Last week’s Millennium Development Goals (MDGs) Summit provided a glimpse into how far we’ve come, and how far we’ve yet to go to eradicate world poverty, disease, and human rights abuses. The good news: in the first-ever development policy announced by an American president, President Obama told Summit attendees, “Put simply, the United States is changing the way we do business.” He was referring to the role of the US government, but might as well have been talking about US business, too. In fact, boundaries between the public, private, and non-profit sectors have blurred as concerns about development, business, and human rights slowly become ingrained in economic decision-making.
The bad news: too often, progress toward reforming market mechanisms and corporate governance fail to incorporate human rights matters. Exhibit A: the September 17th appellate decision in Kiobel et al. v. Royal Dutch Shell, which ruled that corporations are not liable for human rights violations under the Alien Tort Claims Act. Exhibit B: last week’s NYSE proposals for corporate governance principles, which, while welcome, fail to make mention of social responsibility, sustainability, or human rights obligations—even as other global stock exchanges ponder promotion of these and other “responsible” capital market developments. Nevertheless, as the benefits of sustainable prosperity become self-evident, we remain hopeful that the relationship between it and human rights – a concept now embracing disabilities – becomes stronger and tighter.
Let’s step back and look at the recent evolution of public thinking, and setbacks along the way.
The new US Global Development Policy redefines and elevates the meaning of “development” and rests on four pillars, Obama said. First, it redefines development by blending diplomacy, trade, and investment with foreign aid. Second, it focuses on capacity building within nations, or “sustainable development”. Third, it emphasizes broad-based economic growth. Fourth, it demands more responsibility from both the US and partner countries. Obama told the delegates and world leaders that it was “our destiny” to endure a time of recession, war and conflict, and spoke out broadly in support of open governments and human rights. The initiative was embraced enthusiastically among those in the development community, according to Politico. (For more on MDG progress, policy, and practice, see the Guardian’s excellent new interactive website on global development.)
Meanwhile, on the dark side, the 2-1 Second Circuit decision in Kiobel dismissed claims by a group of Nigerians that Shell aided in the torture and murder of dissidents in Nigeria in the 1990s, including the playwright Ken Saro-Wiwa. The court determined that corporate actions differ from individual actions when it comes to human rights abuses, and thus are shielded from victims’ compensation claims. (Ironically, this decision seems to contradict the US Supreme Court’s Citizens United decision, which granted personhood to corporations when it comes to political contributions.) According to Bloomberg, in a separate opinion Circuit Judge Pierre N. Leval wrote that “[t]he majority opinion deals a substantial blow to international law and its undertaking to protect fundamental human rights.”
As for stock exchanges, the Sustainable Stock Exchange Initiative helps pave the way for integrating sustainability indices and environmental, social and governance (ESG) disclosure requirements into exchange operations. In early September, UNCTAD‘s World Investment Forum in Xiamen, China focused on the importance of ESG in creating a vibrant world economy. The event – co-convened with the UN Global Compact and the Principles for Responsible Investment (PRI), with support from the International Organization for Securities Commissions (IOSCO) – involved CEOs and other senior level executives within stock exchanges and institutional investors, as well as senior level regulators. The discussion focused on the relationship between exchanges and the regulatory frameworks in which they operate in light of emerging ESG issues—including human rights.
Perhaps the New York Stock Exchange could benefit from these deliberations, and widen its scope.