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Globalisation and the rules of the road

 

The human rights responsibilities of global companies came under the spotlight at our latest Vital Topics lecture.

Michael Posner, Professor of Ethics and Finance and Co-Director of the Centre of Business and Human Rights at New York University’s Stern School of Business, led a discussion on the growing research field of business and human rights and the responsibilities of the modern-day corporation.

Prof Posner, a leading global authority on the subject who served in President Obama’s administration, said half of the largest 100 economies in the world were not states but private companies. “It is not surprising that people are saying ‘what should these big global companies be doing as we try to set the rules of the road’.”

He said the wider debate about globalisation had become more pressing in the wake of the US election result and Brexit. “The world is suffering from a governance gap. It has some weak governments which are either unwilling or unable to protect their own people, while large corporations are operating in those weak states often because there is a lack of regulation or because it’s cheap to do business.

The question for all us is how do we begin to navigate this increasingly complicated global space where a lack of equality or sense of disenfranchisement is so prevalent throughout all our societies? How do we create a sense that there is some fairness in the global economy?”

 

Syria

A particular focus of our lecture was how these issues relate to the global refugee crisis, particularly in Syria. For instance it was recently revealed that Syrian refugees have ended up working in factories in Turkey which produce clothing for western companies.

Professor Stephanie Barrientos from the Global Development Institute at the University of Manchester, added: “We live in a very globalised economy where businesses are indirectly responsible for human rights through complex supply chains, and a lot of the human rights abuses are at the extended sub-contracted end of the supply chain. The refugee crisis has highlighted what a serious issue this is. It is partly a commercial issue given the pressures that suppliers are put under to produce goods quicker, faster and cheaper.”

She said more collaboration was needed. “If you can get more collaboration between companies themselves – but also between companies and international organisations, governments and civil society – then you begin to get a potential shift.”

 

Education

Our debate heard that business schools had a key role to play in the wider debate. Ken McPhail, Professor of Accounting at Alliance MBS – and founder of the School’s Business and Human Rights Catalyst – added: “If we are after long-term change then education and business schools have a fundamental role to play in developing the next generation of leaders to have the capacity to understand the new challenges that are being levelled at corporations, big and small.

“Compared to a few years ago we live in a completely different world now with different kinds of expectations from workers, consumers, the international environment, and – importantly – investors. Once investors begin to align their values with investment practices then that represents a significant change. There is an increasing recognition that some kind of deal needs to be reached for the ongoing sustainability of the global financial system.”

Prof Posner said business leaders needed to be thinking about how they both make a profit and reward shareholders while behaving responsibly and “doing the right thing” in terms of the various communities they interact with.

“We accept that companies are providing jobs and raising people out of poverty, but we also have to recognise the way in which global companies make money. Their core business activities are creating challenges on issues like the environment, human rights and labour. It is up to business leaders and educators to take that on.”