This is lesson three of six on business ethics.

Here are links to the other five:

Lesson 01-01, Lesson 01-02

Lesson 02-01, Lesson 02-02

Lesson 03-01, Lesson 03-02


Many multinational corporations operate in countries that have varying approaches to global human rights norms. This can expose corporations to undesirable risks and have a negative impact on brand value through association with forced labor, union busting, and pollution. Global NGOs and other watchdog organizations are able to document and publish such abuses in real time and mobilize international campaigns. There is also the worry that an uneven human rights playing field keeps labor costs artificially low in certain countries and thus creates a "race to the bottom" to tap those labor markets, where corporations that are willing to look the other way reap greater profit margins.

In response, several initiatives have sprung up to advocate the incorporation of human rights policies into a corporation's overall citizenship and ethics programs. Prominent among these is the United Nations Global Compact, a voluntary reporting system designed to promote adherence to core human rights among signatory companies. Independently, some companies are also experimenting with Human Rights Impact Assessments conducted in advance of major projects, much in the same manner they would conduct an Environmental Impact Statement before building a large factory or refinery.

Are such voluntary initiatives strong enough to effect real change in corporate human rights policies? Are the voluntary initiatives paving the way for mandatory human rights policies negotiated at the global level? Is there a collective action problem at work wherein obeying international law disadvantages corporations in certain jurisdictions?


Familiarity with existing voluntary initiatives, certification processes, and other non-binding attempts to promote corporate social responsibility.


A. In-Class Activities
Joanne Bauer, The Business and Human Rights Resource Centre and the Importance of Human Rights Policies, Workshop for Ethics in Business (March 22, 2007)

Bauer discusses the work of the Business and Human Rights Resource Centre in advancing corporate human rights policies.

Do: Discussion (30 minutes)

B. Assignments to Be Completed in Advance (0-2+ hours)
Taking Stock of Business and Human Rights: Policies and Practices
," Workshop for Ethics in Business (March 22, 2007)

The transcript from the first Workshop for Ethics in Business includes remarks from the Business & Human Rights Resource Centre, BP, and the Interfaith Center for Corporate Responsibility.

Christine Bader, "Business and Human Rights: Corporate Recognition and Responsibility," China Rights Forum no. 1 (2008) [PDF]

Bader discusses the meaning of corporate social responsibility and how John Ruggie, the UN Special Representative of the Secretary-General for business and human rights, is promoting engagement by companies in the international human rights framework.

Christine Bader, "Helping the Laggards Join the Race," Ethical Corporation (October 17, 2007)

A much-debated point in the field of corporate responsibility is what should be done to encourage companies that have made little progress so far. Bader offers a way forward.

Bill Baue, "Ruggie Report Says Voluntary Human Rights Initiatives Set Stage for Binding Global Standards," Social Funds (March 19, 2007)

While the report finds significant flaws with voluntary collaborations between corporations and civil society, they currently fill the gap created by nation-states failing to protect human rights.

Doug Cahn, "Human Rights, Soccer Balls, and Better Business Practices," Human Rights Dialogue 1.9 (Summer 1997): Innovative Human Rights Strategies in Asia.

Reebok has sought a solution that reflects its long-standing commitment to human rights and its own human rights standards by implementing many different programs in Pakistan.

Rajesh Chhabara, "Voluntary initiatives—Message lost in the crowd?" Ethical Corporation (May 13, 2009)

A proliferation of voluntary initiatives in corporate social responsibility over the past decade has resulted in confusion, clutter, and chaos in the market

Lisa Roner, "Corporate Leaders Putting Human Rights in Focus," Ethical Corporation (February 3, 2007)

A group of big businesses is going further than just keeping its nose clean by trying to advance human rights, particularly in emerging economies.


A. Do companies have financial incentives to comply with voluntary initiatives? If social responsibility requires raising costs, should policy regulations or industry standards be set up to raise costs across the board?

B. In his 2007 talk at the Carnegie Council, John Ruggie pointed out that the United Nations is an international organization made up of state representatives, whereas corporations are global, often operating in multiple countries. How does this impact the ability of the UN to regulate corporate practices? What is the role of individual states in ensuring that businesses operate in ways that uphold human rights?

C. What would happen if new international laws are put in place for corporations in contradiction of existing bilateral investment treaties?

D. Laws, regulations, and norms can all help to influence behavior. Yet there will always be individuals who find ways to break the rules if it brings personal benefits. Can business ethics ever prevail without a personal sense of ethics? How can an effective ethical framework be installed throughout an organization?


"Five-Year Overview of the Voluntary Principles on Security and Human Rights," Voluntary Principles on Security and Human Rights

The Voluntary Principles on Security and Human Rights were developed in 2000 in collaboration with the governments of the U.S., U.K., Norway, and the Netherlands; extractive and energy companies; and human rights NGOs. This report details company perceptions, successes, lessons learned, and challenges associated with implementing the Voluntary Principles over the initiative's first five years of existence.

Pam Muckosy, John Russell, and Tobias Webb, "The pros and cons of voluntary corporate initiatives on CSR issues," Ethical Corporation (June 10, 2009)

In this interview, Muckosy, Russell, and Webb discuss the Ethical Corporation Institute's new report, which looks in depth at what companies think of groups dedicated to a CSR issue or industry, and how the work of these groups makes a difference, or fails to.

John Ruggie, "Business and Human Rights: Achievements and Prospects," Global Policy Innovations talk (October 28, 2008)

UN Special Representative John Ruggie presents his conceptual framework for business and human rights, and his plan to develop practical recommendations for all relevant stakeholders.

Jodi L. Short and Michael W. Toffel, "Turning Themselves In: Why Companies Disclose Regulatory Violations," Working Paper Series, Center for Responsible Business, University of California, Berkeley (2005)

This paper examines how enforcement activities, statutory protections, community pressure, and organizational characteristics influence organizations' decisions to self-police.