Key Insights

MSIs have been influential as human rights tools, but that influence, along with their credibility, is waning.

OUR INSIGHTS

The stamp of legitimacy conferred upon MSIs by powerful international institutions, governments, and civil society organizations (CSOs), epitomized by the inclusion of MSIs in the UN Guiding Principles on Business and Human Rights (UNGPs), gave MSIs significant influence in the field of business and human rights as a prominent response to major governance gaps.

Over the past decade, however, growing skepticism among some civil society actors has resulted in a retreat from MSIs, allowing corporate interests to increasingly dominate the field. Instead of being a response to civil society campaigns, MSIs are now often the target of advocacy for their specific failings and concerning practices. This suggests that the influence of MSIs is eroding. In its place is a resurgence in advocacy for public regulation and more accountable private mechanisms, such as the Worker-driven Social Responsibility initiatives, that may better bridge the governance gaps that MSIs had promised to fill.

KEY FINDINGS AND OBSERVATIONS

1. MSIs emerged as a default response in the Global North to many of the major global business-related human rights crises in the 1990s and 2000s. They were often developed with support from Global North governments or large international NGOs. They were often perceived as a compromise between no regulation and mandatory public regulation.
2. MSIs have enjoyed broad influence in the business and human rights landscape. The support of powerful governments, multinational corporations, and CSOs legitimized MSIs as good practice. Prominent CSOs called for the creation of MSIs and helped found them in many industries. Subsequently, the inclusion of MSIs in the remedial pillar of the UNGPs crystalized them as a “field” that became increasingly institutionalized and well-resourced.
3. MSIs have influenced government action and policy. For example, at least 16 of the 23 National Action Plans that countries have published as part of their efforts to implement the UNGPs include reference to MSIs.
   • MSIs have become part of corporate engagement with human rights. Over 10,000 companies participate in MSIs, including 13 of the 20 world’s largest companies by revenue.
   • MSIs are part of international frameworks and governance. Individual MSIs have been endorsed by international finance institutions and the UN. They are key reference points for company human rights rating agencies.
   • MSIs influence public behavior and perceptions. Many consumers rely on the labels bestowed by MSIs to make ethical consumption decisions.
4. Over the last few years, growing questions and concerns by those who have closely monitored or participated in MSIs have bolstered long-standing civil society criticisms of MSIs:
   • A number of CSOs have withdrawn from individual MSIs over concerns about inaction, ineffectiveness, and the resources they consume.
   • There are now well-documented instances in which MSIs have failed to detect or remedy human rights abuses. Complaints have been brought against multiple MSIs in OECD National Contact Points.
   • The term “MSIs,” which did not have a negative connotation when it was used in the UNGPs, has become increasingly connotative of a corporate-oriented model or a model that is not focused on accountability. “Worker-driven” models have emerged and specifically contrast themselves with MSIs. Such models are growing and may displace MSIs in the medium to long term.
5. There is growing recognition of the need for government regulation in a “smart mix” of tools to promote business respect for human rights, rather than an overreliance on voluntary measures. There has been a resurgence in advocacy for public regulation both domestically and internationally, on the premise that voluntary initiatives are not sufficient.

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MSIs entrench corporate power by failing to include rights holders and preventing civil society from acting as an agent of change.

OUR INSIGHTS

Decision-making on pro-human rights reform issues in MSIs is often slow, incremental, and resource-intensive. The perceived legitimacy of MSIs stems from the fact that they include stakeholders—civil society or rights holders—who might act as watchdogs over corporations and drive pro-human rights reforms. However, in practice, MSIs generally exclude rights holders from governance and implementation processes, relying instead on civil society organizations (CSOs) to counterbalance corporate power. Yet, CSOs are ill-equipped to challenge corporate power within MSI governance due, in part, to their resource constraints, broad diversity, and the fact that they generally need to win the support of corporations to make key decisions. This is exacerbated by the process-oriented nature of MSIs, which favors the status quo and absorbs CSOs’ limited resources.

Despite the rhetoric of multi-stakeholderism, in reality, MSIs entrench power in favor of corporations—the entities they seek to regulate. MSIs are thus poorly situated to fulfill “regulatory” functions, such as upholding compliance with standards or achieving accountability outcomes.

KEY FINDINGS AND OBSERVATIONS

1. MSIs have largely excluded rights holders from their governing bodies and implementation. In particular:
   • Only 13% of MSIs include affected populations in their governing bodies, and none have a majority of rights holders on their boards.
   • The monitoring, compliance, and remedial mechanisms established by MSIs are not centered on rights holders, and the few MSIs that measure their impacts on rights holders do so through top-down studies that do not empower rights holders in their design or implementation.
   • CSOs participating in MSIs are not equipped or resourced to act as proxies for rights holders, and their presence does not necessarily mean that those most affected by the relevant issue are represented.
2. MSIs are premised on CSOs’ ability to perform oversight of their operations. However, MSI decision-making rules and practices, along with differences in resources and capacity between CSOs and other stakeholders, can compromise CSOs’ engagement as equal and effective partners. In particular:
   • Multi-stakeholder decision-making rules can favor the status quo by requiring CSOs and their pro-reform allies to garner majority or consensus support for major pro-human rights reforms.
   • “Civil society” is a broad constituency often without any clearly defined boundaries. The different backgrounds, agendas, and interests of CSOs can require them to expend considerable effort to arrive at a common strategy and approach within the constituency.
   • MSIs are highly technocratic, and effective participation in their governance requires significant financial and technical resources, as well as investments of time. Yet CSOs—particularly those from the Global South—are often poorly resourced compared to their corporate or government constituents. MSIs thus risk reproducing pre-existing Global North/South and corporate/community power imbalances.
   • The process-oriented nature of MSIs also opens them up to delays by those resisting change, which further depletes limited CSO resources and may stymie efforts for reform.
3. Decision-making on pro-human rights reform issues in MSIs is often slow, incremental, and resource-intensive.

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Many MSIs adopt narrow or weak standards that overlook the root causes of abuse or risk creating a misperception that they are being effectively addressed.

OUR INSIGHTS

Although MSIs influence industry practices, when closely analyzed from a human rights perspective, certain standards that MSIs adopt are often far from what is considered to be “best practice.” An MSI’s standards may be too weak to lead to change, may fail to address key human rights issues, or may impose burdens primarily on Global South companies or governments without considering the leverage and responsibilities of Global North actors. Thus, even if a company or government complies with all of an MSI’s standards, critical human rights abuses may continue. Yet few external actors—whether policymakers or consumers—have the time or expertise necessary to analyze an MSI’s scope or limitations.

Rather than transforming the underlying conditions or practices that lead to abuse, MSIs thus risk embedding certain business-as-usual practices and creating a misperception that they are effectively addressing human rights concerns when they are not.

KEY FINDINGS AND OBSERVATIONS

1. MSIs can draw attention away from the full extent of human rights abuses in an industry or create a misperception that they are being adequately addressed:
   • Some MSI names, mission statements, or communication strategies may suggest that they address a broader range of issues than their standards actually do. Over three-quarters of MSIs in our MSI Database use “sustainable,” “fair,” “equitable,” or “responsible” in their name or mission. However, uncovering their true scope requires expertise and close reading of technical documents that many individuals are unlikely to undertake. For example:
     • Although many supply-chain MSIs claim to address the economic well-being of workers, an analysis of eight prominent supply-chain MSIs reveals that—while more than half of the initiatives loosely encourage or mention providing workers with a living or fair wage—only one initiative actually requires that workers are paid a living wage within a fixed timeframe.
     • An analysis of seven prominent certification MSIs reveals that “certified” products like coffee, wood, or palm oil might still be tainted with serious human rights violations that occur beyond the initial point of production, such as when goods are washed, packaged, shipped, and at other later points in the supply chain.
   • Other MSIs have an explicitly narrow focus, but do little to acknowledge the wider human rights problems in an industry beyond those covered by their standards. Some external stakeholders believe that those initiatives may crowd-out or obscure those wider human rights issues.
2. MSIs sometimes create standards that are too weak to ensure that the underlying issue is actually being addressed. This tends to happen through: (1) setting standards that are weaker than international human rights norms or are otherwise regressive; (2) using ambiguous language; (3) relying on processes that lack sufficient detail or rigor to ensure they lead to the protection of rights; (4) making key standards “optional”; and (5) only applying to selective aspects of a business operation or supply chain.
3. Many MSIs have set standards that assign responsibility to less-resourced actors—mainly producers and entities in the Global South—while ignoring more powerful actors in the Global North. These MSIs risk failing to address the underlying drivers of abuse. For example:
   • MSIs that include governments as members have not placed obligations on “home states” (the countries where multinational companies are headquartered) despite the relative power that Global North governments have over those companies. Instead, they focus on placing obligations on “host state” governments, who tend to have less economic or political power over foreign corporations.
   • Supply-chain MSIs do not tend to address the purchasing practices of powerful brands that drive human rights abuses along the supply chain, such as setting below-cost prices or demanding short lead times. For example, only two of the eight prominent supply-chain MSIs we analyzed explicitly recognize the need for responsible purchasing practices. Nor do MSIs adequately disclose the extent of abuses found in brands’ supply chains.
   • Placing certification costs and burdens exclusively on producers might lead employers to cut costs by creating unsafe working conditions or engaging in harmful labor practices. It also risks excluding the world’s poorest farmers and factories from participating in MSIs, thereby exacerbating economic inequality.

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MSIs employ inadequate methods to detect human rights abuses and uphold standards.

OUR INSIGHTS

MSIs put considerable emphasis on the standards that they set, but have not developed effective mechanisms for detecting abuses, enforcing compliance with those standards, or transparently disclosing levels of compliance. Despite the emergence of models that enable rights holders to legally enforce MSIs’ standards or to be actively engaged in monitoring companies for abuses, MSIs have not adopted them. By focusing on setting standards without adequately ensuring if members are following those standards, MSIs risk providing companies and governments with powerful reputational benefits despite the persistence of rights abuses.

KEY FINDINGS AND OBSERVATIONS

1. MSIs employ inadequate methods to detect human rights abuses. Other MSIs have an explicitly narrow focus, but do little to acknowledge the wider human rights problems in an industry beyond those covered by their standards. MSIs that monitor their members’ compliance with MSI standards do so through top-down professionalized audits. These approaches do not take into account the power imbalances between rights holders and MSI members that may inhibit rights holders from reporting abuse or prevent auditors from detecting abuse. For example:
   • In reviewing the monitoring procedures of the 10 newest and 10 oldest MSIs, we found that no single MSI had procedural requirements that address the spectrum of issues rights holders may face when attempting to speak out about abuses, such as offering protection against reprisals or ensuring evaluators speak local languages/use an independent interpreter.
   • The majority of MSIs do not require any unannounced audits or spot checks.
   • There are now many well-documented failures to detect violations that have resulted in harm or abuse, such as audited factories collapsing or catching fire, or the documentation of severe labor abuses in farms or factories that have been certified by MSIs. Yet, despite the increasing evidence about the inherent limitations of MSI approaches to monitoring, most MSIs have not evolved to adopt rights holder-centric models.
2. MSIs have weak measures for upholding or enforcing compliance.
   • MSIs respond to issues of serious non-compliance through their boards or certification bodies. If a member disputes a report or allegation of non-compliance, the processes become vulnerable to delay and indecision. There are many examples of this. In worst-case scenarios, members withdraw if they do not want to remediate or address abuses.
   • Models have emerged that enable rights holders to enforce compliance, for example by requiring members to put legally-binding terms reflecting an initiative’s standards in their contracts. However, MSIs have not adopted them and thus compliance remains dependent on the willingness of members to meet MSI standards.
3. Many MSIs are not transparent about the extent of member compliance with standards. Basic information is often unavailable or incomplete. For example:
   • Only half of the MSIs we reviewed that monitor compliance publish monitoring reports online, and the quality of these reports varies considerably.
   • Only 11 out of the 18 MSIs with the power to discipline members provide a list of members who have been suspended or expelled.

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MSIs are not designed to provide rights holders with access to effective remedy.

OUR INSIGHTS

MSIs do not provide access to effective remedies for victims of human rights violations. Nearly all of the MSI grievance mechanisms we studied fail to meet internationally recognized criteria for access to effective remedy. Many MSIs either do not have a grievance mechanism or, if one exists, they have not developed procedures that meet internationally accepted minimum practices or engender trust among rights holders. By failing to provide rights holders with a route to an effective grievance mechanism, MSIs are not only allowing governance gaps to persist, but are also failing to serve the needs of rights holders and to recognize that harmed rights holders ought to be a privileged stakeholder in human rights interventions.

KEY FINDINGS AND OBSERVATIONS

1. Almost a third of MSIs do not have a grievance mechanism, and therefore, do not provide individuals or communities with the ability to seek remedy for rights violations. Most of those MSIs instead require that their members have a grievance mechanism where rights holders can file complaints, but do not set sufficient standards to ensure that those mechanisms are designed or functioning effectively to enable rights holders to seek remedies.
2. Nearly all of the MSI grievance mechanisms we studied fail to meet internationally recognized criteria for access to effective remedy.
   • Not accessible: Nearly all MSIs lack adequate procedures to ensure rights holders know about and can use the complaint process. For example, only 10 MSIs provide complaint information online in a language other than English, and even fewer MSIs offer translation or require that their members publicize the existence of the MSI’s grievance mechanism to rights holders.
   • Not predictable: Most mechanisms either do not set out a clear procedure and time frame for each stage of the complaints process, or clarify and provide transparency about possible outcomes.
   • Not equitable: Many grievance procedures are complex and confusing to understand, yet most MSIs place little emphasis on equitable access to information, advice and expertise. Only 6 MSIs formally offer any form of assistance to complainants, such as making an advocate available or assisting with complaint preparation.
   • Not transparent: Only 7 out of the 27 MSIs with a grievance mechanism disclose specific outcomes of complaints received, and only 4 MSIs publish the overall number of complaints filed or resolved.
   • Not rights-compatible: Few MSIs appear to have the power or practice of providing meaningful remedies directly to rights holders. Only 3 MSIs have procedures that specifically require input from harmed rights holders when determining the appropriate remedy.
   • Not a source of continuous learning: Complaints from rights holders contain important information about an MSI’s weaknesses, impacts, and areas of improvement. However, only 8 MSIs have procedures requiring an analysis of complaints, and only 4 have published any form of analysis.
3. MSI grievance mechanisms are not rights holder-centric: MSI grievance procedures indicate most MSIs do not view harmed rights holders as a privileged stakeholder, or see their role as championing access to effective remedy.

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There is little evidence that MSIs are meaningfully protecting rights holders or closing governance gaps.

OUR INSIGHTS

If MSIs are going to be relied upon by policymakers, businesses, donors, and civil society organizations as tools for closing governance gaps or achieving rights protection, then there ought to be evidence that they are fit for that purpose. Nearly three decades since the first MSIs emerged, such evidence remains scant. While MSIs often promote themselves as successful, without an understanding of their actual impacts on rights holders, they risk creating the perception that the issues and abuses associated with an industry, country, or company have been addressed—when in fact they may still be occurring.

KEY FINDINGS AND OBSERVATIONS

1. Unsubstantiated claims or no evidence: The majority of the 20 oldest MSIs in our MSI Database either claim to have broad positive impacts without sharing any evidence to back their assertions or do not have public information about their impacts on rights holders.
2. Little focus on measuring their impacts on rights holders: Only 5 of the 20 oldest MSIs have conducted any direct measurement of their impacts on rights holders in the last five years.
3. Conflating scale with impact: Evidence of the impact of government transparency MSIs is sparse. MSIs often promote their growth or the scale of their operations—such as the number of factories that have been audited or countries that they cover—as evidence of their success or “impact,” rather than reflect on whether they are achieving their desired impact on people or the planet.
4. Weak methodologies: Even among the MSIs that do measure impact, their studies are of variable quality and do not allow general conclusions to be drawn about their impact on rights holders. These MSIs often fail to approach impact measurement in a systematic or overarching manner, to examine if they are having any unintended consequences, or to recognize rights holders as partners in impact measurement.
5. Limited evidence of impact on rights holder: Overall, the systematic reviews of the evidence of MSIs’ impacts by academics and other researchers point to sparse, limited, and often context-specific benefits for rights holders—if any. In particular:
   • A growing body of research questions the effectiveness of voluntary standards and auditing in improving labor conditions.
   • Evidence of the impact of government transparency MSIs is sparse.
   • The majority of external research into MSIs is focused on agricultural or forestry MSIs and these studies point to mixed and inconclusive results.

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