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What It Will Take to Make Responsible Business In India
Businesses and governments must realize that the costs of human rights violations- financial, legal and reputational - can outweigh the investments that they seek, and severely impact businesses and their relationship with investors
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I may be a relatively new inductee into the world of human rights speak, but I can claim to know a few things about business. My family was in the textile business, and the spinning of yarn has been my trade for many years in my capacity as a journalist, as an editor and as part of the publishing trade and media business.
And so I can say with reasonable confidence that there is no denying that business activity can generate enormous economic opportunities and services that are vital to human dignity and development. Responsible businesses can contribute to reducing poverty, creating jobs, and enhancing the well-being of society.
However businesses also have the potential to cause serious harm. Next month will mark the 32-year anniversary of the Bhopal gas leak disaster, a reminder of the enormous negative impact that businesses can have on people, and the need for greater accountability and responsibility.
Prime Minister Narendra Modi, in his maiden Independence Day speech spoke of manufacturing which would have 'zero-effect' on people and the environment. However, India still lacks a clear framework for businesses to ensure that their work has 'zero-effect'. There is no nodal body to ensure that policy-making and regulatory bodies are on the same page with respect to ensuring respect for human rights across the board. Instead, we have seen moves by his very government that trust that industry will self-regulate, 'in good faith', despite a legacy of glaring violations.
Internationally, the UN Guiding Principles on Business and Human Rights, which were endorsed by the UN Human Rights Council in 2011, provide a roadmap of the actions that governments and businesses must take to prevent business-related human rights abuse, and to provide effective remedy and justice.
The framework Ruggie put forward is organised around the three foundational principles of "protect, respect, and remedy": the state duty to protect against human rights abuses by third parties, including business; the corporate responsibility to respect human rights, including through 'human rights due diligence'; and the need for access to effective remedies, through judicial and non-judicial means.
Most debate in India related to business responsibility on human rights issues has centred around the soft, "values"-based language of Corporate Social Responsibility (CSR). Following the passage of the Companies Act, 2013, certain businesses are now required to spend a portion of their profits on CSR activities. The top 500 listed businesses in India are also required by the Securities and Exchange Board of India to prepare 'business responsibility reports'. Businesses can also choose to adopt and follow the National Voluntary Guidelines for Social, Environmental and Economic Responsibilities of Business (NVGs) issued by the Ministry of Corporate Affairs in 2011 (although few have done so). However, this approach can convey the message that companies can somehow offset negative impacts in one area of their work with corporate philanthropy in another.
From the horror stories I hear from my colleagues about wide-scale displacement in the central Indian mineral belt, corporate accountability for human rights abuses in India today has barely moved out of the dark ages. Affected communities are frequently denied access to information about company operations and excluded from decisions that affect their lives. When abuses do occur, communities have been denied access to justice and remedy, and the government has failed on several occasions to hold companies accountable, instead weakening the few protections that exist for citizens.
Companies have not adequately lived up to their responsibility to assess the impacts of their work on people and the environment. The last few decades have witnessed massive struggles over land, with forced evictions taking place on a massive scale, accompanied by abuses against communities and human rights defenders. Indigenous Adivasi communities, have been disproportionately affected.Over 24 million people- that's the current population of Australia- have been displaced by development projects between 1947 and 2000.
Businesses and governments must realize that the costs of human rights violations- financial, legal and reputational - can outweigh the investments that they seek, and severely impact businesses and their relationship with investors. It is estimated that a world-class mining operation could be set back between a whopping $20 million and $30 million a week for operational disruptions because of social conflict, as well as time spent towards conflict management.
In the long run, respecting the rights of communities, and consulting and communicating with them in good faith, just as one would with any other shareholder, can make for not merely good practice, but also good business.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.