Michael Posner on defining the rules for the 21st century global economy

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Michael Posner, a leading global authority on the business and human rights agenda, says it is time to define the rules for the 21st century global economy.

When I was working in the US State Department I realised that business and human rights is not something governments do easily. As in other governments, there is a big premium on trade and on promoting national brands, companies and exports. But the idea of a government holding companies to account for the way they operate globally is definitely not on the table.
And yet of the 100 biggest economies of the world, only 50 of them are states. If you compare the Gross Domestic Product (GDP) of states to the revenues of companies, Wal-Mart is the 25th biggest economy in the world. And yet there is no ambassador to Wal-Mart in the US state department.
How can these giant global companies respond, and what specifically can business schools be doing to help?

Rights framework
I believe that for business schools establishing a model that is based on a rights framework is critical. There is an element of corporate social responsibility that relates to businesses and human rights but they are not the same thing. We need to distinguish the field of business and human rights and the idea of rights, and embed this distinction and what it means into thinking at business schools.
I have identified a number of key areas of focus in this emerging agenda which pose the greatest challenges to business. These include: supply chains and labour rights; the extractive industries especially relating to security; information technology and issues of freedom of expression; agriculture and issues of child and forced labour; and investment and socially responsible investors.
Business schools have a crucial role to play in engaging businesses in a challenging and practical way to provide them with workable solutions to these challenges.

Challenges
The challenges were no better exemplified by the Rana Plaza disaster three years ago which saw more than 1,000 people killed after a garments factory collapsed in Bangladesh. The reality is that, in places like Bangladesh, local government enforcement is often inadequate. Laws are weak, enforcement weaker still. We know that international organisations, like the ILO (International Labour Organisation) or the OECD (Organisation for Economic Co-operation and Development) are very good at standard setting, but much less good at enforcement models. And we know that home governments and courts are reluctant to engage beyond their own borders.
Bangladesh is a perfect example of the need to move beyond risk mitigation. While many attempt to monitor their way out of potential difficulties, not many companies stand up and say ‘we’re going to revise our business model and our global sourcing model because we’ve realised that what we’re doing is unsustainable’. Nor do they say ‘we really want to be part of a global solution to this, working with our competitors’. Yet those are the conversations that need to happen.

Human rights
The discussion must now move to what does it mean when you talk about responsibility of companies to respect human rights. We must now define the rules for this 21st century global economy. Would we allow every driver on the road to decide the rules for themselves? And yet that is what is happening with companies and human rights.
We must identify common standards in each industry and identify benchmarks of compliance, coupled with establishing the remedies for non-compliance. We need to engage in this subject in a way that actually brings businesses to the table, otherwise it is pointless.
We need to move from what businesses should be doing in an ideal world to what can they be doing, and then finding the pathway to make that happen. We have come to the end of the beginning of the discussion of business and human rights. We are now in the phase of defining what the rules are in this 21st century global economy.

Michael Posner is the Jerome Kohlberg Professor of Ethics & Finance and Co-Director of the Centre for Business and Human Rights at NYU’s Stern School of Business. From 2009 to 2013 he served in President Obama’s administration as Assistant Secretary of State for the Bureau of Democracy, Human Rights and Labour at the State Department.

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