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New treaty proposal offers hope to victims of financial firms’ human rights abuse

Last week, human rights advocates had a reason to celebrate, as the United Nations Human Rights Council, meeting in Geneva, decided on June 26, 2014 to establish an open-ended intergovernmental working group whose mandate is to elaborate a legally binding instrument on transnational corporations and other business enterprises with respect to human rights.

Not only is the resolution a big achievement in itself. It is also a powerful message of hope to all those in the trenches of facing human rights abuses as a result of the unchecked growth of borderless corporate influence. It proves that people organized across borders, and their political action, still can make a difference. The resolution was achieved against big odds, and even as companies exerted pressure to knock it down, directly and through their influence on important governments. In fact, many governments did not withstand the pressure and voted against, such as the case of United States and many European countries in the Council, while others preferred to abstain.

The passage, which even one week earlier seemed impossible, was possible because of action by people and communities, especially the Treaty Alliance, a group of networks and campaign organizations collectively working to organize advocacy in support of developing binding international regulation to address corporate human rights abuses. Indeed, a statement calling for an international legally binding instrument has been signed by 610 civil society organizations and social movements and 400 individuals from 95 countries.

Nowhere are the limitations of avenues to seek remedy for human rights abuses at the hands of transnational corporations more evident than in the lack of accountability faced by financial firms. In spite of the well-documented impacts of the recent global financial crisis on human rights, victims face impossible hurdles to obtain redress for acts of omissions of financial companies.

But the financial crisis is probably only the cusp of trends that characterize the operation of financial firms in normal times facilitated by borderless operations not matched by borderless mechanisms of accountability. If in doubt, one need only look at the phenomenon of tax planning which deprives countries all over the world of much needed revenue to meet human rights obligations, but passes by as perfectly legal. Or the action by hedge funds to disrupt hard sought debt relief and restructuring gains, which takes advantage of the absence of an international framework to deal with all creditors in a sovereign debt crisis situation.

Instead of facing calls for accountability, companies had oftentimes privileged access to shape the regulatory and policy responses to the crisis. According to a recent UN study, “An important force shaping governance at national and international levels is big corporations, which lobby for laws and policies that serve their interests.” The lack of human rights accountability stands in particularly stark contrast with the protections companies can obtain under Bilateral Investment Treaties and Free Trade Agreements, which have allowed corporations to sue States.

Corporate influence in the design of the rules is a crucial factor why efforts to tackle corporate accountability have systematically come to a halt, even though they have been periodically emerging on the international policy agenda since the rise of transnational corporations themselves.

While the UN Guiding Principles on Business and Human Rights, adopted in 2011, reaffirmed that companies have a responsibility to respect all human rights, the principles themselves are a voluntary initiative and, moreover, one whose implementation relies on the cooperation of the companies themselves. As such, they are an important contribution but cannot be expected to suffice as a tool for accountability.

A treaty with binding obligations is not a guarantee, and one should acknowledge that many things could go wrong with it. But what came to the fore in the debate at the Human Rights Council last week was that maintaining the status quo was simply not acceptable. There is an urgency to try something else. Last week, victims all over the world refused to take “more of the same” as an answer to their plight.

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