Revised draft U.N. treaty on business and human rights: a few steps forward, a few unanswered questions

Last year, the world watched in surprise as reports unfolded detailing how data analytics company Cambridge Analytica gained access to the personal information of 50 million people through Facebook, and used the information to advertise to micro-targeted voters, violating people’s privacy on a massive scale. 

By this means, Cambridge Analytica was able to influence high profile elections including the 2016 U.S. presidential election. Though Facebook and Cambridge Analytica have since been fined for this massive misuse of data – most recently Facebook’s $5 billion fine from the U.S. Federal Trade Commission –  this demonstrates the huge impact companies can have on human rights, and the lack of proper mechanisms to hold them accountable.

In a post earlier this year, we discussed the significance of the first draft of the legally binding treaty, or ‘Zero Draft,’ published by the U.N. working group on transnational corporations as an important step in corporate accountability. Coming seven years after the U.N. Guiding Principles on Business and Human Rights were unanimously endorsed by the Human Rights Council, this treaty is a recognition by the international community that corporate impunity for human rights abuses must end. 

On July 16, the U.N. working group released a revised draft of the treaty which overall appears to be a step in the right direction. In this post, we’ll discuss the improvements to the Revised Draft, as well as the remaining questions and concerns to be addressed as the U.N. working group continues the treaty process.

A few steps forward…

A marked difference between the Zero Draft and the Revised Draft is the explicit reference the Revised Draft makes to the Guiding Principles in its preamble. This change is significant because the Guiding Principles have received support from both the public and private sectors alike, and continue to be implemented. Therefore, by acknowledging the Principles, the treaty drafters are indicating that there is room to build upon the work that has already been done – and this new project is a complement, not a replacement. 

Another significant step forward is the widening of the scope of the treaty. As we discussed in our previous post, all companies can impact human rights. But the Zero Draft’s limited scope of application to “business activities of a transnational character” would have held domestic and transnational companies to different standards. 

The Revised Draft widens the scope to include “all business activities” (Art. 3.1) and describes business activities of a transnational character to include, among others, activities carried out in one State that have a substantial effect in another State (Art. 3.2). Though this does not cover purely domestic companies undertaking purely domestic activities, it does cover domestic companies that have transnational effects, which we consider an improvement. 

The scope has also been widened to ensure that state-owned or controlled companies would also be held accountable under the treaty. The Zero Draft defined business activities of a transnational character as those that included “for-profit economic activity,” potentially excluding state-owned or controlled companies which may operate for purposes other than profit

The Revised Draft, however, expands the definition to mean “any economic activity” (Art. 1.3). This was a key point in our recommendations to the drafting body, as state-controlled businesses, including telecommunications companies with full or partial state ownership, often appear the most reluctant to respect user rights.

Finally, it is an improvement that the language potentially exempting small and medium-sized enterprises (SMEs) from due diligence reporting requirements has been changed in the Revised Draft. The Zero Draft allowed States to “exempt certain small and medium-sized undertakings from the purview of [due diligence] obligations.”

As we noted in our previous post, this could have exempted companies such as Cambridge Analytica and NSO Group from due diligence obligations – companies which more than ever need to be transparent about how their business practices are affecting human rights. 

In a positive development, the Revised Draft permits States to provide SMEs with “incentives and other measures to facilitate compliance with [due diligence] requirements” (Art. 5.6). Though this new language is quite vague, it at least indicates that SMEs will still be expected to conduct due diligence – and that’s a step forward.

…but still some unanswered questions

The biggest question left open relates to remedy: the Revised Draft states its purpose to “ensure effective access to justice and remedy for victims” and yet, like the Zero Draft, it fails to provide a clear, effective path to remedy. Again, it appears to rely on State-level implementation as a mechanism for remedy, without providing an international remedial mechanism. 

As we’ve noted before, a major strength of this treaty is its recognition of the international nature of business-related harms. It should therefore provide an effective international remedial mechanism alongside that recognition. 

This would not be a novelty, as there already exist complex, active systems of international arbitration and dispute settlement. Most of them prioritize the interests of powerful companies and states. But with the right processes and orientation, a combination of State-level and global governance mechanisms could ensure the effective access to justice and remedy the treaty promises to provide – for people.

Another issue the Revised Draft fails to properly address is that of the state-business relationship. The Guiding Principles make it clear that States are the primary duty-bearers under international law and as such should “promote respect for human rights by business enterprises with which they conduct commercial transactions” (Principle 6). 

This recognized State responsibility is not reflected in the Revised Draft. As States contract for services by companies, particularly for those in the tech sector, those States are in a position to ensure that their business transactions respect human rights from the outset. 

Finally, stakeholders need to participate throughout the treaty process. As the Revised Draft has shown, real progress can be made. It is therefore important that civil society organizations from across the board make their voices heard to ensure that the States participating in the process hear our concerns and take them into account to create a truly effective treaty. 

A global instrument must be tuned to the voices of our diverse communities; only then will the necessary human rights protections be in place.