Internal antecedents of corporate human rights violations : policies and leadership commitment

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International business & human rights

Internal antecedents of corporate human rights violations:

policies and leadership commitment

Marit Mieke Kloosterboer

Student number: 11148918

Date of submission: January 27, 2017

Version: 1

First supervisor: Dr. M.K. Westermann-Behaylo

Second supervisor: Dr. L. DiVito

Master thesis

MSc. Business Administration ⏐ International Management Track

University of Amsterdam ⏐ Amsterdam Business School

Key words: human rights – abuses – violations – policy – leadership commitment –

multinational enterprise – motives

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Statement of originality

This document has been written by Marit Kloosterboer, who takes full responsibility for the contents.

I declare that the text and work presented in this document is original, and that no sources other than those mentioned in the text and its references have been used.

The Faculty of Economics and Business is responsible solely for the supervision of the completion of the work, and not for the contents.

Acknowledgements

I would like to thank my supervisor, Ms. Westermann-Behaylo for her helpful comments and constructive feedback on earlier drafts of this thesis. Her patience and continuous guidance gave me confidence and strengthened this thesis. Thanks also to Ms. van den Berg-Warwick for proofreading my work on grammar and spelling; and to my parents for supporting me through the process of writing this thesis, and continuous encouragement throughout my years of study.

Thank you. Marit Kloosterboer

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University of Amsterdam – Graduate school of Business ⏐ Thesis – M.M. Kloosterboer ⏐ January 27, 2017 ⏐

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1) Introduction

. ... 7

2) Literature review

... 10

2.1 INTERNATIONAL HUMAN RIGHTS ... 10

2.2 HUMAN RIGHTS AS A BUSINESS ISSUE ... 11

2.2.1 Globalization and its impact on doing business ... 11

2.2.2 Emergence of international concern ... 12

2.2.3 Protect, respect and remedy framework. ... 13

2.3 THE CORPORATE RESPONSIBILITY TO RESPECT ... 14

2.3.1 Legislative action vs. voluntary policies ... 16

2.4 LEADERSHIP COMMITMENT ... 17

2.4.1 Are policies enough to prevent corporate abuses from happening? ... 17

2.4.2 Leadership matters in firm’s performance ... 19

2.4.3 Leadership matters in firm’s ethical behavior ... ... 21

2.4.4 Motives of leadership commitment ... 22

2.5 CONCEPTUAL FRAMEWORK & PROPOSITIONS ... 23

3)

Methodology

... 24 3.1 MULTIPLE-CASE STUDY ... 24 3.2 DATA COLLECTION ... 25 3.2.1 Data sources ... 25 3.2.2 Case selection ... 26 3.3 DATA CODING ... 28

3.3.1 Human rights policies ... 28

3.3.2 Leadership commitment ... 29

3.4 DATA ANALYSIS ... 32

4)

Results

... 33

4.1 WITHIN-CASE ANALYSIS ... 33

4.1.1 Case 1 Chevron ... 33

4.1.2 Case 2 British Petroleum ... 37

4.1.3 Case 3 BHP Billiton ... 43

4.1.4 Case 4 Canadian Natural Resources ... 48

4.1.5 Case 5 Nexen Inc. ... 51

4.1.6 Case 6 Premier Oil ... 54

4.2 CROSS-CASE ANALYSIS ... 57

4.2.1 Pairs of cases ... 57

4.2.2 Policies (P1) ... 60

4.2.3 Leadership commitment (P2) ... 61

5) Discussions

... 63

5.1 LIMITATIONS & AVENUES FOR FUTURE RESEARCH ...66

6) Conclusions

... 67

7) References

... 68

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Abstract

The overall purpose of this research is to analyze the internal antecedents related to corporate human rights abuses, and to improve our understanding of how to prevent and mitigate corporate abuses in the future. Over the last decade, multinational enterprises (MNEs) committing human rights violations have received increased attention. In part, this could be attributed to John Ruggie’s activities as a United Nations Special Representative of the Secretary General on Business and Human Rights, who introduced a new international framework in 2008. Given the prominence and promise of the framework, the lack of academic research in this area is noteworthy. This present research tries to fill this gap by concentrating on two key elements of the framework: human rights policies and leadership commitment. Hence, this study examines the impact of human rights policies on firms’ corporate abuse records, and how this relationship is influenced by value-driven leadership commitment. This study analyses the chief executive officer (CEO) letters and social performance reports of six MNEs operating in the extractive industry for seven successive years. The results demonstrate significant differences in the adoption of human rights policies and the motivating principles among firms with a very poor record of violations and those with a record of fewer corporate abuses. First, there are differences found in the timing of adoption of human rights policies. Firms that consistently have fewer work-related fatalities and have no reported involvement in other types of corporate abuses all had separate human rights policies in place before 2008.Second, firms that have adopted human rights policies have committed fewer corporate wrongdoings after the implementation, and as such, it appears that firms with human rights policies have a better record concerning corporate abuses. Third, the results show that value-driven and stakeholder-driven motives are needed for policies to be truly effective.

KEY WORDS: human rights – abuses– violations – policy – leadership commitment –

multinational enterprise – motives

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List of abbreviations

BHRRC Business & Human Rights Resource Centre

BP British Petroleum

BTC pipeline Baku-Tbilisi-Ceyhan oil pipeline

CEO Chief Executive Officer

CSR Corporate Social Responsibility

CHRD Corporations and Human Rights Database

CNR Canadian Natural Resources

HSEC Health, Safety, Environment and Community

LDC Least Developed Country

MNE Multinational Enterprise

Nexen Nexen Inc.

Norms Norms on the Responsibilities of Transnational Corporations OECD Organization for Economic Co-operation and Development

Orbis Orbis database

PRR Framework Protect, Respect and Remedy Framework

Premier Premier Oil

SRSG

Special Representative of the Secretary-General

UDHR Universal Declaration of Human Rights

UN United Nations

UNGP UN Guiding Principles

UN HRC UN Human Rights Council

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List of tables

Table 1 Selected cases

Table 2 Different subjects of human rights policy or reference based on Olsen (2014) Table 3 Motives for leadership commitment based on Maignan and Ralston (2002, p. 501) Table 4 Coding frame leadership commitment motives

Table 5A Overview of results per variable

Table 5B Content focus of human rights reference in ‘The Chevron Way’ Table 5C Leadership commitment quotes on human rights

Table 6B Content focus of human rights reference in BP’s code of conduct Table 6C Leadership commitment quotes on human rights

Table 7B Content focus of human rights reference in BHP Billiton’s policies Table 7C Leadership commitment quotes on hum rights

Table 8B Leadership commitment quotes on human rights Table 9A Overview of results per variable

Table 9B Leadership commitment quotes on human rights Table 10A Overview of results per variable

Table 10B Leadership commitment quotes on human rights Table 11 Summary of results per variable

Table 12 Leadership quotes

Table 13 Summary of CAAs per year for every case Table 14 Results of propositions

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1) INTRODUCTION

Bangladesh, recognized as an independent country by the United Nations (UN) since 1974, has to date a Least Developed Country (LDC) status (UN, 2015a). This means that Bangladesh is amongst one of the poorest and weakest nations around the globe. LDC countries face impediments with socio-economic development and often suffer from political instability. Their national business systems are typically characterized by low income, weak institutions and scarcity of domestic financial resources (UN, 2015b, 2016a). It was against this background, when on the 24th of April 2013, the world’s deadliest garment-industry accident happened in Bangladesh: the Rana Plaza garment factory collapsed and killed 1,134 workers (Smook & Heuer, 2015). The tragedy highlighted the bad working conditions, poverty wages, and safety issues in the garment industry. It showed the developed world the hidden price tag of their cheap fashion, and the hazardous problems at the base of the global garment supply chain. The prevalent question is what role MNEs played in this tragedy, as the products of 29 international fashion brands were manufactured in this factory.

Unfortunately, the Rana Plaza tragedy is just one out of many examples in recent decades where MNEs are reported to be involved in human right abuses (BHRRC, 2016b; Preuss & Brown, 2012; Schrempf-Stirling & Wettstein, 2015). Affected societies are most often located in developing countries (Scherer & Smid, 2000), where since the 1980’s globalization has attracted high levels of investments. Globally, governments have adopted liberalization policies that have provided MNEs the opportunity to expand their activities. With no limits for firms on where and how to operate, and improved communication and transportation, globalization has rapidly changed the world we live in.

However, as illustrated at the beginning of this section, the capacity of the host state might be limited due to weak institutions or the fear of losing investments. Fuelled by cases such as the Rana Plaza tragedy, there is a growing concern regarding the negative impact of MNEs on society. Non-state agents including Amnesty International and intergovernmental organizations such as the UN took initiatives to reduce the negative consequences of business on society. Currently, these organizations challenge the notion of accountability for human rights violations that traditionally pertained to the state (Muchlinski, 2001). As such, human rights have nowadays become a business issue for firms.

One of the most recent and far reaching initiatives is the Protect, Respect and Remedy Framework (PRR Framework) (Ruggie, 2008) implemented as the UN Guiding Principles for Business and Human Rights (UNGP) (Ruggie, 2011). The PRR Framework tries to clarify the role MNEs have

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with regards to human rights and the UNGP provides guidance on how to do this. The introduction of the UNGP has changed the arena on human rights and business at an international level. The UNGP have been welcomed by the UN Human Rights Council (UN HRC) and have been globally endorsed by nations, the European Union, Organization for Economic Co-operation and Development (OECD), international organizations, and corporations (Fasterling & Demuijnck, 2013; Harrison, 2013).

Unfortunately, human rights violations still occur today and therefore it is important to assess what the actual impact of this initiative is in relation to corporate human rights performance.Given the widespread endorsement and the prominence of the PRR Framework, this assessment is necessary.

Although a few scholars (Fasterling & Demuijnck, 2013; Harrison, 2013; Preuss & Brown, 2012) recognize this need and call for more empirical research on the PRR Framework, the lack of academic research in this area is noteworthy. As such, there is still no answer on the actual impact of the UNGP on firms’ corporate abuse record. This present study tries to fill this gap by contributing to our current knowledge of internal factors related to human rights violations. Understanding firms’ approaches and their impact on human rights is important for two reasons. First, this could expose the effectiveness of the UNGP in preventing corporate abuses. Second, this understanding could allow corporate managers to better meet human rights duties.

This research concentrates on two key elements of the UNGP: human rights policies and leadership commitment. In line with Ruggie (2011), this study proposes that human right policies will help MNEs in mitigating human rights violations and that leadership commitment with a value-driven focus from corporate leaders is necessary for these policies to be truly effective.This study will make use of multiple-case analysis and considers the empirical situation of six firms in the extractive industry for seven consecutive years. Hence, the following research question is proposed:

What is the impact of human rights policies on firm’s corporate human rights abuse records, and how is this relationship influenced by value-driven leadership commitment?

This report is structured in the following way. First, a review of the literature organized around corporate human rights violations is provided. A brief introduction on the development of international human rights is given, followed by an explanation of how it has become a business issue for MNEs. Moreover, an overview of the response of international communities and a thorough elaboration on the

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PRR Framework is provided. To address the research question, two propositions are developed and are derived from the literature discussed. Second, this study’s methodology is described; a multiple-case study of six MNEs operating in the extractive industry. Finally, the multiple-cases are presented and the results discussed. The remainder of this report outlines the main conclusion and limitations of this study.

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2) LITERATURE REVIEW

2.1 International human rights

Article 23

Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.

(UN, 1948, p. 5)

The idea of individual rights has a long history (Beitz, 2011), early attempts can be traced back to the United States Bill of Rights of 1798 or the French Declaration of the Rights of Man and the Citizen signed in 1798 (Nickel, 2006). It was the Universal Declaration of Human Rights (UDHR) established in 1948 that created the modern idea of international human rights (Beitz, 2011). The UDHR was the first legal document put into place to protect universal human rights. The UDHR was the direct result of the experience of World War II (UN, 1948) and served as a set of non-binding principles, that became on many fronts the foundation for the codification of human rights: international law, global and regional institutions, and in the policies of states (Beitz, 2011; Hannum, 1995).

At the beginning of this section, article 23 of the UDHR has been quoted to serve as an example of what human rights entail. Other articles in the UDHR refer for instance to the right to freedom of expression, the right to life, or the right to rest and leisure (UN, 1948). The UN defined human rights as follows: ‘Human rights are rights inherent to all human beings, whatever nationality, place of residence, sex, national or ethnic origin, color, religion, language, or any other status’. We are all equally entitled to our human rights without discrimination (UN, 2016b). In other words, the virtue of being human, provides and secures the unconditional and moral minimum to live a life in dignity (Wettstein, 2010). After World War II, the discussion and diffusion of the concept of modern international human rights gained ground and human rights has become an emerging ‘international practice’ (Beitz, 2011, p. 1).

2.2 Human rights as a business issue

Traditionally, responsibility for international human rights pertained to the state (Beitz, 2011; Frey, 1997; Graetz & Franks, 2013; Preuss & Brown, 2012). That is why human rights’ literature initially focused upon the relationship between the state and its citizens. However, during the last two decades, MNEs and their role in human rights have become a phenomenon of interest, mostly driven

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by large corporate scandals with far reaching impacts on local communities. Recent examples of international human rights violations where MNEs are involved include the death of 1,134 people at the Rana Plaza factory in 2013 (Smook & Heuer, 2015), the violation of the human right of ‘expression and information’ by Google in China (Brenkert, 2009), or no adequate compensation or solution for 732 families of indigenous communities in Guatemala in 2011 that needed to make way for a palm and sugar company (Deluca, 2012). The purpose of the following section is two fold. It will provide an overview of how international human rights have become a business issue and where this problem stems from.

2.2.1 GLOBALIZATION AND ITS IMPACT ON DOING BUSINESS

In the 80’s, liberalization of trade, improved transportation and communication, and privatization throughout the world, a process also knows as globalization, started to change the world in many aspects. Globally, governments adopted liberalization policies that provided MNEs the opportunity to expand their activities. In particular the trade barriers of many developing countries diminished and as a result MNEs found themselves increasingly investing in developing countries.

Inward foreign direct investment (FDI) to developing countries reached a new peak of $765 billion in 2015 (UNCTAD, 2016). In particular, FDI flows to LDC increased by over 30 percent.

The motives for MNEs and governments to engage in and attract FDI are multiple. On the one hand, Dunning (2000) contends that MNEs engage in cross border activities to seek either markets, resources, efficiencies, or strategic assets. On the other hand, governments of developing countries

expect positive economic impacts; MNES are an important source of job creation and technology transfer (Ruggie, 2008). Moreover, these investments can influence local salaries, export markets, and productivity (Giuliani & Macchi, 2014).

Unfortunately, host countries do not only experience the positive economic impact of MNEs’ inward investments but also increasingly face the negative social consequences of corporate activities. Examples include bad working conditions (Smook & Heuer, 2015), child labor (Nadvi, 2008), environmental injustice (Adeola, 2000), or unrealistic low wages (Monshipouri, Welch, & Kennedy, 2003). It appears that globalization created an environment that permits business to violate human rights (Ruggie, 2008). The section below elaborates on how such an environment got created and tries to answer the question where the business and human rights issue originates.

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The process of international economic integration was accompanied by a significant increase of legal rights protecting intellectual property and investments of globally operating MNEs (Ruggie, 2013). Alongside this, standards or rights protecting the society from the impact of this economic transformation did not get modified or created (Ruggie, 2013). As such, corporate global actions and their impact on society are not centrally regulated on a global level. Instead, each subsidiary is subject to the local jurisdiction in which it resides (Ruggie, 2013).

Since domestic laws in relation to business and human rights are often not in place or governments are unable to enforce them, MNEs could cause human rights harm and commit wrongful acts. The capacity of developing countries to manage firms’ adverse impacts might be limited, due to weak institutions or the fear of losing investments. Thus, some governments will not impose local laws on MNEs operating in their country, as they fear disengagement. Even when developing countries

have the wish to enforce national laws and regulations in relation to business and human rights, they find themselves unable to do so, constrained by institutional capacity or the fear of competitive consequences.

According to Ruggie (2008) these governance gaps, created by globalization, are the root cause of the business and human rights issue.

In absence of a corporate accountability framework and the presence of governance gaps,

intergovernmental organizations like the UN have tried to clarify the human rights obligations of business. Currently, a central aspect of the business and human rights debate is the greater accountability and responsibility expected from the MNE (Blitt, 2012; Preuss & Brown, 2012; Wettstein, 2009). In sum, the idea of human rights as the sole responsibility for the state is changing, and human rights have for firms become a business issue.

2.2.2 EMERGENCE OF INTERNATIONAL CONCERN

Important early initiatives to bridge the gap between business and human rights responsibility, include the OECD Guidelines for Multinational Enterprises in 1976 (Preuss & Brown, 2012; Ruggie, 2007), the UN Global Compact adopted in 2000 (Ruggie, 2007), and the Norms on the Responsibilities of Transnational Corporations in 2003 (Norms) (Arnold, 2010). Although the UN Global Compact was more concerned in providing a framework for general corporate social responsibility (CSR), two out of the ten principles covered human rights duties of business. However,

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this initiative faced some serious limitations and critiques that challenged its usefulness (Arnold, 2010). The main critiques addressed were the absence of a measurement tool or guidance on how to report compliance with the principles, the lack of established sanctions for those who did adhere to the principles, and the shortfall of clarity on both the concepts and distinct duties for corporations (Arnold, 2010).

The Norms included 23 articles written in a treaty-like language, and stated that MNEs have legal duties in relation to human rights (Ruggie, 2007). While the Norms were the first attempt to draft a legally binding international code of conduct for the promotion and protection of human rights by MNEs, they failed miserably to gain ground (Ruggie, 2013). The rejection of the Norms was based mainly on the critique of the business community who argued that the responsibility for human rights belonged to governments (Hamann, 2009).Moreover, the Norms entailed a list of international human rights that pertained to MNEs, which was inclusive as it could not be defended with solid argumentation of why certain rights where left out.Thus in spite of these early attempts, a practical guideline of the implications of international human rights for MNEs remained absent.

The following section will cover the most recent initiative that tries to clarify the relationship between business and human rights. This effort can be assigned to John Ruggie, who was appointed as the United Nations Special Representative of the Secretary-General on Business and Human Rights (SRSG). The introduction of Ruggie’s report has changed the arena on human rights and business at international level, given that it is the first set of international standards, adopted by the UN HRC, which tries to clarify MNE’s role and accountability on human rights (Ruggie, 2007). Muchlinski (2012) even states that ‘John Ruggie, has set in train what is perhaps the most comprehensive discussion to date on the relationship between corporations and human rights’ (p.145). Given that this initiative affects both day-to-day operations and strategic management of MNE’s as well as public policy (Cragg, 2012), it has serious and significant consequences for both states and MNEs.

2.2.3 PROTECT, RESPECT AND REMEDY FRAMEWORK

John Ruggie was appointed in 2005 by the UN Council as the SRSG to ‘identify, clarify and research key legal and policy dimensions of the business and human rights agenda’ (Ruggie, 2008, p. 190). As such, John Ruggie proposed the PRR Framework (Ruggie, 2008), and the UNGP (Ruggie, 2011). The PRR Framework, introduced in 2008, tries to clarify what role MNEs have with regards to

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human rights. The UNGP followed in 2011, as a fully articulated guide on how to implement the PRR Framework. The UNGP came into existence to provide an authoritative global reference point for business and human rights (Ruggie, 2008). In other words, the UNGP has been developed to assist states and business on how to avoid and mitigate the human rights consequences of MNEs. The UNGP have been welcomed by the UN HRC and has been globally endorsed by nations, the European Union, OECD, international organisations, and corporations (Fasterling & Demuijnck, 2013; Harrison, 2013).

The UNGP is built on three core principles: ‘the state duty to protect’, ‘the corporate responsibility to respect’, and ‘the need for more easy access to remedies’ (Ruggie, 2008). The first principle refers to the law-binding obligation states have to protect citizens against human rights abuses by non-state actors, including business, while the second principle reflects the basic expectation society has of firms; to respect human rights. The third principle refers to the judicial and non-judicial need by victims of human rights violations to have greater access to remedy (Ruggie, 2013).

The distinction of the state’s ‘duty to protect’ and the ‘corporate responsibility to respect’ is based on the fact that so far, non-state actors (like MNEs) are not subjects of international law (Muchlinski, 2012). To be more specific, MNEs have currently no obligation by international law to protect against human rights violations (Fasterling & Demuijnck, 2013; Muchlinski, 2012). Instead, International law enforces such duties generally on states and consequently, respecting human rights remains a voluntary responsibility. Hence, Ruggie’s answer to clarify the role of MNEs towards human rights is the voluntary UNGP. This review will further focus on the second pillar of the UNGP; the corporate responsibility to respect.

2.3 The corporate responsibility to respect

Ruggie (2008) believes that it is not possible for MNEs to be accountable for a specific list of human rights. That’s why the second principle tries to define the specific responsibilities of MNEs in relation to all human rights. He argues that any list will almost certainly result in misleading guidance for MNEs, as it will be very likely to be incomplete. The UNGP encourages MNEs to respect human rights by prompting firms to avoid and to mitigate adverse human rights impacts (Blitt, 2012). In order for firms to successfully obtain these objectives, they should set up three measures: carry out human

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rights due diligence, proclaim a policy commitment at the highest management level, and establish a process around remediation (Ruggie, 2011).

The biggest responsibility and the most central aspect of ‘the corporate responsibility to respect’ lies in the concept of ‘due diligence’ (Fasterling & Demuijnck, 2013; Hamann, Sinha, Kapfudzaruwa, & Schild, 2009; Harrison, 2013). Ruggie (2008) defines this concept as ‘the steps a company must take to become aware of, prevent and address adverse human rights impacts’ (p. 199). In other words, due diligence is an on-going process that should be carried out by MNEs to know and show that they respects human rights. The process entails four basic requirements; policies, impact assessment, integration, and performance tracking (Ruggie, 2008).

Given the major global endorsement of the UNGP and its significant influence on both business and governments, the lack of academic research in this area is noteworthy. Scholars have devoted little attention towards the internal antecedents leading to human rights violations. Although a few authors have studied the factors underlying human rights violations on a case-by-case-analysis (Hamann et al., 2009; Schrempf, 2011; Sethi, Lowry, Veral, Shapiro, & Emelianova, 2011), there has been relatively little research conducted on the wider patterns leading to human rights violations.

This present study tries to fill this gap by contributing to our current knowledge of internal factors related to human rights violations. Understanding firms’ approaches and their impact on human rights is important for two reasons. First, this could expose the effectiveness of the UNGP in preventing corporate abuses. Second, this understanding could allow corporate managers to better meet human rights duties. Especially given the prominence and promise of the PRR Framework, it is important to examine whether this PRR Framework is effective in mitigating corporate human rights violations.

Currently, there is no answer yet on the effectiveness of the UNGP in preventing corporate abuses. Ruggie (2011) claimed that a policy commitment from corporate management and the establishment of due diligence processes are essential for human rights to be respected. Given that these claims are key elements for the UNGP to be effective, empirical research is needed on both of these two concepts. This answers the call of scholars (Fasterling & Demuijnck, 2013; Harrison, 2013; Preuss & Brown, 2012) for more empirical research on the UNGP and seeks to contribute to current literature in two ways. First by studying the relationship between human rights policies and a firms’

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corporate abuse record. Second, this study proposes that support from corporate leaders is necessary and a key element for human rights policies to be truly effective.

In the following sections arguments are presented followed by the propositions. As discussed before, the concept of ‘due diligence’ is the biggest responsibility and the most central aspect of the UNGP, and that’s why respecting human rights remains a voluntary practice. Currently, the main debate in the business and human rights area centres around this concept, and discusses the nature (legal vs. voluntary) of corporate responsibilities to human rights (Preuss & Brown, 2012).

2.3.1 LEGISLATIVE ACTION VS. VOLUNTARY POLICIES

While the UNGP was positively received and is internationally renowned, there is a group of critical scholars who rather question the capability of the initiatives to prevent the negative human rights impact of MNEs. Generally, this debate has focused on the concept of ‘human rights due diligence’ (Arnold, 2010; Bishop, 2012; Cragg, 2012; Fasterling & Demuijnck, 2013; Harrison, 2013; Muchlinski, 2012). Many scholars argue that the soft law initiatives might indeed raise awareness or contribute to higher levels of accountability, however they fail to be truly effective because of their voluntary and non-binding character (Anderson, 1999; Deva, 2003; Kinley & Tadaki, 2004; Maassarani, Drakos, & Pajkowska, 2007; Mena & Palazzo, 2012; Schrempf-Stirling & Wettstein, 2015; Wettstein, 2010). Therefore, these authors generally argue that legislative or judicial action is needed in order to have effective regulation of MNEs. Along this line of thought, Monshipouri et al., (2003) calls for an outside governing body, arguing that human rights is not the sole responsibility of the state.

John Ruggie’s answer to this ‘legal vs. voluntary dichotomy’ is that ‘major treaties on complex and controversial human rights subjects require time for the subject to ripen and negotiation to conclude’ (Ruggie, 2013, p. xxii). Thus, Ruggie argues that achieving change in international law and the establishment of a legally binding framework is a long-term process. Furthermore, in his book ‘Just Business’, Ruggie discusses three fundamental issues (effectiveness, enforcement, and legal fragmentation) related to a treaty-like initiative on business and human rights. Moreover, Ruggie contends that neither of these approaches are sufficient by itself, but they should rather complement each other in order to narrow the global governance gaps in business and human rights. Ruggies research concludes that in order to reduce the negative consequences of corporate activities, international law has an important role to play. However, introducing a legally binding global

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framework for corporate accountability was not a feasible objective for his limited mandate (Ruggie, 2013). Instead he proposed a voluntary framework, which gives practical guidance and is a first step in providing an authoritative focal point for business and human rights. The UNGP is a first step and a solid foundation for further progress in this area. Following Ruggie (2011), this study suggest that human rights policies will help in mitigating and preventing corporate abuses from happening.

Assessing the role of policies in relation to MNEs committing wrongful social acts is extensively studied in relation to CSR. Twenty-seven studies in the past 40 years found a significant positive relationship between a firm’s code of conduct and CSR performance (Erwin, 2011). For instance, Erwin (2011) examines the relationship between code of conduct quality and ethical performance and found that a high quality of policies positively influences a firm’s commitment towards CSR. Adams, Tashchian, and Shore (2001) also showed that a code positively impacts ethical behavior in firms. Other scholars conclude that firms adopting codes of conduct is ‘a valuable starting point’ (Wood & Rimmer, 2003, p. 192) or can play a vital role (Coughlan, 2005). Thus, also premised on research conducted in the area of CSR, it is expected that firms with implemented human rights policies have a better record of corporate human rights abuses. Therefore, based on Ruggie (2011) and Erwin (2011), the following proposition is formulated:

P1: Firms adopting separate human rights policies will have a better record concerning corporate human rights abuses than firms not having such policies in place.

2.4 Leadership commitment

2.4.1 ARE POLICIES ENOUGH TO PREVENT CORPORATE ABUSES FROM HAPPENING?

In 2009, Nokia Siemens Networks was accused of assisting the Iranian state in their controversial presidential election (Schrempf, 2011). The firm was publicly criticized for selling their technology to the oppressive Iranian government, which enabled them to monitor, block, and control local communications. After criticisms of both consumers as well as international press (e.g. The Guardian) the sales of both products of Nokia and Siemens fell significantly (Kamali Deeghan, 2009). The above example illustrates that human rights is not only a social or ethical concern to MNEs but could pose commercial risks as well (Muchlinski, 2012). Negative commercial consequences can include reputational damage, legal liability claims, and a decrease in consumer confidence (Aaronson & Higham, 2013; Muchlinski, 2012). Since business costs could significantly rise as direct consequence of corporate abuse allegations, some firms view human rights risk merely as an issue of

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corporate profitability (Bansal & Roth, 2000; Muchlinski, 2012). Other firms incorporate human rights in their corporate strategy, merely as an answer to the increased external pressures of diverse stakeholders (Bansal & Roth, 2000; Spedding, 2009).

There are on-going critiques on firms that use due diligence processes as a ‘tick-box’ exercise (Muchlinski, 2012, p. 156) or ‘greenwash’ practices (Banerjee, 2007; Laufer, 2003, p. 253). In line with these authors, some scholars even state that it is merely a way to manipulate firms’ public reputation (Cloud, 2007; Fineman, 2001; Roberts, 2003; Woolfson & Beck, 2005). Similarly, Peter Frankental, Economic Relations Programme Director Amnesty International UK, argues that firms’ code of conduct, CSR or business principles are not good indicators of a firm’s ethical behavior and respect for human rights (Frankental & House, 2013). In other words, critics complain that MNEs incorporate human rights policies as a response to external pressures (Beck & Toms, 2009; Doane, 2004; Gray & Milne, 2004; Pendleton, 2004) or an economic strategy (Bakan, 2004; Hay, Stavins, & Vietor, 2005) and as such there effectiveness remains questionable.

Alongside this, there are authors that argue that the concept of due diligence is dependent on the moral and ethical duty of firms in order to be effective. Muchlinski (2012) argues that ‘the ethical duty to respect human rights is key’ (p.156) and in order for due diligence process to be truly effective the concern for human rights should be instilled into the corporate culture. Similarly, Coughlan (2005) states that an corporate culture is perhaps one of the largest factors influencing ethical decision-making.

In addition, Arnold (2010) contends that only when firms interpreted human rights in a moral sense it will allow for a sufficiently deep justification of the second principle of the PRR Framework. He further argues that the meaning of ‘responsibility to respect human rights’ remains vague, especially in the context of weak institutions or where state laws fail to protect human rights. He depicts that, in the absence of national laws, MNEs should bear the higher costs in order to protect human rights, or in Arnold’s words ‘meeting human rights duties is to be understood as a necessary cost of doing business’ (p.384). Thus, for instance, when a country’s legal minimum wage of workers is too low to enjoy a decent living, MNEs should have the moral responsibility to naturally pay higher salaries. Cragg (2012) argues that the corporate self-interest of the PRR Framework is a serious weakness and similar to Arnold (2010) reveals that the corporate responsibility to respect human rights should be viewed as an explicit ethical obligation.

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Hence, MNEs that view the adoption of human rights policies as a stand-alone practice will not succeed in their commitment to respect human rights. Following Ruggie (2011) and Bansal and Roth (2000), this study suggests that leadership commitment to human rights is necessary for human rights policies to be effective.In the following paragraphs arguments for this proposition are spelled out by first offering a brief review of corporate leadership in relation with a firm’s performance.Second, this section elaborates on how leadership is related to firms’ socially responsible behavior and concludes with presenting the second proposition.

2.4.2 LEADERSHIP MATTERS IN FIRM’S PERFORMANCE

The concept of leadership is a universal phenomenon and has been studied for centuries. It is one of the worlds oldest preoccupations (Bass & Stogdill, 1990), and is widespread nowadays; in the media, in our history, and in our mind (Pendleton & Furnham, 2012). Extensive academic research on the concept of leadership has resulted in a large body of literature and shows its importance. It is a rather complex topic, with many different approaches, and it can be studied through the lens of different disciplines (history, political science, psychology or sociology) (Pendleton & Furnham, 2012). As a result, there exist many different definitions on what the term leadership implies. For instance, Davis (2003) defines leadership as ‘movement, taking the organization or some part of it in a new direction, solving problems, being creative, initiating new programs, building organizational structures, and improving quality’ (p. 4). Other, more classical views, relate the concept of leadership to power and position (Davis, 2003).

Leadership studies which focus on whether the concept has an impact on firms’ performance are diverged in two ways (Wasserman, Nohria, & Anand, 2001). On the one hand, some scholars argue that leadership is greatly overvalued when explaining the performance of firms. They are rather skeptical, doubting the effectiveness of leadership, and raise questions such as ‘do leaders really matter?’ Literature brings up 3 alternative explanations for the positive performance of firms (Pendleton & Furnham, 2012). They contend that all organizational success depends on: the situation, world events, and the followers. Despite these constraints, Pendleton and Furnham (2012) state that existing research typically points to the positive difference leaders can make, whether that is in morality, productivity, or profitability. Thus, on the other hand, there is a group of scholars who point to the importance of leadership and the difference it can make.

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In general, research emphasizes that there is a substantial effect between leadership and organizational outcomes (Bass & Stogdill, 1990). This school of thought is called the leadership school, and contends that CEOs can adapt the organization’s mission, strategies, structures, and cultures and are therefore significantly able to influence company performance (Wasserman et al., 2001). Through this process, leadership is an important and critical factor in organizational performance, and thus these scholars argue that leadership matters. Lieberson and O'conner (1972) were amongst the first that examined the impact of top management on firm’s success in comparison with firm, industry, and year effects. They concluded that ‘leadership effect on company performance does matter’ (Lieberson & Connor, 1972, p. 123). In addition to this seminal empirical study, Bowman and Helfat (2001) state that there are three other major leadership studies (A. B. Thomas, 1988; Weiner, 1978; Weiner & Mahoney, 1981) that estimate CEO effects on profitability. These studies reveal significant leadership effects, although the variance in profitability explained by leadership is scattered ranging from 6 to 44 percent. A more recent contribution to this school of thought is the study of Wasserman et al., (2001). Wasserman et al., (2001) proposed the question ‘when does leadership matter?’ and concluded that CEO impact was significant, however their impact varies between industries. Specifically, this study explored the industry characteristics in which CEO leadership matters, and found that CEOs have a most significant impact where opportunities are scarce or CEOs have slack resources. In sum, studies supporting the leadership school show mixed results, however all reveal substantial evidence that CEOs matter in a firm’s performance.

The concept of leadership appears to be an important factor in a firm’s performance, and hence the question becomes prevalent whether it plays the same role in a firm’s corporate human rights performance. Ruggie’s answer is a clear ‘yes’ as he states that ‘leadership from the top is essential to embed respect for human rights throughout a company’ (Ruggie, 2008, p. 18). In other words, Ruggie claimed that a policy commitment from corporate top-level management is necessary in order for a firm to respect human rights. First a review is given of the research that examines the role of leadership in relation to socially responsible behavior by firms. This study proposes that the role leadership plays in regards to these practices could be similar towards the role it upholds in human rights practices. This is followed by the presentation of the second proposition.

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2.4.3 LEADERSHIP MATTERS IN FIRM’S ETHICAL BEHAVIOR

A large body of literature focuses on firms that behave socially responsible, however scholars failed to address the antecedents. Several scholars (Angus-Leppan, Metcalf, & Benn, 2010; Campbell, 2006; Du, Swaen, Lindgreen, & Sen, 2013; Hoffman & Bazerman, 2007) especially emphasized the lack of research that explores organizational factors that could possibly drive or shape a firm’s ethical behavior. Basu and Pallazo (2008) focus on managers’ mental frames and sense-making processes, whereas others (Berger, Cunningham, & Drumwright, 2007; Maignan & Ferrell, 2001) link organizational culture to the socially responsible behavior of firms.

A recent trend within this field is to study the relationship between leadership and CSR (Angus-Leppan et al., 2010; Du et al., 2013; Waldman, Javidan, & Siegel, 2004; Waldman, Siegel, & Javidan, 2006; Wu, Kwan, Yim, Chiu, & He, 2014). Scholars questioned themselves: what is the role of key decision-makers, such as CEOs, on firm’s engagement in CSR? Leadership behavior is a particular relevant and important aspect to consider as CEOs have the responsibility of formulating corporate strategy. Therefore, it would be logical to assume that leadership styles would influence a firm’s CSR activities and could thus be an important organizational antecedent to understand. Du, Swaen and Lindgreen (2013) try to address this gap by studying the interplay between both transformational and transactional leadership styles, and CSR. They conclude that transactional leadership is not associated with institutional CSR practices, whereas firms with managers that employ transformational leadership are more likely to engage in institutional CSR practices. Similarly, Waldman et al., (2004) find a significantly positive relationship between aspects of transformational leadership (intellectual stimulation) and a firms’ CSR activity. Other scholars relate different types of leadership styles to CSR activities. Wu et al., (2014) studied the relationship between ethical leadership and CSR engagement and found that CEO ethical leadership positively influences CSR practices.

Park, Chidlow and Choi (2014) take a broader perspective and study how both primary and secondary stakeholders influence MNEs’ CSR activities. They report a positive significant effect between internal managers and employees, and MNEs’ CSR activities. The results are in line with Lindgreen, Swan and Johnson (2009) indicating that firms can not be socially responsible without the support of corporate members such as employees and managers. According to their findings, international managers play a key role in a firm’s engagement in CSR. In a similar vein, Bansal and

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Roth (2000) argue that the individual concern of organizational leaders for the environment will be positively associated with a firm’s engagement in CSR practices. All in all, these studies support the findings of earlier research by Thomas and Simerly (1995, p. 414), who contend that ‘top managers are important internal determinants of a firm’s corporate social performance, and top management teams and CEOs are both important to social performance outcomes’.

Given the above arguments, leadership plays a key role to commit firms to behave socially responsible and appears to be an important internal determinant to consider. Hamann et al., (2009) are amongst the first academics that try to understand why companies consider human rights. This research studies both internal and external factors related to human rights due diligence. Hamann et al., (2009) find evidence that leadership commitment is an important determinant of human rights due diligence. Even though this study confirmed the importance of a policy commitment from corporate top-level management it did not attempt to relate this to actual corporate abuses. Given the above arguments, this study proposes that human rights policies are not enough to prevent corporate abuses to happen. Leadership commitment is a key factor needed for firms to respect human rights. Hence, leadership could significantly influence the relationship of human rights policies and a firm’s corporate abuse record.

2.4.3 MOTIVES OF LEADERSHIP COMMITMENT

Before formulating a clear proposition on the above-proposed statement, it is necessary to specify what type of commitment communicated by corporate leaders has a positive influence. Maignan and Ralston (2002) reveal that a company has different motives that drive its corporate social involvement and these corporate motives are considered to be one of the main forces influencing a firm’s approach to CSR (Gatti & Seele, 2015). Therefore, this study argues that the type of commitment motive, as communicated by corporate leaders, is an important factor to consider.

Based on Maignan and Ralston (2002) there are three main motivating principles of leadership commitment to CSR, which are performance-driven, stakeholder-driven, and value-driven. First, leaders that have a performance-driven approach, view CSR merely as an instrument to help to achieve performance objectives such as profitability, sales volume, or return on investment. Second, the stakeholder-driven principle suggests that leaders commit to CSR mainly to conform to stakeholder norms. CSR is introduced as a response to external social pressures. Third, the

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driven motive is based on a positive duty view, which suggests that CSR is part of a firms’ corporate identity and is therefore considered by to be a distinctive value to the firm (Maignan & Ralston, 2002). This motive suggests that a firm is self-motivated to help others and to make a positive impact. As leadership plays a key role in a firm’s commitment towards human rights, it is worth considering whether all motivating principles would have the same impact. Therefore different motivating principles are considered as presented by Maignan and Ralston (2002).

First, based on the previously discussed work of Muchlinski (2012) and Coughlan (2005), this study proposes that human rights policies need value-driven leadership commitment in order to be truly effective. Second, based on Doane (2004) and Bakan (2004) performance-driven and stakeholder-driven commitments will not have a positive influence on human rights policies. Hence, it is suggested that:

P2: Leadership commitment with value-driven motives will positively influence the relationship of human rights policies and corporate human rights abuses.

2.5. CONCEPTUAL MODEL & PROPOSITIONS

P1: Firms adopting separate human rights policies will have a better record concerning corporate human rights abuses than firms not having such policies in place.

P2: Leadership commitment with value-driven motives will positively influence the relationship of human rights policies and corporate human rights abuses.

Leadership commitment with value-driven motives

Separate human rights policies

Corporate human rights abuse records

P1 -

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3) METHODOLOGY

This section describes the research strategy and methods. Next, the data collection and case selection processes are outlined, following by a description of the selected cases and coding framework. The last section will cover this study’s approach on data analysis.

3.1. Multiple-case study

The nature of this case study research is exploratory and aims to examine the propositions focused on the internal antecedents related to a firm’s corporate abuse record. The theoretical framework has been developed based on reviewing academic business and human rights literature. That is why this study has a deductive approach (Saunders, Lewis, & Thornhill, 2016) and qualitative data will be analyzed through a multiple-case study. Case studies can be defined as ‘rich empirical descriptions of particular instances of a phenomenon that are typically based on a variety of data sources’ (Eisenhardt & Graebner, 2007, p. 25). This research strategy is preferred because ‘how’ questions are being posed in the research question (Yin, 2014). Furthermore, this strategy enables the study of cases in their own complex and unique real life context (Eisenhardt, 1989)

There are several reasons to choose for a multiple-case study instead of a single-case study. First off, multiple-cases provide a more robust theory as they allow for an in-depth exploration of multiple perspectives grounded in varied empirical evidence (Eisenhardt & Graebner, 2007; Thomas, 2011; Yin, 2014). Secondly, a multiple-case design allows for comparison of complementary or contrasting cases (cross-case analysis) (Yin, 2015), and may better identify whether a phenomenon is consistent throughout several cases, rather than simply typical to a single-case (Eisenhardt & Graebner, 2007).

It is important to understand the nature and concept of a case study design, before continuing with the description of this study’s data collection and case selection. While quantitative research makes use of statistical generalization, analytic generalization applies to the results of case study research. Given that a case study does not represent one sample, the findings can be generalized to fit the proposed theoretical propositions but not to a population (Yin, 2015). Next, case studies rely on replication logic rather than on sampling logic which is used in quantitative research (Yin, 2015). Replication logic implies that cases are selected either based on the prediction of similar results or on

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the prediction that contrasting results can be produced for expectable reasons (Eisenhardt, 1989). This study’s approach is based on Yin’s (2015) replication logic.

3.2 Data collection

3.2.1 DATA SOURCES

Case studies typically use multiple-data sources in order to add depth and provide a throughout understanding of the studied phenomenon (Yin, 2015). This study uses secondary data from three main sources: Corporations and Human Rights Database (CHRD), Orbis database (Orbis), and archival documents published online such as annual reports and corporate environmental reports. First off, the CHRD will be used in order to include companies that have a very poor record concerning human rights abuses. The CHRD is an on-going project led by the University of Oxford, University of Amsterdam, and the University of Denver to systematically code the information from the Business & Human Rights Resource Centre (BHRRC) website. BHRRC is an independent non-profit organization that tracks both the performance and human rights policies of over 6000 companies (BHRRC, 2016a). Once the three previously mentioned universities have coded the qualitative dataset from BHRRC, CHRD will be a large-N database on alleged corporate human rights violations (Olsen, 2014). The CHRD captures information of companies that are alleged to have committed human rights violations. As such, the unit of analysis in this database is a Company Abuse Allegation (CAA), where one CAA represents one company that is accused of committing one human rights violation. Every CAA includes information about the violation, judicial action, and remedies. Furthermore, information about CAAs will be accompanied by additional Internet research.

Secondly, Orbis will be assessed to include companies that have a better record of corporate abuses. Cases selected in this database have been double checked via the CHRD and BHRRC to make sure that these firms were not reported for being involved in other types of corporate abuses than the reported fatalities in their CSR reports. Orbis is a global database that collects comprehensive information on over 200 million listed and unlisted companies (Orbis, 2016). Bureau van Dijk created and owns Orbis, and combines data from multiple sources to deliver information about companies.

Thirdly, archival documents will be used to acquire information about the company’s level of human rights policies and leadership commitment. Archival documents include corporate publications like annual reports, CSR reports, websites, press releases, newspapers, and NGO reports.

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3.2.2 CASE SELECTION

The selection of cases for a case study is according to Flyvbjerg (2011), a crucial aspect for this type of research strategy. As previously explained, cases are selected based on the expectations of their content, and thus, are chosen purposefully rather than randomly. (Flyvbjerg, 2006; Yin, 2014). An overview of the six selected cases is presented in table 1.

It is important to note here that, although firms are not reported in the CHRD, they are still associated with human rights violations. The reason is that unfortunately, deadly incidents frequently happen at firms operating in the extractive industry and the CHRD or BHRRC does not capture incidents in the developed world. Historically, this sector has been recognized as one of the most hazardous industries and the number of fatalities is above the average of any other industry (Christ, 2015). In particular, the fatality injury rates in this industry are systematically between three and eleven times the national average (OECD, 2016). To my current knowledge there is no company in this industry were zero fatalities occurred during the years 2008 to 2014. That is why this study makes a distinction between firms with a very poor record of human rights violations and those with a better record.

1

_{Revenue as presented in firms’ annual reports of 2014}

2

_{Based on exchange rate at}

_{http://www.xe.com/}_{on 19th January 2017}

Table 1 Selected cases

_Company Operating in developing _{world between 2008 and}

2014? (Asia, Africa, south America)

Home country Revenue1 (2014)

Listed in the CHRD (between 2008 and 2014)

#1 Chevron Yes: i.a. Angola, Nigeria, Colombia, Venezuela, Bangladesh

United States $200,5 billion Yes

#2 British Petroleum Yes: i.a. Brazil, Bolivia, Angola, South Africa

United Kingdom $65.4 billion Yes

#3 BHP Billiton Yes: i.a. Chile, Brazil, Colombia, Algeria, Peru

Australia $67.2 billion Yes

#4 Canadian Natural Resources

Yes: i.a. South Africa, Gabon Canada $21.3 billion xx

#5 Nexen Yes: i.a. Colombia, Nigeria, Yemen

Canada _{$4.6 billion}2 Cdn$6.2 billion (2011)

xx

#6 Premier Oil Yes: i.a. Indonesia, Vietnam, Congo, Mauritania

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Six firms have been carefully selected for this multiple-case study. The case selection for this research is based on the following criteria: a firms’ record of corporate abuses, home country of firm, industry, period, operating in the developing world, and information availability.

Firms’ corporate human rights record – MNEs with a long, appalling, history record of corporate abuse allegations, as listed in the CHRD, are considered for this study as ‘worse actors’. These companies have a very poor record of corporate human rights violations as they consistently and frequently seem to violate human rights. The firms that were not reported by the CHRD and BHRRC for being involved in human rights violations are considered ‘better actors’ with a significant lower record of corporate abuses. These companies do report to have deadly incidents happened over the years this study covers.

Home country of firm – Previous studies have shown that the institutional context in which a firm is embedded, strongly influences the level of sustainability reporting (Bonsón & Bednárová, 2015). As the institutional context varies across countries with different regulations and governance systems, this study will include firms with different home countries in order to increase generalizability. For instance, firms that are based in the UK or USA might have been influenced by the Voluntary Principles on Security and Human Rights (Voluntary Principles) (Preuss & Brown, 2012) and as such display different approaches to human rights. That is why this study focuses on firms that have home countries based in North America, Europe, or Australasia.

Industry – The sample for this study will include firms of the extractive industry (e.g. oil, gas and mining). Firms in this industry appear to be more frequently alleged of human rights violations than firms in other industries (Preuss & Brown, 2012). Given the high occurrence of human rights violations in this industry, it would be particularly interesting to shed light on the internal antecedents of firms in this industry. Additionally, based on Preuss & Brown (2012) the adoption rates of human rights policies are scattered in this industry, which will provide a vast pool of firms to select cases from.

Period – CAAs committed after 2008 will be reviewed, as it is less clear whether companies had a human rights policy before that time. Most companies have only recently started to commit themselves to socially responsible behavior, let alone to publish anything about it.

Operating in the developing world – Since the CHRD only covers CAAs in Asia, South America, and Africa, all cases should have subsidiaries in the developing world.

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Information availability – The selection of companies for this study depends on the availability and openness of communication in their corporate human rights policies; therefore this study only focuses on publicly listed companies with an Internet presence.

3.3 Data coding

In order to measure the level of human rights policies and identify the motives of leadership commitment in the selected cases, qualitative content analysis will be done (Hsieh & Shannon, 2005). Content analysis is a qualitative research method which is used to analyze text data (Hsieh & Shannon, 2005). Through the systematic identification of themes or codes in the content of a text, content analysis provides ‘knowledge and understanding of the phenomenon under study’ (Downe Wamboldt, 1992, p. 314). Codes will be based on previous literature and thus developed before data is collected. Hence, predetermined coding schemes have been developed in order to describe each firm’s performance on human rights policies and leadership commitment. The following section elaborates on the coding process and schemes.

3.3.1 HUMAN RIGHTS POLICIES

In order to measure whether a company has a separate human rights policy in place, a detailed search and review will be carried out on its website to assess CSR reports and other corporate publications. According to Preuss and Brown (2012), who studied the adoption rates of human rights policies amongst MNEs, most companies host human rights documents on their corporate website. These authors contend that relying on these websites for examining human rights policies is a reliable research method.

Adoption rate of human rights policy – In order to measure whether firms have a human rights policy in place, a predetermined classification is used from previous research (Preuss & Brown, 2012). Firms can have 1) A stand alone human rights policy, 2) A designated section in CSR reports (e.g. codes of conduct), 3) References in the text of CSR reports, or 4) No human rights policy, section or reference at all.

Content of human rights policy or reference – If a firm has a policy or a section dedicated towards human rights, an extensive analysis of its content will be completed. According to the CHRD, human rights issues can be classified into five categories (Olsen, 2014). Particularly, when a firm has no

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separate policy in place for human rights, it would be interesting to analyze what the content focus is of the separate section or reference. Table 2 lists the five categories of human rights issues.

3.3.2 LEADERSHIP COMMITMENT

CEOs use the preface of annual CSR reports or financial statements to communicate their viewpoint and managerial vision on financial and non-financial issues (Bournois & Bastien Point, 2006; Garzone, 2004; Gatti & Seele, 2015; Weber, 2010). Even though the CEO letter is not formally required and nor are there international regulations, every head of a company whatever the size, industry, or turnover does attach some sort of letter to corporate reporting (Bournois & Bastien Point, 2006; Geppert & Lawrence, 2008). It is a way to influence corporate reputation (Craig & Brennan, 2012), reveal corporate strategies (Westphal & Zajac, 1998), and communicate future priorities and objectives (Garzone, 2004). As such, the message from a CEO to stakeholders is considered to be a powerful strategic instrument (Bournois & Bastien Point, 2006; Gatti & Seele, 2015). Important topics are typically introduced by the CEO in this letter, and are further elaborated on elsewhere in the report (Hutt, 2012). Following Amernic, Craig and Tourish (2010) CEO’s interest and attention devoted to certain topics and issues, can lead to greater anticipation, awareness, and action amongst employees. These authors contend that the amount of attention devoted to certain topics or issues is a good indicator to identify its importance in the firm. Therefore, CEO letters are a suitable way of measuring leaders’ viewpoint and commitment.

This study reasons that if management is committed to the prevention of human rights violations, and if they view human rights as an important aspect they will elaborate on this in their

Table 2 Different subjects of human rights policy or reference based on Olsen (2014)

Content focus of human right policy, reference or section

Health: Access to medicine, health problems, HIV/AIDS, pollution related health concern Environment: Water contamination, air contamination, land contamination, land erosion,

deforestation, destruction of natural resources, destruction of wildlife, unsustainable use of natural resources

Labor: Child labor, forced labor, prison labor, denial of freedom of association/right to unionize, denial of freedom of expression, substandard wages, failure to meet basic labor standards, discrimination

Development & Poverty:

Denying access to basic needs, destruction of local economies, lack of investment in local economy, encroachment/exploitation of indigenous land, no support from communities, denial of freedom of expression, denial of freedom of association

Abuse: Disappearances/abduction, arbitrary detention, deaths, denial of freedom of movement, displacement, intimidation/threats, rape/sexual abuse, violence

Internal antecedents of corporate human rights violations : policies and leadership commitment

International business & human rights