How Businesses Can Help Safeguard Human Rights

Michael H. Posner has had a long career in the promotion and protection of workers and citizens around the world. He served as the U.S. assistant secretary of state for democracy, human rights, and labor in the Obama administration from 2009-2013. Before that, he cofounded and led the advocacy organization Human Rights First. Today, Posner is the Jerome Kohlberg Professor of Ethics and Finance and director of the Center for Business and Human Rights at New York University’s Stern School of Business.

Posner’s new book, Conscience Incorporated: Pursue Profits While Protecting Human Rights (NYU Press), draws lessons from his years of experience working with governments and corporations to improve the conditions of vulnerable people in challenging environments around the world. In an interview with features editor Kaushik Viswanath, Posner discussed why business leaders need to embrace responsibility and become part of the solution in safeguarding human rights. This conversation has been edited for length and clarity.

Kaushik Viswanath: What do you see as the role of business in protecting human rights today?

Michael H. Posner: Businesses are being pushed to do that which governments are failing to do. Many governments are either unwilling or unable to protect their people, and those are often countries where some group of big companies come in and have enormous influence. So these companies have the responsibility to do something and to make sure that they at least aren’t making the human rights problems more acute.

Businesses are increasingly acknowledging that they have constituencies other than just shareholders, such as the communities where they operate, their consumers, and their employees. Are they doing enough? Are these business priorities for most companies? No. But there is at least a real conversation going on.

What kinds of pressures do you see on businesses today to pay more attention to people affected by their operations?

Posner: Governments, especially in Western Europe, have felt pressure from their citizens not to leave it entirely up to business to determine how they are held accountable to those constituencies. Left to their own devices, companies will do things around the edges, like set up sustainability committees or publish a human rights report. But they’re not looking deeply at their business practices or being evaluated by others in a way that gets them to change how they operate. So in the past few years, European governments have started to regulate companies doing business in Europe. For example, this year the European Union adopted the corporate sustainability due diligence directive, which asks all members of the EU to draft their own laws within two years.

The U.S. does not have anything like the mandatory due diligence and supply chain laws coming out of Europe, and that won’t happen for a while. There’s no political will, and American companies will be resistant to it.

The U.S. did take the lead in challenging forced labor practices in Xinjiang, China, where millions of Uyghurs are subjected to forced labor. Congress passed the Uyghur Forced Labor Prevention Act with near unanimity, [and it was signed into law at the end of 2021]. The act prevents any product or component of a product coming out of Xinjiang province from being imported into the United States.

You open the book with a discussion of the 2013 Rana Plaza disaster in Dhaka, Bangladesh. Why did you choose to highlight that incident?

Posner: In April 2013, this factory complex collapsed, killing over 1,100 workers, mostly young women, and injuring another 2,500. It was the biggest industrial accident in the world since the chemical accident in Bhopal, India, in 1984. European, American, and some Asian clothing companies produce garments in countries like China, Vietnam, and Bangladesh, where they are cheaper to produce.

Bangladesh is now the second-largest garment-producing country in the world for export, and garment production accounts for 80% of the country’s export income. This is an example of a state with weak governance and inadequate health and safety protections. Many of their factories are in buildings that were built for a different purpose, built on unstable foundations, or dangerously modified.

The attitude of the big global garment companies that come to Bangladesh to produce things cheaply, unfortunately, has been that the safety and health of those workers is not their job. It’s emblematic of a phenomenon I call outsourcing of responsibility. The Rana Plaza incident was a wake-up call to that industry.

How can businesses address this outsourcing of responsibility?

Posner: I believe globalization has resulted in many hundreds of millions of people working for the first time in the moneyed economy. That’s a good thing, but we must have rules for how you do it in a responsible way that protects the dignity of workers.

There are some encouraging signs. I helped set up an organization called the Fair Labor Association [FLA] 25 years ago. It was initiated by the Clinton administration and Robert Reich, who was the U.S. labor secretary, and it brought together about a dozen apparel companies and some NGOs. I was working then with a group called Human Rights First, and some universities and the government nudged us to come together and create a code of conduct and figure out how to use those standards in a way that improves practices in that industry. The FLA now also extends to agriculture, and companies like Nestlé and L’Oréal are also part of it. Companies go through accreditation every three years or five years, and that’s some form of accountability. I would say that’s a step in the direction of what needs to happen in other industries.

No one company wants to act by itself and be disadvantaged against its competitors. The theory of the Fair Labor Association is, you bring groups of companies in an industry together and get them to work with a common framework.

Your book offers insight into the challenges of working in regions with poor records of protecting human rights, such as China, Russia, Saudi Arabia, and the Democratic Republic of the Congo. You also discuss how companies approached working in South Africa during the apartheid era. One humanitarian situation that the book doesn’t discuss is the ongoing war in Israel and Palestine. Why did you choose not to address this in the book, and how would you advise business leaders with interests in that region to be thinking about it and taking action right now?

Posner: It’s a fair question. Most of the book was written before Oct. 7, 2023, so it wasn’t as prominent a focus as it is today. Businesses certainly need to be attentive to the direct effects they’re having in exacerbating a conflict. If you’re an oil company and you’re operating in the Niger Delta, in Myanmar, in Angola, or in Sudan, you need to be attentive to how the money is being used. To what extent is it extending the conflict?

I don’t generally believe that companies, especially those that are already invested in a society, should walk away from it. There are plenty of global companies that do business in Israel, and I don’t think it’s going to improve the human rights situation of the Palestinians if they all decide to leave.

I believe business engagement has the potential to be a force for good, if companies are paying attention to the well-being of workers and if they’re paying attention to the environmental effects they’re having.

The South African example is instructive here. The Sullivan Principles directed American and European companies to do business in South Africa while respecting international human rights in their own businesses. Business leaders had to treat South African citizens equally, even if their government was not. I believe that pressure from global companies was part of what led to an end to the apartheid regime.

You are critical of ESG investing — prioritizing environmental, social, and governance issues — as a way to make meaningful progress. Why do you think the ESG investing approach falls short?

Posner: I think the ESG framework makes sense. I just don’t think it’s been applied very rigorously or ambitiously. When you see ESG funds coming from Vanguard or BlackRock or State Street, they tend to focus more on risks to investors than to people or the planet.

You can’t have everyone focused all the time on maximizing returns on every investment. Investors such as pension funds do have a fiduciary duty to protect the retirement account of a teacher, for example. But individual investors, family offices, foundations, and universities that care about the environment or diversity or labor should be willing to take a lesser return.

As consumers, we’ll buy more-expensive organic produce because it’s healthier, but we’re also making a statement about our values. Investors ought to be doing the same thing.

I’m all in favor of doing well. You just don’t have to do as well as the maximizing of return. Companies can’t raise wages, do proper content moderation on their platforms, or pay attention to the 25,000 children mining cobalt in the Congo without investing in addressing those things. And those costs are going to have some impact on the price of the stock.

A lot of leaders believe that business and politics shouldn’t mix. What’s your perspective on business leaders wanting to stay out of politics?

Posner: If you’re running a giant company, you likely have people working for you who disagree about a whole lot of things. It’s tempting to pick the issue you are personally passionate about and say something. But then you will face questions about why you didn’t weigh in on some other issue. Understandably, CEOs are now thinking they’d better be a bit more cautious.

Having said that, there are some issues that transcend partisan politics. One issue that ought to matter to every company is the integrity of democracy and the rule of law. To the extent that there are efforts to deny people the right to vote or disrupt the democratic process, companies ought to assert that they believe in the franchise and that democracy is good for society and good for business. I think democracy, human rights, and the rule of law should be the exception to the rule that leaders should be careful about where they jump in.

What gives you hope today about business’s role in protecting human rights?

Posner: I’ve been working in human rights for decades. In that time, I’ve seen that in virtually every country in the world, individuals have mobilized for human rights. There are now human rights organizations, women’s rights and environmental organizations, in almost every country in the world. That wasn’t always the case. When I wrote about Idi Amin in Uganda in 1974, there were no human rights organizations in sub-Saharan Africa outside of South Africa and what was then Rhodesia.

Now, except for maybe North Korea, there are human rights organizations everywhere. I think businesses operating in this better-informed, better-organized world should benefit from the energy of people raising their concerns as consumers, investors, employees, and communities — and seize this moment to do better.