Businesses’ Impacts on Human Rights

9 Min Read By: Alan S. Gutterman

For states, businesses, and other stakeholders to effectively develop a framework for the relationship between business activities and human rights, it is helpful and necessary to step back and consider the impacts of common day-to-day business activities on universally recognized fundamental human rights.[1] While a great deal of attention is rightly focused on instances where business activities adversely impact human rights (e.g., contamination of drinking water supplies, displacement of communities in the wake of new development projects, and failure to pay wages sufficient to support a dignified standard of living), businesses also pay taxes to support local services and contribute to economic development by providing jobs and underwriting the development of their workers’ skills. Impacts vary depending on the specific context and factors such as the type of industry and the state of economic and social development in the areas where the business is operating. The traditional role of business and of societal and political expectations also varies from country to country and within national borders.

More and more businesses, sensitive to the criticisms of corporate social responsibility (CSR) as being little more than a self-serving marketing activity, are taking a hard look at their activities through a human rights lens. For this reason, human rights have become a top priority within the business community, based on surveys conducted by the United Nations (UN), the International Chamber of Commerce, the Economist Intelligence Unit, and the UN Global Compact. Interest has been driven by the recognition that human rights (1) touch on every aspect of a company’s operations, (2) are universal and easier for everyone to understand as opposed to CSR, and (3) are the essence of sustainability. Moreover, the evolution and maturation of the global human rights law framework provide businesses with clarity regarding the steps to be taken to fulfill their human rights duties.[2] All of this means that sensitivity to the interaction between business and human rights can be enhanced by focusing on specific rights, such as the following:[3]

  • Right to an adequate standard of living: Businesses contribute to providing members of society with an adequate standard of living by creating job opportunities that allow them to afford decent housing and food. However, when businesses push forward with projects that displace communities without consultation and compensation, they endanger the livelihoods of the members of those communities.
  • Right to just and favorable working conditions: Businesses can provide just and favorable working conditions by following strong health and safety standards, but they can also cause harm to their workers by failing to provide sufficient breaks during working hours or exposing workers to toxic substances that are dangerous to their health.
  • Right to water and sanitation: Businesses can work with governmental authorities to improve the water and sanitation infrastructure in a community, but they may also contribute to water scarcity for domestic and farming uses by using large amounts of water for their business operations or discharging pollutants into the local water supply.
  • Right to education: Businesses pay taxes and licensing and permitting fees that governments use to support education in the communities in which the businesses are operating. However, the failure of businesses to respect restrictions on child labor will prevent children from enjoying their right to education.
  • Right to access to information: Businesses can publish data on their environmental and social performance in languages and formats that make the information readily available to stakeholders. However, in many cases, governments and businesses do not make the results of environmental impact assessments publicly available and fail to carry out adequate engagement and consultation prior to launching a new project that will have an adverse human rights impact.
  • Right to nondiscrimination: Businesses fulfill their duties with respect to rights to nondiscrimination by implementing and following employment-related practices (e.g., hiring, promotion, and benefits) that do not discriminate on unlawful grounds, but they often engage in discriminatory practices that violate the rights of women (e.g., failing to provide equal pay to men and women for the same work or not allowing women to return to the same position following maternity leave) or of persons with disabilities.

Another method for connecting business activities to human rights impacts is to sort by reference to common business functions:[4]

  • Human Resources: The human resources function must regularly address the impact of decisions relating to workers on their rights to be free of discrimination and on the rights of protected groups such as women and disabled persons. Key questions that need to be asked include whether female and male personnel are hired, paid, and promoted based solely on their relevant competencies for the job; whether women and men are paid the same wage for the same work; and how sexual harassment in the workplace is handled.
  • Health and Safety: The health and safety function involves duties to protect workers’ rights to just and favorable conditions of work and health and safety. Therefore, attention needs to be paid to assessing whether the workplace is safe and to protecting the mental and physical health of workers.
  • Procurement: The procurement function is responsible for monitoring suppliers to ensure that they respect the rights of their workers to form and join a trade union and to bargain collectively and to assure that suppliers do not engage in actions that violate the rights of children or prohibitions against slavery. Businesses must impose appropriate labor standards on their suppliers as a condition of the business relationship and engage in due diligence to monitor compliance with those standards.
  • Product Safety: Businesses have an obligation to protect the rights of the customers and end users to health and privacy with respect both to the products and services that the company sells and the processes that it uses in connection with related activities such as marketing. Attention should be paid to products that raise safety issues and/or that might create health hazards, as well as to the collection and use of sensitive personal information of customers and end users.

Businesses can also orient their stakeholder relationships and engagement to the core human rights issues that are most relevant to the members of each stakeholder group. For example, relationships with workers should conform to their human rights to freedom of association, health, an adequate standard of living, and just and favorable conditions of work, and their rights not to be subjected to slavery or forced labor. Relationships with consumers and end users should be guided by respect for their human rights to health, privacy, and personal security. Members of the communities in which a business operates are entitled to respect for their rights to health, water and sanitation, life and health, and an adequate standard of living and, in addition, to not be resettled or otherwise have their access to land and natural resources adversely impacted by businesses without free, prior, and informed consent.[5] Obviously, businesses need to order their activities in ways that do not infringe on the aforementioned rights of community members, such as by knowingly polluting drinking water or emitting toxic chemicals. However, companies can also have a positive human rights impact by creating and supporting programs to provide adequate food and clothing to individuals and groups within the community and promote local cultural life. When identifying and defining stakeholder groups, businesses should take into account particular groups or populations that have been afforded special protection in human rights instruments, including women, children, migrant workers, persons with disabilities, indigenous peoples, and members of certain types of minority groups (i.e., national or ethnic, religious, and linguistic).

While the discussion above focuses primarily on the direct impact of a business’s activities on human rights through its own operations, the wave of globalization that has occurred over the last several decades has led to calls to expand the human rights duties of businesses to include adverse human rights impacts resulting from their involvement in business relationships with other parties.[6] For example, the UN Guiding Principles expect business enterprises to carry out human rights due diligence that covers not only adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, but also impacts that may be directly linked to its operations, products, or services by its business relationships. Traditionally, human rights due diligence in the supply chain has focused on working conditions and labor rights, often in response to news of unhealthy and unsafe conditions in supplier facilities that resulted in tragic outcomes for workers. However, the trend is to expand the scope of the inquiries to include human rights risks and impacts in other areas such as pollution and other environmental damage caused by the actions and corrupt activities (like bribery) of suppliers and contractors in the countries in which they operate that ultimately interfere with the human rights of the people in those countries.[7]

This article is an excerpt from the author’s new book, Business and Human Rights: Advising Clients on Respecting and Fulfilling Human Rights, published by the ABA Section of Business Law. More information on the book is available here.


[1] Alan S. Gutterman is a business counselor and prolific author of practical guidance and tools for legal and financial professionals, managers, entrepreneurs, and investors on topics including sustainable entrepreneurship, leadership and management, business law and transactions, international law, and business and technology management. He is the co-editor and contributing author of several books published by the ABA Business Law Section, including The Lawyer’s Corporate Social Responsibility Deskbook (2019), Emerging Companies Guide (3rd Edition) (2020), and Business and Human Rights: A Practitioner’s Guide for Legal Professionals (2020). More information about Alan and his work is available at his personal website at www.alangutterman.com.

[2] Why Businesses Say Human Rights Is Their Most Urgent Sustainability Priority (October 13, 2016), https://www.bsr.org/en/our-insights/blog-view/why-businesses-say-human-rights-most-urgent-sustainability-priority.

[3] Business and Human Rights: A Guidebook for National Human Rights Institutions (November 2013), 8. The website of the Office of the UN High Commissioner for Human Rights includes a comprehensive list of human rights issues (https://www.ohchr.org/EN/Issues/Pages/ListOfIssues.aspx) that businesses should consult for guidance in identifying and prioritizing the issues most relevant to their specific situation. Other useful resources are the annual lists of the top ten key issues that are of particular importance in the arena of business and human rights that are published by the Institute for Human Rights and Business (https://www.ihrb.org/).

[4] Doing Business with Respect for Human Rights: A Guidance Tool for Companies (2016), 21.

[5] Id. at 24.

[6] The OECD Guidelines for Multinational Enterprises defines the term business relationships to include relationships with business partners, entities in the supply chain, and any other nonstate or state entities directly linked to its business operations, products, or services.

[7] When developing processes for addressing human rights impacts in their supply chains, businesses can tap into a wide range of resources that have been developed as part of sector-specific standards initiatives and by organizations such as the UN Global Compact. See https://www.unglobalcompact.org/what-is-gc/our-work/supply-chain. The UN Global Compact aligns sustainable supply chain management to several of the UN Sustainable Development Goals, including decent work and economic growth, responsible production, and consumption and climate action.

ABOUT THE AUTHOR

Alan S. Gutterman

Alan S. Gutterman is a business counselor and prolific author of practical guidance and tools for legal and financial professionals, managers, entrepreneurs and investors on topics including sustainable…

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