Quick Take

Governance Innovations to Develop Practical Solutions for Business and Human Rights Challenges

July 1, 2016

Over the course of the past weeks, I attended several conferences and events that not specifically dealt with business and human rights issues but with the larger question of how to govern transnational issues that no actor alone can solve. There was a particular focus on Multi-Stakeholder Initiatives (MSIs), framed as a new governance model. This surge of interest in new governance models in academia and practice reflects a need for a better understanding of what has become a common empirical phenomenon: When nation states are unable or unwilling to regulate human rights, collaborative governance models emerge and are supposed to serve as a stop-gap measure.

In May, for example, a small group of leading academics with interdisciplinary backgrounds gathered at Duke University’s Kenan Center for Ethics to define a research agenda that acknowledges the growing number of MSIs in different industry sectors. The objective was to discuss the link between their institutional design and effectiveness. MSI Integrity, a think tank that co-organized the workshop at Duke, plans to systematically analyze whether, when, and how MSIs can be effective. Together with the Kenan Center for Ethics, MSI Integrity wants to create a publicly accessible database of human rights MSIs for academics that maps MSIs’ institutional design. The mapping methodology, however, is still a work-in-progress.

The Stanley Foundation, whose mission is to advance fair, just, and lasting solutions to critical issues of peace and security, also just started a consultation on the question “how are multi-stakeholder coalitions filling gaps in global governance”. At this point, the input from different stakeholders raises more questions than it answers. Similarly, the nascent research field of MSIs, is wrestling with a range of basic questions: how to define a multi-stakeholder initiative, what are the criteria of success, how can private initiatives legitimately design and enforce rules, and what factors make MSIs more effective (see our contribution to the academic debate here)?

In our recently published textbook on Business and Human Rights, the chapter on Human Rights MSIs is therefore central. We argue that collaborative governance initiatives are not only a common response to human rights challenges in the global economy in lack of anything better, but also one that is potentially the most practically feasible, effective, and legitimate. We assess the status quo of some MSIs that target the behavior of corporations to fill governance gaps and develop a typology for what has become a highly heterogeneous group of organizations. The chapter also points to the imperfect nature of current MSIs. For example, we outline the many operational challenges of current MSIs, highlighting that many of these initiatives suffer from insufficient funding that prevents them to reach their full potential.

The book also includes case studies of prominent Human Rights Governance MSIs in four sectors (Fair Labor Association in manufacturing, Global Network Initiative in ICT, the International Code of Conduct of Private Security Providers in the extractives/ private security sector, and the Voluntary Principles, the Extractives Industry Transparency Initiative, and the Kimberly Process in the extractives sector). These case studies illustrate how current MSIs are meeting the challenge of addressing governance gaps. The differences among these MSIs are substantial. Many organizational aspects of the Fair Labor Association (FLA) as the most mature MSI of the sample (the process of the creating the FLA started in 1996), could serve as a model for other MSIs. For example, the FLA’s remedy mechanism has recently served as a reference point for a study conducted in context of ICAR’s access to remedy project.

Every crisis that involves business – may it be a factory collapse, an oil spill, or new technologies with unforeseen implications – shows us the limits of regulatory state power. These incidences ask for a reflection on how to redefine governance in the context of a global economy with multinational corporations that are oftentimes more powerful than governments. Framing human rights issues as a governance challenge points to practical solutions. The MSI model presents such an innovative governance mechanism and we encourage further investigation on this model. Instead of too easily dismissing MSIs as ineffective or illegitimate, we should rather focus on strengthening governance models that correspond to today’s business reality.