The era of ‘Globalization 4.0’ comes with its adverse consequences such as geopolitical struggles, rising economic and social inequalities, and ecological disasters triggered by the unsustainable policies and practices of the international community. The challenges posed by the Covid-19 pandemic further added to the global sustainability concerns. According to the Sustainable Development Goals Report 2020, we are now at a very critical turning point for achieving the Goals by 2030 and it is crucial to find pathways for a legal, economic, social, and environmental transformation to ensure a safe and just space for humanity. In this blog post, I briefly introduce the theoretical framework for a future corporate accountability mechanism model that I will present at the first Quinquennial Conference of Daughters of Themis, entitled Regulating Business in Times of Turbulence: Thinking Out of the Box for A Sustainable Future. (You can see the programme here, and register your participation here.)
The Network Science, Corporations and International Law
Network science, used for analysing a wide range of physical, biological, and social phenomena, can be a guide in theorizing the corporate accountability mechanism model operating as a ‘glocal’ network for a responsible business in a sustainable future. Manuel Castells, in ‘The Rise of the Network Society’, argued that the organizational structure of corporations has transformed from vertical bureaucracies to horizontal networks in order to adapt to the rapid economic and technological changes in business relations. In this new organizational structure, the geographically, organizationally, and legally fragmented corporate networks are connected through contractual or de facto relationships. As a symptom of this operational transformation, the regulatory framework for corporate activities has also developed in the form of a web of national, regional, and universal rules and principles adopted by various public and private actors.
However, apart from the newly emerging transnational sustainability laws, the legal framework on business and human rights is mostly based on the soft enforcement mechanisms of international law or on the self-regulatory efforts of the private actors in the context of corporate social responsibility. Hence, international law remains to be a source of justification for the continuance of the status quo, despite the global finance, security, energy, climate, and health crises we have been witnessing since the beginning of the 21st century.
The Draft Treaty on Business and Human Rights
In order to respond to the pressing need for an international binding treaty and the calls from the international community to fill the governance gap in the business and human rights field, the Open-ended Intergovernmental Working Group on transnational corporations and other business enterprises with respect to human rights, established by the UN Human Rights Council, has released the second revised Draft Business and Human Rights Treaty on 6 August 2020. The Draft Treaty, if adopted, is envisaged to become a non-voluntary legally binding instrument for States and regional integration organizations. In line with the UN Guiding Principles on Business and Human Rights, the primary obligation to respect, protect, fulfil, and promote human rights rests with the State, and the States, within their territory or jurisdiction, ‘or otherwise in their control’ (art. 8(1)), must protect human rights against third party abuses including transnational corporations and other business enterprises (art. 6).
The work of establishing the accountability mechanism(s) under the Draft Treaty and its Draft Optional Protocol is still in progress. However, the envisaged institutions, such as the National Implementation Mechanism, and their functioning strategies can be conceptualized and further developed based on the theories and methods of the network science.
The Future of Corporate Accountability
In shaping a new global architecture for Globalization 4.0, the network science together with the statutory and regulatory network analysis of international law can be used for developing a holistic and coherent legal accountability model for a responsible business operating within the limits of planetary boundaries. Adding on to the scholarly discussions for establishing a specialized international body and in line with the ongoing work of the Open-ended Intergovernmental Working Group, I argue that a new model of corporate accountability mechanism can be designed as an international network of ‘glocal’ networks. This international network would consist of formal and informal, vertical and horizontal, regional and national interconnected sub-networks operating through an interactive communication and consultation process among all relevant public and private stakeholders.
The widespread use of the Internet of Things and other advanced technology opportunities of the Fourth Industrial Revolution, such as blockchain and cloud computing, can further facilitate the flow of data and communication among the global value chain of corporations, which would also ensure corporate traceability, transparency, and accountability.