The UN's top expert on business and human rights, Harvard Professor John Ruggie, was in Parliament on Thursday for a hearing which looked of improving business ethics. We asked him about the economic crises and how EU companies should act in the developing world or in places where human rights abuses take place. He said the area of business and human rights was 'very fluid' and the EU needs to work hard to catch up with the debate. He also warned against unsustainable 'over-eager philanthropy'.
Q. Do you think the economic crisis has put corporate and social responsibility under pressure and what impact do you think it will have?
> In the short run everything has been cut and that of course includes expenditure related to corporate and social responsibility, although they have not been as drastic as one might have feared. I think in the long run the crisis will have a salutary effect on the relationships between states and markets. The long term consequences - in terms of revisiting corporate law and regulation - will require greater transparency, greater reporting and greater oversight.
Q. European companies in the developing world, should they just trade there or should they provide local services like education and healthcare?
> I don't want to sound like Milton Friedman here but the business of business ultimately is business, it isn't building hospitals unless that's the industry they're in or providing schooling. It is there to carry on operations with respect to human rights and other social considerations.
My preference would always be that if they do find they have to do more (like providing services), that they do so in partnership with public authorities so that capacity gets built up and is sustainable.
Firms typically don't remain forever and one of the sad things about over eager corporate philanthropy has been is that you drive through the countryside in a number of countries and you see the skeletons of former schoolhouses and clinics that companies built that nobody has sustained.
Q. What about European companies that operate in places that have a history of documented human rights abuses - what should their role be?
> Companies that operate in countries where prevailing human rights standards are not standard practice are in dilemma that they need to be very careful about.
The worst thing that they could do would be... if they become complicit in the acts of the local government in the violation of some human rights. They need a heightened due diligence process to be very sure that they themselves don't get involved.
At the same time they can make very positive contributions. We have seen this in the area of freedom of association for example. Even though it may be outlawed or not permitted by law in a county like China, many companies have permitted the formation of workers' councils in the factory. Or on gender equality many western companies - at least within the four walls of the operation - have tried to be as supportive of the principle of gender equality as is possible.
The hearing was organised by Parliament's sub-Committee on human rights.
John Ruggie CV:
* Born 1944, Austria, moved to US in 1967
* Professor of International Affairs, Harvard University
* 1997-2001: Assistant UN Secretary General
* 2005 UN Special Representative of the Secretary General on human rights and business enterprises
* Author of term 'Embedded Liberalism' to describe post war economic system which was dominant until 1970's
- Further information :
* Report on Hearing: "we have to change our ways"
* John Ruggie
* Ruggie wiki: 'Business and Society exploring solutions'
* European Parliament resolution of 13 March 2007 on corporate social responsibility (based on report by Richard Howitt MEP