Challenges in Accounting for Human Right

It has been clear that business is the part of society, in doing business companies might work with regimes whose values they might consider offensive. It is quite often that companies have to deal with the local society who need to mine land that is ancestral home of indigenous people. (Gray, Adams, and Owen, 2013)

the illustration above is just a small example which portray that companies are actually deal with human right issue. Human Right is could be defined as the fundamentals principles allowing individuals the freedom to lead a dignified life, free from fear, and free to express independent beliefs (Gray and Gray, 2012). Companies have an obligation to ensure that they do not violate the human rights.

International initiative on human right has been emerged in 1948. As the World War II ceased, the United Nation declared the Universal Declaration on Human Rights (UDHR) for the purpose of protecting individual rights and freedom throughout the world. UN General principle emphasized in the importance role of State in protect against human right abuse within their territory  and jurisdiction by third parties, including business enterprises. Consequentially, this principle also obliged the businesses to respect human rights whereby they should address adverse human rights impact with which they are involved. Moreover, businesses are not only obliged to respect human rights but they also have to avoid infringing on the human rights.

Despite all these initiatives, Gray and Gray (2012) highlight that there are some challenges in articulating the notion of human right that it drives to the very basic question about what is to be human? and what each individuals owes to themselves and to each other?. Albeit this confusion, the notion of human right tend to use UDHR as its touchstone. Arguably, as UDHR is not legally binding and only form the basis of what nations are expected to follow, it has lead to the widespread acceptance of human rights as a basic tool of moral evaluations. 

Another problem arises as UDHR per se  having some disputes and the most substantial dispute is, UDHR is considerably  emerged on western idelogy. It leads to the essential conundrum over the extent to which the UDHR leans towards a privileging of western notions of individualism over the eastern sense of collectivism. 

Moreover, the non-legally binding nature of UDHR, is however, constitutes  no well-defined responsibilities
expected from the government and businesses. As the UDHR has asserted, initially and predominantly human right is a matter of state. Nevertheless, government is incapable in controlling the MNCs as MNCs have many subsidiaries outside its reign. Fortunately, the international initiatives, including UNGC and OECD guideline for MNEs, are developed in order to define how business might begin to understand human right. However, there is a growing resistance from business as human rights are considered to be outside the scope of business that therefore business will have little benefit from engaging corporations with human rights. 

The unclear responsibility of who should assert the human right, leads the NGOs to arbitrate this issue. There are several NGOs initiate in addressing the human right issue. For instance, The business and Human Right Resource Centre (Responses from companies to allegations of misconduct); Right and Accountability in Development (promotes corporate accountability, fair investment, and good governance). However, the complex nature of MNEs with the growing range of stakeholders in different places and the unabated capital mobility, creates a difficulty to small-funded NGOs in monitoring MNEs’ human right-related activities. Therefore, the social accounting and the mechanism of accountability is expected to tackle this issue. the social accounting might help companies to monitor and manage human right risk only and if only the social  accounting have a reporting framework and a clear mechanism of monitoring. Unfortunately, the beyond dispute notion of human right makes there is no clear reporting framework and measurement of human right. Even though, GRI has provide  a guideline in reporting human right, according to GRI (2008) survey there was only 7% of companies surveyed report using G3 guideline comply with the guideline

Closing Remarks

although it is not yet clear how the measurement and calculations to reflect the rights of humanity, some initiative arises in the area of finance through the development of Socially Responsible Investment index such as FTSE4Good, DJSI, KLD Domini and so forth to facilitate conscientious investor place their fund in companies with highest respect in human right. In term of human right practice monitoring, inevitably we still heavily rely on NGO or media. It is expected that this practice could prevent the human right abuses by business enterprises

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