Über die Autorin bzw. den Autor

Galit A. Sarfaty is Assistant Professor of Legal Studies and Business Ethics at The Wharton School, University of Pennsylvania.

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Values in Translation

Stanford University Press

Contents

Foreword Mark Goodale................................................................................................ixAcknowledgments.......................................................................................................xiiiIntroduction..........................................................................................................11 Behind the Curve: Institutional Resistance to Human Rights..........................................................232 Political and Legal Constraints: The Board of Executive Directors and the Articles of Agreement.....................513 Bureaucratic Obstacles: A Clash of Expertise Within the Organizational Culture......................................754 Reconciling Interpretive Gaps: Economizing Human Rights.............................................................1075 Conclusion..........................................................................................................133Notes.................................................................................................................157Bibliography..........................................................................................................169Index.................................................................................................................183

Chapter One

WHY IS IT SURPRISING that human rights has been such a marginal issue at the World Bank? If the institution is a bank, after all, why should we expect it to incorporate human rights norms into its activities? There are a number of reasons the Bank's approach to human rights (or lack thereof) appears counterintuitive.

Over the past two decades, the Bank has been a leader in promoting particular development issues that it has interpreted as central to a mandate of poverty reduction. These issues include environmental sustainability, which the Bank began to interpret as a core objective during the 1980s after decades of grassroots activism, growing evidence of the environmental costs of Bank-sponsored projects, and its own need to develop alternative rationales for an interventionist development mission (Rajagopal 2003, 113–27; see also Wade 1997). Although the Bank has taken pride in serving as a norm setter among development agencies on the environment, why hasn't it taken the initiative to serve as a leader on standards relating to human rights?

Compared to other international institutions and aid agencies, the Bank stands as an outlier in terms of its approach to human rights. For instance, the United Nations Development Programme has begun to implement a rights-based approach (UNDP 2005), while the Bank's implicit human rights work has been criticized by development experts as rhetorical and ad hoc (Uvin 2004). The Bank's approach also stands in contrast to that of many private financial institutions. Because of a concern for their public image and the reputational and legal risks of committing human rights abuses, some corporations are beginning to take steps toward becoming more socially responsible by adopting such tools as human rights impact assessments. In fact, the International Finance Corporation (IFC), the Bank's private-sector arm, has openly adopted a human rights agenda as part of a risk management approach, under a market-based operational logic. This approach translates international human rights norms for the business community by defining potential human rights violations as strategic risks, which may damage a company's reputation, threaten its profits, and lead to possible litigation. 1 However, the IFC's selective engagement in human rights has been subject to criticism by nongovernmental organizations (NGOs).

Moreover, civil society organizations and internal advocates have pressed the Bank to integrate human rights considerations into projects and programs. One would expect the Bank to have been swayed by this pressure, as well as by the growing trend of corporations and development agencies to address human rights more openly. Yet it has not been so swayed. In this chapter, I elaborate on the external and internal pressure on the Bank over the past two decades to adopt a human rights agenda.

External Pressure International Organizations and Aid Agencies

Over the past two decades, international organizations and aid agencies have increasingly recognized an interdependence between human rights and development. There are several reasons for this change of thinking: (1) the end of the Cold War, which brought a sense of missionary zeal; (2) the failure of structural adjustment programs and a greater emphasis on good governance and democracy; and (3) the redefinition of development as more than economic growth (Uvin 2007, 597). As evidence of this growing consensus, the 1993 Vienna World Conference Declaration affirmed, "Democracy, development and respect for human rights and fundamental freedoms are interdependent and mutually reinforcing.... The international community should support the strengthening and promoting of democracy, development and respect for human rights and fundamental freedoms in the entire world" (para. 8). The United Nations' 2000 Millennium Summit and its 2005 World Summit reiterated this declaration and spurred the adoption of new policy frameworks among bilateral and multilateral agencies.

The United Nations has been leading the way in incorporating human rights concerns into development policies. In 1990, it began promoting a human development approach, which offers an alternative view of development to the neoliberal paradigm of the Washington Consensus. This approach defines development as not only generating economic growth but also distributing its benefits equitably, and it promotes a conception of well-being that goes beyond the economic. It is applied in the UN's Human Development Reports, published annually by the UNDP since 1990 (see Fukuda-Parr 2003). The UN has since begun mainstreaming human rights in all of its activities, as announced in the 1997 report "Renewing the United Nations: A Programme for Reform." As part of this effort, the UNDP (which is not hampered by the political prohibitions that exist in the Bank's Articles of Agreement) adopted a rights-based approach to development (UNDP 2005).

Many bilateral and multilateral aid agencies have followed the UN's lead and adopted human rights policies or a rights-based approach to development. A recent study conducted by the Organization for Economic Cooperation and Development (OECD) compares the Bank's approach to those of other donor agencies. It found that the Bank stands on one end of a continuum, which classifies methods of integrating human rights into development strategies (Piron and O'Neil 2006). The methods range from a rights-based approach and human rights mainstreaming to human rights dialogue and human rights projects, and finally to implicit human rights work (2006). Most agencies (including the European Commission, UNICEF, and many bilateral agencies) fall within the three middle categories-human rights mainstreaming, dialogue, and projects-while the Bank falls within the last category of implicit human rights work. When a working draft of the OECD study was presented to Bank staff in April 2006, the deputy general counsel acknowledged that "rhetorical repackaging" describes how the Bank has traditionally approached human rights, although the Bank is striving to move further on the continuum.

Given the Bank's position as an outlier among international institutions and aid agencies in terms of its approach to human rights, representatives from the UN, the academic community, and the OECD have pressured the Bank to more explicitly address human rights. In March 2004, the former UN High Commissioner for Human Rights, Mary Robinson, and a New York University law professor, Philip Alston, convened a conference at New York University School of Law on "Human Rights and Development: Towards Mutual Reinforcement" (see Alston and Robinson 2005). The purpose of the conference, which also featured legal scholars and senior vice presidents from the Bank, was for the Bank to share its existing human-rights-related activities and learn more about the UN's practice on human rights and development. Similar meetings have occurred over the past few years between members of the Bank's Legal Department and UN representatives in Geneva. These interactions have pressured the Bank to reflect on its approach to human rights, although they did not directly lead to substantive changes in Bank policy.

The International Finance Corporation and the Private Sector

Another source of external pressure on the Bank has been the International Finance Corporation, which lends money to corporations in emerging markets. Since 2002, the IFC has become a stronger promoter of human rights than the Bank by promoting such initiatives as a human rights impact assessment to corporate clients. The IFC's support for human rights is due to pressure from corporations, which are concerned with their public image and are subject to competitive pressures. Given that the IFC is moving beyond the Bank in explicitly incorporating human rights concerns into its operations, NGOs have recently lobbied the Bank to adopt a human rights approach that is at least as progressive as that of its private sector arm. Moreover, the private sector has increasingly been competing with the Bank to fund projects in such emerging markets as China and India. This competition has pressured the Bank to conform to private industry standards on social responsibility.

Since 2002, when then Executive Vice President Peter Woicke publicly announced the institution's commitment to human rights, the IFC has been facilitating the translation of human rights norms for the private sector. It is leveraging a leadership role among financial institutions to set standards on how to operationalize human rights. In a discussion note on the topic, the IFC explained its role in promoting the UN Global Compact, a set of nine corporate social responsibility principles on human rights, labor, and environmental issues:

As a development institution, IFC does not see itself in competition with commercial banks, rather it aims to advance the debate on difficult issues, through providing technical assistance if necessary, and convince others to follow by demonstrating what can work in practice. IFC is seeking to make the race to the top (as opposed to a race to the bottom) real. In this way, IFC can help translate the debate at the Global Compact into the emerging markets context, and help increase the volume of responsible investments in those markets.

One of the IFC's first steps in promoting corporate social responsibility was to take on the role of chief broker for the Equator Principles, standards for private sector banks that are modeled on the IFC's social and environmental policies.

The Equator Principles were originally conceived in October 2002 when the IFC invited a group of major private banks to discuss an environmental and social risk-assessment framework for the projects they finance that are over $50 million in size. These projects often include oil and gas pipelines and hydroelectric dams, which are particularly prone to causing environmental and social disruption. The preamble states, "We will not provide loans to projects where the borrower will not or is unable to comply with our respective social and environmental policies and procedures that implement the Equator Principles." The principles are to be incorporated into loan covenants, thereby holding borrower countries accountable for any failure to comply. Although activists have argued that the standards do not go far enough and lack a monitoring and enforcement mechanism, the Equator Principles are representative of a shift toward greater human rights accountability on the part of private banks.

The IFC's involvement with the Equator Principles prompted engagement with human rights when it adopted new operational policies. In 2003, the IFC began to revise its policies, which had been modeled on those of the World Bank's, and issued new "performance standards" in 2006. As part of this process, the institution received internal support to more forthrightly address human rights issues and what they mean for private sector clients. Although the IFC did not adopt a freestanding performance standard on human rights, it strengthened provisions in the areas of labor and working conditions and projects' use of private or public security personnel. In 2007, the IFC released a draft Guide to Human Rights Impact Assessment and Management, in collaboration with the International Business Leaders Forum and the UN Global Compact. The guide is intended as a tool for the private sector to address human rights concerns and is currently being piloted to evaluate potential human rights impacts in a number of IFC projects.

NGOs have questioned why the World Bank has not similarly developed a human rights impact assessment for its own projects. Given that the IFC and World Bank are sister institutions with the same Board of Executive Directors, it appears inconsistent that one institution would directly engage in human rights while the other would claim that the issue is too political. The primary reason for their disparate policies is that the two institutions have different clients; the World Bank lends to country governments while the IFC lends to corporations that then carry out projects in poor countries. According to a Human Rights Watch representative, "the IFC is more progressive-minded, but it's also less constrained because it's dealing with the private sector. So there are natural limits on what it's going to address anyway. And that allows them to be more focused, [and] to deal with issues that are less controversial in the business world ... like human rights and security ... and core labor rights." Many corporations are expressing at least minimal commitment to human rights and environmental sustainability, which they view as instrumental in maintaining their reputation, hedging risks, and differentiating themselves from competitors.

Given their enormous international financial leverage, corporations have been finding themselves under intense scrutiny for direct or indirect involvement in reprehensible activities within the borders of host countries, particularly human rights abuses. Corporations can be complicit in human rights abuses in several ways: ignoring violations in situations of violent conflict, exacerbating such situations, generating revenues that governments use to commit violations, and engaging in corruption and bribery with state officials. And they can be involved in more direct violations of human rights, as in seizing an indigenous people's territory and thus violating their rights to land, culture, and livelihood. There have been a variety of efforts to hold businesses liable for human rights violations and responsible for the promotion of human rights. These efforts include regulations, marketplace incentives, and litigation in U.S. courts through the Alien Tort Claims Act. The most recent initiatives to create regulatory structures have been the UN Global Compact and the UN Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights (see Ratner 2001; Weissbrodt and Kruger 2003). Yet the Global Compact and the UN Draft Norms are not binding and have failed to close the gap between theory and practice. There have been recent developments that may address this gap. In 2011, the UN Human Rights Council endorsed the Guiding Principles on Business and Human Rights developed by John Ruggie, former Special Representative to the UN Secretary-General.

To deflect the threat of governmental regulation and international initiatives to develop binding legal mechanisms, corporations tilted the meaning of corporate social responsibility (CSR) toward business interests as they campaigned for voluntary, non-enforceable guidelines and codes of conduct (Shamir 2004, 3, 7). Many have questioned whether these forms of self-regulation actually have an impact on corporate behavior, or whether they simply serve as window dressing and facilitate "greenwashing" by rewarding empty commitments and reporting for its own sake. By shaping the scope and contours of this field as one of self-regulation, corporations are deradicalizing the CSR field as they "disseminat[e] the neo-liberal logic of altruistic social participation that is to be governed by good will alone" (9). Their transformation of CSR into a risk management tool commodifies critique and incorporates it into a business opportunity. By legitimizing "an economization of authority" and constructing "a depoliticized framework of market-embedded discourse" (Shamir 2010, 14), CSR initiatives are part of the neoliberal practice of grounding sociomoral concerns within the instrumental rationality of markets.

Feeling pressure from civil society through consumer boycotts and popular protests, corporations have requested guidance from the IFC to advise them on social and environmental issues. As a result, as one IFC employee remarked, the situation has changed from the time "when internal and external people looked upon the environment and social [policies] from IFC as an add-on or an additional cost of doing business, to a point where in two years, it went ... to 85% of the project finance market being governed by the same environmental and social guidelines and policies as our own" (referring to the widespread adoption of the Equator Principles modeled on IFC policies). As the IFC and the private sector appear to move ahead of the Bank with regard to their approach to human rights, the Bank is facing demands to raise its standards and serve as the norm setter among international institutions. Yet as I elaborate below, external pressure has been surprisingly weaker than one would have expected, which is due to internal disagreement and lack of coordination among NGOs as well as their failure to form alliances with internal advocates.

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Excerpted from Values in Translationby Galit A. Sarfaty Copyright © 2012 by Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of Stanford University Press. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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