Human Rights

A pressing issue which has impacted the largest of corporations is the use of child labour. This is a controversial topic which demands an abundant amount of attention because individuals in the developed world are unable to fathom such extensive acts of human rights violation. It is especially detested for large corporations - such as Nike – to neglect basic workplace health and safety or even go to the extent of using child labour as cost-effective tools to increase their bottom line profits. This point is particularly emphasised when we consider the remuneration packages company executives receive – this is often increased based on performance, where Australia Post CEO Ahmed Fahour can be used as an example – which are supposed to pave the corporate governance of the entity. With executives having such significant “skin in the game”, it is difficult to imagine governance changing without a forceful push.

In a recent scandal, it was found that child labourers in the Democratic Republic of Congo, whom are as young as seven, are used to mine the cobalt used to manufacture smartphones on a global scale. Reputable brands such as Apple, Microsoft and Vodaphone are part of a new investigation fronted by Amnesty International. Working in conditions where the children are overburdened by heavy loads and plastered in the African heat, the clear violation in human rights is not being deterred. The demand for everyday consumer products like phones or computers is too high. A Chinese supplier, Huayou Cobalt, sources more than 40% of its cobalt from the DRC and companies such as Apple, Microsoft and Vodaphone and no definitive way of proving they were unaware of where the cobalt is sourced from, or even the fact that child labour was used in the mining of these minerals. This also impacts the economy on a global scale as developing countries will lag behind. Children should have the right to education, but instead they are being overworked and underpaid in inhumane working environments. As such, it can no longer be justified that corporations receive slap on the wrist punishments for these gross violations of human rights. There is evidence that CSR is being considered by global entities, however through independent investigations from organisations like Amnesty International, the idea that corporations will exploit where they can becomes easier to digest. Holding corporations accountable for their actions is increasingly important, however from a historical standpoint, this does not appear to be occurring effectively.

In the modern era the concepts of corporate social responsibility and corporate governance has become increasingly prevalent as a means to keep corporations accountable. There is evidence to support a progression in the corporate mindset where profit is not the primary end goal. However, provided listed companies are all owned by a large variety of shareholders with the intent to create more cash flow, this is difficult to neutralise. It is therefore suggested that a higher emphasis is placed on punishment on both a legislative standpoint and an investment standpoint; of which both will result in a financial impact.

Although corporations may not manufacture in the developed world, the home base of operations generally are; by way of example Apple in the US or Samsung in South Korea. Using Australia’s fight against several large corporations in relation to taxation, it can be concluded that these corporations are playing by the relevant country’s rules. Imposing a form of financial punishment in the form of fines or trade restriction is an effective way of counteracting the cost savings corporations are making through the means of human rights violation. This acts as an incentive for corporations to source more legitimate means of supply in materials and labour as the competitive advantage no longer comes from cost cutting, but from aligning with social values and stimulating product sales growth through brand recognition. Organisations like Amnesty International will need to be at the front lines of pressuring governments worldwide to consider global treaties and legislation to properly enforce these changes. If there is no push for change, policies regarding human rights matters will become stagnant.

Audits should become more extensive in that the focus in financial statements is not simply based on compliance in terms of accounting standards. This acts as a means to change the direction of corporate governance and the profitability of corporate social responsibility in a forceful manner. It would be too complicated to influence how the numbers are reported, however it can be enforced that corporate entities must disclose their knowledge of any connection with human rights violation. Breaking down the source of where corporations are sourcing their materials, the labouring conditions and remuneration would be effective starting points of an investigation. Referring to the cobalt mining incident, Apple, Microsoft and Vodaphone were unable to prove their ignorance in these matters following the investigation of a not-for-profit organisation. The effectiveness would be accentuated with an institution honed in all these matters. This is also an opportunity to create a new industry which can act as an incentive for an already oversaturated job market.