BUSINESS AND HUMAN RIGHTS: TOWARDS BINDING LEGAL OBLIGATIONS PRESENTATION BY DR DAVID BILCHITZ SOUTH AFRICAN INSTITUTE FOR ADVANCED CONSTITUTIONAL, PUBLIC, HUMAN RIGHTS AND INTERNATIONAL LAW

PRESENTATION OUTLINE  The Impact of Corporations on Fundamental Rights  The Voluntaristic Framework  Problems with Voluntarism  International Developments Towards Binding Obligations  The South African Constitutional Paradigm  Implications: Reform of Corporate Law

Voluntary Approaches International Initiatives  OECD Guidelines  Tripartite Declaration  The United Nations Global Compact  Individual Company Codes of Conduct In South Africa:  Corporate Social Investment  King II Report: non-financial reporting  JSE Sustainability Index

The Problems With Voluntarism  Conceptual Problems  Fundamental rights obligations are not voluntary Content of Norms  Vague and lack specificity  Variable Enforcement Mechanisms  Self-regulation  No remedies for non-compliance

Towards Binding Obligations: International Developments  Transnational Human Rights Litigation  UN Draft Norms on Responsibilities of Multi-National Corporations and Other Business Enterprises  The Ruggie Framework State duty to protect individuals from corporate violations

The South African Context: The Impact of the Constitution  Company law and Constitutional Law regarded as separate  Express Application of Bill of Rights to natural and juristic persons  Focus has been on corporate rights rather than obligations  Hyundai: privacy  FNB: property  Primacy though of natural persons

What are Corporate Obligations?  Section 8(2) of the Constitution: “A provision of the Bill of Rights binds a natural or a juristic person if, and to the extent that, it is applicable, taking into account the nature of the right and the nature of any duty imposed by the right”.  Features that render rights applicable to corporations  Which features render rights applicable?

What are Corporate Obligations?  Constitutional Court (Khumalo)  Intensity of Constitutional Right  Potential Invasion of Right  Nature of the party before it and role in democracy(media)  Two main factors:  Recipient perspective: Impact of Corporations on HR  Agency Perspective: the Capabilities of Corporations Need to apply factors to specific rights to determine more concrete obligations

Implications for Reform of Corporate Structure and Law  What are implications of horizontality for reform of corporate law?  Focus of corporations has been on realizing profit for shareholders  At times, realisation of economic profit is in tension with some of ideas surrounding wider social/environmental responsibilities

Requiring Reform of Corporate Structure  As with public structures, all private structures subject to constraints of constitution  Creation of structure that can pursue profit at expense of HR is not meaningful  Inherent in structure of company is now demand it respect HR to extent applicable  Change of nature of corporation

Requiring Reform of Corporate Law  Memorandum of Association of Company should require respect and promotion of HR to extent applicable to Company  Add fiduciary duty of director to realise fundamental rights to the extent they are required to.  Impose personal liability on directors for decisions that violate human rights  Impose mandatory, standardised non- financial reporting obligations with compliance office to monitor

Conclusion  Constitutional Framework moves us beyond voluntarism  Implications of framework have not yet impacted largely on corporate law  Need for law reform  Continuation of parallel voluntary initiatives  Power of corporation placed within constraints such that do not harm fundamental interests of persons and often actively promote their development