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Industry-Specific Multi-Stakeholder Initiatives That Govern Corporate Human Rights Standards: Legitimacy assessments of the Fair Labor Association and the Global Network Initiative

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Abstract

Multi-stakeholder initiatives (MSIs) are increasingly used as a default mechanism to address human rights challenges in a variety of industries. MSI is a designation that covers a broad range of initiatives from best-practice sharing learning platforms (e.g., the UN Global Compact) to certification bodies (e.g., the Forest Stewardship Council) and those targeted at addressing governance gaps (e.g., the Fair Labor Association). Critics contest the legitimacy of the private governance model offered by MSIs. The objective of this paper is (1) to theoretically develop a typology of MSIs, and (2) to empirically analyze the legitimacy of one specific type of MSI, namely industry-specific MSIs. We argue that industry-specific MSIs that set out to govern corporate behavior have great potential to develop legitimacy. We analyze two industry-specific MSIs—the Fair Labor Association and the Global Network Initiative—to get a better understanding of how these MSIs formed, how they define and enforce standards, and how they seek to ensure accountability. Based on these empirical illustrations, we discuss the value of this specific MSI model and draw implications for the democratic legitimacy of private governance mechanisms.

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Notes

  1. Writing in 2008, then United Nations Special Representative for Business and Human Rights, John Ruggie noted that “the root cause of the business and human rights predicament today lies in the governance gaps created by globalization—between the scope and impact of economic forces and actors, and the capacity of societies to manage their adverse consequences” (Ruggie 2008).

  2. See http://www.opensocietyfoundations.org/events/problem-multi-stakeholder-initiatives.

  3. UNGC expectations of business participants: http://www.unglobalcompact.org/HowToParticipate/Business_Participation/index.html.

  4. See: http://sustainability.thomsonreuters.com/2014/03/01/executive-perspective-can-private-politics-replace-government-regulation/.

  5. See Amnesty International’s latest publication entitled: “Injustice incorporated: Corporate abuses and the human right to remedy” (2014). Available at: http://www.amnesty.org/en/library/info/POL30/001/2014/en and Human Rights Watch World Report 2013 USA, 2013 at 29. Also Peter Frankental, “A Business and Human Rights Treaty? We shouldn’t be afraid to frighten the horses” 10 June 2014: http://www.ihrb.org/commentary/guest/business-and-human-rights-treaty-we-shouldnt-be-afraid.html.

  6. Daniele Gosteli, Amnesty International’s business and human rights expert in Switzerland, for example points out in an interview with us that voluntary initiatives are resource consuming for NGOs and “often result in a compromise around the lowest common denominator” that her organization could not support. Gosteli also argues that the power inequalities among participating stakeholders in these initiatives are significant, and the decision-making processes are often dominated by the most powerful participants, typically corporations (sometimes together with governments).

  7. UN Human Rights Council Resolution, 24 June 2014, A/HRC/26/L.22/Rev.1

  8. The substantive outcome from the Rio conference was Agenda 21which acknowledged the important role of non-state actors in developing environmental policy. United Nations Sustainable Development ‘United Nations Conference on Environment and Development, Agenda 21’ Rio de Janeiro, Brazil, 3–14 June 1992, available at: http://sustainabledevelopment.un.org/content/documents/Agenda21.pdf. Another MSI, the Rainforest Alliance, emerged in the late 1980s and predates the 1990s surge of MSIs.

  9. Between 1993 and 1998 a number of diverse initiatives emerged including: the Forest Stewardship Council (1993), the Marine Stewardship Council (1997), Social Accountability International (1997), the Fair Labor Association (1998) and the Ethical Trading Initiative (1998). Each of these, in its own way, attempted to regulate what each viewed as a (partially) unregulated market. Each had different goals and processes for achieving this, but what they had in common was an approach that brought together a multiplicity of stakeholders to work together to achieve their goals. The establishment of MSIs continued unabated in the following decades which, more recently, have witnessed the launch of the Voluntary Principles on Security and Human Rights (2000), the United Nations Global Compact (2000), the Kimberley Process Certification Scheme (2002), the Extractive Industries Transparency Initiative (2003), the Global Network Initiative (2008) and the nascent International Code of Conduct for Private Security Providers (2010).

  10. For more information on Google’s transparency report see http://www.google.com/transparencyreport/.

  11. See, for example, the comment of the Institute for Human Rights and Business on the latest transparency report from Vodafone: http://ihrb.org/commentary/staff/vodafone-transparency-report.html.

  12. See, for example, the commentary of Lucy Purdon from the Institute of Human Rights and Business: http://www.ihrb.org/commentary/ict-sector-transparency-reports.html.

  13. See, for example, the UN Global (UNGP) attempt to clarify their principles in the investment context. The UNGP and the UNEP Finance Initiative launched in April 2006 at the New York Stock Exchange, the Principles for Responsible Investment (PRI). PRI invites large institutional investors—both asset owners (e.g., pension funds, endowments) and asset managers—to commit to a set of six principles designed to put ESG issues into the core of investment decision-making. While PRI addresses a specific sector, the principles remain broad and are not fully operationalized.

  14. The FLA does not consider itself an industry-specific initiative. In fact, it operates in multiple industries in the manufacturing sector and even in agriculture. Its profile in the sportswear industry, however, is the strongest. All major sportswear brands participate, and hence, it meets our case selection criteria in the context of this study.

  15. See http://globalnetworkinitiative.org/participants/index.php.

  16. John Ruggie, the former UN Special Representative for Business and Human Rights, for example, declared the FLA as the “gold standard” within MSIs and the leader in its field (Ruggie 2009).

  17. See for example the criticism of American student organizations on the more recent work of the FLA with Apple (http://flawatch.usas.org).

  18. Names omitted for the review process.

  19. The NYU Center for Business and Human Rights and the Institute for Human Rights and Business has co-hosted a series of meetings among several MSI secretariats in 2014 and 2015 to better understand the current challenges of MSIs. The meeting minutes of these meetings and conversations with participants complemented our perspectives.

  20. Refined case studies of the FLA and the GNI from the same authors will also be integrated in the forthcoming textbook entitled “Business and Human Rights—From Principles to Practice” (Routledge 2016).

  21. FLA case study prepared by co-author.

  22. GNI case study prepared by co-author.

  23. The Global Online Freedom Act was introduced in 2013: https://beta.congress.gov/bill/113th-congress/house-bill/491.

  24. GNI case study prepared by co-author.

  25. See https://www.globalnetworkinitiative.org/news/gni-urges-us-senate-lead-surveillance-reform.

  26. See http://usas.org/campaigns-old/sweat-free-campus/dont-pay-the-fla/about-the-fla/.

  27. See http://www.forbes.com/sites/larrydownes/2011/03/30/why-no-one-will-join-the-global-network-initiative/.

  28. FLA case study prepared by co-author

  29. GNI case study prepared by co-author.

  30. For example, The Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111–203, 124 Stat. 1376 (2010) (codified at 12 U.S.C. §5301 note), addresses financial transparency. Section 1504 requires all listed oil and mining companies to disclose the revenues that they pay to governments worldwide. The European Parliament has recently approved a Directive on the disclosure of non-financial information by European Union (EU) companies. The Directive will require EU public interest entities with more than 500 employees to provide an annual written report on human rights, environmental, and social issues to give an understanding of their impact in each of these areas See Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013, Article 2(1)).

  31. See http://www.fairlabor.org/report/jerzees-de-honduras-honduras.

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Authors and Affiliations

  1. Stern School of Business, Center for Business and Human Rights, New York University, New York, USA

    Dorothée Baumann-Pauly

  2. Faculty of Law, University of New South Wales, Sydney, USA

    Justine Nolan

  3. Equiception & Center for Business and Human Rights, New York University, New York, USA

    Auret van Heerden

  4. School of Foreign Service, Georgetown University, Washington, DC, USA

    Michael Samway

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  1. Dorothée Baumann-Pauly
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  4. Michael Samway
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Correspondence to Dorothée Baumann-Pauly.

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Baumann-Pauly, D., Nolan, J., van Heerden, A. et al. Industry-Specific Multi-Stakeholder Initiatives That Govern Corporate Human Rights Standards: Legitimacy assessments of the Fair Labor Association and the Global Network Initiative. J Bus Ethics 143, 771–787 (2017). https://doi.org/10.1007/s10551-016-3076-z

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