Profit with principles

 Good afternoon, everyone.

Very warm welcome.

Very good evening maybe for some of you or morning, we have participants from all over the world, really.

My name is Leila Choukroune and I'm professor of International law and director of the University of Portsmouth Democratic Citizenship theme.

Today we are absolutely delighted to welcome our colleague from Hong Kong, Professor Surya Deva.

Surya and I have been working together for quite some time and I'm very much delighted, as I said, very happy to welcome him today, not only because it's so late already in Hong Kong, but because Sury's work really matters.

Suryais an associate professor at the School of Law at City University of Hong Kong, and he's the current vice chair of the United Nations Working Group on Business and Human Rights.

He's from our research interests, lie in the business and human rights domain in India and China, constitutional as well as sustainable development.

He has published extensively in these areas.

Surya Deva is one of the founding editor in chief of the Business and Human Rights Journal, and sits on editorial and advisory board of the National Council of Human Rights, the Vienna Journal of International Constitutional Law, the Indian Law Review, the Australian Children of Human Rights.

And while this doesn't say everything Surya's work in the business and human rights domain has been extremely important, critical and certainly has made the mark already.

So Surya, one more time, thank you very much for your participation.

And without further ado, the floor is yours.

Thank you.

Thank you very much, Leila for the invitation and the kind introduction.

This is really my great pleasure to be able to share some thoughts on this theme.

And I guess this theme of profit with principles, with the question mark has perhaps become more critical in the recent weeks or last couple of months.

After I sent you this title in the abstract, I think it has become more pressing.

Let me start by outlining the central argument that I'm going to present for your consideration, I don't have any slides and I welcome any feedback from the participants, by questions and comments or disagreements.

The argument that I propose for your consideration is this.

That it is not easy for businesses to earn profit with principles.

And by principles, I mean human rights, respecting human rights in a broad sense to cover labour rights and environmental rights as well as human rights.

And if I'm saying it is not easy, then I am personally refuting the idea that it is a business case for human rights in most other situations.

I mean, they may be a business case in certain situations, but there is no unqualified or absolute business case for human rights.

And I think that is where the conflict between profit and principles and steps in.

And I based on my experience, it is not easy for companies to do both.

It also seems to me the second part of my argument, it also seems to me that this dilemma between profit and principles is deepening.

It is becoming more serious because of a number of push and pull factors as compared to how this dilemna unfolded, let us say, in the 20th century.

And the last part of the argument is that despite the challenges and difficulties, business is going to still try to adopt some strategies to navigate through these dilemmas and try to respect human rights as a matter of principle and also make profit.

So I think it's possible, but it is very, very challenging.

So that is, in short, what I would like to share with you.

So let me start by unpacking this dilemma, and I would like to pick four case studies from Asia.

I'm based in Hong Kong, so Hong Kong is going to be one of those case studies.

As you may recall, the Chinese government enacted a national security law early July last year.

And that enactment of law, which applies to all businesses because of this enactment of national security law, they have been some regulatory measures on the part of in particular the US government, which also impose some obligations on businesses.

And I think that creates this dilemma.

For instance, the US government has imposed sanctions against some Hong Kong government and Chinese government officials who they believe are undermining the autonomy of Hong Kong as they are.

And then the government, U.S.

government is saying that the banks should not do any business with these government officials.

Now, this dilemma is created not only for.

Hong Kong based banks, but any banks which may have exposure to the US market, they are trying to comply with those regulations coming from the US government to try.

And what is interesting is that even Chinese banks who would like to not really follow these sanctions, they are they are they are following the sanctions.

Right.

But that creates this conflict between the banks.

What should they follow national security law in Hong Kong as they are, or should they follow the US government regulations in terms of this? So that my first case study of this dilemma.

The second is I come from India, the second example I would like to pick from is from India.

So early this year, I mean, Twitter in India has have had issues in the past as well.

But the most recent tussle has been about the Indian government requesting Twitter to suspend hundreds of accounts.

And some of these accounts were all journalists or some online media companies and all that.

And I think the list was very extensive.

And initially Twitter suspended, then they said, OK, we will not suspend.

The accounts were opened again.

The government still wanted them to suspend accounts and all that.

So that continued the battle.

And, of course, the arguments taken by the Indian government is that, OK, if you want to operate in India, you have to follow the rules of the Indian government.

Public order is important, and some of the Twitter accounts are creating a potential threat to public disorder because a lot of protesters and I think there was the issue of about the farmers protesting in India in January and February and there was some violence and all this.

So I think that is the second case that I would like to highlight again, that the Twitter in India faced this dilemma.

What to do? Should they stand with the peaceful protest? Should they stand with freedom of speech and expression, or should they follow whatever the Indian government is asking Twitter to do? The third case study that I would like to mention is what should companies do when they operate in Xinjiang? I'm sure all of you are fully aware of the allegations that have been coming out of China for a number of years now.

And the big issue is that are these businesses, whether these are local Chinese companies or these are the Western companies with the supply chains in China, are they complicit in some of these serious violations, if true? Of course, the Chinese government is denying all of these abuses.

So so I think this is yet to be seen on the ground if some independent actors could travel to China in Xinjiang and make those findings.

This is this is a very disputed question.

But irrespective of this question, I think the fact that those allegations are being repeatedly made, that itself raises questions about this dilemma that companies are facing.

My fourth in the last example is about businesses operating in Myanmar.

And as all of you should know, after the military took over in early February, this issue is becoming quite a challenge for many businesses day by day because the military is threatening to undermine the whole democratic system.

And, of course, it is violating a lot of rights, including the right to life, because they have killed hundreds of people so far, including peaceful protesters.

So I think these cases, studies, I will say, can be replicated, can be found elsewhere in the world as well.

But I just picked these four and they are many more in Asia.

Now about these dilemmas, tell us.

In my view, we can look at these dilemmas in terms of two aspects, one is there is a clash of regulatory norms and the second element is they are competing market norms that we need to consider.

How do we explain this? So in terms of clash of competing, regulated, competing and sometimes conflicting regulatory norms, we can look at the situation in which the law is in one particular country may conflict with the extraterritorial legislation of another country.

So, for instance, I was giving you the example of the banks operating in Hong Kong.

So they have to satisfy with the national security law in Hong Kong.

And they also have to satisfy the US law, which which has imposed sanctions on the Chinese government and the Hong Kong government officials so that it creates a clash.

This clash is a hard versus hard norm clash because you have binding legislation and you have binding legislation coming from another country.

Another variation of this hard versus hard conflict of norms can also arise in those situations where the laws of two laws or more laws of one country may come into conflict.

Right.

So let us stay in Hong Kong we have a National security law, but we also have the Bill of Rights ordinance, which businesses may have to respect in certain situations, or we have the other legislation protecting human rights and non-discrimination that businesses, including banks, would have to follow.

So how do you ensure that you are respecting those legislation at the same time? Sometimes they may conflict.

The other possibility of this regulatory clash may arise when there is a clash between the law of a particular country and the corporate codes adopted by a particular company so that Twitter case study that I was highlighting it is a good example of it because the law in India is saying something and to be done has a code of conduct, how they operate and when they can suspend a particular account and what materials they can take off the Internet and all of this.

Right.

So I think then there could be a clash that arises between the law and the code of conduct of the comonay.

And that evaluation of this conflict, I would say, is the law in a particular country and a solved international standards like the UN guiding principles or the OCED guidelines.

And here we can refer to the situation with the case study that I was talking about in Myanmar.

So companies in Myanmar, if they wish to operate as in compliance with the domestic law, including the regulations that have been introduced by the military in the recent couple, the last couple of months, they are unlikely to be able to operate in compliance with the UN guiding principles or the OECD guidelines of the ILO declaration.

So then there is this clash triggering again.

The second explanation for these dilemmas, in my view, could be because of the competing market forces.

Right.

So the expectations businesses, of course, would like to enter new markets.

They would also like to create new markets for certain products.

And those expectations and norms in different markets, what consumers are expecting, what investors are expecting may not be universal.

And I think then there could be a clash between the market forces and let us stay of the parent company.

So if the parent company as it comes comes from Europe, so the expectations of the investors and consumers in Europe, maybe a very different from if that company is operating in China.

I'm sure you have seen the newspaper reports of last week where H&M and Nike and many of the brands were targeted by the Chinese consumers and customers online, as well as through their action that if you do not buy the Xinjiang cotton and if you if you kind of want to be party to this, which the government claims false allegations of forced labour, then we are not going to buy your products in China.

So this createsconflicted norms between the expectations coming out of the Chinese market and the expectations which could be there in the European market.

And sometimes these expectations may not match.

So I think there are those situations.

Now, let me go back to the second point of my argument, which is that it seems to me that although these dilemmas have been there from the very beginning when we started talking about business and during the colonial period, for instance, it can be argued that the companies like the British East India Company, they might have faced a dilemma when they were operating in Asia because because they were trying to collect revenue from farmers and even the farmers are starving and there is a drought, they still are recovering a huge amount of revenue.

So that creates a conflict.

Of course, those conflicts and dilemmas perhaps were not articulated at that particular point of time in terms of human rights, but those dilemmas did exist.

Or are you going to fast forward to this First World War in the Second World War context in which there were serious allegations of companies providing assistance to the Nazi Germany, for instance, the Second World War situation, and a dilemma maybe there in those particular situations as well.

Or we can go back to go further to the apartheid situation in South Africa.

Right.

So there must have been dilemma in those particular situations as well.

But my sense is that the dilemmas that we were facing until the end of the 20th century perhaps were not as serious as the dilemmas that are being faced by businesses in the 21st century.

And I think there are a number of reasons why the dilemmas are becoming more complex and more serious for businesses.

And I would give a laundry list of factors for your consideration.

Let me start with the BHR standards that the standards in the field of business and human rights now are more sophisticated, especially after the UN guiding principles.

And that means that the expectations from consumers and investors are growing.

So businesses, as compared to the businesses operating, let us say, even in 1990s, a lot of issues about sweatshops, right.

So that context of dilemma, in my view, was not as serious as the dilemma Nike is facing now in China right.

So I think there are bigger markets like China and India and other places, where not as big as the market.

So you can't really look at only the global north markets.

You want to target the global south markets as well.

And I think those markets sometimes may come up with some unique challenges.

So I think those are the situations that we need to invest in.

I also see that all the UN guiding principles try to replace this idea of naming and shaming with knowing and showing.

I still feel that naming and shaming has not disappeared.

It has reinvented itself in terms of social media campaigns.

So if you look at all over the world, companies are being put under pressure under the spotlight because the civil society is globally interconnected as free internet means of communication are very good and there's a coordinated civil society campaign against companies and in many cases they have to board this pressure.

You know, of course, the pressure could also be in a negative manner.

Like I already mentioned, the consumers in China saying ignore the human rights.

So that could also be a very unique dimension of pressure.

But I think in many cases the pressure is positive so that respect human rights or provide remedies in those particular situations that is very much there.

Then we also have, as you may know, mandatory human rights due diligence legislation evolving in particular in Europe.

And because of those legislation, I think the dilemmas are going to be deep and rich.

So, for instance, if we have the French duty of vigilance law and you have a French company operating in Myanmar or in China or in India, that company definitely has to think twice to manage those risks as compared to a situation if the French government never had this law.

So those legislation are definitely going to deepen this dilemma for businesses.

And I think once the European Union introduces the mandatory human rights and environmental due diligence regulation, I think this dilemma is going to become deeper and deeper, in my view, in certain situations.

In addition to these legislation, there have been some interesting and innovative cases coming out of some common law as well as civil law jurisdictions, whether it is U.K.

or Canada or Netherlands.

And there are interesting cases coming out of even Australia recently and there's a case this is pending in the courts in Thailand.

So what we see is that increasingly a lot of thought on misrepresentation or negligence, a nuisance.

These kind of cases are being pursued in a number of jurisdictions.

And I think some of these cases have been successful, at least on jurisdictional point, which are putting pressure on companies, how they manage their global affairs.

So I think that issue is very much there.

So because of these factors that I mentioned, I think I have a feeling that instead of it becoming easier for businesses to respect human rights, in some cases it seems it is becoming harder for them to respect human rights and make money.

And of course, I should qualify this, because these dilemmas are not present in each and every condition or in each and every market.

These dilemmas may not be there for each and every company.

Right.

So if you have a company which is not known by the society, it's kind of an unknown name.

Or this is a small company, which is not an easy target for social media campaign or it is not a big enough company, which is captured by the mandatory human rights legislation.

And in those cases, those dilemmas may not be triggered.

But if you are a big multinational with global operations and you are captured by the duty of care cases, all the mandatory directives legislation, then it is very likely that those dilemmas are going to be very profound and the in those particular situations.

That brings me to the third and the final part of my talk, and here I would like to outline some of the possibilities, some of these solutions or strategies, if not solutions that businesses can consider to employ to overcome those dilemmas.

So there are challenges, dilemmas that are deep, but still, I think businesses can try to do something about it rather than saying we can't really do anything about it.

Of course, starting point has to be human rights, due diligence.

But I would say this due diligence should be proactive and it should be done continuously.

To manage the risk and risk, not merely to the companies, because still many companies, it seems, still have this mindset of managing the risk to themselves rather than managing risk to companies.

So managing risk to rights holders.

So I think it is crucial that businesses start doing the due diligence with a future in mind, right.

So, for instance, let me go back to my case studies that the struggle that we did in India has had this is not unique.

The request that came, if you look at the last several years of how the Indian government is behaving, social media companies are having this difficult time.

So there are things you can anticipate.

Right.

And that should be part of your due diligence or this or the allegations that are coming out of China about Xinjiang.

These are not new allegations.

They are there for several years now.

Right.

So if you are a company, then you should be thinking proactively about those things earlier rather than just buying your time and think, oh, this will pass and we continue to do business in that particular country.

Same can be applied to Myanmar.

So countries, sorry companies, that were operating in Myanmar after this potential transition to full democracy, they must be fully aware that how fragile the democratic transition in Myanmar was.

Right.

So just say in many of these cases, the risks, if you manage them proactively, I think you can decide what to do in advance rather than reacting.

So I am suggesting a proactive approach of due diligence.

Futuristic.

Let me let me call it futuristic due diligence rather than the due diligence, which is you're looking at your current operations.

The second tool that may be relevant is what I will call creative compliance.

Sometimes when you have competing or conflicting regulatory norms, businesses can be creative in how to comply, both set of rules and regulations and try to satisfy.

The example I would like to give here is that when the national security law was imposed in Hong Kong last year, many companies, including Google, said that 'we will stop sharing the information about our users with the Hong Kong government because we cannot trust the system anymore'.

Right.

And later on, Google adopted a policy that's now if a new request comes to us, we will ask the government to send that request via tue diplomatic channels.

Say if the Hong Kong government wants anyinformation about a Google user they should approach the US government and the US government will approach Google.

So they are not saying no to the government.

So that's why we said this is a creative compliance.

They're not saying they will not follow.

They're saying we will follow it.

But there's a process we need to follow and the processes is that the government should request the other government for the information.

So I would think this is an example of a creative compliance.

I mean, the second creative compliance example could be Twitter, right? So even if the accounts are to be taken off or suspended, Twitter has said that they will be suspended only in that particular country.

So an account which has been suspended in India could be visible, could be seen in the rest of the world.

Right.

So this is a game that you are trying to strike a balance rather than a complete blanket ban on those particular situations.

The third possibility, in my view, is that businesses should develop some robust internal policies and frameworks.

And they could fall back on those policies and frameworks and processes and mechanisms if the government is asking them to follow certain rules and regulations in a very broad manner.

For instance, Facebook had established the oversight board and commenting here whether this idea of the board is good, whether it's effective or not, yet to be seen.

But the system at least provides Facebook an option to fall back on that.

Right.

So we have a process in place.

And I think this also will allow businesses to say that we are not taking a political position because often businesses are getting grappled into these highly polarised and political debates all over the world, including in the context of China versus the rest geopolitical situation.

And, of course, Chinese government is saying that these companies are taking a political stand.

So how do you refute it? How do you refute it? I think the only way to refute it could be if you have those internal policies and practises of mechanisms and you can show it to all stakeholders, including to the Chinese government, that we have nothing to do with political reasons here.

And we are acting in ABC because of these policies and actions.

The next possibility could be collective action, I think that links back to the idea of leverage.

So if companies get to act together and they can say that these are our non-negotiable red lines, whenever we are going to operate, I think that is going to increase the leverage, quite, quite significant matter.

So if one particular company let us say is being targeted.

What about other companies from the same sector, or what about all companies from all sectors operating in that particular country? Because if today is a country Company A that is being targeted tomorrow, it could be Comany D right because the states can target any company.

The states which are repressive, they don't care.

It's just a matter of time where this company is going to be targeted.

Right.

So I think the collective action sometimes not always, but sometimes it could be tried.

It could be effective in those particular situations.

The next thing I like to consider is communicate publicly.

Right.

So if you are able to communicate publicly and of course, in some cases privately as well with the governments and other agencies, that where you stand on those issues and you try to continuously engage with all stakeholders, I think that communication is quite crucial.

And again, I would suggest that the communication should be proactive rather than reactive to a particular situation.

My last two points.

As I mentioned, that human rights due diligence has become kind of the global basic norm expected of any business operating anywhere in the world.

So what do you do if in a particular market, in a setting, no meaningful human rights, due diligence is possible? What you to do? In my view, then you need to exit that particular market, even if that means sacrificing the profit in those particular situations.

Of course, that raises the question about leverage.

That raises questions about that.

If you exit the market, your leverage is gone.

Right.

Or you may think if the exit market, there could be a worse company that may enter the market and replace that and the and the people on the ground may be worse off.

Yes, those are different.

Those are difficult issues.

And I think those should be part of the consideration of a responsible exit.

But if you do not see any hope of a meaningful human rights due diligence, even in the short term or medium term or long term, thenI don't really understand how a company can justify operating in that particular market simply because it is going to make more money.

My last point is that many of the issues that I'm highlighting today, they are there not because of businesses.

They are there because of governments.

They are there because of the states.

States are the elephant in the room.

The real difficulty we are facing today all over the world is that we cannot really trust the governments almost anywhere in the world.

To respect, protect and fulfil human rights.

They are not doing what they should be doing.

And then because the states are not doing that, we are expecting businesses to fill some of those gaps which are left by the governance gaps, as we call them, left by the states.

And I think this is a legitimate expectations to have businesses also respect human rights.

And I think there's nothing wrong with that.

But my summation is that companies can not fill all the gaps that are being left by the governments.

We cannot expect companies to do everything what governments and states should be doing.

Because that is going to then completely reverse this idea of relationship between individual human rights and states.

So I think we should be also keeping the expectations from businesses within the managed parameters.

Otherwise, it could backfire.

So Leila.

Thank you very much.

I will stop here and of course, happy to take any questions.

And if he had any comments or anything, Thank you.

Thank you so much, Surya.

That was fascinating.

Also very important and to some extent it was quite thought provoking.

You going to hear me play the devil's advocate a little bit, because there are certain things you said which certainly deserve discussion.

My first question, because I know we're receiving questions in the chat, but but my first question is the following that not everybody's very familiar with business and human rights environment.

So can you explain further what you say or what you mean when you say there is no business case for human rights? That's an expression we use so, so many times.

You know, in the past when I was myself, teaching businesses and human rights to business executives, a way to make them understand that human rights matter was to say there is a business case for human rights.

But maybe you're right.

It's not really that.

Can you explain that further? Sure.

I mean, when I say that there is no absolute or unqualified business case for human rights.

So I think my my my stand is that there may be a business case for human rights, for certain companies in certain situations.

But human rights are applicable to all companies in all situations wherever they operate, and I think the business case, in my view, does not really help in those particular situations because there are challenges that businesses are facing.

And I think we also undermine the idea of human rights if we link it with the idea of business case, because these are normative goals and businesses should total human rights, not because following them is going to make them more profitable, but because these are parts of the rules of the game of doing business, in my view.

So if there is a business case, good! Business can make more money.

But the point is, even if there is no business case, businesses should follow human rights.

And the case studies that I'm highlighting today, including the case example I gave from China, for instance, right.

Now there's a reverse business case so chinese consumers are saying if a company wants to respect human rights, then you cannot make profit in China because that is what it means.

Right.

But if you ignore labour rights allegations in Xinjiang, then you can make profit.

So there is an interesting reverse business case for human rights as well.

Mm hmm.

Yeah, I understand.

And thanks very much for clarifying Suya.

The way you explain it is crystal clear.

So human rights, no matter what, there's no business justification to implement abide by human rights rules and obligation just because we received a few questions already.

But I'd like to to play the devil's advocate, if you don't mind, when you said in a very pragmatic manner and of course, as I said as an introduction, you've been working in this domain for so many years.

You are a very active member of the UN Working Group on Businesses and Human Rights.

So at one point, one needs to be pragmatic.

But when you say, well, what would you ask businesses to implement certain business, a certain human rights when the state is not doing its job? The state is very much absent.

In a way I agree with you.

We need to get the state back into the picture.

But yet, at the same time, isn't it a bit naive when certain states are so powerless, so much less powerful than major businesses? And certainly depending on foreign direct investment, depending on trade, depending on these businesses, which basically dictate their policies? Thank you.

I think the situation is very complex, so I think we cannot put all businesses in the same basket and only stitch in the same basket.

Sometimes states are not powerless.

They pretend to be powerless.

Because if they want to act, they can act.

So when the governments would like to enact a law to let us recover the tax if they want, they can recover the tax.

If they want to stop money laundering by businesses, they can act.

If they want to stop, let us say anti-competitive behaviour.

If they want to stop any potential terrorism funding by businesses, they can act robustly and also collaborate across the borders.

But when it comes to human rights, something happens to these very governments that are not willing to act with the same strong, robustness.

So I think that is something that we need to question.

The other point that I would like to highlight here is that, of course, under the UN guiding principles, and I think that is one unique contribution of the UN guiding principles, that they don't make this primary versus secondary obligation or responsibility of states and businesses.

Rather, both states and businesses have let us say independent but complementary duty versus responsibility in those particular situations.

And that is useful in my view.

But the point I'm trying to make is that when we focus too much on the polycentric governance, because the ideal polycentric governance is that we cannot trust states alone.

And I agree, we cannot trust the states alone.

But the difficulty is that if we; it seems to me that we cannot also run and manage and regulate businesses effectively without the state.

So we should also try to do what I will call "recover the state".

Because human rights are about us, they're not about the states, we have these rights and the states exist because of us.

Not other way round, so individuals and rights holders really do claim the ownership, in my view, over these rights and insist as part of the political process that states are regulating corporate behaviour for the benefit of all society, not for the top two percent of the private.

That fascinating Surya, I love this expression, "recover the states" we could talk about that for for hours and what it means in law, really, we've received a few questions for you.

So the first question from Barnaby, would you consider social media business, which needs to follow laws of a given country or space in its own right, which is only dictated to by international law? Also, do Asian country ever put sanction to England or on England or America? I both clearly violate human rights in one way or another.

So two questions for the price of one.

The first one, the social media.

And I think we can probably extend that to online businesses.

So where do we regulate? I think social media companies, of course, they are unique in certain ways because they are operating in a cyber world.

But I would say that they have to still follow the laws of the countries in which they are operating as well as international standards.

They may have their own unique standards that may be relevant, but I think they still need to follow the standards that are applicable to, let us say, physical or the typical face to face businesses.

Right.

So I think those situations, of course, in certain situations, the regulations may need to change.

If you look at the recent tussle that, for instance, Google and Facebook had with the Australian government about revenue sharing.

Right.

That that highlights this issue, that rules may have to evolve.

But, of course, social media companies and online companies, they have to follow a range of regulatory frameworks, including their own, as well as the laws of the country as they're operating, as well as international standards.

If I remember correctly, the second question was about Asian countries imposing sanctions on the UK or let us say, European countries or the global north.

I think that is likely to happen more and more in the future, in my view, because let us say the unilateral sanctions that have been imposed so far, but imposed by the global law for reasons which they consider legitimate human rights.

But I see the possibility of powerful countries in the global south in the future imposing sanctions against the global north actors, including governments in future for reasons that they will regard illegitimate, even if they are not legitimate by the international standards.

So I think this is a power game.

Unilateral sanctions.

And I think we will see a new governance model, let me put it this way, at the international level, because I will call it the China Challenge.

Mhmm mhmm.

So I think China is going to pause.

I think it has been difficult to control powerful countries in the past, whether it is the colonial power of Spain or the UK or other countries in the Europe, or it was difficult to control the human rights abuses by the US government or when they acted in violation of international law.

It was difficult by this war in Iraq or something else.

Right.

So international law, as well as international human rights law has already struggled to hold powerful countries accountable, especially when I think the challenge that is going to be posed by the power of China is going to be unique, in my view.

And I think we are not ready for that.

We are not even discussing that, in fact, fully.

And so I think that's that's what I have said, is that I guess what I would stop.

Yes, indeed.

Thanks very much Suryaa.

Another question from Olga.

What do you think about the pressure that's being put on consumers to only engage with ethical businesses? Is it fair? And should it be consumer driven rather than policy driven? I think, of course, consumers have autonomy in agencies, so consumers should be free to decide what they want to do, right.

But as I mentioned, if we value if we value human rights as consumers, then we also need to play our part in ensuring that we create an ecosystem in which human rights, not only of us as consumers, but rights of others are also respected.

So I think there should not be any compulsion or pressure.

But I think if there are policy frameworks and grazing businesses to be taking ethical decisions, I think I will personally believe that this is the right rule, because for me, all of us have a role to play in promoting human rights, including consumers.

Thank you, Surya.

A question from Samad.

Dr. 

Deva are incentive mechanism provided by the state to businesses which respect human rights even at the cost of revenue, valid, realistic and pragmatic or a pragmatic idea.

If so, can you give any examples of any such initiative from around the world? So Leila, if I if I go to it right, the question is about what incentives have been given by the state.

Is it is it is the question? Possible incentive given by the state to businesses to implement? Sure.

I think this is a very good question, I must say, because in my view, a state should provide both incentives and disincentives.

So I call it as part of the integrative theory of regulation that no one tool is adequate in itself.

So the state should combine a number of incentives as well as disincentives.

Now let me give a couple of examples of incentives.

One could be public procurement.

The government can say that only those companies which have a strong human rights record, not merely policies, because many companies can say they have policies on their websites.

In my view that is not [inaudible].

So only those companies which can demonstrate that they are respecting human rights in practise, only those companies will get public procurement contract.

On the other hand, companies which are shown to have a track record of abusing human rights are not providing remedies: they can be blacklisted by the government.

Right.

So I think that is going to create some kind of what incentive and disincentive in those particular situations.

I would also say that they could be tax incentives for companies right, Say, if companies can show that they made less profit.

Why? Because they invested a lot of money in ensuring that the supply chain is completely free from human rights abuses, that companies should be demanded because it is contributing value.

If a company can show that we have saved 5000 children from malnutrition who might have died otherwise, some of them, that company must be rewarded so they can be those incentives that are possible.

Of course, you can also think of giving preferential loans to companies which which are, let's say, green companies, those who are taking steps to protect the environment or taking steps to to save the planet.

Right.

So I think those kind of incentives can be given by the governments.

And increasingly, governments are trying to do that.

But I think we need to do more of that.

And once that starts happening, then we will have a business case for human rights.

Because those incentives and disincentives, so so my point is that there is no strong business case now, but the government must create that business case and they will create their business case when they create those incentives and so on, so forth.

That's very interesting Surya.

And we could think about the scheme of framework as sort of a reverse special economic zone, you know, where you would get lots of incentives, lots of rewarding cookie points if you respect human rights.

That would be really creative, I suppose.

Thanks so much.

Another question from Barnaby.

How do you think populism may impact business and human rights? I think it is already impacting quite significantly populism.

I so populism is impacting, let me say, human rights as such, and if it is impacting human rights, it cannot remain untouched on the BHR domain.

So societies are becoming highly polarised.

People are becoming, in my view, irrational.

They're not thinking,they're blindly following wher a particular narrative is being built around something and we are becoming very, very self-centred and not thinking about all of us as part of one humanity.

Right.

And I think that is highly problematic.

So so there the tensions on the grounds of race or religion that we see all over the world is made worse by the populist policies.

And I don't think some of the populist policies are helping the societies.

Perhaps they're creating further divides in societies to that extent, but it will be very difficult to repair those divides.

So if we have companies operating in such polarised societies, it becomes more difficult and challenging for them to respect human rights, because they would have to really do something extra to manage those tensions in society.

Of course.

Thank you very much, Surya.

Another really interesting question from Sonia.

Excellent lecture.

That's the first comment.

My question is related to the H&M case.

From the point of view of international law, the focus of the Chinese government is the denial of forced labour, which is a dispute on facts.

If China had ratified the ILO convention, there would be an authoritative investigation and conclusion from the ILO regarding the nature of the factual information.

But since China has not ratified the convention and the ILO UN keep silent about what is happening and in this case, a brand like H&M is taking risks to classify the practises into forced labour within its discretionary private power.

It is also something that international community seek to avoid.

Otherwise, what mechanism has final say regarding de facto part of the case? Really interesting.

Thank you, very interesting question.

Yes, a couple of observations I would like to make.

First observation is that even if China has not ratified the fundamental ILO conventions, China is bound by the core ILO labour rights because of the 1998 ILO Declaration of Fundamental Principles and Rights at work.

Because simply because China is a member state of the ILO, it has to follow those principles, which includes issues like forced labour.

So no, ratification is not an excuse for China.

That's my first point, or any country for that matter, because the question is asking about China's [inaudiable], but that fundamental declaration of fundamental principles, declaration of fundamental principles that applies to all ILO member states.

And I think those rights are at the core of it, and I think they are non-negotiable in respect of ratification.

The other issue is that, there is definitely an issue about what are the facts on the ground.

And I think there are allegations and I'm going to underline the word allegation, because you need to see for yourself what the truth is and there are competing narratives.

So there is one narrative by the Chinese government and there's a narrative by the others.

Let me put it this way.

And if China's government does not allow free access to media,to companies,to others, including U.N.

agencies, to come and do a full inspection anywhere.

Then I think the burden is on China to see that there is not no forced labour.

Because if the society is free, there's a free press, there are civil society groups who can criticise the government, there are multiple parties, there's independent judiciary and all this.

So I think we have to see that China presents unique challenges because in other countries, let, say, India.

And I'm very critical of what some of the things the Indian government is doing, which is democracy and everything is there.

So the point is that India at least provides some possibilities of course correction.

But those possibilities of course correction and accountability are almost not there in China.

So if the Chinese government says, oh, we are saying there's no forced labour and you must believe it, and if you don't believe it, you're anti-China, I think that cannot fly, in my view, because hardly any country will ever say that we wanted human rights.

I'm not aware of many countries who openly say, 'oh, yes, we are for slavery, We like it' and so I think not many countries say that every country will say we don't abuse human rights.

And I think that is where the idea of independent agencies and observers become quite crucial.

So we need to look at this issue in a depolitical matter.

And I agree that there is a question about fact, but how do we find the facts? You need to create that opportunity to find the facts and once the facts are available, then the companies like H&M should do what is demanded under the international standards as well as in fact, they can follow the Chinese standards because the Chinese local legislation is against forced labour.

It's not really international standards.

Even the Chinese constitution would not permit forced labour.

Right.

So I think these are even domestic standards that companies need to follow.

Thank you.

Thank you so much, Surya, in relation to two that's in a way to the garment sector, but also the pandemic.

Last question for you.

You alluded to the idea of risk, risk taking for businesses and obviously due diligence and the fact that there was this sort of absence of preparation that was rather a reaction than preparation.

This is something we've seen very much in the context of the covid-19 crisis when you think about the garment sector, for example, and the fact that a number of companies have cancelled their orders and they couldn't pay the, you know, the salaries of their contractors, subcontractors, et cetera.

So can you elaborate further on that, on the idea of maybe finding a creative longer term financial solutions to address the risk? Yeah, yeah.

Thank you.

I think that that's that's a very good point.

You mentioned about the garment sector and covid impact on all this.

Right.

So I think we can look at many such situations.

And I will argue that businesses are very good at creating models of innovations into models of irresponsibility.

So if you look at the gig economy like gig economy workers, so the companies will have a narrative that 'we are creating employment'.

Yes, you're going to be creating employment, but you're also creating an employment which is not with the social protection, which is not with the labour rights protection.

Right.

So why don't you create jobs which come with Social Security and labour rights protection as a company? So these business models are inherently unfair and problematic, in my view.

And the covid pandemic has merely exposed those things which were there before, but we had put them under the carpet.

So a proactive due diligence or a proactive idea of business in society, in my view, would be they have to rethink the very purpose of doing business.

The purpose of a business, in my view, should not be merely to make money at any cost.

Rather, it should be creating social value.

And profit is just part of creating that social value.

It is not separate from it, so if you are creating profit and that profit gets vested in the top two percent, then in fact you are not creating social value you are damaging social value because you're creating those inequalities and perpetuating them.

I'll stop here.

Thank you.

Yeah.

Thank you so much, Surya.

Yeah, that's again another that topic, I think businesses contribution to the creation of social value.

We have the very final question from Sonia.

I'm conscious of time, but I don't want to frustrate Sonia.

One more question.

The recent case shows that international corporation can be vulnerable and subject to retaliation of a powerful government.

Forward looking, do you think international human rights, labour rights, standards, setting and monitoring mechanism can or there is a possibility to form an institutional representation of an international company within the organisation like the ILO to represent their collective voices? I mean, it is already there, so ILO is a tripartite institution, and that's very unique.

UN is not a tripartite institution.

The UN is a state based institution.

But ILO as a labour agency of the UN is a tripartite.

So you have a business representatives, workers representatives and the states.

So there is always that relationship that is there.

But there are difficulties is, and I go back to the comment I made earlier, that the states are the elephant in the room when it comes to human rights.

States on their own are not respecting human rights.

And the states are not letting companies respect human rights in some cases, and the states are not ensuring that businesses respect human rights.

So I think we also need to invest a little bit more time and I would say the political process becomes crucial there.

So business and human rights issues should be part of the election agenda in different countries, in my view, at all levels, because and I think unless we do that, we will not be able to compel the government and to make those transformative changes.

To ensure that businesses respect human rights, That's interesting, Surya, what you say in the sense that we've heard often businesses demanding that demanding legislation in private probably, because often what they say in public, we don't want to have more regulation, but in private, they may say, well, we'd like to have legislation because at least we know what we can follow.

Yeah, that's true.

So it's because that creates a level playing field level playing field, at least for those businesses who are really serious about human rights.

There are alwayse free riders in a society.

So those free riders, of course, don't want regulation.

Thank you.

Thank you so much ever so much, Surya.

Yeah, that was fascinating.

I think everybody loved your presentation.

You had great comments from everyone and it's such an important topic.

You know, it's a discussion we have to have.

We've had so many times.

And human rights I always see that as a as a sort of fight, really.

You know, there is no single day without the need to reaffirm certain principles, to work collaboratively as well with businesses in this particular case to achieve the objective that you clearly explain.

Thank you so much, Surya, and of course..

My pleasure.

Thank you very much for having me.

No problem.

Thank you very much to the team as well.

In particular He, Claudia, Barnaby, Olga for facilitating this webinar.

Thanks very much to the audience.

Thank you, everyone, for participating.

Bye bye for now.

Bye.

Thanks a lot, Surya.

Thank you, Leila bye.