Monday, 6 January 2014

Corporations and human rights

This blogger was listening to his favourite programme From Our Own Correspondent on the BBC - easily one of the finest radio programmes the world has ever seen. One of my favourite correspondents, Humphrey Hawksley was filing from Hyderabad on the plight of those who work in brick kilns.  And then he casually hinted that British companies might somehow be held accountable for this ! This set me thinking on the thorny issue of global corporations (alright, the appropriate dirty word is multinationals ) and the issue of human rights.

What is a business corporation really responsible for ? - that it should not condone human rights abuses in its operations is indisputable. That is should likewise do so in its supply chain is also in principle correct, but in practice, where do you draw the line of its supply chain ?

Humphrey Hawksley was hinting at the following logic. Let us construct a hypothetical example. GlaxoSmithkline, a "British company", outsources its back office work to Genpact an Indian company. Genpact delivers this service from Hyderabad. They do so from a building that, let us say, they rent from one of the major builders. The builder, when he constructed the building, bought bricks from the local brick kiln. This brick kiln was abusing human rights - so Glaxo is responsible.

I can extend the logic further. The builder bought cement from L&T. L&T bought limestone , a raw material from a nearby quarrie. The transporter who moved the limestone, employed children as cleaners - so Glaxo is responsible.

There has to be some sanity and reasonableness in what you expect corporations to be responsible for. The issue has really arisen because nations, which are the prime guardians and  responsible for checking human rights violation in their territories, are abysmal in their jobs. This is  not just a third world problem only - American agriculture for example will come to a standstill if illegal Mexican workers paid less than minimum wage, working way beyond beyond an 8 hour working day and subject to sundry abuses were not in operation (Mr Preet Bharara -  please note ). Multinationals, the dirty word again, are soft targets. Therefore it is easy to go after them. In the case of the brick kiln workers, the Indian government and the Indian society is responsible - not Glaxo.

Equally, consumers are, largely unconcerned with anything else other than the price of their product. They want the cheapest price for a product, and if this was achieved by abusing the rights of a worker in a faraway land, tough luck . Why faraway land - every American who drinks milk has a greater than a 50% probability that he has condoned human rights abuse - somewhere in the milk producing chain in the US, an illegal immigrant was used and was exploited..

A test of reasonableness has to be applied when we hoist human rights responsibilities on corporations. Some principles are black and white - you will obey the law, you will not bribe, you will conduct your operation where safety of those working is accorded the highest priority, etc etc. You can also say that you will  demand your suppliers to conform to these and conduct periodic audits at major suppliers to verify that this is so.  But it s practically impossible to ensure that every supplier's supplier's supplier is adhering. Common sense has to prevail. For eg if Walmart is sourcing garments through an American agent, who in turn is sourcing through a Bangladeshi agent who in turn is buying from a garment manufacturer who has appalling conditions for his workers - you can reasonably say that Walmart should stop buying from them. It is the germane buyer even though intermediaries are involved, and it is a direct piece of Walmart's main business. But to say Glaxo should stop its operations with Genpact, because the building it is operating in was built using bricks whose supplier violated human rights  is carrying things too far.

Corporations have certainly been guilty of much evil in the past. They should rightfully be held to account. But when you forsake reasonableness in setting what you will hold them to be accountable for, you are violating their human rights ! After all, the learned wise men and women from the US Supreme Court have said that corporations are also people !!


Prats said...

Brilliant Post sir. I totally agree with you on this. It has become easy to shrug responsibility by the government and their agencies while loading the burden on the corporations.

Remember the corporation bank ATM issue, the simple solution instead of improving overall city law and order was to close all non guarded ATMs. I mean who bears the cost at the end of the day the consumer just because the government agency doesn't want to be responsible.

Ramesh said...

@Prats - Thanks Prats. Yes the ATM issue is a beautiful example of nonsensical overreaction . Its not just cost - its also complete denial of a service. Of course the safest way Bangalore can be is if we imposed a curfew at 6.00 PM and everybody stayed indoors.

Sriram Khé said...

It has almost become a knee-jerk reaction for some to blame the MNCs for anything and everything. Yes, we have had plenty of godawful MNCs, especially in the past ... but, ...

I tell students a variation of the idea you present here--consumers "want the cheapest price for a product." In my intro class, I tell the same thing and remind them that the modern day corporations then work on their behalf and search the entire planet for where they can produce tshirts, transport them, and retail for 4.99 each. Which also means that if we think our supplier is behaving badly, then to a large extent, we can influence the MNCs through our own purchasing behaviors ... but, then the tshirt will not be at 4.99 and might cost 7.99.

It is amazing how much we consumers do not want to put our money where our mouths are! ;)

Ramesh said...

@Sriram - Yes, you have expounded on that theme before. But I am not so strongly in your camp. The same argument I am making for corporations is valid for consumers too. Its not their role primarily to protect human rights in Timbuktu. It is of governments and the Malian society. They can help by being socially conscious and voting with their dollars, but that cannot absolve governments and local societies of the fundamental responsibility.

Ravi Rajagopalan said...

@Ramesh: I am shocked and disgusted to learn from your esteemed organ that you consider "From Your Own Correspondent" to be the finest radio program ever. As any fule kno, the finest radio program is "Desert Island Discs". The delectable Kirsty Young spends 45 minutes with a notable asking the interviewee to name eight musical soundtracks which have meant something to him or her in their life. And in the process teases out a nuanced picture of the person. It is delightful. I request you to issue a correction failing which I will be forced to cancel my subscription to your rag.

Yours in indignation

R Rajagopalan

Ramesh said...

@Ravi - Ha Ha Ha. I will grant that Kristy Young is delectable though I rather expected you to extol the virtues of Roy Plomley. Evidently you are getting younger :):)

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