Making economic rights “real” with stakeholder dialogues

There has been a growing global backlash—especially in countries like the US and the UK—from people who feel they’ve been negatively affected by business practices. Yet we also have people in poor countries clamoring for access to factory jobs. In order to prevent a “race to the bottom” where wages and working conditions drop through the floor globally, the United Nations and many human rights advocates have re-framed these issues as human rights challenges.

Within that arena—as I recently discussed with Todd Landman—stakeholder dialogue is central to bringing business, governments, workers and community members around the table to negotiate better conditions and practices. Stakeholders can range from workers, stockholders, business partners and consumers to people who live in communities affected by business activity. Each one of those people has an interest in what the company does, but those interests aren’t always aligned. Poor people often end up being most negatively affected and least able to negotiate for better treatment.

New research on stakeholder dialogue reveals the urgency and the challenge of figuring out how to more effectively broker company engagement with workers and communities. For example, what types of companies are most likely to be involved in “stakeholder dialogues” over how to prevent abuse at work and how to improve the impact of business on the community? Analyzing the 6,000 companies in the Business & Human Rights Resource Centre database, my students and I have found that stakeholder dialogues are principally happening among extractive companies (e.g., mining) and are far less common among companies involved in light industry (like garment manufacturers or cellphone makers). These patterns are consistent across the world, regardless of region. There is a much bigger sunk cost for companies that drill an oil well or extract copper or mine gold—they have to get minerals out of the ground and they have to negotiate with workers and community members to do so, or they lose money quickly as the mine sits idle. By contrast, light manufacturers have little incentive to negotiate with workers or community members. It’s too much trouble. They can simply pack up a factory (literally putting it in a shipping container and moving through deep water ports from Mexico to Vietnam within a few weeks), and they can find a new community where people are willing to work for low wages. The business and human rights framework is vital to changing the nature of the incentives for companies in the light manufacturing sector, and this is where we need to focus more research.

Flickr/NYU Stern BHR (Some rights reserved)

A garment factory in Dhaka, Bangladesh. Light manufacturers have little incentive to negotiate with workers or community members. It costs too much.

Through analysis of reports by companies, community organizations, and other academics, I’ve found that companies typically have the upper hand in stakeholder consultation, and that community members struggle to develop the skills and resources to effectively negotiate with companies. My next step will be to interview workers, managers, and community members affected by light manufacturing in order to explore how to change the “stakes” so as to make dialogue a normal part of the process of doing business—even in the sector where sweatshops have dominated the stage.

A significant challenge for any social movement is sustained engagement. 

A significant challenge for any social movement is sustained engagement—poor people, after all, are exceptionally busy just trying to get by. One of the most important contributions can be training and support from allies of the business and human rights movement, such as assistance with telling the story, contributing funds, assisting with legal proposals, and so forth. Allies can also help in meditating conflict that is internal to the networks—settling disputes among community members in order to define and keep focus on the goals.

On the company side, developing a reputation as a business that respects human rights can be a significant advantage—particularly if a company is in a highly competitive sector where the race to the bottom is pervasive. If a company pays terribly, or managers abuse workers in the factory, for example, this only leads to high turnover, production errors and bad publicity. But engagement with the communities can help a company figure out how to partner with state and local institutions (including government agencies and NGOs) to address problems like daycare, transportation, environmental compliance and other issues that are overwhelming for a single firm to tackle alone.

Another way to stand out is to engage with consumers to tell the company story—making business and human rights part of the company image. For example, the company Alta Gracia has marketed itself as a living wage company, and is building brand reputation precisely in this way: producing t-shirts and sweatshirts with university logos for schools throughout the USA while at the same time featuring the faces of the workers in the Dominican Republic who sew these items and telling their stories on the hang-tag that accompanies the price tag on every item. Consumers also have a responsibility to be part of the solution (e.g., by supporting rights-respecting companies) rather than contributing to the problem by chasing after the cheapest goods possible. In national public opinion surveys from 2006, 2008 and 2009, we found that well over half the population across the United States expressed a desire to consume more ethical products such as fair-trade coffee and sweatshop free clothing. Consumers who care about these issues also want evidence that their willingness to pay more actually benefits the worker.

This brings us back full circle to the faces of the people who come into my classroom and loom large in my research—the faces of workers and members of poor communities, who have helped make economic rights “real” in my work and life for much of the past 25 years. They are the reason why business and human rights matter now more than ever.