How to make transnational companies accountable?

Feb 06, 2018

It is our belief at that policy makers in the European Union, and around the world, need to commit to the effective safeguarding of fundamental rights. As we focus on positive impact in business, we specifically see that they have a duty to create a binding treaty to hold companies responsible for their activities, protect human rights and the environment. There are multiple recommendations and guidelines such as the:

  • OECD Guidelines for Multinational Enterprises
  • UN Global Compact
  • UN Guiding Principles on business and human rights (and there is an update to this in November 2017)

Why should the treaty be binding and international?

Many companies have multi and bilateral investors and customers throughout the world. From the smallest little cacao farming company like BLYSS, to large cosmetic multinationals that we work with, almost all aspects of modern business have geopolitical and commercial interdependencies. An international treaty regulating transnational business activities is necessary to truly protect human rights.

An international treaty will establish an a good type of legal framework to:

  • hold corporations responsible for fundamental rights
  • set well defined obligations for international companies to protect human rights on a national level
  • set the legal obligations and establish mechanisms for monitoring and implementing the guidelines
  • create an international set of standards to follow while additional rules and regulations are set up.

Will an international binding treaty ever become reality?

In 2014, an international treaty was started by Ecuador and South Africa within the UN Human Rights Council (UNHRC) to serve as a legally binding document to regulate activities of transnational corporations and other businesses to protect fundamental rights.

“Ecuador will present elements of the UN Treaty at the next working group meeting, which will take place from 23-27. October 2017 in Geneva, Switzerland.” And, we are looking forward to the results of this!

What can the EU do?

They can begin to proactively take part in the process and begin to support the treaty overall.

For example, the EU has started to implement other measures to protect fundamental rights: in 2016, it passed a regulation on “conflict minerals” that aims to stop the financing of armed groups and human rights abuses through trade in minerals from conflict areas. “This regulation shows the EU’s potential to promote human rights internationally, if sufficient political will is invested.”

What can EU Member States do?

  • be active in show of support of mandatory UN Treaty regulating fundamental rights
  • develop national regulations that complement the international framework
  • set examples of how it can work to help other countries come on board

As ChangeMakers, we can do that ourselves by both supporting regulatory and commercial projects to achieve it, while also calling out the details on a daily basis.