“To deny people their human rights is to challenge their very humanity.” – Nelson Mandela
Technological advancements have narrowed the time-space convergence by enabling cross-border travel, integration, and trade, resulting in a globalized and united world trade frontier.
In recent years, this has escalated the growth of multinational corporations (MNCs). An MNC is a parent company which has agents and has operations which involve cross-border transactions. (Root, 1994) There has been much debate surrounding the concern of the growing power of MNCs, and its ability to get away with creating adverse effects to human rights, thus worsening their public image to consumers. Human rights are rights inherent to all human beings without discrimination, which consists of the right to life and liberty, freedom from slavery and torture, freedom of opinion and expression, and the right to work and education. (Un.org, n.d.) There have been numerous cases of unjust exploitation namely, Nestle’s forceful and abusive use of child labor, Coca Cola’s water privatization and discrimination, as well as Foxconn’s mass suicides, to name a few.
Hence, there is a deficiency of corporate accountability as well as transparency over the protection of human rights. The largest MNCs have responded by either creating or placing more emphasis on their individual company codes of conducts and ethics.
A code is said to have both an internal guideline and an external statement of corporate values and responsibilities. (Ethics.org, 2018) Well-written codes include a mission statement, values and principles, and a benchmark for professional conduct.
In this essay, accountability will be interpreted as xxxx, as this definition puts the term in a corporate context, in alignment with this essay. (Businessdictionary, 2017).
This essay aims to analyze and assess the usefulness of MNC company codes in promoting human rights accountability within their operations. This will be done by evaluating ethical perspectives through the lens of relevant theory. By taking a panoramic approach to this thesis while considering ethical, legal, and social implications.
Erwin, (2011) indicates that any firm, irrespective of its size and function, must follow a code of conduct. MNC’s contribute towards the protection of human rights due to which they must be fair in their decisions for their stakeholders. Gilman, (2015) indicated that the MNCs are imperative part of the society due to which the protection of the interest of the stakeholders become important.
It has been indicated by Murphy, (2014) that code of conduct empowers the workers to cope with daily operations of employees. The individual code of conduct is crucial as it acts as a reference for the employees to get crucial services and other material of ethics. Besides, some crucial activities for code of conduct include marketing and compliance.
Members of a profession or a professional body are expected to abide by the code. (Press-files.anu.edu.au, n.d.)
Furthermore, in the last decade, there has been a shift in nature of MNC’s power dynamics, allowing MNCs to affect legal regimes through economic and political lobbying. Consequently, this has led to the “emergence of fragmented centres of power which extend the individual’s perception of authority, repression, and alienation, beyond the apparatus of the state” (Muchlinksi, 2001). A study done by economic analyst Steven White suggests that the top 175 ‘economic entities’ derived from GDP for nations and revenues from corporations, comprises of 63% MNCs and just 37% nations (Freudenberg, 2015). The argument for MNCs being accountable for protection human rights highlights the transformation in mechanisms of governing power, and calls for the reconsideration of governance of the domestic space, given the extent of influence profit maximising entities have on regulations. Kant’s Deontology thesis, which argues that to act in the morally right way, people must act from duty, and it’s not the consequences that makes an action right or wrong but rather the motive behind it (Jens, 2007), reiterates the call for corporations to look beyond their legal compass; but rather act upon ethical implications.
The positive change in an individual company’s code of conduct can in fact promote human rights accountability in MNCs. It is highly apparent that metamorphissis can take place even after a myriad/trend of negativity/humn rights abuse. Software company Dell was accused of xxx in 2013. Dell suppliers in China work for up to 74 hours a week amid health risks, for as little as 66p an hour, according to a new report. However, after adusting/chaging their values.
It managed to earn its third consecutive award as the most ethical company in 2016 through its core values of winning with integrity, its ongoing focus on accountability across the company, as well as its Dell’s high ethical standards and commitment to conducting business in the best interest of customers, suppliers and partners. There is no evidence that the development of its codes of conduct directly promotes human rights accountability.
It is not possible to go against the view that corporations are responsible for the protection of human rights within their operations, and as Kant argues, should regard it as a moral duty.
However, the works of utilitarian John Stuart Mill helps illuminate our understanding of the subject of morality, providing stark contrast to the Deontology thesis. The bedrock of the utilitarianism doctrine was built upon the question “does this institution contribute to human welfare, and does it do so better than any of the alternatives?” (Bailey, 2002). Bailey suggested that the guiding principle of conduct should be dictated by which actions would benefit the majority. It could then be argued that the issue of human rights exploitation would be ‘justified’ given that it has provided more economic, social or political benefits to host nations.
For instance, in the early 1980s, Nike outsourced a significant volume of manufacturing to Indonesia, a developing nation which begun its search for economic growth through FDIs.
However, multiple incidents indicated Nike’s failure to meet minimum wage requirement and pay 600,000 hours of overtime worth $1 million USD (Kavoussi, 2013). As political pressures from civil organisations in the US proliferated, Nike started reshoring, jeopardising the jobs of 171,000 workers who “supported the request of the Nike plants to be exempted from the requirement of the new minimum wage” (Sicat, 2013). Milton Friedman, and illustrious writer who argued against advocating social responsibilities to businesses suggests “there is one and only one social responsibility of businesses–to use its resources and engage in activities designed to increase its profits so long as it stays within the law, which is to say, engages in open and free competition, without deception” (Friedman, 1970). During the inception of the UN Framework, representatives recognised that ultimately corporations are ‘private non-state actors’, and they do not have a duty to observe human rights issue beyond their scope of their legal limits, hence, conveying the unfeasibility of imposing hard laws. Therefore, “it is only for the state to regulate on matters of social importance and for MNCs, as private actors, can be only beneficiaries of human rights protection, not human rights protectors themselves” (Muchlinksi, 2001). Moreover, MNCs’ sphere of influence and control over social issues such as human rights protection is limited. Corporations might have a substantial control over the treatment of workers, however in situations where “governments lack the economic resources to monitor and enforce laws” (Arnold 2010), or minimum wage is still below the poverty line, MNCs are unable to reform civil laws and regulations. The mechanisms of the free market pose further contradictions to the extension of human rights responsibility to MNCs, in the form of ‘free-rider’ market failure. “Given that not all states nor corporations are conscientious about human rights issue, those that invest resources in observing human rights and in making themselves accountable will be at a competitive disadvantage in relation to more unscrupulous corporations that do not” (Muchlinksi, 2001). Moreover, the dependency on MNCs to govern social issues would downplay the role of the state; during the Rana Plaza factory collapse Bangladesh, local government officials did checks on factories but did not find fault (Burke, 2014). However, in the aftermath of the disaster mass media focused on MNCs as the centre of accountability. Lastly, actions of NGOs driven by political motives; to enhance their profile by targeting specific MNCs, create fragmented governance mechanisms resulting in corporations not held equally accountable. This further highlights the limitation of social framework in governing human rights issues in global supply chains, and provides strong argument against extending protection of human rights responsibility to MNCs.
MNCs aim to maximize profits and thus tend to have a different approach to the triple bottom line as they usually only focus on the economic branch of the framework and take less consideration for social and environmental factors. Being a non-human entity, most MNCs do not have a moral obligation to follow an ethical code, and therefore its focus would be to increase shareholders wealth. This has a contrasting idea to John Elkington’s framework which suggests that the focus on one aspect should not be at the expense of others. In order to benefit from lower costs, MNCs are known to exploit workers rights, such as by underpaying workers in poor working conditions. (Warwick.ac.uk, 2006) This trend is
(Murphy, 2005) final conc point <- add main citation below Conclusion Drawing upon ethical, social, and legal frameworks this essay has explored the usefulness of an individual companies' codes of conduct to promote MNCs accountability for the protection of human rights in their operations. Existing voluntary codes of conduct do somewhat encourage ethical consideration involving human rights since all employees and staff within the MNCs try to comply with the code and report any unjust activity and thus serves as a means to improve transparency within a supply chain. (HRW, 2016) Thus, promoting the human rights accountability of MNCs. However, legislations such as the Modern Slavery Act, demonstrate that state agents should set stronger legislations which attribute greater responsibility and accountability for MNCs to greater mitigate human rights violations. This essay suggests that greater importance should be given to governments to augment more stricter codes, which would result in greater compliance and accountability from MNCs.