Author: Teddy Ostrow

by Zobaida Khan

After the devastating and avoidable collapse of the Rana Plaza in 2013 in Bangladesh, two innovative multi-stakeholder initiatives (MSIs) emerged: the Alliance for Bangladesh Worker Safety (“Alliance”) and the Bangladesh Accord on Building and Fire Safety (“Accord”).

They engaged a diverse group of regulatory actors (local suppliers/producers, foreign buyers, the International Labor Organization, the national government, and activist networks), regulatory mechanisms (for operating, financing and monitoring safety inspections), and detailed standards or rules in order to ensure factory safety for garment workers. Moving beyond voluntary codes of conduct and “Do No Harm” policies, these MSIs introduced significant institutional changes in corporate responsibility. They included stronger sourcing policy, improved safety of factory premises, and public reporting of corporate compliance. Indeed, unlike traditional international standard-setting MSIs, the Accord’s terms were legally binding between brands and trade unions. This is the first time an MSI allowed legal enforcement of its provisions and obligations in a transnational labor regulatory setting. Although the terms of both programs have ended, these MSIs attempted to address the regulatory deficiencies created or overlooked by the national government and the supplier factories.

Yet, with continued evidence of a race to the bottom for wages and working conditions in supplier factories, brands offering cut-rate sourcing prices, and recent reports on the costs to the jobs, health and work entitlements of millions of laborers due to COVID-19-related supply contract cancellations, academic and policy debates are focusing on MSIs’ structural and functional effectiveness and the possibility of restructuring these to deliver social justice oriented results:

1. How could MSIs be more inclusive in their formation?
2. How could MSIs lead to long-lasting influence on corporate sourcing policies and improvement of work conditions and entitlements?

Although these issues appear separate, I argue that to properly address diverse compliance challenges in supply chains, there needs to be a coherent and connected restructuring of MSIs that both strengthens their participatory mechanisms and influences the transformation of our liberal market system’s dominant business model.

Greater participatory space

While some have argued that MSIs aggravated the post-World War II labor disempowerment process by excluding true representation of labor in their governance, the aforementioned initiatives created participatory governance models in supply chain businesses. Both insisted on unionization and greater participatory space for laborers in supplier factories, promoted strong labor standards in their monitoring processes, or influenced the corporate codes of participating brands. Yet, after years of MSI involvement, shadow unions that are constantly under threat and have slim worker representation are still the norm in garment supply industries. The sourcing brands (some of which are participants in these initiatives) provoke the continuance of these anti-union practices and lack of respect for associational rights through their search for lowest-cost producers/suppliers. Additionally, by relying on ineffective audits and failing to take corrective action when clear violations are detected, some brands incentivize further violations.

More surprisingly, these initiatives precluded any form of collective strategic response from laborers, failing to provide enough space for discussion or information-sharing between different labor representatives working with different suppliers. To make it more complex, in supply chain businesses it is difficult to ensure compliance at the supplier level unless managers of factories formally adopt these standards in their internal management. Therefore, any effort to redesign/rethink the MSI model should incorporate plans for A) effective factory-level unionization; and B) creating more space within the MSI model for laborers to connect themselves with others working with different suppliers and to challenge the initiatives’ governance arrangements that affect them.

Better business model

Although greater participatory space helps to generate collective demands for appropriate labor rights and ultimately leads to institutional strengthening, meaningful and long-term structural change that benefits laborers needs to focus on the possibility of transforming the existing model of doing business. The underlying connection between these issues is obvious: realization of the one depends on the other. For example, if sourcing brands are allowed to shut down production firms abruptly, unilaterally terminate supplier relationships, or source from lowest-cost producers/suppliers, then what would prevent producer/supplier companies from searching for less regulated markets and “better” deals? If the buyer-dictated supply contracts continue to put downward price pressure on the suppliers, what would prevent the suppliers from minimizing or falsifying their social compliance efforts? My own data-based research showed that elaborate safety and social compliance demands from brands, declining sourcing prices, and increase of garment laborers’ wages in Bangladesh are seriously affecting or undermining factory managers’ social compliance willingness and capacity.

Therefore, only by connecting the fairness in supplier relationships with a model of employment where labor has ownership and/or greater participatory space, would it be possible to create the potential to support and sustain labor rights for a longer period of time. In other words, MSIs regulating supply chains need to focus on transitioning towards a better business model (by participating brands of MSIs) and a better employment model (at producer/supplier companies). I present here some relevant ideas:

1. Fairness in supplier relationships should be maintained both at the time of negotiation of the supply contract and during and after the supply process. While a steady supplier relationship, minimum benchmark of labor rights, and participatory, transparent sourcing and pricing policies would positively impact factory level wages, work conditions, and entitlements, a similar effort is necessary for the post-supply monitoring phase. Reportedly, rather than conducting rigorous assessments, sourcing brands often rely on simple box-checking and calculating how much money was spent on monitoring to prepare social audits or sustainability reports on the social, economic, and environmental impacts of corporate operation. Such ineffective, non-transparent audits exacerbate the sourcing challenges that result from the asymmetric power of brands over suppliers. In its place, independent post-supply monitoring should include a formal process for mapping and reaching out to the suppliers and receiving feedback on sourcing policies, the nature of the business relationship, and barriers to social compliance. For example, it might be useful for audits to analyze whether and how sourcing prices incentivize standards compliance. Some of the expenses incurred to conduct these reputation-focuses sustainability reports or social audits would be better used to undertake these alternatives.
2. With deep power imbalances between capital and labor, it is time to rethink how the participating stakeholders at MSIs could influence the existing business model at the producer/supplier level. While corporate structures until now have focused mainly on increasing shareholder value, an important discussion point is the ownership of companies by laborers in different forms: laborers having a share in capital, profit-sharing, and finally, a voice in decision-making. These alternative employment models, such as cooperatives and ESOPs, mostly operate to benefit direct employees of corporations and not all workers in the supply chain. In order to replicate these models in the factories of supply chains, some crucial questions need further research: if supplier companies can avoid unionization by forming shadow unions or by maintaining two different books relating to wages, work conditions, and indirect sourcing policies, how could it be ensured that corporate structures actually accommodate meaningful representation of laborers? If the export-focused national policies continue to prefer underfunded labor ministries and to sideline enforcement of codified labor laws, how could the worker representation/ownership MSIs insist on actually be implemented at the supplier companies?

Although there is no quick-fix solution, only with a collective effort that connects the brands’ (participating in the MSIs) and factories’ business and employment models and participatory strategies would it be possible to boost social compliance prospects in labor-intensive supply industries. Despite significant limitations, if the safety initiatives could introduce the concept of safety, i.e. the workers’ right to refuse unsafe work or to work in dangerous conditions, and engage powerful brands in accepting joint, mandatory responsibility in financing and overseeing factory inspections, there is ample space for future MSIs to utilize positive sourcing influences as a means to redesign the existing ways of doing business.

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Zobaida Khan advises on the research projects at Chicago-based Corporate Accountability Lab (CAL). At CAL, she designed an independent research programme that focused on designing a worker-focused corporate responsibility framework from the perspective of the lessons from Bangladesh’s garment sector. She completed her doctoral studies in law from McGill University, Canada. Her research interests are international trade, sustainable development, and transnational labour law and policy. She has published in leading journals and wrote policy papers. 

This is the eighth contribution in a joint blog series by the International Human Rights Clinic and MSI Integrity. The series will critically examine the role and value of MSIs in business and human rights; it coincides with a new report, Not Fit-For-Purpose, which compiles experience and insights over the last decade and explores cross-cutting trends and lessons learned about MSIs, as a field, from a human rights perspective. Read other blogs in the series here.

by Bennett Freeman

MSI Integrity’s Not Fit-For-Purpose report is the culmination of a decade of examination of 40 standard-setting multi-stakeholder initiatives (MSIs) focused on corporate accountability and human rights. Its release in July 2020, coincidentally but significantly, comes amid the epic disruption of a global pandemic and a historic movement for racial equality. Both COVID-19 and Black Lives Matter have separately and together exposed (literally) fatal weaknesses of national and global governance; both have challenged governments and businesses to confront inequality and injustice. At a time when corporate accountability and government responsibility are under critical scrutiny, it is useful to revisit what Not-Fit-for Purpose calls “the grand experiment of multi-stakeholder initiatives.”

Despite what the report argues, however, I believe that it is premature to declare MSIs no longer “fit-for-purpose.” We must be clear that the “grand experiment” was indeed bold but not quite so grand. The aim was to supplement, and not supplant, the role of governments where governments could not, or would not, act to protect human rights connected to corporate misconduct. It was an essential start, a beginning but not an end that would be complemented and reinforced by law and regulation when possible. We must not only revisit but revitalize MSIs at a time when, ironically, multi-stakeholder governance models are setting standards across the policy arena beyond the human rights field where they first gained significant influence.

The number and type of MSIs across issues, industries and regions—and their different forms and missions—make it difficult to make broad generalizations that address them all. But I offer a perspective based on my work over the last two decades with four flagship MSIs: as the leader of the process that produced the Voluntary Principles on Security and Human Rights (VPSHR); as a co-founder and longtime board member of the Global Network Initiative (GNI); and as an early board member of the Fair Labor Association (FLA) and the Extractive Industries Transparency Initiative (EITI).

Each of these MSIs was an imperfect response to issues that seemed intractable in the late 1990s and early 2000s. None of these MSIs were envisioned to be more than an initial baseline from which to hold companies accountable. Each was an innovative approach that stretched what was then considered possible. None attempted to achieve the ideal. Each convened varying configurations of stakeholders—most of which had never met let alone together—to listen and learn, to build trust and forge consensus sufficient to establish standards and processes for corporate conduct that would partly fill governance gaps. None aimed to replace governments or to represent civil society beyond the NGOs dedicated to their cause. Each emanated from Global North country initiatives to address the conduct of multinational corporations mostly in Global South countries—with inadequate participation of Global South civil society and human rights in their founding and initial development. None doubted that progress would be made mostly by the persistent struggles of civil society and local communities, workers and trade unions, human rights defenders and rights holders around the world.

Each of these MSIs had significant, ambitious but clearly defined, limited purposes (in chronological order of their founding): the FLA to improve workers’ rights in global apparel and (later) agricultural supply chains; the VPSHR to ensure human rights safeguards for oil and mining company security arrangements with military, police and private providers in conflict zones and in proximity to local indigenous communities; EITI to empower civil society to hold extractive companies and host country governments accountable for the transparent use of oil, gas and mineral resources; GNI to ensure transparent respect for freedom of expression and the right to privacy for internet users in the face of government censorship and surveillance demands. All have brought together companies and NGOs—together with investors through EITI and GNI as well as academic experts through GNI—to demonstrate corporate accountability but also when necessary to mitigate human rights abuses (and corruption in the case of EITI) which governments perpetuate or fail to prevent.

Each of these MSIs strengthen corporate accountability—and fill gaps in government responsibility—through their standards and processes as well as their multi-stakeholder engagement. The FLA’s Code, Principles and Benchmarks promote freedom of association and collective bargaining while the initiative overall works to diminish forced labor and child labor, amplify worker voices and enhance access to remedy across those supply chains—all in the face of weak enforcement of labor laws by many governments. The VPSHR attempts to protect rights, safeguard communities and save lives in those conflict zones as well as in indigenous and other local communities—and to improve the conduct of host country governments and security forces. The EITI Standard requires companies and governments alike to disclose revenue payments delivered and received—in order to diminish corruption and enhance governance of natural resources in some countries. The GNI Principles and Implementation Guidelines support expression and privacy online in response to government demands—and make clear to governments the lines that its participating companies will not cross or at least not without transparency with their users.

All four have fallen well short of perfect consistency. It is challenging to demonstrate direct positive impact or even correlation between commitments and outcomes—especially to demonstrate rights not violated (or lives saved) even more than rights respected and protected. But these MSIs have highly developed accountability mechanisms that compel signatory companies (plus governments in the case of EITI) to demonstrate their implementation efforts to their constituent stakeholder representatives—including human rights NGOs and other civil society organizations—in order to determine compliance.

In my view, the efficacy and credibility of each of these MSIs have been undermined to varying extents by flaws in their original conception and subsequent evolution: the FLA by the lack of participation by trade unions in its governance and on its board; the VPSHR by inadequate external transparency and accountability; EITI by periodic harassment by governments of civil society anti-corruption activists working inside or alongside its multi-stakeholder groups within countries; GNI by the perception that it promotes freedom of expression and the right to privacy online generally when its principles, implementation guidelines and assessment process focus significantly but exclusively on company responses to government censorship and surveillance demands and not on other related freedom of expression issues such as content moderation and privacy issues arising from company use of customer data.

These four MSIs (and others) should closely examine the key findings and observations and the six cross-cutting insights put forward by Not Fit-for-Purpose. I believe that the original goals of these four MSIs are as important and urgent as ever. But each must be self-critical enough to confront their weaknesses, as well as self-confident enough to consolidate their strengths. They must be more transparent and accountable as the wave of mandatory disclosure of human rights due diligence approaches and as human rights benchmarking initiatives gain even greater traction. They must become more inclusive of Global South civil society and companies alike. And even as they remain primarily focused on avoiding and mitigating corporate misconduct, they must challenge companies’ home and host country governments alike to protect human rights and labor rights, human rights defenders and civil society activists. It was encouraging that GNI made a May 2020 public statement opposing network disruptions during the Covid-19 pandemic and to oppose shutdowns in Belarus, India and Ethiopia in recent months. Also encouraging was a July 2020 joint statement from VPSHR corporate and NGO members urging respect for human rights “following weeks of demonstrations around the world condemning police brutality and systemic racism present in public security institutions.”

Beginning two decades ago, MSIs became cornerstones of the new global architecture to protect human rights and worker rights alongside trade unions, NGOs and local communities. A decade ago that structure found its floor—not its ceiling—in the UN Guiding Principles on Business and Human Rights. While companies must protect and promote as well as respect human rights, greater pressure must be also placed on states—both home and host country governments of multinationals and their supply chain partners—to protect human rights. We need to use every tool: legislation and regulation; litigation and non-judicial remedy; civil society activism and corporate advocacy; trade unions and Worker-driven Social Responsibility initiatives; pressure from responsible investors and financial institutions. MSIs can become fitter-for-purpose if both their attributes and limitations are more clearly understood and appreciated.

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Bennett Freeman led the development of the Voluntary Principles on Security and Human Rights (VPSHR) and served on the board of the Fair Labor Association (FLA), both as U.S. Deputy Assistant Secretary of State for Democracy, Human Rights and Labor in 1999-2000. He served on the first board of the Extractive Industries Transparency Initiative (EITI) from 2006-09, representing Oxfam while also serving on the board of Oxfam America. As Senior Vice President of Calvert Investments, he co-founded the Global Network Initiative (GNI) in 2006-08 and served as Board Secretary from 2010-20.

This is the seventh contribution in a joint blog series by the International Human Rights Clinic and MSI Integrity. The series will critically examine the role and value of MSIs in business and human rights; it coincides with a new report, Not Fit-For-Purpose, which compiles experience and insights over the last decade and explores cross-cutting trends and lessons learned about MSIs, as a field, from a human rights perspective. Read other blogs in the series here.

by Judy Gearhart

The phenomenon of multi-stakeholder initiatives (MSIs) has spread rapidly across the globe since the 1990s, with governments and multinational corporations (MNCs) alike promoting them as the new solution to the global governance gap even before they were fully road-tested. Civil society organizations (CSOs) saw them as a way to engage MNCs on the environmental and social problems exacerbated by global trade. MNCs saw a means to inoculate their global reputations from the risks of doing business in places where human rights scandals were greater than at home. Just as MNC staff required vaccines against tropical diseases before departing, the corporation needed to guard against the risk of coming into contact with the plagues of corrupt governments and abusive employers.

Yet MSIs, at least those focused on the impact of global supply chains, were only set up to address the symptoms, not the cause of these plagues. Most failed to recognize how MNCs were actually fueling corruption and employer abuse by constantly demanding lower prices and faster production times. Thus, the global governance gap grew wider as MNCs diversified their supply chains and effectively played one producer country against the other. When the scandals multiplied and children were found making clothing for Wal-Mart in Honduras or soccer balls for adidas and Nike in Pakistan, global brands sought help from MSIs.

The majority of MSIs are set up as public charities and their goals express the intent to protect a public good. This includes MSIs working with public sector institutions to improve accountability such as the Extractive Industries Transparency Initiative (EITI), those covering workers’ rights such as Social Accountability International or the Fair Labor Association, and environmentally focused groups such as Rainforest Alliance and Marine Stewardship Council. What nearly all of them have in common is a mission to address a lack of regulation or the weak legal protections of national resources, the environment, or workers. Yet MSIs focused on supply-chain monitoring—as distinct from MSIs engaging the public sector—have been largely silent or disengaged on advocacy for legal reforms and rule of law, often turning a blind eye as member MNCs’ suppliers pursue multi-year legal battles against whistle-blowers or worker organizers.

The recently released MSI Integrity report, Not Fit for Purpose, tracks the uptake of MSIs as a reference point for addressing gaps in global governance. MSI Integrity cites how the UN Guiding Principles (UNGPs) on Business and Human Rights extended legitimacy to MSIs by directly referencing them, and the 23 countries that have referred to MSIs in their National Action Plans for implementing the UNGPs. Yet most MSIs are a weak stopgap for failing legal protections. They are also poor exemplars of good governance given the extent to which they have eschewed the key elements of transparency, accountability, and participation.

Not Fit for Purpose could have distinguished more among distinct MSI approaches, e.g. supply-chain versus public governance-focused MSIs, and those treating symptoms through risk mitigation among suppliers versus Fairtrade’s work to gain more direct market access for small farmers. The report is very helpful though, especially in identifying patterns and quantifying how the majority of MSIs fall short on models of good governance:

• Transparency: Less than one-third (as of July 20, 2019) of MSIs reviewed published monitoring reports and suspension decisions.
• Accountability: 25% of those reviewed do not publicly prohibit a conflict of interest in grievance handling and only four in forty provide a complete list of complaints, their status, and outcomes.
• Participation: Only 13% of MSIs include affected populations in their governing bodies, and none have a majority of rights holders on their boards.

Given the extent to which they have become embedded in multilateral and government efforts, MSIs may be around for a long time. So it’s worth calling out reforms needed. MSIs should be seen as a first-wave experiment in partially addressing the global governance gap. To see them as a cure, however, is to lose sight of the need to advance legal reforms and address the ways MNCs continue to create the very problems the supply-chain MSIs purport to fix.

Potentially the greatest contribution of MSIs has been to get MNCs to acknowledge they needed to address the problems in their supply chains and to reveal (through multiple failures) how ineffective voluntary compliance programs are. Also, the idea that solutions to intractable problems are more effective when crafted by people with diverse perspectives is still generally a good one—provided everyone has an equal voice.

Few rights holders have a seat at the table, however, because most MSIs are global in scope and they use CSOs as stand-in stakeholders. This is the fundamental flaw of MSIs: powerful actors are engaged in their design without ever being asked to cede any power, sit down with those affected, or submit to legal requirements. Rather than serve to improve rule of law and good governance, MSIs establish internal grievance systems that rarely include a wholly independent, external review, and remediation is decided under cover of confidentiality agreements. The result is the workers or communities the MSI aims to protect are marginalized from problem-solving and unable to build power.

MSIs’ failure to address the power imbalance between rights holders and MNCs has fueled growing demands for Worker-driven Social Responsibility (WSR) or enforceable brand agreements (EBAs)—models that are in effect new forms of collective bargaining designed to negotiate a contractual agreement between global brands and workers in their supply chain. These agreements have demonstrated an almost immediate positive impact, improving factory safety in the case of the Accord for Fire and Building Safety in Bangladesh or wages in the case of the Coalition for Immokalee Workers, and dramatically improved access to remedy and effective grievance handling for the workers covered by them. Although they include MNCs and workers’ organizations, these programs should not be confused with the MSIs discussed above. These are programs based on a binding agreement that was negotiated, much in the way collective bargaining agreements are negotiated. They are designed to address problems, secure benefits, and implement solutions identified by and developed with workers. Although these programs cannot replace the need for legally protected trade union representation, they are profoundly different from MSIs. Supply-chain MSIs work with MNCs to develop scalable, global supply-chain coverage—a design approach that makes meaningful participation by workers and other rights holders virtually impossible.

This raises the question as to how WSR or EBAs can scale up and benefit more people, while still ensuring the affected people are at the center of the solution. Driving to a global scale does not need to be the main goal, however, because the impact of these programs goes beyond workers directly benefiting to advance the pillars of good governance. First, they ensure there is a ground game; rights holders are able to join together to advance their views and are supported by basic legal protections for trade union organizers and other civil society freedoms. Second, they focus on rights holders’ access to legal remedy, both locally so that rights holders can speak out without fear of being sued and contractually so that MNCs don’t walk away at the first sign of a challenge. Third, there needs to be transparency so that participating MNCs are recognized for their commitment and their impacts are shared widely, including with local authorities, so they can be used to help set new standards of practice for other rights holders seeking remedy.

In short, if we are going to close the global governance gap, we need to support initiatives that advance effective legal remedies and models of good governance. Anything less is a distraction, like a painkiller that works by numbing your senses rather than alleviating the pain. The global governance gap needs a cure that addresses the root cause of the problem.

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Judy Gearhart is a visiting scholar at the Accountability Research Center at American University and an adjunct professor at Columbia University. Previously she served nine years as the executive director at the International Labor Rights Forum and twelve as the programs director at Social Accountability International.

This is the sixth contribution in a joint blog series by the International Human Rights Clinic and MSI Integrity. The series will critically examine the role and value of MSIs in business and human rights; it coincides with a new report, Not Fit-For-Purpose, which compiles experience and insights over the last decade and explores cross-cutting trends and lessons learned about MSIs, as a field, from a human rights perspective. Read other blogs in the series here.

by Rebecca Tweedie and Tyler Giannini

The opening blog in this series laid out two different paths MSIs could have taken:

The allure [of MSIs] was (and still is) obvious. If we bring the right players together, they can learn from each other and solve the given problem by setting up a democratic institution that can prevent future abuses and sanction violators, and governments will not have to pass hard laws and unnecessary regulations. The potential flaws were (and remain) just as obvious—the power imbalances amongst the players are acute and asking industry to voluntarily give up power and self-regulate is a fool’s errand that puts the fox in charge of the chicken coop.

The differences between the institutions that emerge from the two paths may not be as obvious as one may think. The first path describes MSIs as democratic governing bodies where different stakeholders with adequate representation come to agreement on reasonable and effective standards, and these standards are upheld because the governed have bought into the system in exchange for representation, the reputational benefits of membership, and the sanction of competitors who do not play by the rules. The second path still includes a governing body with multiple stakeholders, but the representation is skewed to favor one party (repeatedly industry actors), the standards the institution creates are weak, or its sanctions are ineffective or rarely used. The institutions down each of these roads look quite similar at first glance because there is a “representative” governing body in both, but the second is far less democratic. In the end, the persistent power imbalances in the second have resulted in MSIs that allow corporate actors to call the shots and reap the reputational benefits of multi-stakeholderism.

In hindsight, the road to corporate capture was predictable. MSIs’ flaws were baked in from the outset, and it comes down to power—the relative power of the different stakeholders and the power embedded in the MSIs as institutions themselves. MSIs were created without mechanisms to ensure meaningful power sharing or restraint of the outsized power of industry, all but ensuring that MSIs would not fulfill their promise to prevent and remedy human rights abuses and hold corporations to account.

It is easier to analyze them now, having watched these power dynamics play out over the years, and to think about how and why the fox has gained the upper hand. The experience with corporate capture and the inability to constrain corporate power can be compared to other democratic endeavors. For example, the trajectory of MSIs resembles that of failed democratic governments. In How Democracies Die by Steven Levitsky and Daniel Ziblatt, the authors examine how democratic regimes give way to autocracies and authoritarianism. In other words, when power concentrates in the hands of one or a few. They are particularly concerned with the “electoral road” to authoritarianism, which occurs when elected individuals undermine democracy through engaging in what appear to be legitimate legal processes. These processes can be “dangerously deceptive” as they are not a classic coup d’etat and are often cloaked in calls to “improve” the system. There is “no single moment” that “crosses the line” when the system is captured; instead, a “veneer” of democracy often remains while governance actually erodes in a way that is “almost imperceptible.” Unfortunately, this story has some eerily familiar warning signs for the field of MSIs. The electoral road to authoritarianism is one where a would-be autocrat comes to power through legitimate means, often with the aid of institutional elites who choose to overlook their autocratic tendencies, or believe the autocrat can be controlled by working with them. Once in charge, the autocrat is either checked by robust democratic norms, or they consolidate power, “rewriting the rules of politics to tilt the playing field against their opponents. The tragic paradox of the electoral route to authoritarianism is that democracy’s assassins use the very institutions of democracy—gradually, subtly, and even legally—to kill it.” (See How Democracies Die at 5–8.)

What is the parallel here? We can imagine this sentence: “The tragic paradox of MSIs is that human rights’ assassins use the very institutions of human rights—gradually, subtly, and even legally—to kill them.” Instead of a politician with authoritarian tendencies, we have corporations, often with dubious human rights records who are invited to participate in standard-setting bodies and accountability mechanisms. The theory goes that to be effective MSIs require broad buy-in from industry, giving other stakeholders reason to include these bad actors. But the experience of MSIs indicates that once at the table, industry can and does use the institution to push for weaker standards and then evade compliance with human rights. Without sufficient power to control industry, the institutions end up serving corporate interests.

The fox guarding the chicken coop analogy also helps us better understand why corporate capture is so predictable. As Levitsky and Ziblatt point out, established democracies have guardrails strong enough to reign in powerful threats. The ability for MSIs to weather bad actors is more in doubt than that of democracies, however. Many MSIs were born out of human rights crises, during which perpetrators of human rights abuses—certain brands and at times entire industries—were invited to participate in the creation of these new institutions. If there already were a coop and you invited the fox to guard it, we’d worry. But the case of MSIs is even more troubling: here, the foxes were not just invited to guard the coop, but they were invited to design and build it.

As a description of the power dynamics of many MSIs, the fox analogy suggests that MSIs may not only fail to be rights holder-centric; they may not even be rights-centric. The right to remedy is an established human right, but as MSI Integrity’s report, Not Fit-For-Purpose, makes clear, they have not been successful in providing remedies for harms. If these institutions do not uphold such fundamental rights like that to a remedy, then the power wielded by industry in MSIs may have undermined human rights in a more profound way than solely through the exclusion of rights holders. They may truly be institutions by and for corporations rather than human rights institutions.

Is this path of corporate capture inevitable? No, but preventing severe forms of corporate capture require some major adjustments to the power structures in this regulatory space—from mindset shifts to better gatekeeping of those with poor human rights records, to placing primary decision-making power in the hands of non-corporates.

Let’s play with the fox analogy a bit more. We see three alternative paths for building institutions that create better human rights outcomes.

First, the foxes become vegetarian.

Second, the farmer does its job.

Third, the chickens are in charge.

Vegetarian Foxes

This requires a clear and major mindset shift. There would need to be a change in culture—where the new generation of foxes are vegetarian. This is a normative shift away from the sole primacy of profit-maximization to a more human-centered capitalism. There is a need for a human-centered capitalism that mitigates the worst dimensions of the foxes and the structural issues that come with foxes dominating leadership and decision-making.

But asking foxes to become vegetarian is no small order. And even if they did for a while, could you trust them not to relapse? Indeed, no matter what one thinks of capitalism, it has at least some predatory elements. Even the most well-meaning vegetarian fox is going to be hard-pressed to survive out there in the wild when all its competition is eating meat. Such a fundamental change in mindset would need to be supported by new laws and policies that prevent the breakdown of voluntary shifts away from profit-maximization.

It may be more realistic to strive to get rid of rabid foxes. In this variation on option one, unless the group of foxes is willing to isolate and control its worst offenders based on fundamental human rights, no governing institution is likely to make it as an effective human rights body. Levitsky and Zablatt argue that one of the most important roles in a functioning democracy is the gatekeeping function of political parties. The gatekeepers in our MSI analogy are the industry bloc (the group of foxes). They must step up and embrace the need for remedies, for example, if the regulating institution is to be called a human rights institution.

The Farmer Steps Up

This, simply put, is government oversight. A more powerful player oversees and punishes bad actors and makes sure the system is sustainable and equitable. But it is hard to rely on government oversight in this realm of voluntary initiatives, especially as MSIs most often have been set up because the government has not been willing or able to act. The power imbalances at work in MSIs, however, highlight the need for government involvement and the dangers of abdicating such oversight to private governance.

Community Governance

The rise of worker-driven social responsibility and other models designed by rights holders and affected communities demonstrates the potential of private governance when there is a real shift in power among the stakeholders. The limits of the fox analogy are most acute here, as the helplessness of chickens does not connote the strength and agency of workers and communities, and the advantages they have in designing governing institutions that best fit the industry and the rights—their rights—that are at stake. The success of worker-driven consortiums makes this abundantly clear. Especially in the absence of government oversight, these models—where the fox does not build nor guard the coop—offer the most long-term promise for human rights protection.

We know that MSIs may not be perceived as authoritarian or undemocratic, and that many of our colleagues contest the extent of corporate capture in the field. For us, however, this is what makes authoritarianism a good analogue. The power that industry wields in MSIs can be subtle and seem reasonable. And yet, or precisely because of these qualities, there are few effective tools with which to check it. Indeed, it is this insidiousness that makes us wary of the fox.

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Rebecca Tweedie, Harvard Law School JD’21, is a former intern at MSI Integrity.

Tyler Giannini is the board treasurer and co-founder of MSI Integrity. He is a Clinical Professor of Law and directs the Human Rights Program and International Human Rights Clinic at Harvard Law School.

This is the fifth contribution in a joint blog series by the International Human Rights Clinic and MSI Integrity. The series will critically examine the role and value of MSIs in business and human rights; it coincides with a new report, Not Fit-For-Purpose, which compiles experience and insights over the last decade and explores cross-cutting trends and lessons learned about MSIs, as a field, from a human rights perspective. Read other blogs in the series here.