Background
During the 1990s and 2000s, the growing role of multinational corporations in major human rights or environmental harms came to the forefront of public awareness. This period included many high-profile exposés of corporate misconduct, from sweatshop scandals to deforestation of indigenous peoples’ lands and internet giants breaching user privacy at the behest of repressive governments. The governments that host these companies’ operations could not—or would not—create or enforce laws to hold them accountable for contributing to such harms. Nor did the home governments of multinational corporations create sufficient incentives or legal regimes to protect against, or hold companies accountable for, human rights abuses that occurred abroad. In the absence of any adequate domestic or international accountability mechanisms, civil society teamed up with companies, and some governments, to establish voluntary frameworks to fill these governance gaps.
A grand experiment in global governance had begun. While corporations have long claimed to be effective at self-regulation, and certain civil society organizations—specifically trade unions and faith-based organizations—had some experience participating in private governance, never before had corporations and civil society so formally stepped into the legal lacuna that governments were expected to fulfill: protecting citizens from human rights abuses. Many MSIs were created at the specific behest of governments, or with their explicit support; indeed, some governments even became members of MSIs, in which civil society and corporations have decision-making power over the nature and quality of governmental reforms. Although an abundance of different types of multi-stakeholderism emerged throughout the 1990s, ranging in function and formality (see What is an MSI?), the most prominent initiatives adopted a regulatory flavor: setting standards that member companies (and sometimes governments) promised to follow, establishing collaborative governance systems premised on including actors with different stakes in the issues, and creating mechanisms to oversee or monitor compliance with their standards.
Without much critical examination into their effectiveness, these standard-setting MSIs quietly grew into widely accepted responses to multinational corporations’ contributions to human rights abuses. By 2010, almost 40 “international standard-setting MSIs”—a governance arrangement that was unheard of less than two decades before—had been launched. Although the MSI is far from a household concept, many people around the world now rely on or interact with them in their daily lives: from factory workers and local communities negatively affected by corporate behavior, to consumers looking at labels on chocolate bars, bags of coffee, and tins of tuna that claim the products are made “sustainably,” “fairly,” or “ethically.” Governments or consumers often equate membership in or certification by MSIs with good practice or evidence that a company is taking reasonable steps to safeguard rights holders. This history of MSIs and their ultimate transformation into institutions with tremendous influence over the norms, policies, resourcing decisions, and overall trajectory of the business and human rights fields are discussed further in Insight 1: Influence.
Despite the growth and prevalence of MSIs, there has been little public examination of whether these experiments in private governance have worked for rights holders. As standard-setters for their industry members, MSIs created a private form of regulation—a new category of regulatory institution—that wields significant influence in the public domain. Yet, unlike governments, they are not appointed by or accountable to the wider public. Nor are they as heavily scrutinized as government bodies, whose decisions and functioning are subject to formal processes of review, transparency, and public debate in democratic societies.
Key questions about MSIs have remained largely unanswered: have these MSIs delivered on their promise to protect human rights? Are MSIs fit to prevent abuses, provide remedies to adversely impacted communities, and hold companies accountable?
Drawing on a decade of research and work around MSIs, this report puts forward our answers to these questions (see Knowledge Base on this page). It critically examines MSIs across a range of elements—their influence, governance, standards, member monitoring and accountability procedures, grievance mechanisms, and impact. While individual MSIs may vary in their characteristics and performance, the report highlights common trends that apply broadly to MSIs as a field to determine whether these grand experiments in private governance are, in fact, delivering human rights protections to rights holders.
To promote a more informed discussion about the often cryptic field, this report clarifies what MSIs actually do, what they have failed to do, and what they must do to undertake the critical task of mitigating business-related human rights abuses. We also hope to spur policymakers, journalists, activists, concerned businesspeople, and civil society organizations to examine the lessons learned from these experiments in multi-stakeholder governance, and to consider what they mean for the ever-increasing involvement of corporations in other forms of national and global governance: from the inclusion of corporations in global negotiations around climate change, to the growth of public-private partnerships to fulfill functions formerly undertaken by governments. What does this experiment with MSIs tell us about what role corporations should play—if any—in the efforts to regulate their conduct?
There is a lot at stake in these lines of inquiry. Given MSIs’ significant influence in and relevance to the human rights field, their ability to close governance gaps is critical to the lives and livelihoods of rights holders across the globe, who desperately need effective solutions to the negative impacts of corporate conduct.
At their most expansive, multi-stakeholder initiatives (MSIs) can be imagined as any collaboration between public and/or private actors—such as corporations, governments, civil society organizations, and rights holders—that have a stake in an issue. The term can mean anything from public-private partnerships in an infrastructure project, to forums for collective learning or dialogue.
However, our work, and this report, focus on a particular type of MSI: those that address or affect human rights by setting transnational standards for corporations or governments. We call these “international standard-setting MSIs.” Well-known examples include Fairtrade International, Rainforest Alliance, Roundtable on Sustainable Palm Oil, Extractive Industries Transparency Initiative, Fair Labor Association and the UN Global Compact. There are 40 standards-setting MSIs in our MSI Database and that are examined in Not Fit-for-Purpose.
International standard-setting MSIs cover a wide range of different industries, issues, and approaches. Some certify factories, farms, or other production sites as meeting their standards; others may be focused on changing government behavior as it intersects with corporate practice; some may set standards for large brands or companies about a specific human rights issue, while others may try to address a wide range of adverse impacts linked to an industry. Although the MSIs are diverse and each is unique in its context and form, as explained further in Our Perspective and Analytical Framework on this page, they share a common architecture that enables them to be broadly compared and critiqued.
Specifically, we define the term “MSI” in this report to mean initiatives that have the following characteristics:
- Multi-stakeholder governance: The initiative either requires more than one stakeholder group (i.e., industry, civil society, government, or rights holders) to be represented in its primary decision-making body; or it describes itself as multi-stakeholder, and in actual practice, has more than one group represented in its primary decision-making body.
- Standard setting: The initiative sets standards for its members to follow.
- Global: The initiative’s standards apply in more than one country.
- Address or affect human rights: The initiative focuses on addressing business or government conduct relating to issues of public concern (human rights, environmental sustainability, government transparency, and corruption, etc.), and has standards that address or affect human rights. Note that this determination is made from a human rights analysis of an MSI’s standards, rather than how it describes or identifies itself.
With some modification and contextualization, the insights in this report will likely translate to many different types of MSIs. However, we have long been interested in international standard-setting MSIs because of their regulatory and formalized nature, the resources and influence they have accrued, and thus their intersection with global governance and international human rights law and practice.
- The development of analytical frameworks and tools to evaluate the effectiveness of MSIs from a human rights perspective.
- Critical research into MSIs, including through direct dialogue with rights holders and MSI members.
- Convening and collating external research and observations into the impact and effectiveness of MSIs.
Our Perspective and Analytical Framework
As a human rights organization, we apply a human rights-based approach to our analysis of MSIs, inquiring about their real or potential impacts and their effectiveness in respecting, protecting, or promoting human rights. This has informed the development of our analytical framework, premised on the development of the MSI Evaluation Tool and related research, which examine the key qualities that make an MSI effective as a human rights instrument.
We see the international human rights framework as a broad ecosystem of rights and responsibilities. We are part of a growing number of organizations that recognize there is an inextricable link between human rights and the environment, on the basis that a healthy environment is integral to the full enjoyment of human rights, including the rights to life, health, food, water, and sanitation. Therefore, our human rights analysis moves fluidly between different international sources of human rights—spanning civil, political, economic, cultural, social and environmental rights—depending on the context of a particular MSI, industry, or issue at hand.
All the MSIs we analyze in the report, and that are in our MSI Database, have standards that address or affect human rights. Indeed, many of these MSIs explicitly champion human rights or describe themselves as human rights instruments, and thus assessing them against their ability to deliver human rights-consistent outcomes is obvious and uncontroversial. For others, human rights may only be one part of their wider mandate, or they may not use the “language” of human rights because of perceived political sensitivities, in which case they may not immediately see the usefulness of being assessed through a human rights lens. For those MSIs, while we should be clear that our insights are focused on the human rights aspects of their operations, we believe that much of our general analysis can be widely applied to other aspects of their operation, and also that they provide important insights about MSIs as tools of global governance more broadly. We therefore encourage these MSIs—as well as those beyond the remit of our study, such as those that do not set standards, or those that operate nationally, rather than internationally—to critically consider whether and how these insights and wider findings apply across their operations.
As an organization, we take a particular interest in how MSIs include, empower, and impact affected communities. This commitment to valuing rights holders is central not only to our mission, but to our analysis and evaluation of MSIs’ effectiveness. Throughout our organizational history, we have consistently raised concerns about the extent to which MSIs include rights holders’ perspectives and serve their needs. This report is therefore centered on an analysis of MSIs that assesses whether they are effectively protecting or benefiting rights holders.
Ultimately, it is our view that if MSIs are not working to protect or benefit rights holders, then they cannot be relied upon to close governance gaps. MSIs’ interventions in ecosystems, industries, and economies are fundamentally connected to the people who live and work in them. It is rights holders’ workplaces, homes, and communities that are at stake. This is true of all the MSIs included in Not Fit-for-Purpose: from those focused on transparency of revenue flows to those that regulate farms and factories. They all affect rights holders in some way. The value and importance of rights holders to MSIs is outlined further in Insight 2: Stakeholder Participation.
We recognize that the task of some MSIs in identifying or conceptualizing their rights holders or affected communities may be more difficult than for other MSIs. Some MSIs address issues that touch immense populations, such as freedom of expression on the internet or the governance of a country’s natural resources, and these MSIs have generally been less directly engaged with rights holders. In such contexts, the most manageable approach—which is central to our analytical framework—may be to focus on “especially affected communities.” For example, rather than focusing on all internet users, an MSI may instead focus on individuals in repressive regimes who may face significant repercussions if their email accounts are shared with the government; or rather than focus on an entire national population who theoretically stands to benefit from natural resource management, an MSI may instead focus on the communities who live near mines or other sites of extraction. In our analysis of MSIs, we strive to be cognizant of especially affected communities and to remain aware of the diversity and plurality of rights holders that are potentially affected by an MSI.
This is not to suggest that we speak for or on behalf of rights holders. We do not. Rather, our analysis, insights, and critiques come from the perspective of considering the effects of MSIs on rights holders, and whether MSIs are designed to benefit the communities and individuals affected by the businesses governed by MSIs.
Our normative and analytical framework for analyzing MSIs has been deeply informed by the criteria for MSI effectiveness that were identified in our development of the MSI Evaluation Tool. We pay particular attention in our research to whether MSIs exhibit the Essential Elements of MSI Design, which are the key qualities relating to the structure of an international standard-setting MSI that we believe are necessary, but not sufficient, for an initiative to be potentially effective as a human rights tool.
The Essential Elements can be categorized into seven core areas. Some of these core areas, or the essential elements within them, directly correspond to the six key insights in this report. For example, the analysis in Insight 5: Remedy and Insight 4: Monitoring & Compliance each respectively evaluates whether MSIs are meeting the Essential Elements found in the “Grievance Mechanism” and “Monitoring” sections of the MSI Evaluation Tool. However, the report is not a strict assessment of all the MSIs against all the indicators in the Tool, which is well beyond the resourcing of our organization (see the discussion of the time and resources involved in conducting comprehensive evaluations of MSIs in the Background of the full report). Rather, the Tool has been used as a framework for examining areas where we have observed consistent patterns or trends. Indeed, some of the insights in this report address issues that extend beyond the design of MSIs—and thus the scope of the MSI Evaluation Tool—such as the insights examining the waning credibility of MSIs or the impacts of MSIs on rights holders (see Insight 1: Influence and Insight 6: Impact).
Underlying the development of the MSI Evaluation Tool was the question of whether there are any indicators of effectiveness that applied universally to MSIs. Answering that question involved extensive multi-year examination of the different types of MSIs, as well as global consultations with MSI members, staff, researchers, policymakers, businesses, CSOs, and affected community members. During this process, and the testing and refinement of the MSI Evaluation Tool, it became clear that many MSI participants and commentators perceived their initiative, or certain types of MSIs in general, as “exceptional” due to the specific complexities of the industry, or the history or operating context of the initiative. Thus, they thought their initiative was unsuitable for assessment against any universal criteria.
However, when analyzed as a field, there is a common architecture that is shared between standard-setting MSIs (as opposed to MSIs that do not set standards, such as those with learning or policy reform objectives). It is this common architecture that enables standard-setting MSIs to be evaluated against a limited set of indicators, as prescribed in the MSI Evaluation Tool. The shared architecture of standard-setting MSIs includes: (1) governance by a multi-stakeholder body; (2) the creation of global standards that members must follow and that include or affect human rights; and (3) the establishment of mechanisms designed to offer assurances that their members are complying with their standards (e.g. monitoring, reporting, or grievance mechanisms).
All the MSIs in our MSI Database, and examined in this report, share this architecture. This is true regardless of the industry, the type of standards, or form of an MSI: from those certifying products to those setting good practices for governments. This is not to suggest that understanding the context, history, or mandate of an MSI is not important (indeed, this is the first step in the MSI Evaluation Tool and methodology), or that there are not any useful considerations for different types of standard-setting MSIs. Rather, we consider that the common architecture that the MSIs in this report employ around governance, standard-setting, and assurance allows for those components—and thus those MSIs—to be broadly evaluated against the same criteria
Underpinning the methodology in the MSI Evaluation Tool is the view that MSIs can and should be evaluated against the information that they publicly disclose about their operations, implementation, and performance. This stems from MSI Integrity’s perspective that—because standard-setting MSIs are ultimately tools of global governance operating in domains that are traditionally occupied by public entities, and specifically offering some assurances to the public that their members follow their standards—MSIs must disclose sufficient information for external actors to assess if they are adequately fulfilling those functions. If they do not, they risk contributing to a form of whitewashing: offering assurances without evidence that issues are being addressed when in reality they are not.
Similarly, because many MSIs operate mechanisms that allow public engagement by, for example, reporting violations or seeking remedies, it is critical that individuals and their advocates can make an informed assessment about the risks and consequences of engagement, as well as track the outcomes that follow. For this reason, “Transparency and Accessibility” is one of the seven core areas of effective design. This means that MSIs necessarily require significant resources to fulfill these transparency expectations and remain accessible, which may create fundamental constraints on the capacity of private initiatives to operate as effective global governance tools; this is explored throughout the report.
To be clear, this is not to suggest that an analysis of the architecture of MSIs, or their public materials, is more valuable than understanding their the on-the-ground impacts—or that one should disregard the internal workings or other qualitative aspects of MSIs, such as the trust that can be built, the unexpected or unintended consequences they may produce, or the industry practices that may change. These qualitative aspects are critical sources of information, and we encourage MSIs to provide more access and visibility into their practices and impacts. However, documenting the qualitative effects and impacts of MSIs is a highly resource-intensive and difficult task, and it is well beyond our capacities to do so for 40 MSIs. Nonetheless, wherever possible and relevant throughout the report, we also cite sources and reflect on our experiences that shed light on these fronts. As explained further in the report, we also invited all MSIs to review our data, and some MSIs used this as an opportunity to share information that was not in the public domain.