The last decades of globalisation have seen corporations expanding across the globe in search for new markets, cheaper labour and lower environmental standards. As economies become more and more intertwined, companies increasingly operate outside their country of origin, often making use of factories and offices in multiple countries in order to assemble a single product.
The main beneficiaries of this development are transnational corporations (TNCs), which have seen their share of profits as a part of global GDP increase by 30% between 1980 and 20132 – thereby appropriating over the years an ever-greater share of the wealth produced around the globe. As a result of this process, inequality has risen, large-scale environmental destruction has followed in the wake of the growing trade in commodities such as palm oil or soy, and labour conditions in factories assembling consumer goods and clothes have, in many cases, become shockingly poor. These negative impacts of globalisation are felt particularly hard by people in developing countries.
This expansion of international commerce and the increasing profits reaped from it by corporations have been aided by agreements that facilitate cross-border trade and investment. These agreements enable companies to move their activities to wherever they can maximise their returns, and provide them with extraordinary safeguards if government interventions affect what they consider to be their future profit (see Box B). These agreements also diminish the ability of governments to regulate corporate activities and can therefore hinder their ability to fulfil their human rights obligations to their own citizens.
While trade and investment agreements provide corporations with extraordinary rights that enable them to operate across the globe, companies do not have any binding international obligations regulating their conduct. Communities and workers who are harmed by their operations do not have recourse to an international mechanism through which to hold them accountable. Concurrently, people who resist large-scale projects, such as those carried out by the extractive industry, are increasingly being intimidated, harassed and even killed. In 2017, nearly four human rights and environmental defenders were killed per week, with companies and state security forces often working closely together.
These systematic human rights violations linked to business operations highlight the need for an international grievance mechanism, especially as affected people often cannot rely on their governments to protect their rights. While a number of guidelines and codes of conduct exist, such as the OECD guidelines for multinational companies and the UN Guiding Principles on Business and Human Rights (Box D), these are voluntary and have been rather ineffective in preventing corporate human rights abuses and environmental destruction. Social movements, activists, trade unions and affected people have long been calling for a binding instrument that would make it possible for affected people to hold companies directly responsible for violating human rights.
The European Union and its Member States are some of the most important actors when it comes to shaping globalisation. This briefing explores the double role the EU plays in this process: spinning a web of treaties that give corporations extraordinary powers while hindering efforts to hold these very same companies accountable. This double agenda is exemplified by the EU’s actions in two areas: its reluctance to support binding and enforceable rights for citizens through an UN Treaty on Business and Human Rights (see Box A), while at the same time expanding and entrenching a system of legally binding and enforceable investor rights and privileges that grants corporations extraordinary power over governments and communities.
Posted by the Friends of the Earth Europe. To see the original report, click here.