Companies should brace themselves for human rights claims from abroad.
A-brands watch your backs! An increasing number of protest groups are using the Internet as a public podium to raise the alarm on corporate abuses, especially since the publication of Naomi Klein’s corporate wake-up call, No Logo. Nike, a favourite target of business watchdogs, has been badly bruised in recent years. The shoe manufacturer experienced first hand just how damaging unethical business practices (using child labour to stitch sports shoes) can damage your precious reputation.
Despite the public outrage, Nike failed to make any radical course alterations. This is evident in the recently published ‘Saving the Corporate Soul & (Who Knows?) Maybe Your Own’ (Jossey-Bass, 2003) by entrepreneur and journalist David Batstone. ‘Maybe you think, as I did, that such companies have since shifted to a more enlightened personnel policy,’ he writes in his book. But according to a report from Oxfam Community Aid Abroad on the labour situation in Indonesian factories that produce for Nike, there has not been much improvement. Workers still live in extreme poverty, the machines they work with are dangerous, they are exposed to noxious vapours and trade union membership can lead to dismissal. Nike admits it is aware of the situation and has said that it has launched an improvement programme. According to Oxfam, the programme has only been applied in 30 of the 900 factories.
Nike has every reason to take the matter seriously. According to attorney Elliot Schrage, a former vice president at the clothing concern Gap and currently with the Council on Foreign Relations, it is only a matter of time before companies in the United States will be prosecuted and fined for violating human rights abroad. In Harvard Business Review (August 2003) he writes that the globalisation of the economy and communications has meant that American courts are increasingly willing to take on cases they would previously have rejected as having too little bearing on US interests.
Last September, a California court ruled that villagers in Myanmar – Burma – could take the oil company Unocal to court for human rights violations. Unocal, writes Schrage, was held responsible for torture, rape, slavery and executions that were carried out by the military regime in connection with the construction of a pipeline. Workers at banana plantations in Central America have initiated legal proceedings against Dole and Chiquita for failing to sufficiently warn them of the detrimental effects of pesticide use.
Sloppy handling of human rights issues is becoming a serious corporate risk, particularly since a California court ruled that companies can be held responsible on the basis of negligence for the misdeeds committed by a supplier. ‘It is crucial that companies be prepared for such court cases,’ Schrage says. ‘Any meaningful defence of [human rights] claims will require a company to show that it has made a good faith effort to closely examine local practices and ensure that they meet international human rights standards.’
Schrage, who expects the first convictions or settlements within the next couple of years, advises companies to get clear on their relationships with governments in emerging market countries, particularly those with a less than stellar reputations in the area of human rights. At the same time, organisations should re-examine their business relationships. Ignorance is no longer a credible excuse in today’s world.
