President Donald Trump’s first few months in office have seen a flurry of actions seemingly designed to benefit powerful corporate interests. From weakening ethics rules to halting key enforcement mechanisms, these developments have raised serious concerns about the long-term health of U.S. regulatory institutions. But even amid domestic retrenchment, corporations must adhere to internationally recognized human rights responsibilities.
On day one, Trump rescinded prohibitions on executive branch employees accepting major gifts from lobbyists, and removed a two-year “cooling off” period, which is intended to help slow the revolving door between government and lobbying. In early February and without explanation, Trump fired the director of the Office of Government Ethics, who is the official in charge of policing conflicts of interest and ethics requirements in the executive branch. He was removed just two months into what was supposed to be a five-year term.
Federal enforcement actions targeting corporate wrongdoing have slowed. The Department of Justice has reportedly paused enforcement of the Foreign Corrupt Practices Act and the administration has declined to fully implement or enforce the Corporate Transparency Act’s beneficial owner reporting requirements. Regulatory enforcement against corporations has slowed considerably. Several offices within the Department of Labor (for example, the Wage and Hour Division) appear to have significantly reduced or stopped regulatory activity aimed at companies, and other regulatory agencies that typically report a significant number of resolved enforcement cases—including the Securities and Exchange Commission, the Environmental Protection Agency (EPA), and the Federal Trade Commission—have reported few resolved cases in recent months. As of mid-June, more than 140 corporations that were facing federal investigations or regulatory scrutiny appear to have seen their cases halted or dropped. These matters cover a wide range of alleged corporate misconduct, including the use of forced labor, financial violations and fraud by big banks, pollution and endangerment of public health, and discrimination by large employers, among others.
No administration has been free from problematic corporate influence, but recent developments under this administration represent a significant departure from established norms. Businesses may be tempted to take advantage of this environment and engage in political activities to advance their interests at the expense of the public and the planet. But domestic deregulation does not nullify international obligations. Now, more than ever, it is imperative that businesses take heed of the fact that there are widely accepted international standards that they should adhere to when it comes to their corporate political engagement, namely, the UN Guiding Principles on Business and Human Rights (UNGPs).
The Connection Between Corporate Political Engagement and Human Rights
Adopted unanimously by the UN Human Rights Council in 2011, the UNGPs are the world’s most authoritative framework on the respective duties and responsibilities States and business entities have when it comes to preventing, addressing, and remedying human rights abuses in business operations and global supply chains. In addition to reaffirming the State duty to protect, the UNGPs make clear that business enterprises have an independent responsibility to respect human rights, which means that they “should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.” More specifically, the responsibility to respect requires that business enterprises: (1) avoid causing or contributing to human rights harms through their own activities and address negative human rights impacts when they occur; and (2) seek to prevent or mitigate human rights harms that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.
Corporate political engagement, regardless of what form it takes, is not exempted from businesses’ responsibility to respect human rights, and the UNGPs have important implications for what corporate actors aim to advance through their political activities, and how they go about doing that, among other things. Indeed, the UN Working Group on Business & Human Rights issued a report in 2022 which highlights how corporate political activities can lead to human rights abuses and lays out what UNGP-aligned corporate political engagement looks like.
As with all other aspects of business operations (for example, sourcing decisions, purchasing practices), business activity aimed at influencing political outcomes—which can range from direct and indirect lobbying, political or election related spending, and efforts to influence the public debate on policy issues, to name a few—have human rights impacts. For example, through their political activities, corporations can facilitate and contribute to human rights abuses by influencing the “design, implementation, execution and evaluation” of public policy and regulations in ways that undermine rights protections and enable violations. This could include lobbying to block laws that hold companies accountable for human rights abuses in their global supply chains; successfully convincing decision-makers to weaken regulation and enforcement of frameworks that protect workers rights, consumers, and the environment; or limiting victims’ access to the courts, among others.
Human rights harms resulting from irresponsible corporate political engagement are experienced by people inside business entities’ operations and value chains, as well as more broadly throughout society. For example, during the first Trump administration, after industry lobbying, the EPA withdrew its proposal to ban the agricultural use of a neurotoxic pesticide, endangering farmworkers, children, and the environment. In another clear case, just three months before a massive derailment accident, Norfolk Southern Railway Company urged the government not to adopt a federal rule that would make trains safer, according to the Washington Post. The accident led to the release of toxic chemicals and sparked a massive fire in East Palestine, Ohio.
The 31 UNGPs are meant to curb this kind of activity and their legitimacy comes not only from their unanimous adoption, but from the broad global consensus that was the result of a painstaking six-year long development process led by Professor John Ruggie. It featured extensive consultation with industry, as well as other stakeholders, including governments, civil society, corporate lawyers, and investors. Between 2005 and 2011, Ruggie and his team convened nearly 50 international consultations and expert meetings, and in 2010 they held a global online consultation on a draft text of the guiding principles which elicited thousands of responses from stakeholders in over 100 countries. The Guiding Principles were further informed by site visits to the operations of companies in different sectors and countries and by pilot projects through which 10 companies road-tested certain aspects of the UNGPs.
By the time they were adopted, the UNGPs already enjoyed strong support from business. In fact, at the time “several [companies] had written to the Human Rights Council recommending that it endorse the UNGPs.” Company support for the UNGPs and acknowledgement of their responsibility to respect human rights has only grown since then, and the UNGPs have gained “extensive support from businesses.” In addition, business and industry platforms have embedded the UNGPs into their respective expectations toward member companies, and even the International Chamber of Commerce and the International Organisation of Employers have come out and strongly supported the UNGPs.
All of this points to the fact that the UNGPs represent a business-supported and accepted global minimum standard of conduct that stakeholders–including civil society, consumers, employees, and investors–can and will assess corporate actors against. In addition to living up to their own commitments, the business benefits of respecting human rights and aligning with the UNGPs, and the risks of failing to do so, are well documented. Indeed, when companies fail to meet their responsibility to respect human rights, it can lead to reputational, operational, and in some cases legal, risks. Further, the responsibility to respect human rights is slowly but surely shifting from “soft” to “hard” law, with aspects of the UNGPs increasingly being integrated into and reflected in binding legislation and regulation. Operating in accordance with the UNGPs will make companies better prepared as new legislation in the EU and in other jurisdictions comes online.
When it comes to corporate political engagement, companies are facing growing scrutiny around the world about whether their lobbying efforts align with the public interest and sustainability commitments. As highlighted in a recent report by Oxfam America, when corporations engage in political activities in a way that fails to put respect for human rights at its center and instead prioritizes short-term corporate profits, it can not only put company reputations at risk, but it can also “undermine public institutions on which society and businesses depend for a stable political and economic environment.” Irresponsible corporate political engagement can also come with significant problems for business including “heightened risk of corruption; misalignment of companies’ political engagement with their stated values and sustainability commitments; [and] costs arising from government inaction to address market failures.”
Although the UNGPs themselves do not create legally binding requirements for companies, businesses played a significant role in their creation and have broadly accepted them as a crucial component of what it means to be a responsible business. If companies want to be able to hold themselves out as a positive force in the world with any legitimacy, they need to take the UNGPs and the responsibility to respect human rights seriously.
Human Rights Due Diligence, Reporting, and Remediation
As detailed in the UNGPs, this responsibility to respect is not just a lofty principle – it requires that corporations behave in certain ways and that they have robust policies and processes in place across all functions to ensure their compliance. More specifically, to be aligned with the UNGPs, corporations need to be able to both “know” and “show” that their political activities are rights-respecting in practice.
“Knowing” entails conducting a robust and ongoing human rights due diligence process to identify, prevent, mitigate, and account for how they address their impacts on human rights. In plain terms, the human rights due diligence process is a way for enterprises to proactively manage their potential and actual adverse human rights impacts.
To be UNGP-aligned, businesses need to apply human rights due diligence to all their political engagement activities. This entails: (1) conducting an assessment of the actual and potential human rights abuses associated with their political engagement; (2) integrating the findings from that impact assessment across relevant company processes and taking appropriate action; (3) tracking the effectiveness of measures and processes to address human rights risks and harms in order to know if they are working; and (4) communicating on how impacts are being addressed. Although there is growing business uptake of human rights due diligence in relation to other aspects of business operations, human rights due diligence related to political engagement has been largely absent. Companies may be tempted to maintain the status quo and continue compartmentalizing their political influence activities into an organizational silo, but this risks putting them on the wrong side of policy changes, especially given the current administration’s disdain for human rights.
To illustrate, when it comes to corporate lobbying activities, the simplest way for a company to ensure coherence with the responsibility to respect is by refraining from lobbying to advance policies that would lead to human rights harms. To do this effectively, a company needs to map and assess their lobbying through a human rights lens, which should include closely examining the human rights implications of specific policy positions they are advocating for, as well as identifying lobbying methods and practices that exacerbate the risk of harm, among other steps. In addition to thoroughly assessing their own direct lobbying efforts, companies should also conduct a “continuous review of industry association memberships to identify any inconsistencies between associations’ lobbying activities and businesses’ public human rights commitments and responsibilities under the UNGPs, followed by possible public withdrawal from an association if those inconsistencies are not resolved.”
Under the UNGPs, “showing” they are respecting human rights means that businesses need to publicly communicate about their human rights due diligence with respect to their political engagement activities and report on steps taken to prevent, mitigate, and remedy any adverse human rights impacts. The UN Working Group has further specified that, in the context of corporate political engagement, “showing” should include (1) “discussion of alternative approaches the business could have taken to avoid adverse impacts” and (2) explanations of the human rights dimensions of decisions that were ultimately made.”
Finally, if a corporation’s political activities have “caused or contributed to” an actual adverse human rights impact, fulfilling their responsibility to respect requires that they provide for or cooperate in the remediation of those abuses. In the context of corporate political engagement, the UN Working Group has clarified that the corporate responsibility to remediate also requires “avoiding corporate political engagement that aims to shield businesses from liability or to avoid responsibility to cooperate in remediation” and “encompasses a responsibility for businesses to refrain from lobbying for the cessation of State judicial or non-judicial proceedings intended to assess the business’s potential liability.” Given that Trump has demonstrated a willingness to let corporations off the hook, companies may be tempted to lobby or otherwise use their influence to try and get investigations and cases against them dropped, but doing so would run afoul of their human rights responsibilities.
The Important Role of Transparency in Reducing Human Rights Risks
The responsibility to respect has implications for how corporations conduct corporate political engagement. In its report, the UN Working Group highlights that certain factors and modes of corporate political engagement are more likely to lead to or enable business-related human rights abuses. In particular, across a wide variety of categories of political engagement, risks of human rights harms occurring are heightened when corporations engage in political activities in secret and when transparency and disclosure is lacking or insufficient. This flows from the fact that when corporations engage in political activities in the dark, it can enable and breed misalignment between the businesses’ public human rights commitments and the political priorities it is working to advance behind closed doors.
As such, being transparent about political activities is a crucial part of reducing human rights risks and ensuring political activities are rights-respecting. For example, when it comes to lobbying, the Working Group highlights that businesses and industry associations should disclose comprehensive information about their lobbying spending and activities, regardless of whether they have a legal obligation to do so in the relevant jurisdiction, and that businesses should disclose their industry association memberships, participation, and activities. Additionally, the UN Working Group makes clear that companies that choose to make corporate financial political contributions (e.g., to political parties, causes, or campaigns) “must also be transparent about that spending and the human rights analysis behind those spending decisions.” However, companies may be wise to follow the lead of IBM and others by taking a public stance against making political contributions of any kind.
Using Political Influence to Advance Human Rights
The UNGPs also note that if a business enterprise “has leverage to prevent or mitigate [an adverse human rights impact] it should exercise it.” In the context of corporate political engagement, this means businesses should take advantage of opportunities to leverage their influence in support of policies that protect human rights, or in opposition to political and regulatory developments that threaten human rights. In one recent example, the American Apparel and Footwear Association issued a statement condemning the dismantling of USAID and U.S. foreign assistance and sent public letters to the administration calling for the protection of the Department of Labor’s Bureau of International Labor Affairs and its programs to defend workers. The UN Working Group notes that this should most often be undertaken where there is a direct linkage to their business activity, but that companies may also engage in efforts to advance “broader protections for the rights of their employees, customers, and wider communities.”
Even amid the current weakening of domestic oversight and undercutting of human rights protections, corporations remain bound by their human rights commitments and responsibilities. The erosion of federal enforcement does not exempt businesses from international standards. To remain UNGP-aligned and fulfill their responsibility to respect, companies must avoid taking advantage of the current moment in the United States to engage in political activity that prioritizes corporate profits ahead of people and the planet. Instead, more corporate actors should take active steps and use their political influence to publicly push back on the dismantling of human rights and environmental protections and accountability frameworks.
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