The much-vaunted 2019 public listing of Saudi Aramco set a record for the world’s biggest initial public offering. But it was likely a disappointing affair for its architect, Saudi Crown Prince Mohammed bin Salman: The stock saw only tepid demand outside the region. That it failed to gain the level of global enthusiasm and support he had been seeking was due in no small part to investor wariness of Aramco’s close ties to the Saudi regime and the country’s appalling record on human rights.
For example, the brutal killing in October 2018 of Washington Post columnist Jamal Khashoggi by Saudi agents in Turkey prompted dozens of high-profile business leaders to withdraw that year from the country’s flagship investment summit, nicknamed “Davos in the Desert.” CEOs from JPMorgan Chase, BlackRock, Google, Uber, Siemens, and Glencore, as well as then International Monetary Fund managing director Christine Lagarde and World Bank president Jim Yong Kim, all boycotted the event. In recent years, the Saudi government has also been more broadly condemned for its harsh crackdowns on dissidents, activists, and independent clerics; its exploitation of migrant workers; and its unlawful airstrikes in Yemen.
The extent to which corporations should react to human rights abuses by governments in their host and home countries has become one of the most dynamic and interdisciplinary discussions in the field of corporate responsibility. Corporations are increasingly expected to become more proactive in protecting human rights as private and public responsibilities blur and companies become more conscious of the expectations of a more socially aware investor base and workforce. And we believe that speaking out against human rights violations is the right thing to do on its own merits.
But once a company decides to take a stand, what can it do? Are the only options to carry on with business as usual or cut ties with a country completely?
Continuing with business as usual in countries where human rights are systematically abused raises obvious questions of company complicity with these human rights violations. As in other cases of passively standing by, the government engaging in the abuse might even feel encouraged when businesses fail to act decisively by either intervening or leaving the country altogether. But cutting ties with the country can be problematic as well. Lost revenues can cost both the company and people in that country: Employees lose jobs, much-needed services and products become unavailable, and the company abdicates potential influence in the country and over the perpetrators.
As business ethicists, we have developed conceptual and normative frameworks for how companies can deal with human rights issues. In our work and research with international nongovernmental organizations (NGOs) and with multinational companies that confront these questions, we have found a number of tactics — between the two extremes of standing by or cutting ties — that organizations can take to effectively address human rights abuses without abandoning all involvement (and revenue) in the region.
In 2010, for example, Microsoft became aware that Russian enforcement officers were using suspicion of software piracy as an excuse to raid the offices of NGOs critical of the government. Instead of ignoring the problem or removing its products from the Russian market entirely, Microsoft issued a blanket software license to nonprofit groups outside the U.S., effectively negating software piracy as an excuse for the Russian government’s nefarious actions.
When contemplating how to act in such a case, companies should first decide whether to work alone or in collaboration with other organizations. While Microsoft was able to act quickly on its own, smaller companies may find it more effective (if slower) to work collectively with other companies or in multistakeholder initiatives that can also involve NGOs and governments.
Once companies decide on the adoption of an individual or collective approach, they then need to decide whether addressing the issue directly or taking an indirect approach to influence the overall institutional context will gain greater or more sustained success. Six tactics fall under these direct and indirect strategies.
Direct Actions
Inform. Provide background analyses, develop position papers, testify as expert witnesses, or even directly lobby for human rights.
After Khashoggi’s murder by the Saudi state, the CEO of German conglomerate Siemens publicly condemned the human rights violation, even making a reference to German history to illustrate what atrocities could happen if nobody spoke up.
In 2018, in collaboration with the Danish Institute for Human Rights, Nestlé, the world’s largest food and beverage company, further developed its human rights training program for employees, focusing on understanding human rights, human rights challenges, and practical solutions. The company claims that it has already trained 100,000 of its employees and aims to have all of its staff members trained by the end of 2020. Nestlé made the program public in the hope of inspiring other companies to follow suit.
Finance. Provide (or withdraw) financial support for politicians, interest groups, and companies. This includes measures such as divestment or cutting financial ties with nonaligned stakeholders.
The Norwegian pension fund GPFG (Government Pension Fund Global), for instance, has added a number of Israeli businesses to its list of excluded companies, arguing that they indirectly benefit from the breach of international law and human rights violations occurring through the occupation of Palestinian territories.
Reject. Refuse to participate in business meetings and summits, as several companies did with the 2018 Saudi Davos in the Desert summit.
Indirect Actions
Take on institutional development. Use company resources to provide and enhance human rights education, support the establishment or enforcement of well-ordered social and political institutions, encourage transparency, and safeguard a free press. This is an area in which partnering with other organizations can be particularly effective.
For example, in an attempt to modernize one country’s legal system and fight corruption, Norwegian oil company Statoil (now known as Equinor) committed to support a human rights training program for Venezuelan judges.
Sign on to standards. Sign up (and comply with) nonmandatory charters and commitments such as the United Nations Global Compact or the International Organization for Standardization’s ISO 26000. This tactic is particularly effective for industry associations and companies that are leaders in their field. These commitments might not amount to much in and of themselves, but they can translate into meaningful action under the pressure resulting from scrutiny by critical stakeholders such as NGOs, employees, or customers.
Raise standards. Develop new standards that supplement hard law. This can be one of the most effective tactics that organizations practice. By working collectively with other companies or stakeholders, companies can create ethical frameworks that define corporate behavior in regard to human rights violations.
Take, for example, the Accord on Fire and Building Safety in Bangladesh and the industry-led Alliance for Bangladesh Worker Safety, an initiative formed within the apparel industry following the 2013 Rana Plaza building collapse in Bangladesh that killed more than 1,100 garment workers.
Still, some situations call for more radical action, and the best decision could be discontinuing business in the relevant country. For example, Chase and other banks, alongside many other companies, refused to do business with apartheid South Africa. More recently, Google partially withdrew from China after refusing to provide the government with access to user data or regime-critical emails. Choosing this most drastic option has potentially severe consequences for both the company and the host country. Companies and their leaders should not make this decision lightly or on their own. After all, business managers are not experts in social issues, let alone in human rights. Responsible managers should include multiple stakeholders in the decision process — in this extreme instance and more generally — to determine which tactics to apply and whether to cut ties altogether.
The tactics we’ve described here are not limited to human rights issues and can be modified in response to other pressing concerns as well. These social and ecological agendas have evolved significantly in recent years, leading to today’s broad recognition that corporations can be a vehicle for the promotion and protection of human rights and environmental justice.
Choosing which approach and strategy to use will depend on the context and the impact your company wants to make. Instead of carrying on with business as usual in the face of clear evidence of human rights abuses — or in the context of the evolving climate crisis — business leaders can do something more positive and, in taking deliberate action, become a force for good.
Six Ways Companies Can Promote and Protect Human Rights
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