Rethinking MSIs: Time to Bury MSIs?—Not so Fast

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.

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.

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