post a long-form response, or contribute your own piece, please contact us at: info@msi-integrity.org

On December 17, 2016 the United States Government released its first National Action Plan on Responsible Business Conduct. The United States is the 12th country to publish a national action plan (NAP) in response to encouragement from the United Nations that governments develop such policy strategies outlining state commitments to protect human rights against business-related harms. In a time of considerable uncertainty around the future of corporate regulation in the United States, the NAP has the potential to establish resilient policies for responsible business conduct under the incoming Trump Administration. Unfortunately, it fails to fully realize this potential.

The U.S. NAP provides a useful overview of existing laws, programs, and mechanisms that have been developed to address the adverse human rights impacts of business. However, as noted by several commentators, the NAP does not propose many new commitments. Despite a general absence of substantive new actions, one of the NAP’s ten target outcomes is to “enhance the value of multi-stakeholder initiatives.” Multi-stakeholder initiatives (MSIs) are voluntary collaborations between businesses, civil society and other stakeholders that often set standards around issues relevant to human rights. While it is admirable that the U.S. Government seeks to improve MSIs, it is troubling that voluntary measures have been made so central to the NAP without acknowledgement of the significant limitations these instruments have in protecting and promoting human rights. The U.S. Government must critically reflect on the shortcomings of the MSIs it is already involved in and understand that MSIs are not substitutes for legally-enforceable corporate regulatory frameworks.

The Limitations of Multi-Stakeholder Initiatives

The U.S. Government has been a leading proponent of MSIs for over fifteen years  – founding, funding and participating in initiatives such as the Open Government Partnership, Voluntary Principles on Security and Human Rights, and, more recently, the Extractive Industries Transparency Initiative amongst others. But while MSIs have emerged as a central pillar of the U.S. Government’s responsible business strategy, there is little evidence that these initiatives have been successful in protecting and promoting human rights.

MSIs cannot provide a comprehensive strategy for the protection of human rights given their voluntary and patchwork nature. For one, MSIs are only founded in sectors where there is sufficient willingness to do so, leaving some industries – often those buried deep in the supply chain – comparatively under-regulated. Secondly, MSIs can be selective in the human rights issues they choose to address within a given industry, often focusing on just one or two hot-button issues such as child labor or conflict. Finally, MSIs are only as strong as their memberships, and often only attract a small proportion of companies in a given sector. Taken together, this means that an MSI’s capacity to protect and promote human rights is dependent on the participation and willingness of member companies to comply with initiative standards.

Consider the rights violations committed over the Dakota Access crude oil pipeline at Standing Rock last year. This would have appeared to be the ideal opportunity for intervention by the Voluntary Principles on Security and Human Rights, a U.S.-supported initiative designed to protect the human rights of individuals interacting with security providers at mining, oil, and gas project sites. However, the oil pipeline’s owners are not signatories of the Voluntary Principles, making them exempt from the initiative’s standards. While the Voluntary Principles involve many leading extractive companies, such as Shell and Chevron, it leaves out innumerable smaller or state-based mining, oil and gas businesses, thus allowing for a regulatory gap. Even if the pipeline’s owners had chosen to participate in the initiative, it is unclear whether the Voluntary Principles would have mitigated the human rights abuses at Standing Rock given that they have, according to some human rights organizations, “vague standards,” and “weak or non-existent assurance mechanisms.”

Such is to show that even if MSIs were comprehensively dispersed across industries, actors, and issue areas, initiatives would still need to be designed in such a way to ensure that they effectively hold their members accountable. For example, the United Nations Guiding Principles on Business and Human Rights call for MSIs to include grievance mechanisms for affected parties to raise concerns about breaches of initiative commitments. However, neither the Voluntary Principles on Security and Human Rights nor the Extractive Industries Transparency Initiative –  both referenced as key initiatives in the NAP – provide any access to remedy. As United Nations Special Rapporteur Maina Kiai notes in his fourth and final report to the United Nations General Assembly, voluntary initiatives that lack critical accountability mechanisms, such as legally binding standards and access to effective remedies, may even worsen workers’ welfare.

Next Steps: How to save the NAP?

It is concerning that the U.S. Government has made the promotion of MSIs so central to its national action plan without taking clear steps to determine whether its two decades of involvement in MSIs has actually led to the protection of human rights on the ground. Nevertheless, it is possible for the United States to improve the initiatives it participates in without discarding them entirely. MSI Integrity’s research indicates that if MSIs are to be relied upon for protecting human rights and used as tools to hold companies to account, they must, for example: (a) offer rigorous monitoring and evaluation frameworks to assess member compliance with initiative standards; (b) meaningfully involve affected communities in their design and operation; (c) provide access to remedy; and (d) maintain the ability to sanction members for non-compliance.* It is encouraging that the NAP has outlined a commitment to promote the development of key performance indicators such as these as part of its efforts to enhance the value of MSIs. Now it is essential that the U.S. Government honestly assess the shortcomings of the initiatives it already participates in using these very metrics.

Ultimately, while the United States may want to leverage MSIs to achieve its responsible business goals, voluntary initiatives should not be considered substitutes for legally-binding and enforceable corporate regulatory mechanisms. Unlike MSIs, the U.S. Government has the power to mandate responsible business practices through enforceable law, such as with the Trade Facilitation and Trade Enforcement Act of 2015 which bans the importation of goods produced with forced labor. While the NAP could have outlined a roadmap for more such binding mechanisms, it relies heavily on voluntary measures instead. MSIs may be useful supplements to law when they meet certain essential elements of good practice. However, the U.S. Government has an obligation to investigate the effectiveness of these initiatives before devoting additional resources to their promotion.

If the United States continues to endorse MSIs without first assessing whether these initiatives have been effective in protecting human rights, the United States risks disempowering workers and communities on the ground and leaving these populations more vulnerable to rights abuse. In this way, the U.S. NAP’s blanket support for MSIs, including those that lack the most essential accountability safeguards, is not only a missed opportunity but also a potential barrier to the advancement of the business and human rights movement.

*In the coming weeks, MSI Integrity will release a guide on the Essential Elements of MSI Design detailing MSI features that are necessary, but insufficient, for initiatives to operate effectively and protect human rights.

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