Leseprobe
Table of Contents
1. Introduction
2. Context and general overview
2.1 Commodity Trading Sector in Switzerland
2.2 UN Guiding Principles on Business Humans Rights
3. Case Study: Analysis of two Swiss Commodity Trading Corporations on Human Rights Practices
3.1. Methodology
3.2. Glencore Holding AG Case
3.3. Trafigura Groupe Pte. Ltd
3.4. General comment on the analysis
4. Recommendations to ensure the respect for Human Rights in least developed countries
4.1. International perspective
5. Conclusion
References
List of tables:
Table 1: Assessment of Glencore AG Human Rights policy and practices
Table 2: Assessment of Trafigura AG Human Rights policy and practices.
Abstract
The main objective of this paper is to analyze the Human Rights practices and policies in developing countries of two Transnational commodity trading corporations (Glencore AG and Trafigura AG) headquartered in Switzerland through the companies’ Corporate Social Responsibility Reports (CSR) and then try to find solutions to ensure its compliance. In the last few years, several Swiss Corporations operating in the commodity trading sector have been directly or indirectly implicated in several scandals related to violation of Human Rights in different developing countries rich in raw materials. The analysis of the two companies’ official reports showed that there is a great commitment to respect Human Rights in their business process in order to align with the requirements and criteria of the UN and various organizations sensitive to social issues. However, relying solely on the trust of the Transnational Corporations is certainly not enough because there will always be agents who do not take the Human Rights issue into consideration. Therefore, there must be a coercive force acting internationally to punish guilds that commit Human Rights abuses in all the countries in the world, something that unfortunately does not happen today.
1. Introduction
"Anyone who disregards Human Rights should have to answer for it" (Aebischer, 2018), stated the Nation Council Commission after a recent violation of Human Rights in Peru by a Peruvian subsidiary of the Anglo-Swiss multinational commodity1 trading company Glencore Plc, headquartered in the municipality of Baar, in the canton of Zug.
This is not the first time that a Swiss Transnational company operating in the commodity trading field is involved in such scandals abroad. As a matter of fact, it is not uncommon to hear in the mass media or in the NGOs reports that a Swiss trading company has violated Human Rights in a developing country with the aim of maximizing profits (Swiss Federal Council, 2015). In recent years, several protest rallies have been organized in Switzerland by different groups of activists, NGOs and political movements sensitive to social issues to ask, also on a political level, for a better behavior on the part of these companies operating in the Swiss commodity trading sector. The main issue is that nowadays when a Transnational company headquartered in Switzerland violates Human Rights, on a legal level, they risk almost nothing in the least developed countries where most of those companies operate directly or indirectly. Transnational Corporations have the means to circumvent national laws and avoid legal consequences of their criminal actions often with the complicity of local political authorities and public institutions (Weissbrodt & Kruger, 2017).
The main question that will be answered in this term paper is:
"How are the Human Rights practices and policies among two Swiss Transnational commodity trading Corporations (Glencore AG and Trafigura AG) in least developed countries and what can be done in the future to ensure its compliance?"
At the beginning of this paper, in the second chapter, there will be a general overview of the commodity trading industry in Switzerland and of the Business Human Rights issue in order to understand better the context. Then, in the third chapter, there is a case study in which Human Rights practices among two Swiss commodity trading Corporations (Glencore Holding AG and Trafigura AG) that operate in Least Developed Countries (LDCs) will be analyzed through company’s official reports. Further, in the fourth chapter, the paper will try to find and provide solutions to solve the problem in a local (Swiss) and International perspective. In order to answer this research question, different kind of documents such as companies’ reports, different academic resources and reliable mass media articles will be considered and analyzed with a critical eye throughout all the paper.
2. Context and general overview
2.1 Commodity Trading Sector in Switzerland
In the last decades, Switzerland became a major commodity trading hub (Aizawa, Battaglia, & Jerbi, 2017) and commodity trading became an important economic sector, representing approximately 3.9% of the Swiss GDP (Swiss Federal Council, 2015, pp. 5). A lot of big Transnational Corporations working in commodity trading have set up their headquarters in various Swiss municipalities and cities. There are many reasons behind the attractiveness of Switzerland for these kinds of companies. One of the main factors is definitively the low corporate tax rates; in some Swiss Cantons, they are the lowest in Europe (like in the Canton of Zug). Then also the political stability, the reliability of the public institutions, the optimal framework conditions for foreign Transnational Corporations, the reputation of Switzerland as reliable "financial center" contribute to the attractiveness of the small alpine country.
One of the reasons why Switzerland can also be attractive for these companies is that nowadays a Transnational Company cannot be punished for violations of Human Rights in a foreign country according to Swiss legislation. This is the reason why in the last few years, after the numerous media articles dealing with Swiss commodity trading Corporations’ abuses committed abroad, the issue of Human Rights policy among Swiss Transnational Corporations touched the Swiss public opinion and the Swiss politics significantly.
2.2 UN Guiding Principles on Business Humans Rights
When we talk about Human Rights, most of the us think that it is an issue belonging only to the domain of the state, but it is not only like that anymore in our neoliberal globalized world. Santoro and Wettstein (2014) stated in their journal paper that nowadays "there is a broad interdisciplinary and dynamic discussion on the potential Human Rights responsibilities of business", especially among powerful actors such as big Transnational Corporations, like the Swiss commodity trading companies mentioned above, operating in different countries and jurisdictions directly or indirectly (through subsidiaries).
In 2011, to adapt to this important change, after several years of work and discussions, the United Nations Human Rights Council drafted the United Nations guiding principles on Business and Human Rights which is applied to all states and companies to prevent Human Rights abuses in business operations (United Nations, 2011). The report, in different chapters, provides the duties for states and the responsibility for businesses to ensure the respect for Human Rights in all countries of the world, especially in countries where its respect for is not always guaranteed by law and / or local authorities. In this report it is essential to underline the small but fundamental difference between the different role that states and companies should play according to those guidelines. As a matter of fact, the report says that it is the state’s responsibility and duty to guarantee the respect of Human Rights by the enterprises operating in their own territory (Weissbrodt, 2014, pp. 154). This means that the companies are not directly embedded by the International laws and treaties regarding Human Rights. For example, if a Swiss Transnational Corporation commits an abuse regarding Human Rights in a developing country it is only the concerned state’s duty to punish these enterprises. Therefore, International Organisations, such as the United Nations, cannot punish legal entities even though they do not receive an adequate punishment by the competent legal entity. According to John Ruggie, the Special Representative of the Secretary-General on the issue of Human Rights and Transnational Corporations and other business enterprises’ (SRSG) such gaps "create the permissive environment within which blameworthy acts by corporations may occur without adequate sanctions or reparation" (Fasterling & Demuijnck, 2014, pp. 800).
A lot of Transnational Corporations, such as some Swiss commodity Trading companies, can take advantage of this legal situation. In a lot of countries, especially in the least developed ones, the respect of Human Rights by the Transnational Corporations is not always guaranteed because these agents have all the means to circumvent laws and to act in all impunity, often, exploiting the complicity of the corrupted local authorities and institutions.
The United Nations guiding principles on Business and Human Rights states some basic principles that firms, regardless of their size, have to take into consideration in order to prevent Human Rights’ abuses:
1) "Business enterprises should respect Human Rights. This means that they should avoid infringing on the Human Rights of others and should address adverse Human Rights impacts with which they are involved" (United Nations, 2011, pp. 15).
2) "In order to meet their responsibility to respect Human Rights, business enterprises should have in place policies and processes appropriate to their size and circumstances" (United Nations, 2011, pp. 15).
3) "Companies should have a policy commitment to meet their responsibility to respect Human Rights" (United Nations, 2011, pp. 16).
4) "A Human Rights due-diligence process to identify, prevent, mitigate and account for how they address their impacts on Human Rights" (United Nations, 2011, pp. 16).
5) "Processes to enable the remediation of any adverse Human Rights impacts they cause or to which they contribute" (United Nations, 2011, pp. 16).
Therefore, in the following chapter, there will be a case study which has the objective to assess and compare Human Rights practices and policies of two important Swiss Transnational Corporations operating in the commodity trading sector and see if they have taken measures to ensure its compliance after all the Human Right’s scandals that hit the Swiss commodity trading sector.
3. Case Study: Analysis of two Swiss Commodity Trading Corporations on Human Rights Practices
3.1. Methodology
In this chapter there will be a specific case study in which there will be the analysis of Human Rights policies and practices in Least Developed Countries of two important Swiss TNC of the commodity trading sector. Firstly, there will be an individual assessment of the two mentioned firms according to precise criteria inspired to the UN guidelines, then they will be compared and commented. For this short paper we have decided to see if the two firms’ Human Right policy fulfill the following criteria which have been defined by Bench Marks Foundation and Bread for all, a well-known NGO sensitive to social issues (Bench Marks Foundation and Bread for all, 2015c):
1. Human Rights commitment and policy:
1.1 Does the company have a commitment to Human Rights?
1.2 Does the company have a Human Rights policy?
1.3 Does the policy refer to international Human Rights standards?
2. Human Rights due diligence:
2.1 Does the company assess its Human Rights impacts?
2.2 Does the company integrate the assessment findings into decision-making and processes?
3. Remedy:
3.1 Does the company address harms to individuals if it causes or contributes to an impact?
To answer those questions, the researcher will analyze the Corporate Social Responsibility official reports of the two Swiss companies operating in the commodity trading sector that operate in developing countries.
3.2. Glencore Holding AG Case
Glencore Holding AG is the biggest Swiss commodity trading company headquartered in the municipality of Baar, in the Canton of Zug. Glencore employed 146’000 people worldwide, whereas its yearly revenue in 2017 amounted to 205.476 million of USD, thus becoming the largest Swiss company by revenue. Glencore, as many other big commodity trading companies, do not only trade commodities but is also involved directly or indirectly in the extraction of raw materials (especially in mining sector) in different developing countries. In recent times, several local and international newspapers have accused the company of not respecting Human Rights in the developing countries in which it operates. Therefore, according to us, it would have been interesting to see if Glencore has taken steps to ensure its commitment to respecting Human Rights in vulnerable countries in its management processes / policies.
Self-made table 1: Assessment of Glencore AG Human Rights policy and practices:
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Source: answers based on the company’s 2017 Annual Report (Glencore, 2017).
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1 Commodity: raw material or primary agricultural product that can be bought and sold, such as copper or coffee (Oxford Living Dictionaries, n.d.).