What does Target 16.3 mean for businesses?
While there is no universally accepted definition for the rule of law, it may be characterized as providing clear, fair and predictable laws to which all are equally accountable and that such laws are enforced impartially, independently and consistently with international human rights norms and standards. By extension, this definition includes how businesses respect and support the rule of law, including through conducting geopolitical (including political freedom) and human rights risk assessments and due diligence consistent with the Guiding Principles on Business and Human Rights (UNGPs). This approach allows businesses to assess whether a positive enabling environment exists where they have a direct or indirect interest.
Access to justice is a fundamental tenet of the rule of law whereby all persons are aware of their rights and responsibilities and are able to seek legal recourse or remedy should the need arise. Yet given that more than 5 billion people have unmet justice needs and 1.1 billion of the world’s population lack a legal identity and the necessary resources to access the legal system, it is clear there is a long road ahead to achieve this target. Businesses also have an interest in access to justice for all as an indicator of strong rule of law as well as of social equity and inclusion.
To be sure, access to justice and the rule of law provide commercial certainty and social stability and are, therefore, the foundation for responsible investment and sustainable development. The benefits of strong rule of law to businesses include:
- Increased security of assets, employees and investments
- Reduced risk of political instability, business disruption or bribery and corruption
- Protected commercial and intellectual property rights enforced in a clear, impartial and timely way
- Strengthened markets and societies that promote dignity, inclusivity and prosperity
Measuring access to justice and rule of law effectiveness
There are many indices and reports that measure access to justice and rule of law effectiveness in various jurisdictions around the world, including the Institute for Economics and Peace (IEP) Global Peace Index (aggregated under “Well-Functioning Government”); Transparency International Corruption Perceptions Index; World Bank Doing Business 2020; World Bank Women, Business and the Law 2021; World Justice Project Rule of Law Index 2020; and a host of others.
While it is expected that the strength of the rule of law will vary over political systems and economic cycles, in recent years there has been significant backsliding across various jurisdictions, including in places where the rule of law has long been taken for granted. This includes a rise in authoritarianism/populism and a decline in access to information, freedom of assembly and expression. This trend has only been amplified by the global pandemic, particularly with respect to civil and political rights and the rights of women and girls.
Some notable observations include:
- More countries are declining in rule of law performance over three consecutive years (World Justice Project Rule of Law Index 2020)
- Measures of global freedom have been declining for 14 consecutive years (Freedom House, Freedom in the World: Democracy in Retreat, 2019)
- According to the global average, women still have just 76 per cent of legal rights afforded to men (World Bank, Women, Business and the Law, 2021)
The impact of weak (or weakening) rule of law on business and society is not only disconcerting and disruptive but also fuels uncertainty and instability. This presents new challenges for businesses — not only in terms of their investments, operations and relationships — but also in terms of rising expectations from customers, employees and investors that businesses take a stance on politically and socially sensitive issues.
Moreover, businesses seek greater consistency in countries or jurisdictions where they invest, operate or otherwise have an interest in, particularly with respect to institutions, laws and systems. As such, businesses are increasingly looking to intergovernmental organizations to establish consistent frameworks, norms or standards across a wide spectrum of economic, social, environmental and governance issues through greater global cooperation, inclusive multiculturalism and universal values.
How should businesses implement Target 16.3?
The Business for the Rule of Law Framework was developed by the UN Global Compact and sets out to demystify the rule of law and emphasize its importance for thriving markets and societies. It highlights aspects of rule of law that resonate most with businesses, including access to justice; accountability and transparency; legal certainty; equality before the law; and respect for human rights. It also shows that the rule of law is not a linear concept but rather comprises procedural and substantive elements. The substantive aspects set out the rights and responsibilities we are governed by as a society (including companies as separate legal entities) and the procedural aspects set out the way these laws are enacted, adjudicated and otherwise enforced. This distinction is important to reflect just how foundational the rule of law is to how Governments, businesses and societies behave and function independently and collectively.
Respect and support for the rule of law by businesses can be demonstrated in a variety of ways. Businesses must respect the rule of law in the countries where they operate and are encouraged to apply higher/international standards wherever possible. In recent years, we have seen more businesses demonstrating their support for the rule of law including by speaking out on procedural issues (e.g. upholding free and fair elections and separation of powers) and substantive issues (e.g. upholding fundamental freedoms and gender, racial and social equality). Moreover, they are encouraged to act as a responsible party in alternative dispute resolution and/or court proceedings and not engage in strategic litigation against public participation (SLAPP). Unfortunately, a recent report by the Business and Human Rights Resource Centre, highlights how SLAPPs have been used by businesses to intimidate and silence human rights defenders and other activists. That said, businesses are increasingly recognizing the mutuality that exists between protecting the rule of law and providing access to justice for all and the impact this has on its own social license to operate and on its customers, employees and communities.
Here are some ways businesses can take action
Culture and board/management oversight
Ensure that the principles of good governance are adhered to at all levels of the organization, including board and management oversight, and across all personnel based in countries/jurisdictions beyond the location of corporate headquarters.
Awareness, education and training
Develop and facilitate training that creates awareness of and respect for the rule of law, including local laws and international norms. If the rule of law is weak in a given jurisdiction, businesses are encouraged to apply the higher standard wherever possible.
Policies and processes
Develop and implement effective, accountable and transparent governance (Target 16.6) frameworks, including ethics and compliance programmes, that are guided by responsive, participatory, inclusive and representative decision-making processes at all levels (Target 16.7) and applied across all functions and stakeholders.
Grievance mechanisms including access to justice and extrajudicial remedy
Develop, implement, monitor and adequately resource internal grievance mechanisms, through which employees and external parties can report concerns regarding any adverse business conduct. Such mechanisms should include providing access to effective remedy for adversely affected parties. Access to remedy underlines the importance of bringing the principles of organizational justice and due process to internal grievance mechanisms, including with respect to internal investigations and disciplinary procedures.
Avoid taking action that undermines the rule of law and accountable governance. Businesses should not lobby Governments to adopt laws/regulations that appear to bring commercial benefit but hinder the environment, human rights or transparency. Businesses must refuse to pay Government officials bribes for public procurement contracts or to not enforce laws on the books that would adversely affect them.
Board/management oversight, culture, strategies, policies, operations and relationships
Lead, promote and support advocacy efforts that call for the development of and/or adherence to legal frameworks that protect and respect the rule of law. These efforts may include supporting regulation that promotes clean and responsible business and investment practices, fair labour practices and respect for human rights and environmental protection.
Lend expertise in building the capacity of local/national governments to administer the rule of law and improve access to justice. These contributions may include working with local bar associations or civil society organizations to provide judicial training to local courts on the importance of impartiality and independence; building the infrastructure necessary for the effective administration of justice; and supporting the drafting of much needed legislation.
Work with Global Compact Local Networks, business associations, civil society organizations and, where relevant, the home country embassy to support the strengthening of the rule of law in a given jurisdiction. These efforts may include supporting the right to peaceful assembly or opposing discrimination against a marginalized group.
Institutions, laws and systems at the international, national and municipal levels
Here are some ways businesses are taking action
Access to Justice for Marginalized Groups and Individuals
The Fernando Pombo Foundation (FFP), of the Spanish-based Gómez-Acebo & Pombo law firm, advances the rights of the poor through the tenets of SDG 16, especially the rule of law. FFP engages with law schools to raise awareness on the role of business in supporting human rights and ethical legal practices. It also partners with civil society organizations, public administrations, the private sector and philanthropists to support the elimination of violence, human trafficking, corruption and other SDG 16 targets. FFP encourages the legal profession to embrace SDG 16 in order to advance human rights and the rule of law. (Source)
- Alliance to Combat Anti-Asian Violence
Historically, the legal system has marginalized low-income and under-represented Asian Americans who have not been afforded due process, let alone the basic respect and attention their cases deserve. Victims often lack access to legal remedies and support because of language and cultural barriers, among other inhibiting factors. Victims of anti-Asian hate need culturally responsive advocates and real solutions. Responding to heightened attacks on the Asian American community, a group of Fortune 1000 General Counsel and over 40 law firms announced the creation of The Alliance for Asian American Justice (The Alliance), a national pro bono initiative committed to standing up for victims and preventing future acts of anti-Asian hate. (Source)
- Business Network for the Rule of Law
The Bingham Centre for the Rule of Law Business Network aims to identify rule of law issues relevant to the business community and provide input to corporate partners. Central projects include examining how businesses should adhere to international human rights standards when faced with contradictory domestic requirements. Other topics under discussion with the Network include transnational public interest in international investment and trade law; bribery and corruption; SDG 16 and the role of the private sector; a rule of law index for business; and data privacy versus data sharing. Founding members included Nestlé, BP, Anglo American, BT Group, Diageo, HSBC, Rio Tinto, Rolls-Royce, Shell International and Unilever. (Source)
- Business Response to the Military Coup in Myanmar
Further to the United Nations response to the military coup in Myanmar, the business community was urged to speak out against the attack on democratic processes and human rights violations, including efforts to limit access to the internet as well as restrict freedom of assembly and expression and the killing of protestors. Businesses issued statements raising concerns regarding these actions. (Source)
- Business Response to the Murder of Jamal Khashoggi
Following the brutal murder of journalist Jamal Khashoggi in the Saudi Arabian consulate in Istanbul, many business leaders declined to attend the annual Future Investment Initiative, known as “Davos in the Desert”, given questions that existed at the time about the circumstances surrounding Khashoggi’s death. (Source)
- Business Response to the United States Capitol Riots
In the days following the riots at the United States Capitol, Chief Executive Officers from across the business community issued statements condemning the violence and defending democratic governance and the rule of law in the United States. In addition to such statements as well as grave concerns expressed by the United Nations and others, many businesses announced changes to their political contribution policies, with certain companies refusing to contribute to specific candidates who opposed the certification of the President-elect while others paused all political contributions. The shock of the events at the Capitol — and the threat posed to the United States electoral system — sparked an unprecedented response from the business community in defence of democratic institutions and processes. (Source)
- Business Support for Access to Justice During the Pandemic
As courts were forced to close their doors across much of the world in the face of pandemic restrictions, they lacked guidelines or direction in how to continue functioning remotely in a way that would continue to maintain standards of impartiality, accountability and judicial independence. The pitfalls that were encountered were both technical and procedural. The CEELI Institute (Prague) stepped in to work with judges across Central and Eastern Europe to develop appropriate guidance for judges on the conduct of remote hearings in a way that continued to respect international fair trial standards. The Institute was supported in these efforts by businesses including Nestlé, Shell International B.V. and CourtCall, who offered time, skills and insights as well as the necessary financial contributions to facilitate these programmes. (Source)
- Corporate Alliance for the Rule of Law (CAROL)
The Alliance comprises private and public institutions and seeks to utilize various strengths and experiences in partnership to enhance the rule of law. Effective institutional change requires cross-sectoral commitment and cooperation on improving formal legal frameworks, informal cultural norms and behaviours and enforcement. The Alliance focuses on supporting, promoting and strengthening transparent enactment and enforcement of clear and just laws; independent, competent and well-resourced judicial systems; universal, equal access to justice; effective anti-corruption incentives and mechanisms; effective mechanisms to ensure administration of the law is fair, not arbitrary; and a capable legal profession that is well equipped to uphold the rule of law. (Source)
- RELX-LexisNexis Rule of Law Impact Tracker
The Rule of Law Impact Tracker brings together data from the World Justice Project, the World Bank and Transparency International to quantify relationships between the rule of law and economic and social indicators. It allows users to explore not only why the rule of law is vitally important to sustainable global development but also what’s truly possible in the world if we work together to affect change. (Source)
Some industries that could/should contribute to achieving Target 16.3
The rule of law is inherently relevant to all industries. Without the rule of law, businesses cannot function and societies cannot thrive. That said, lawyers — in-house or at firms — have a special responsibility to protect, respect and uphold the rule of law, particularly with regard to the advice they provide to businesses and other individuals or entities.
Some intersections with Target 16.3 and the Ten Principles, UNGPs and SDG16+
The rule of law is inherently relevant to all aspects of the Ten Principles and all of the Sustainable Development Goals. The rule of law is foundational to the realization of these principles and goals both procedurally and substantively.
- Alliance to Combat Anti-Asian Violence