Business and human rights : health system distance and corporate human rights violations

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Business and Human Rights

Health System Distance and Corporate

Human Rights Violations

Author: Mario Dominik Schultz Student number: 10712224

Date of submission: 29 January 2015 (final version) Supervisor: Dr. M. Westermann-Behaylo Second supervisor: Drs. Erik Dirksen

Qualification: MSc. in Business Administration – International Management Institution: University of Amsterdam, Amsterdam Business School

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Statement of Originality

This document is written by Student Mario Dominik Schultz who declares to

take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and

that no sources other than those mentioned in the text and its references have

been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision

of completion of the work, not for the contents.

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List of Abbreviations and Acronyms

BHRRC Business & Human Rights Resource Center CHRD Corporations & Human Rights Database Project CSR Corporate Social Responsibility

FDI Foreign Direct Investment I-distance Ivanovic-distance

IB International Business MNE Multinational Enterprise

NGO Non-governmental organization

UN United Nations

UN GC UN Global Compact

UN GPs UN Guiding Principals on Business and Human Rights UN HRC UN Human Rights Council

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Abstract

Business responsibility for human rights has been discussed for many years. Only recently a global standard setting instrument emerged in the form of the UN ‘Protect, Respect and Remedy’ Framework and the ‘Guiding Principals on Business and Human Rights.’ Scholars recognize the introduction of the framework drafted by the UN Special Representative of the Secretary General John Ruggie as a landmark shift in policy and practice of corporations (Cernic 2010; Hamann et al. 2009; Taylor 2011). The new standard calls upon businesses to respect human rights, yet little is known about the causes that trigger corporate human rights violations. Addressing this limitation, the present paper develops a theoretical framework striving to explain the mechanisms that drive corporate human rights violations using national health system distance as antecedence. The underlying thesis uses data of 225 extractive sector multinational enterprises (MNEs) over the 2000-2014 period to examine violations in nine developing countries by using the I-distance approach. This study is the first to suggest that high health system distance matters for corporate human rights violations in host countries that have weak health systems. The main findings indicate that MNEs headquartered in countries with enhanced health systems are less likely to be involved with health and development violations of human rights than those in countries with weaker health systems.

Keywords: UN Guiding Principals, Human rights violations, Multinational Enterprises, Health system distance, Developing countries, Extractive sector

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1. Introduction

Over the past decades, major developments have transformed the International Business (IB) arena, giving rise to a growing global debate concerning business and human rights. The worldwide integration of markets in goods and services, has led to a substantial increase in power, size and scope of corporate business (Garrett 2000). According to the United Nations (UN), approximately 7,000 multinational enterprises (MNEs) existed in 1960 (UNCTAD 1994). Recent estimates, suggest that the number of MNEs has amplified, and even exceeds 80,000 today (Ramamurti & Hashai 2011). Not only has the number of MNEs grown tremendously, but also the focus of their operations has shifted in recent years. In 2012, for the first time in history, Foreign Direct Investment (FDI) inflows into developing countries outstripped FDI inflows into developed countries (UNCTAD 2013). This remarkable shift in global business practices occurs at a moment in time, where MNEs around the globe are facing increased public pressure due to adverse impacts on human rights linked to their business conduct.

Within the past years, reports about MNEs being involved in human rights abuses, particularly in developing countries have increased alarmingly. The Business & Human Rights Resource Center (BHRRC) tracks allegations of human rights violations encompassing every business sector and includes various prominent transnational corporations (Union Carbide, Nestlé, Novartis, Nike, Royal Dutch Shell, Apple, Deutsche Bank, Yahoo to name a few; BHRRC 2014). The allegations against companies virtually cover all aspects of human life: inter alia, death threats, child labor, environmental contamination, health abuses and oppression of development (Ruggie 2013; Wright 2008). The list of examples where businesses are directly or indirectly involved with human rights violations seems inexhaustible. The adverse developments in the business field, led to

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2 growing calls for a global standard that could hold corporations accountable for their adverse human rights impacts and also limit harmful business practices (Ruggie 2008).

A global standard setting instrument emerged in the form of the UN ‘Protect, Respect and Remedy’ Framework and the ‘Guiding Principals on Business and Human Rights.’ Scholars recognize 2008’s introduction of the framework drafted by UN Special Representative of the Secretary General John Ruggie as a landmark shift in policy and practice of corporations (Cernic 2010; Hamann et al. 2009; Taylor 2011). Combined with the Guiding Principles (GPs) on Business and Human Rights, unanimously endorsed in 2011, the framework represents the authoritative international reference on business and human rights (Ruggie 2011).

The ‘Ruggie Framework’ describes the corporate duty to ‘respect’ human rights, which entails the requirement of corporations to actively conduct human rights due diligence; a process that is defined as “the steps a company must take to become aware of, prevent and address adverse human rights impacts” (Ruggie 2008, p. 199). A key element of human rights due diligence is the identification and assessment of factors within the firm but also in its environment that can cause human rights violations (Fasterling & Demuijnck 2013). Recently, scholarly literature started to examine these risk factors (Olsen & Payne 2013). Therefore, at this time, little is known about causes that lead to corporate human rights violations.

The underlying paper focuses on the exploration of antecedents of corporate human rights violations, in particular those that involve health and development rights. The right to health conjointly with the right to development constitutes inalienable human rights protected by various international conventions. The right to health is a universal right, codified in the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights and the Convention on the Rights of Persons with Disabilities (UN General

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3 Assembly 1948; UN General Assembly 1966; UN General Assembly 2007). Likewise, the right to development was codified in the UN Declaration on the Right to Development in 1986 and reaffirmed at the Second UN World Conference in Vienna (UN General Assembly 1986; Sengupta 2001). Although both represent inalienable human rights, the everyday lives of billions of people in developing countries, illustrate vast differences in the nature and extent to which these rights are established and sustained around the globe. The differences between countries’ commitments to upholding the rights to health and to development become particularly evident when focusing on national health systems. Whilst many Western countries have established universal health coverage, many African countries cannot provide the most basic medical care to citizens. Conducting business under such dissimilar circumstances is a difficult task for MNEs.

The oil, gas and mining industry is claimed to be one of the largest human rights offenders on the planet and is subject to several contemporary debates (Davis & Franks 2011; Lindsay et al. 2013). Corporate human rights abuses, such as oil-related violence in Nigeria, have received considerable public attention (Jochnik & Rabaeus 2010). Some scholars claim that extractive sector MNEs have a human rights obligation to affected communities due to the health, social and environmental impacts of their business (Caplan & Silva 2005). Analyzing a sample of 286 subsidiaries controlled by 225 extractive sector MNEs, the underlying thesis examines the relationship between health system distance and corporate human rights violations, thereby drawing on, and expanding upon the distance concept of IB literature. Although, the distance concept has a long tradition in IB theory, health system distance has received little attention in the field thus far. In order to capture health system distance, the present thesis approaches this from the field of public health (Jeremic et al. 2012; Schoen & Osborn 2005; WHO 2000). A health-distance-score was generated based on secondary data - health indicators - derived from the World Health Organization (WHO). The

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4 impact of health system distance was analyzed in relation to health as well as development and poverty violations (henceforth stated as development violations) of human rights.

The findings of the thesis can contribute to scholarship and practice in several ways. First, businesses can benefit from new insights in antecedents of human rights violations, especially regarding human rights due diligence. Second, the outcomes of the thesis can help to expand the current scholarly knowledge base and serve as a reference for subsequent research in the developing field of business and human rights.

The present thesis is structured as follows. First, the literature review introduces the theoretical background and recent developments in the research field of international business and human rights in relation to the rights to health and development. The literature review leads to the research question. Subsequently, the theoretical framework and the hypotheses are discussed. Section three describes data and method use, whereas section 4 appraises the results of the empirical data analysis. Subsequently, the findings and contributions to literature and practice are discussed and a conclusion drawn. The Appendix summarizes the results of health system distance calculations among 63 countries.

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2. Literature Review

Scholars recognize the introduction of the UN ‘Protect, Respect and Remedy’ framework drafted by UN Special Representative of the Secretary General (UNSRSG) John Ruggie, as a landmark shift in corporate policy and practice (Cernic 2010; Hamann et al. 2009; Taylor 2011). In 2008, the UN Human Rights Council (HRC) unanimously endorsed, the ‘Ruggie framework’ and three years later, the GPs on Business and Human Rights, thereby acknowledging: “[…] corporations have substantive human rights obligations and responsibility to observe human rights” (Cernic 2010, p. 1265). Since its introduction, Ruggie’s ‘Protect, Respect and Remedy’ framework has become the focal point in what is now called ‘the business and human rights debate’ (Wettstein 2012).

The unanimous endorsement of Ruggie’s tripartite framework and the Guiding Principals on Business and Human Rights, can be seen as the result of an ongoing endeavor, reaching back to the 1970s (Lim & Tsutsui 2011). In response to public outcry, the international community made several attempts to regulate the private sector. Incidence such as India’s Bhopal disaster triggered action. In 1984, a gas leak in a pesticide plant of Union Carbide India, a subsidiary of the U.S.-based Union Carbide Limited Company, resulted in the immediate death of more than 3000 people, mainly workers and local residents (Prakash & Potoski 2007; Jochnik & Rabaeus 2010). After thirty years, estimates suggest that the catastrophe has cost the lives of 10,000 people, 100,000 have suffered and still suffer severe health problems caused by the toxic methyl isocyanate (Murphy et al. 2014). While the accident clearly violated the right to life and the right to health of all affected people, the human right to development was also drastically infringed. The livelihoods of thousands of local residents are still threatened as soil and groundwater contamination continuous (Murphy et al. 2014; Broughton 2005).

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6 The Bhopal disaster illustrates the central issue in the business and human rights debate: the lack of binding international law. In the aftermath of the Bhopal incident, intergovernmental groups tried to bring forth obligatory regulations. Yet, the efforts found no common ground in the face of dissenting voices from Western governments and pressure from the private business sector (Lim & Tsutsui 2011). The political and legal debate at that time was dominated by the question regarding the role of the parent company and to what extent it was responsible for the catastrophe by its foreign affiliate (Zerk 2010). Legal claims against Union Carbide Limited were filed in a U.S. court; however, these claims were rejected due to the lack of juridical foundations that could hold the parent company accountable under U.S. law (Zerk 2010). After years of inconclusive legal proceedings, Union Carbide accepted a moral responsibility, paying $470m in compensation to victims and surviving dependents (Broughton 2005). The Bhopal disaster and forthcoming scandals triggered many companies to take proactive self-regulatory steps towards protecting human rights (Banerjee 2008).

In the mid 1990s, Nike was forced to reassess its policies after media reports on abusive work practices and child-labor were exposed in Indonesian supplier factories (Kramer & Porter 2006). Nike became a prominent target and experienced an extensive consumer boycott once activist groups disclosed sweatshop-working conditions that gave rise to severe health maladies amongst the workforces (Li et al. 2014; Spar & Mure 2003). As a result, many firms and industries in the focus of the public eye, began introducing new labor standards and codes of conduct, considering that “corporate reputation, access to capital, access to resources, recruitment and retention were all potentially at stake” (Jochnik & Rabaeus 2010, p. 5). The new developments were subject to critical observation and review by the public and scholars alike. Banerjee (2008) as well as Kolk and Tulder (2002) question the effectiveness of codes of conduct due to the voluntary nature and lack of legal

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7 enforceability. However, apart from their obvious shortcomings, the self-regulatory attempts of companies helped to sustain the discussion on business and human rights. As a result, national- and transnational stakeholder dialogues led to several voluntary initiatives, based on broader concepts such as business ethics, corporate environmentalism, corporate citizenship (Hamann et al. 2009). The previous mentioned models are often used in relation to, or interchangeable with the most prominent concept of corporate social responsibility (CSR), which is often understood as an umbrella-term (Palazzo & Scherer 2008).

Since the late 1990s, the CSR concept has gained growing popularity amongst companies (Waddock 2008; Kramer & Porter 2006; Hart & Milstein 2003; Carroll 1999). The Nike incident, respectively the ‘sweatshop crisis’ caused firms within the textile industry, but also other industries to use codes of conduct and the CSR concept as a means to regain trust and increase firm reputation (Hart & Milstein 2003). Consequently, MNEs introduced the CSR concepts as part of their firms’ policy and strategy, yet with varying interpretations of the concept itself (Waddock 2008).

CSR has no single definition. Instead, academic literature reveals that CSR has been defined and interpreted in numerous ways (Wettstein 2012). In a study of 37 different CSR definitions, Dahlsrud (2008) points out that CSR is a socially constructed concept and as such, context driven. Dahlrud’s findings show most CSR definitions cover, to a certain extent, the following five dimensions: the stakeholder, the social, the economic, the voluntariness and the environmental (Dahlsrud 2008). Hence, it is difficult to assess CSR commitment by firms. In order to do so, one has to go beyond the definition and consider the above-mentioned five dimensions in the firm context. As a result, many scholars have pointed out that firms use the CSR concept as a strategic means to “offset the demand for binding costly, and restrictive legislation” (Olsen & Payne 2013, p. 4). According to Banerjee (2008), CSR is a tool for large corporations to take more power because CSR actions often

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8 remain declaratory in nature and firms interpret the concept so that it favors company goals. The lack of a common basis regarding the CSR concept was also recognized and addressed by the UN.

2.1 The UN Global Compact

In 2000, the UN launched a new initiative to set a worldwide standard for corporate social responsibility. This standard is known today as “the leading global voluntary initiative for corporate social responsibility that also addresses the issue of business and human rights” (UN General Assembly 2012, p. 9). Former Secretary General of the United Nations, Kofi Annan, proposed the UN Global Compact, with the goal that corporations voluntarily support and express their commitment to: human rights, labor rights, environmental protection and anti-corruption (Jochnik & Rabaeus 2010). The underlying ten principles of the Global Compact (GC) relate, inter alia, to the Universal Declaration of Human Rights (Bernhagen & Mitchell 2010). Principles one and two specifically address human rights (UN General Assembly 2012, p. 10):

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights.

Principle 2: Businesses should make sure that they are not complicit in human rights abuses.

According to the UN GC, more than 8,000 companies in 145 countries are currently applying the ten principles (UN GC 2014). With the acceptance of the principles, companies declare their commitment to the GC and voluntarily adopt normative obligations similar to states (Bernhagen & Mitchell 2010). Yet, significant variations in the commitment of GC members have been noticed (Ruggie 2004). Moreover, the membership expenses are low “the only prerequisite for initial participation is a letter stating commitment to GC principles”

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9 (Lim & Tsutsui 2011, p. 71). From a legal perspective, there are no mechanisms of enforcement because ‘self-reporting’ and ‘voluntary monitoring’ remain the only benchmarks (Lim & Tsutsui 2011). The only scenario when GC members get delisted, is in the case of non-submission of annual progress reports (Arnold 2010).

Scholarly literature identifies several reasons that drive companies to participate in the GC. Some firms show commitment to ‘escape’ stricter governmental restrictions (Seppala 2009) while others are seen to be driven by strategic reasons (Lim & Tsutsui 2011). Bernhagen (2010) points out that firms potentially sign-up for symbolic motives, which helps them increase/improve their reputation. The findings of Lim and Tsutsui (2011) support this notion, adding that liberal economic policies potentially trigger the ceremonial commitment of firms. In a thorough study of more than 2,000 companies participating in the GC, Bennie et al. (2007) revealed that commitment and the reason for participation in the GC depended on multi-layered factors. Thus, corporate political activity, but also industry- and country characteristics affect firms’ decision to participate in GC (Bennie et al. 2007).

Recognizing its limitations as well as the controversial discussion about firms’ commitment and reasons for participation, the GC serves the essential purpose of being “a platform for interaction and learning among concerned corporations and other relevant actors” (Lim & Tsutsui 2011, p. 71). In summation, CSR and other voluntary concepts have gained considerable attention in the human rights debate. Yet, CSR initiatives are not based on legally binding statutes. This in turn stimulates discussions calling for an obligatory legal framework that can hold corporations responsible in case of human rights violations (Hamann et al. 2009).

The UN Sub-Commission on the Promotion and Protection of Human Rights tried to comply with these requests and established a working group; its mission was the creation of an obligatory framework for corporate human rights matters (Nolan & Taylor 2009). As a

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10 result, the ‘Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights’ (Norms) were presented in 2003 (Kinley et al. 2007). Several NGOs and human rights groups welcomed the norms; however, strong resistance from businesses and concerns from lawyers and academics regarding the framework led to this being abandoned (Kinley et al. 2007). Though the Norms can now be declared as defunct, they have advanced the business and human rights discourse (Nolan & Taylor 2009). In light of growing concerns on corporate involvement in human rights violations and the rapid expansion of the private sector around the globe, the issue of business and human rights remains on top of the UN agenda.

2.2 The ‘Ruggie Framework’ and the Guiding Principles

In 2005, Harvard Professor John Ruggie was mandated by the UNHRC to investigate the extent to which corporate responsibility and accountability could be implemented on a transnational basis (Cernic 2010). The result of Ruggie’s investigation and analysis, is the ‘Protect, Respect and Remedy’ Framework. The three pillar framework highlights: the states’ duty to protect human rights; the business responsibility to respect human rights; and in case of human rights abuse, the provision of remedy (Taylor 2011). Together with the issuance of the GPs on Business and Human Rights in 2011, the framework represents the authoritative international reference on business and human rights (Ruggie 2011).

A key element of the GPs is the process of human rights due diligence, understood as “the steps a company must take to become aware of, prevent and address adverse human rights impacts” (Ruggie 2008, p. 199). As stated by Taylor (Taylor 2011, p. 15) due diligence “requires a company to assess its activities and relationships in their social, political, and economic context, act on the findings and report on actions taken.” Four elements of due diligence are mentioned in the literature that can help companies asses human rights risks (Taylor 2011). First, companies need to become aware of their activities in a host country and

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11 how behaviors relate to other private or state actors. Second, the context of a host country has to be analyzed carefully in relation to present human rights violations. Third, a company needs to identify activities and interactions that could possibly violate any human rights. Lastly, corporations should analyze the kind of violations that might be related to their business. Hence, due diligence is a process of constant monitoring and assessing of the firm environment and business activities in relation to potential adverse human rights impacts (Salcito et al. 2013). Due diligence helps firms identify potential human rights risks and should ultimately lead to the avoidance of any rights violation (Cernic 2010).

Although the Ruggie Framework and the GPs on Business and Human Rights received support from multiple parties in civil society, politics and business, they received critique. Some scholars criticized the Ruggie Framework, saying it was based on “pragmatic, enlightened self-interest or strategic considerations rather than on moral duty” (Fasterling & Demuijnck 2013, p. 800). According to Arnold (2010), the Ruggie Framework would have more effectiveness if the focus used a moral interpretation of human rights rather than a political or legal one. He points out that in some cases, existing judicial mechanisms are not able to protect human rights effectively and political commitment to human rights can be rather declaratory (Arnold 2010). In that sense Arnold (2010) claimed that the focus should use moral and ethical reasoning and the perception of human rights as a minimal, universal requirement. In a similar manner, Cragg (2012, p. 13) questions whether the enlightened self-interest holds a sufficient “justificatory foundation on which to build a responsibility to respect human rights.” Settings in many developing countries differ vastly from Western situations and MNEs operating in developing countries are often faced with different norms and values, which might not necessarily prioritize principles such as the Bill of Human Rights (Cragg 2012). It is debatable whether corporations live up to their responsibility to

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12 respect human rights in such circumstances, especially when civil society or governments do not demand such accountability.

John Ruggie acknowledged the limitations, but also highlighted that the tripartite framework and the GPs should not be seen as a means that instantly brings all adverse business impacts to an end (Ruggie 2013). Taylor (2011), comes to a similar conclusion stating that the Ruggie Framework generates a regulatory dynamic, where law and voluntarism are equally important in governing business conduct. In his final report to the Human Rights council, Ruggie notes that the GPs only “mark the end of the beginning,” there is still a long way to go (Ruggie 2011, p. 5). The implementation process of the GPs is in an early stage of development and time will tell whether these trigger the envisioned regulatory reforms (Ruggie 2013). Yet, the outlook is promising and efforts are already on the way at the state-, industry-, and firm- level. Many countries, as well as the European Union, have set forth action plans for implementation of the GPs (Ruggie 2013). On the industry-level, standard-setting organizations and business sectors, which are particularly known for human rights issues such as the extractive industry, have undertaken notable steps for the implementation of the GPs (Davis & Franks 2014; Institute for Human Rights and Business 2012). In a study of the corporate uptake of the GPs, Aaronson and Higham (2013) confirm the notion that particularly oil, gas, coal and mining corporations are trying to adjust their business policies to utilize the GPs. Yet, a contemporary analysis of extractive MNEs by Lindsay et al. (2013), reveals that few of the largest companies have publicly available human rights policies or reports on human rights issues in accordance with the Global Reporting initiative.

On the firm-level, the focus of the implementation of the GPs is placed on the corporate responsibility to respect human rights, which is carried out via due diligence (Muchlinski 2012). The due diligence mechanism has the potential to serve as a positive catalyst in human

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13 rights protection. Muchlinski (2011) remarks that human rights oriented companies will change managerial structures in order to establish human rights compliance systems. In that manner, the due diligence process could become an incremental instrument within businesses helping to assess potential adverse human rights impacts.

Human rights due diligence implies careful observation of potential causes of human rights violations. In this regard, the home/host country context is a crucial factor businesses have to consider, due to the fact that country differences in culture as well as institutional contexts can affect the strength of human rights protection (Fasterling & Demuijnck 2013; Taylor 2011). Hence, the upholding of human rights can differ from one country to another. This fact becomes clear when focusing on the right to health as well as the right to development. Both are internationally recognized rights adopted by numerous national jurisdictions and codified in UN declarations (Meier & Fox 2008). The introduction of the GPs has put the independent responsibility on corporations to respect all human rights, yet these responsibilities are often disregarded.

In a study on corporate project impacts, Salcito et al. (2014) show that firms are concerned with human rights impacts during the construction phase of large scale projects, but lack concern over the long run. This is particularly evident in infrastructure intensive projects in the oil, gas and mining industry, where longitudinal assessments for health and development violations are often completely absent (Salcito et al. 2014). Once it comes to mining projects, development and health violations are not evident right away, yet emerge as living conditions near the sites deteriorate. Because development and health violations are often overlooked, novel research is vital. The following paragraphs depict the rights to health and development and further show how both relate to the business and human rights discourse.

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2.3 The Right to Health

The right to health was given legal foundation in several international treaties and has been ratified by almost every nation in the world (UN General Assembly 1948; UN General Assembly 1966; UN General Assembly 2007). The Universal Declaration of Human Rights describes the right to health as follows (UN General Assembly 1948, p. 5):

Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

Although the UN adopted the right to health as a universal right, it is addressed and protected in a different manner around the globe. Since the introduction of the Ruggie Framework and the GPs, the right to health has emerged as a key aspect that firms are obliged to respect (Salcito et al. 2013). Focusing on the health system of a nation can provide extensive insights into how the right to health is sustained in a given context. Backman et al. (2008) show that health systems of developed and developing countries display intense differences and vary considerably in the aspect of upholding the right to health. Thus, from a firm perspective, it is important to consider the health system of a host country as a risk factor that needs to be evaluated and assessed.

2.4 The Right to Development

Equivalent to the right to health, the right to development represents a fundamental human right. In 1986, it was adopted in the UN Declaration on the Right to Development and reaffirmed in 1993 at the Second UN World Conference (Sengupta 2001). According to the United Nations General Assembly (UN General Assembly 1986, p. 186):

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15 The right to development is an inalienable human right by virtue of which every human person and all peoples are entitled to participate in, contribute to, and enjoy economic, social, cultural and political development, in which all human rights and fundamental freedoms can be fully realized.

Duty bearers of the right to development are primarily states (UN General Assembly 1986). However, as mentioned previously, businesses carry the obligation to respect the right to development. Poverty and development issues are highly sensitive and the role of businesses is discussed, with controversy, since the introduction of the CSR concept (Bebbington 2001). Meanwhile, reality illustrates the harsh fact that poverty remains a key problem in today’s world. Per definition of the World Bank, the poverty line is drawn at the income level of $1/day (Ravallion 2012). Recent studies estimate that roughly 1 billion people are living below this threshold (Dhongde & Minoiu 2013). The vast majority of the poor live in developing countries, under conditions where basic needs are hardly covered and necessary infrastructure such as health treatment is either weak or missing (Ravallion 2012; Sengupta 2002). In a rather counterintuitive manner, these conditions do not deter investment and MNEs willingness to operate. In fact, the contrary is true. As mentioned in the introduction, in 2012, FDI inflows into developing countries surpassed those into developed countries for the first time in history (UNCTAD 2013). The World Investment Report 2014 confirms that 2012 was not just an anomaly as FDI inflows into developing countries have now exceeded those into developed countries for two consecutive years (UNCTAD 2014). The year 2012 marked a turning point in the global economy as more and more MNEs set up operations to expand activities into the developing world.

Against the backdrop of the business and human rights debate, the new patterns of FDI flows are particularly delicate. Research shows that most of the severe human rights abuses corporations are involved in actually occur in developing countries and conflict zones

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16 (Ruggie 2013). Weak governance systems and underdeveloped legal structures are two of the key sources that facilitate human rights violations in developing countries (Hancock 2006; Cragg 2012). The Ruggie Framework in general, and the corporate responsibility to respect human rights in particular, are meant to address the governance gap in such ‘legal vacuums’ (Muchlinski 2012). However, many MNEs have not set-up appropriate due diligence mechanisms to assess human rights risks involved in investment ventures.

2.5 Cross-national distance

Cross-national distance is a major concept in the research field of international business. In IB literature, cross-national distance is conceptualized in terms of the distance between the countries of the parent company and of the recipient unit, along multidimensional measures, including inter alia “economic, financial, political, administrative, cultural, demographic, knowledge, and global connectedness as well as geographic distance” (Berry et al. 2010, p. 1460; Kostova 1999). Since the inception of the international business field, cross-national distance has received great scholarly attention, especially in relation to the attractiveness of national markets, market entry mode decisions, firm performance and the management of subsidiaries (Bae & Salomon 2010; Eden & Miller 2004; Xu & Shenkar 2002). Within recent decades, this concept developed consistently, which led to the existence of four main conceptual distance streams, namely: geographic, psychic, national cultural, and institutional, which will be described in the following section.

The geographic distance approach deals with distance in a physical sense (Hymer 1976; Ghemawat 2001), referring to the separation between countries based on a geographical dimension. The other three streams towards cross-national distance are all based on non-geographic approaches. Psychic distance ( Johanson & Vahlne 1977) stems from the perceived differences between countries based on different dimensions, such as language, culture business practices, etc. (Demirbag & Glaister 2010). Hence, once business actors

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17 become familiar with a foreign country, the psychic distance will decrease (Luo & Tung 2007). National cultural distance (Hofstede 1994; Drogendijk & Slangen 2006) deals with the differences between countries arising from different cultural aspects such as social norms, values and religious beliefs (Ghemawat 2001). The measurement of national cultural distance commonly relies on cultural indices as distance proxies (Xu & Shenkar 2002).

The underlying paper follows the institutional concept of cross-national distance (Berry et al. 2010; Gaur & Lu 2007). Institutional distance is defined as “as the difference between the institutional profiles of the two countries - the home country of the practice and the country of the recipient organizational unit” (Kostova 1999, p. 316). In comparison to psychic-, and national cultural distance, the institutional distance concept is a more detached concept because the measurement can draw on national indices and expert data (Newman 2012). According to Newman (2012, p. 47), “institutional distance is the difference between two countries on relatively objective contextual factors that influence business conduct.” In this sense, the institutional concept of cross-national distance builds upon the comparative assessment of institutions, which are defined as “humanly devised constraints that structure political, economic and social interaction” (North 1991, p. 97). Institutions affect and shape the context in which businesses operate and therefore, directly or indirectly, influence conduct. Institutions are subject to change over time and variations in the institutional context can lead to alterations in business behavior (Kostova et al. 2008). Multinational Enterprises, which usually operate in multiple countries, are exposed to several heterogeneous institutional contexts that carry both opportunities and risks. The institutional concept of cross-national distance represents a valuable approach for assessing contextual differences in countries and thus helps to explore how distance affects MNE business conduct with regard to human rights.

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18 Since the systematic study of antecedents for human rights violations as well as their outcomes started only recently, little is known regarding risk factors that MNEs should observe while conducting human rights due diligence. The Ruggie Framework and the GPs imply that corporations should monitor and assess potential human rights impacts on an ongoing basis. Yet, in an exploratory study on the adoption of corporate due diligence policies, Aaronson and Higham (2013) find that only a very small fraction of MNEs have implemented efficient human rights due diligence processes. One reason is certainly a knowledge gap about factors that relate to corporate human rights violations. The underlying thesis aims to contribute to the scientific discourse by focusing on differences between home/host country health systems, via a distance approach. The centerpiece of the study is the exploration and analysis of health as well as development violations of human rights to find an answer to the following research questions:

2.6 Research Question

What factors related to the distance between a MNEs home/host country are likely to be associated with human rights violations? More explicitly, how does home/host country distance of health systems relate to health and development violations of human rights? Are corporations headquartered in countries with advanced health systems less likely to be associated with health violations in their host countries?

Are corporations headquartered in countries with advanced health systems less likely to be associated with development violations of human rights in their host countries?

2.7 Conceptual Framework

Multinational Enterprises usually consist of a network of affiliates, which can be situated in multiple countries with multiple institutional contexts. Recent studies reveal that diverse institutions can impinge upon corporate conduct and increase or decrease cross-national distance (Berry et al. 2010; Dow & Karunaratna 2006; Bhardwaj et al. 2007; Daude & Stein

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19 2007). For the purpose of this study, the focus is set exclusively on countries’ health systems as an institutional cause for cross-national distance. The WHO defines a health system - sometimes referred to as healthcare system - as “all the activities whose primary purpose is to promote, restore or maintain health” (WHO 2000, p. 5). According to the WHO (2000), national health systems stand as a fundamental social institution similar to the legal system of a country. Whereas the right to a fair trail sets the foundation for a just legal system, a health system is based on the right to health as a cornerstone (WHO 2000).

As previously mentioned, the right to the highest attainable standard of physical and mental health represents a fundamental human right (UN General Assembly 1948; UN General Assembly 1966; UN General Assembly 2007). Yet, it is a human right subject to the principle of progressive realization (Schrecker et al. 2010). This implies that the right is contingent on the availability of appropriate resources (Forman & Ooms 2013). The availability of resources can be problematic, especially for countries in the developing world that show dramatic shortcomings in this area. Consequently, nations around the globe differ considerably in the degree of maintaining the right to health and eventually in sustaining a sufficient health system.

Health system distance refers to the extent of similarity or dissimilarity between the home and the host countries’ national health system. The underlying paper focuses on health system distance with respect to FDI flows from home countries with stronger health systems to host countries with weaker health systems. This work also contends that the distance between home and host countries’ health systems of an MNE relates to a decrease or increase in corporate human rights violations.

Health violations

In host countries with weak national health systems, MNEs face higher levels of uncertainty and risk, which arise from an underdeveloped health infrastructure and a shortage of health

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20 personnel. In particular, developing countries suffer from low numbers of physicians, dentist and other medical staff, as well as an insufficient supply of pharmaceuticals and medical equipment (Beaglehole & Bonita 2008; Samb et al. 2009). One could suggest that under such conditions, business conduct becomes more risky and difficult for MNEs that originate from a country with an enhanced health system. Multinational Enterprises depend on a functioning workforce to produce and deliver goods and services. In this light, it is widely recognized that health issues can negatively impact the workforce and organizational productivity and financial performance (Danna & Griffin 1999). Host countries with weak and distant health systems represent a risk factor because of less predictability for the company. For instance, employees suffering from work related accidents might not be given the same treatment as they would receive in the home country of the MNE due to the differences of the health systems. Consequently, large differences between the home and host countries’ health systems require foreign MNEs to be more cautious and sensitive to health issues in the host country. Given the increased sensitivity for health related issues, one can suggest that such MNEs also have a stronger tendency of upholding the right to health. Research shows that many European and American MNEs, which are embedded in relatively enhanced health system contexts, are trying to offset host country health system risks by investing in health protection programs (Zink 2005). In a study on workplace health, Chu et al. (2000) illustrated that many leading European MNEs have implemented health protection and promotion programs that cover all affiliates, worldwide. For instance, Volkswagen AG, one of Germany’s leading car manufacturers is running an extensive company health strategy encompassing all its foreign subsidiaries (Chu et al. 2000). Thus, when MNEs that are headquartered in countries with stronger health systems conduct business in host countries with weaker health systems, it is hypothesized that:

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21 H1: As health system distance increases between the home and the host country, MNEs are less likely associated with health violations of human rights and vice versa.

Development violations

Several scholars argue that a national health system not only constitutes the visible expression of the right to health but also the manifestation of the right to development (Marmot 2013; WHO 2000). Gauri (2004) contends that an adequate health system represents a fundamental institution for alleviating poverty and improving people’s standard of living. A lack of appropriate medical care, treatment and rehabilitation can constrain sick people’s right to health but also their right to development. A shortage of medical care can hinder a sick person from participating in the society and the labor market, which in turn increases the risk of poverty (Gauri 2004). Improvements in health systems can lead to a reduction of disease and poverty in general and an alleviation of levels of human capital in particular. Human capital is widely recognized as the key building block of a successful company (Loeppke et al. 2007). The levels of human capital are based on aspects such as health and education, which are the outcome of a cumulative investment in educational and health infrastructure over time (Yamin & Sinkovics 2009). A healthy workforce with access to appropriate healthcare resources is more productive and less absent due to illness (Simon & Fielding 2006). Thus, there is a strong relation between the improvement of health systems and the right to development.

Given the close relation between the right to health and the right to development, one can suggest that a large health system distance between home and host country can give rise to conflicting demands. Multinational Enterprises that are operating under such conditions, are subject to twofold pressure, that of the home and the host countries. According to Xu and Shenkar (2012), large institutional distance leads to a demand for internal (home country) and external (host country) legitimacy. With regard to health system distance, one could suggest

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22 that MNEs from advanced health system backgrounds might face different legitimacy standards in the host country compared to MNEs headquartered in countries with weaker health systems (Kostova & Zaheer 1999). Thus, those MNEs might be expected to show greater support for the local society and contribute to community development. The United States based Newmont Mining Corporation, developed a health infrastructure in the adjacent communities of its Peruvian mining sites (Gifford & Kestler 2008). Similarly, the internal pressure arising from a strong health system background might push MNEs from advanced health system countries to engage in community projects. ExxonMobil controls subsidiaries in Chad, where the American MNE is also funding health service facilities to improve the lives of children and mothers (Cash 2012).

Given the previous arguments, one can suggest that MNEs originating from countries with enhanced health systems have a stronger tendency of upholding the right to development. Thus, when MNEs headquartered in countries with stronger health systems conduct business in host countries with weaker health systems, it is hypothesized that:

H2: As health system distance increases between the home and the host country, MNEs are less likely associated with development violations of human rights and vice versa.

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23

Figure 1. Conceptual model Health system

distance

Corporate human rights violation

Development - violation Health - violation

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24

3. Data and Method

This section presents the data and shares the methodology used to answer the postulated hypotheses of the previous segment.

3.1 Sample

The sample used in the underlying study consists of 286 subsidiaries from 225 different MNEs, representing the total number of foreign corporations active in the extractive industry of the following countries:

Table 1. Sample countries

Americas Africa South-East Asia

Argentina Ecuador El Salvador Peru Paraguay Chad Mozambique India Myanmar

The choice of countries, as well as the focus on the extractive sector, is based on several specific motives. The extractive sector, which encompasses the subsectors of oil, gas and coal along with mining, is highly relevant. The very nature of exploiting fossil fuels and mineral ore goes along with an adversarial impact on the environment and often affects local people and workers alike (Sethi et al. 2011). As a result, the extractive sector, particularly in developing countries, is known for deteriorating the living conditions of local residents rather than uplifting their livelihoods (Calain 2012). This phenomenon is often referred to as the ‘resource curse.’ Specifically, sub-Saharan countries but also regions in the Americas that are rich of natural resources are affected. Calain (2012) stresses the example of the Zamfara State in northern Nigeria, where one of the most tragic lead poisonings in 2010, caused by mining activities, affected 43 villages. Child mortality rates in the concerned areas increased dramatically and left one quarter of children below the age of five, dead (Calain 2012).

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25 Another reason for setting the focus on the aforementioned industries stems from literature on human rights policies of extractive companies. Hamann et al. (2009, p. 455), stresses the fact, that almost all of the Global 500 companies, operating in the extractive sector claim to have “an explicit set of human rights policies or management practices in place.” From this perspective, insights in the involvement of extractive sector companies in human rights violations are particularly substantial to study. Based on the aforementioned motives, the sample of MNEs was analyzed with respect to corporate human rights violations tracked by the Corporations & Human Rights Database Project (CHRD), and the home/host country distance of health systems of the selected MNEs.

3.2 Data collection

Multiple data sources are used in this study. These sources reflect the subsequent components: a) sample of subsidiaries and general MNE information; b) information about corporate human rights violations; and c) country specific health system information.

The sample of subsidiaries stems from the Orbis Database provided by the Bureau van Dijk. The Orbis Database contains key information on company activities by country and industry of some 120 million public and private firms worldwide (Bureau van Dijk Electronic Publishing 2013). One of the strengths of the database, and the reason it is used in this study, lies with the availability of data from companies operating in developing countries. Particularly, the availability of subsidiary/MNE-information and the mapping of ownership structures are highly relevant for the present paper (Bureau van Dijk Electronic Publishing 2013). The data collection of this component was carried out with respect to the following: MNEs active in the extractive sector of the countries mentioned in Table 1 were identified. Further, company specific information, such as headquarter locations, the number of employees as well as operating revenue, was completed according to availability.

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26 The CHRD served as an information database for corporate human rights violations. The CHRD represents one of the most consistent and detailed scientific databases of claims on corporate human rights violations in existence and is developed by the Oxford University in the UK and the University of Denver in the U.S. (Olsen & Payne 2013). The CHRD is built upon archival information collected through the Business & Human Rights Resource Centre (BHRRC), an independent non-profit organization based in London and New York (Olsen & Payne 2013; BHRRC Business & Human Rights Resource Centre 2014). Since its establishment in 2002, the BHRRC gained a high reputation advancing corporate transparency and accountability (Business & Human Rights Resource Centre 2014). Moreover, the BHRRC collaborated and provided key information to the UN Special Representative on business and human rights during the development of the GPs and the Ruggie Framework (Aaronson & Higham 2013; Ruggie 2007; Wright 2008). Consequently, the CHRD with its underlying connection to the BHRRC represents a highly relevant and consistent data source for information on corporate human rights violations. The data collection from the CHRD for this work was carried out subsequent to the data collection from the Orbis Database. As a result, development and poverty violations of human rights were matched to the subsidiaries/MNEs operating in the relevant countries.

Relevant data for the calculation of the health system distance score was collected from the public databases of the WHO and the World Bank. The collection process for health indicators was conducted according to the following three steps. First, the necessary health indicators were determined. Second, effectively available indicators were identified. Third, the collection of health system data, focused on the years 2000 and 2012 (the year with the most recent health data available). Both years have the most complete records for health indicators for the countries included in the sample. This is due to the fact that the WHO only collects relevant data every few years (WHO 2013). Moreover, the focus on these years is

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27 consistent with the human rights violations in the sample, which are reported between 2000 (first) and 2011 (last). Therefore, the health system data covers the full period of reported violations.

3.3 Variables

3.3.1 Dependent variable

The effect of health system distance on corporate human rights violations is tested. Hence, health and development-violations of human rights are used as the dependent variable. Within the CHRD, these violations are coded as health corporate abuse allegations (CAAs) and development and poverty CAAs, respectively. It is important to note that CAAs, recorded in the CHRD are based on information collected by the BHRRC. Each abuse allegation is checked for validity and accuracy and corporations are invited to respond to any allegation (BHRRC 2014). Allegations that are scientifically coded in the CHRD are crosschecked before they are recorded (Olsen & Payne 2013). Moreover, it is important to note that corporate human rights violations are very difficult to document. The BHRRC, conjointly with the CHRD, represent the most complete sources of data available with respect to corporate human rights violations (Olsen & Payne 2013). Thus, CAAs used in the underlying thesis are highly reliable and valid. All CAAs refer to a specific subsidiary that is involved in one or more human rights violations within a given country. Consistent with the records in the CHRD database, the analysis in this work focuses on corporate human rights violations recorded from 2000 onwards.

3.3.2 Independent variable

The independent variable consists of a health system distance score, representing the distance between the health system of the MNEs home country and host country, where a specific human rights violation has occurred. The calculation of the health system distance score follows the Jeremic et al. (2012) distance approach. The authors observe health systems through the Ivanovic-distance (I-distance) method, which allows a comparison of health

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28 systems based on a single score (Jeremic et al. 2012). The methodology can be customized, such that any selected number of relevant health system indicators is calculated into a single comparison score, reflecting the distance between given health systems (Jeremic et al. 2012). The I-distance method is used in several studies and has proven to deliver valuable results when comparing health systems but also when building other comparison scores, which rely on a multidimensional set of indicators (Radojicic & Jeremic 2012; Bulajic et al. 2013; Jeremic et al. 2012; Al-Lagilli et al. 2011; Jeremic & Isljamovic 2011).

Formula (1) and (2) below depict the I-distance method, id est the iterative steps, which ultimately lead to the distance score based on a set of variables X! _{= X}

!, X!, … , X! (Radojicic & Jeremic 2012). Thus, x_!" can take on the value of a certain health indicator of a specific country. 𝐷 𝑟, 𝑠 = 𝑑! 𝑟, 𝑠 𝜎_! ! !!! 1 − 𝑟_!",!"…!!! !!! !!! 1 𝑑_! 𝑟, 𝑠 = 𝑥_!" − 𝑥_!" , 𝑖 ∈ 1, … , 𝑘 2

The health system indicators in Table 2 were identified from the literature as highly relevant, reflecting the twofold nature of health systems (Evans et al. 2001; Meijer et al. 2011; Jeremic et al. 2012). On the one hand, a health system depends on input factors, for instance government expenditure on healthcare, whereas on the other hand output factors, such as mortality rates and life expectancy indicate the outcomes of a health system (WHO 2000). Table 2 depicts all selected indicators in relation to their influence on a health system. The high number of 16 indicators was chosen to generate a detailed and reliable depiction of the state of different health systems.

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29 Table 2. Health system indicators and sign of the relationship of the indicator to the increase in a countries’ health system

I. Input variables:

1) Measles immunization coverage among 1-year-olds (positive sign +) 2) Polio immunization coverage among 1-year-olds (positive sign +) 3) Diphtheria tetanus toxoid and pertussis immunization coverage among

1-year-olds (positive sign +)

4) Hospital beds availability (positive sign +) 5) Dentistry personnel density (positive sign +)

6) Nursing and midwifery personnel density (positive sign +) 7) Physicians density (positive sign +)

8) Pharmaceutical personnel density (positive sign +)

9) Per capita total expenditure on health at average exchange rate (positive sign +)

10) Per capita government expenditure on health (positive sign +) 11) Total expenditure on health as percentage of GDP (positive sign +) II. Output variables:

1) Total life expectancy at birth (positive sign +) 2) Neonatal mortality rate (negative sign -) 3) Infant mortality rate (negative sign -) 4) Under five mortality rate (negative sign -) 5) Maternal mortality rate (negative sign -) Source: own preparation, based on WHO indicators (2014)

3.3.3 Control variable

In order to isolate effects that could influence the relationship under observation, this study uses company (firm size) as a control variable. There are several reasons for using firm size as a control variable. First, an increase in firm size often comes with several changes to organizational factors. Usually, the business strategy, the organizational structure as well as the top management are subject to change, once a corporation grows in size (Zhou et al. 2006). Moreover, in many countries, regulatory requirements vary between small, medium and large firms. Large U.S. corporations are obliged to provide health insurance to employees

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30 (Kumar et al. 2001). Consequently, changes in internal and external factors of the firm can influence how it operates and thereby this relates to the occurrence of corporate human rights violations.

Second, firm size can be a very relevant factor with respect to the selected industry in this study. The top ranks of the 500 largest companies on the planet, feature many extractive companies such as Shell, BP or Chevron, which have affiliates in almost every country on the planet (Hamann et al. 2009). These MNEs have usually larger financial resources, greater market power and a stronger reputation compared to smaller corporations (O’Faircheallaigh 2013; Eden & Miller 2004). As a result of their increased visibility, they are easier targets for special interest groups and NGO campaigns (Spar & Mure 2003). In order to avoid being targeted by interest groups, which can lead to a damage of the brand and a loss of reputation, one could expect that large-scale MNEs are more concerned with upholding human rights, particularly in developing countries. Additionally, large-scale MNEs are often headquartered in countries with enhanced health systems. Thus, firm size could influence the relation that is studied in the present paper. Consequently, this study uses firm size to control for the possibility that businesses might be more or less involved in corporate human rights violations depending on size. In the present paper, firm size is operationalized as operating revenue (turnover). Operating revenue is selected because it represents the most complete and consistent proxy for firm size with respect to the availability of data of developing country MNEs (Kumar et al. 2001).

Another potential control variable, which might affect the relation of health system distance and corporate human rights violations, is already considered based on the sample selection. Due to the explicit focus on the extractive sector, it is not necessary to control for industry effects.

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4. Results

The main sample of analysis used in the underlying study consists of 286 subsidiaries from 225 different MNEs. All subsidiaries were analyzed for corporate human rights violations. The data analysis was carried out in a twofold manner. First, the independent variable (health system distance) was computed using the statistical open source software R (version 3.1.1) respectively, RStudio (version 0.98.1085) for Mac. Subsequently, the results were exported to complement the initial data set. All remaining statistical analyses were carried out with the Statistical Package for Social Sciences (SPSS version 21 for Mac) from the IBM Corporation.

4.1 Health system distance score

The appropriate measurement of distance between two entities is subject to an ongoing discussion in current IB literature. Different distance approaches, such as the traditional Euclidean distance measure, have received renewed attention (Berry et al. 2010). Hitherto, there is no common agreement whether there is a best method of measurement. Before considering the health system distance outcomes of the underlying study, it is important to note that the minimum values for each partial indicator were taken as a reference. Consequently, a higher value symbolizes a greater distance from the theoretical minimum, the ‘unhealthiest’ situation. Therefore, countries with a greater distance score stand for a better health system, whereas countries with lower scores imply a weaker health system. This reasoning is possible due to the sample selection, including host countries with weak health systems and home countries with stronger health systems than the host. Nonetheless, it is important to consider that in theory, a high distance could also indicate a weak home country health system and a strong host country health system. A central topic in scholarly debate focuses on the question of whether

such a relation can be interpreted in the same way as the

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32 previously described relation (e.g. a strong home country health system and a weak host country health system and vice versa; Berry et al. 2010).

In the present paper, the health system distance score is based on 16 different health system indicators. Data of 63 countries was used in the analysis. All indicators for the selected countries were complete, thus a substitution of missing values was not necessary. The raw scores of the calculation are summarized in Appendix 1. The outcomes reveal that Japan (15.02), the United States (13.93) and Germany (13.83) are the countries with the best health systems. At the bottom of the scale, Pakistan (1.95), Nigeria (1.47) and Chad (0.93) have scored the lowest, exhibiting the weakest health systems. The following example shows how the results can be interpreted, when comparing two countries: the distance between Japan and Chad being 14.09 stresses the fact that there are tremendous disparities between the countries’ health infrastructures.

As mentioned above, the results of the health system distance calculation represent the independent variable. In the next step, the results were used to complement the primary data set, such that the succeeding analysis could be performed. It is important to note that health system distance was calculated for 63 countries as shown in Appendix 1. Not all of these countries are represented in the primary data set of the 286 subsidiaries. Yet, this additional effort was made to highlight the validity and relevance of the health system distance approach along a larger country set.

4.2 Data analysis

4.2.1 Missing data and multi-item scales

The control variable company size displayed missing values. This was due to a lack of publicly available financial data on developing country firms, particularly with respect to MNEs headquartered in China. The missing values of 28 corporations were complemented with the average value of the variable. Furthermore, the independent variable (health system distance) used in the analysis was computed as the means of the year 2000 and 2012 scores.

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33 A reliability analyses was performed for this scale, which attained a Cronbachs Alpha of .96. According to Bryman and Cramer (2011), the Cronbachs Alpha of a given scale should be equal or greater than .8 to confirm sufficient internal scale consistency. Thus, the mean health system distance score represents a highly reliable scale.

4.2.2 Descriptive statistics

The following results were attained by running descriptive statistics analysis. The sample included 286 subsidiaries of 225 MNEs headquartered in 36 different countries. The largest groups were affiliates controlled by Canadian (21.7%), followed by U.S. (15.7%) and British (13.3%) headquarters. This is consistent with scholarly literature highlighting the dominance of the three countries in the extractive industry (Drimmer 2010). A detailed overview of MNEs home countries is presented in Table 3.

Table 3. Home countries, distribution, I-distance and violations Number of

subsidiaries Percentage Headquarters location I-distance Mean

Number of violations 3 1,0% Argentina 07.71 2 17 5,9% Australia 11.88 4 1 0,3% Austria 12.39 0 6 2,1% Belgium 13.28 1 14 4,9% Brazil 09.46 7 62 21,7% Canada 12.46 11 1 0,3% Chile 07.51 0 10 3,5% China 07.42 3 2 0,7% Colombia 08.02 2 1 0,3% Cyprus 10.05 0 1 0,3% Denmark 12.10 0 10 3,5% France 13.19 2 4 1,4% Germany 13.83 0 1 0,3% India 03.75 1 1 0,3% Ireland 11.67 1 7 2,4% Italy 12.30 1 5 1,7% Japan 15.02 0 3 1,0% Luxembourg 13.15 0 2 0,7% Malaysia 07.81 1 14 4,9% Netherlands 11.34 1 1 0,3% New Zealand 11.49 0 3 1,0% Norway 12.89 0

Business and human rights : health system distance and corporate human rights violations