The cooptation of BHR: the looming threat of ‘CSR capture’

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This blog post was authored by Prof. Dr. Florian Wettstein – Universität St.Gallen (HSG) | unisg.ch, who was the keynote speaker at the Symposium: Colonisation in, of and through Business and Human Rights, held in April 2023 in Tilburg (the Netherlands). It is part of a Blog Series published on Rights as Usual.

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Corporate social responsibility (CSR) has become an essential part of doing business. There is hardly any large company that does not publish a report on its responsibility and sustainability efforts, that does not have staff or even a department dedicated to CSR, that does not showcase its various responsibility projects and initiatives on its website. While some applaud such efforts, others have warned early on that their deeper aim has never been to transform, but rather to legitimize the neoliberal agenda. They have compared CSR to a ’trojan horse’, that is, an instrument for corporate capture, rather than for corporate change. Such ‘CSR capture’ poses a threat also to the critical potential of the business and human rights (BHR) agenda. How this plays out in practice can be illustrated with the example of companies’ opposition against mandatory BHR laws.

Of course, corporations opposing – sometimes vehemently – new restrictive regulation is not a new phenomenon. They have spent staggering amounts to lobby law makers to design regulatory instruments in their favor and they exert influence at all stages of the process in the lead up and enactment of such regulation. Hence, the mere fact that corporations similarly tend to reject new human rights due diligence (HRDD) legislation both in various domestic jurisdictions as well as at the level of the EU, is not surprising and it fits the usual pattern.

Nevertheless, there seems to be a new feature characterizing the opposition specifically against such new HRDD laws. While commonly the resistance against new regulations tends to invoke what can be called ‘efficiency-based’ arguments, companies seem to have shifted towards ‘responsibility-based’ argumentation in their struggle against BHR legislation. The former set of arguments claims that new social or environmental regulation hampers corporations’ efficiency and thus leads to reduced profitability. Often such arguments are connected, implicitly or explicitly, to a so-called ‘exit threat’, i.e. corporations threatening that they may move their operations elsewhere. This puts pressure on governments to abandon their plans for tighter regulations if they want to remain competitive as an attractive location for lucrative businesses.

Such arguments abound also in the public discussions around mandatory HRDD laws, but there is an increasingly prominent focus on the latter, responsibility-based, set of arguments in this context. Responsibility-based arguments do not emphasize the economic, but the social impact of such regulation, claiming that such laws would undermine the responsibility that companies are already adopting through their voluntary CSR efforts. One argument is that the potential liability risk attached to such legislation would prevent them from continuing their long-existent engagement with affected communities on the ground and thus be counter-productive when it comes to enhancing the position of local stakeholders. In other words: BHR laws are claimed to lead to less, rather than more responsibility.

Accordingly, companies’ position against such laws is increasingly voiced by a group of company representatives whom one would not intuitively associate with a position against BHR regulation: CSR managers. Thus, the very same people who welcomed the UN Guiding Principles on Business and Human Rights (UNGPs) and were at the forefront of implementing them early on are now taking a stance against mandating those very same provisions they earlier voiced support for. What may seem counter-intuitive at first glance, follows a certain logic at a closer look.

When the UNGPs were published in 2011, early implementation efforts by companies leveraged largely on existing CSR structures and resources. This domestication of BHR in and through the existing CSR organization facilitated the reframing of BHR along CSR lines – and it has turned CSR managers into the ‘gate-keepers’ of this newly framed BHR agenda in business practice. The conventional CSR perspective views corporate responsibility essentially as private responsibility, which companies adopt on a voluntary basis at their own discretion. It is corporate-centric, apolitical, and tends to be driven by instrumental considerations. Legal mandates and government involvement do not fit this conventional CSR agenda neatly. In fact, CSR is commonly seen precisely to address the realm beyond such mandates. Thus, the opposition against BHR legislation is not counter to but in line with a conventional CSR mindset. And because BHR has been reframed in the categories of such conventional CSR, such legislation can essentially be portrayed as running counter the BHR agenda itself. Thus, the BHR agenda has successfully been turned against itself.

This is not to say that the new mandatory HRDD laws are the silver bullet to advance the BHR agenda and that companies ought to accept any such proposition without any reservations. However, rather than rejecting them across the board, corporate responsibility would require companies to engage with them in sincere and constructive ways. If the design of current legislative proposals distracts from practical engagement on the ground, the response should be to include stakeholder engagement and the inclusion of marginal voices a requirement both in the process of designing such laws as well as in the actual mandate of such laws. After all, this is a demand that also BHR advocates have voiced repeatedly and thus where business support could secure real improvements of existing proposals and laws. In other words, the answer would be to advocate for stronger mandates, rather than to lobby against weak ones. The UNGPs ask governments to enact a ‘smart mix’ of voluntary and mandatory measures to give practical meaning to the BHR agenda. Corporations who have endorsed the UNGPs early on must play a constructive role not only when it comes to showcasing voluntary efforts, but also in advancing the mandatory part of the deal.