Michael Clements on Business and Human Rights

Welcome back to Sustainable Views, the podcast looking at sustainability policy and regulation in depth. My name is Philippa Nuttall and I'm editor of Sustainable Views. And today I'm delighted to have with me in the studio Michael Clements, who recently joined the UK-headquartered Business and Human Rights Centre as its executive director. And so welcome. And this is particularly exciting, not just because of the discussion we're about to have, but I'm normally based in Brussels and Michael's in South Africa. And so somehow the gods have conspired to bring us together in the studio in London. So yeah, great to have you with us. Us today. And perhaps we could start by you telling us a little bit more about yourself. I think you were working for the Centre for 3 or 4 years as the Director of International Programmes before you became Executive Director. And so, yeah, what excites you about the organisation and what are your initial priorities as Director, given there are no shortage of issues at the moment?

Yeah, thanks so much, Philippa, for having me. What a privilege. And yeah, I think that's exactly right. This is a moment of profound challenge for the business and human rights movement, project, agenda. Like many, I think I was really struck by Mark Carney's reflections, reflecting on the world as in a moment of rupture. Let me be direct. We are in the midst of a rupture, not a transition. Not transition, not a moment in a cycle, but The world order has fundamentally changed, and inevitably that has real implications for business and for business and human rights. And when I'm looking at the world, I'm seeing the sustained political pressure on ESG, the deregulation agendas that are advancing in key markets, the trend of corporate hushing. We can get into all of that, but what it means is that on some level, are— we are facing more challenges, but at the same time, it feels to me that the moment still favors our agenda. The core logic of business and human rights remains. For business, that's about risk management. That's about value creation and protection. That's about corporate accountability writ large. That's about delivering a world that is based more on shared prosperity than the retention of profits by a small portion of the world when the inequality emergency persists, when the climate crisis persists. So for me, it's a challenging moment, but it's an incredibly exciting one for us to think about evolving our tactics and our strategies to meet this moment.

And I'm glad that you don't see it all in doom and gloom terms because some people I speak to at the moment are definitely quite despondent. And you talk about evolving tactics.

Yeah.

How does that mean and how does that sort of work with working with businesses? Because you mentioned there has been this tendency, especially since Trump came in, coming back for a second term, for green hushing and for companies to sort of put their heads down a little bit and not want to speak out about what they're doing in terms of sustainability or human rights. And how do we change that? What are the tactics that can be used?

Yeah, I think it's a great question. And I think that it is one for the broad movement. And I see the movement as civil society, yes, rights holders, communities, workers, certainly, but also responsible business and responsible investors. Progressive policymakers, you know, like-minded governments. This is a moment for all of us to muck in. This is a time for real collective action to address what I think are some of the greatest collective action problems we've ever faced. And what that will mean, I think, is bolder business leadership in the first instance, because what we're seeing is a fundamental undermining of the very democratic institutions in many jurisdictions. That have facilitated, for example, the dynamic and massive American markets. And we know that businesses thrive in circumstances of stability, of predictability, where rule of law is consistently respected. So I would argue that it is absolutely in the self-interest of business, if nothing else, to defend those institutions and to defend the rule of law, because the long-term consequences of not doing that would seem to far outweigh any short-term benefit of staying silent or actively seeking to benefit from what is a 3-year term that remains.

Yeah, no, I think it's really interesting because on the one hand, we see this risk, which is obviously on the books of businesses who are doing things that perhaps are not great or who are not actually acting to reduce emissions, for example, when there's climate risk further down their supply chains. But at the same time, it's not just in the US we're seeing this pushback. In the EU, for example, we've seen the recent changing of the scope of the Corporate Sustainability Reporting Directive. We've seen a change as well with the Due Diligence Directive, which has watered down what that was supposed to achieve. And so we kind of get the feeling that policymakers are pushing back against this regulation, but they're doing it in the name of business most of the time. They're sort of saying we can't be competitive, we can't have strong businesses in Europe unless we roll back on the regulation. So what's your role in terms of working with businesses to potentially give them the confidence or for them to sort of give certain messages to policymakers to say, well, actually, you know, perhaps this isn't going in the right direction, not just in terms of sustainability or human rights, but also as a business value creation, as you say?

Yeah, I think it's a great question too. So in the first instance, evidence-based research, and that is core to our mission as the Business and Human Rights Center. And what we see time and again is failure to respect human rights in jurisdictions where the law says you have to and in jurisdictions where the law says don't worry about it. The consequences are rising conflict, increased litigation risk, project halts and stoppages. This is a time when rights holders have access to more information, more networks, more knowledge than they ever have in history, and we are seeing those consequences writ large across sectors where there are these massive human rights failures, that translates into a higher cost of capital. These are balance sheet issues, you know. So of course, I think there's a moral imperative here, and it's my job to, to say that there is. But, but beyond that, this isn't about altruism. It's not about wokeness. This is about a hard-nosed approach to long-term risk management. And so I think You know, part of our job is setting that out in stark relief in our research and analysis. And that's by surfacing the lived realities of the experiences of rights holders suffering corporate harms, but also surfacing where they are seeing better practice and where they are able to identify solutions. What does it look like to respect human rights in a way that not only respects those fundamental rights, but also contributes to shared prosperity in communities? That make space for fair and free negotiations. Rights holders are excellent at highlighting that. I think maybe one more thing, Philippa, just it's not exactly what you asked, but we are seeing your right to point to the EU and we can talk about the CSDDD, but one of the great victories for me of that process was the momentum that it inspired around the world in other jurisdictions around mandatory human rights and environmental due diligence. And so now, We're seeing really interesting policy discussions and regulatory initiatives emerging in Thailand and Indonesia, Colombia and Mexico. You and your listeners will know this well. And for us as the center, that's a real area to support and for the business and human rights movement to support because these are jurisdictions where the harms are happening, not where the corporations are headquartered, but where the harms are happening, which means those laws can be well nuanced to the realities of workers and communities there.

And you're obviously based in South Africa, and I think we do have a tendency to sort of focus on the UK, the EU, and the US as if, you know, they're very much the centre of the universe and that this is kind of where everything happens. And being based in Brussels, you kind of constantly hear the mantra that this is only happening in Europe and we can't compete. And it's the same sort of refrain we've heard over and over again. But as you say, there are things happening elsewhere in the world. Do you think you bring a bit of a different perspective because you can kind of, you live in a different part of the world and you can see that there are initiatives that are happening that don't have to necessarily just come from the EU?

Yeah, I think, you know, inevitably, yes. Not better or worse, but different. And I think one of the strengths of the centre is that we have a global team that's spread across 30 countries. And so what that means is those different perspectives and lived realities are very much informing our strategy, our style of engagement with business, our entry into global conversations with those local nuances very much on the tip of our tongue and informing how we think about global norms. And that's right, because the world is changing. You know, the global majority states are demanding, rightly, more influence in the international system. We are seeing this leadership emerging on business and human rights in the Global South. But I think there's also just so much to learn from these jurisdictions. You know, I was thinking a couple of days ago about 2015, 2016 in South Africa. We were on the precipice. You know, the president and his administration had effectively bankrupted the country, stealing tens of billions of dollars through corruption, obviously. And in a really interesting turn of events, it was business and business associations that stood up strongly and provided cover for the very powerful civil society and labor movements that were also challenging this. But business stood up to defend democratic institutions, to say that the consequences of undermining these fundamental rights would have long-term impacts on the country that couldn't be recovered from. And ultimately, the side of justice won. And I think at this moment in time, that's a really interesting example from the global majority for the world to consider. For business to consider.

Definitely. I mean, I think it's super pertinent in terms of what's happening in the US at the moment and this increasing call from investors, from consumers for certain businesses or for businesses in general to stand up against ICE and the immigration raids and the shootings. Do you see that there are certain parallels there or that lessons could be learned from the past to sort of give business the confidence to do that?

I mean, absolutely. And I think, you know, one of the things just on the example that I just mentioned is that, again, it was the big business associations that led the charge. We've seen a little bit of that in the US that obviously provides cover for the businesses themselves to be able to act in concert. And we understand at the moment that part of the corporate hushing trend is an unwillingness to potentially be the recipient of individual retribution by the administration, but acting in concert is a powerful way to counter what is happening. Obviously, the level of abuse and cruelty of the ICE campaigns in particular is staggering, and I think what's important there for business to be reckoning with is the fact that these are egregious attacks on individuals and families, but they are also fundamental attacks on constitutional rights. This is about the right to peaceful protest. This is about the right to due process. And again, these are the kind of very foundations that business thrives in. Again, this is about respect for rule of law, knowing that with legal certainty that there are rules and they will be followed. And it's what's made, I'm sorry to use this term, but America great in this respect because it's the way that businesses have thrived. That's GE, that's Boeing, Meta today for all of its problems. But it's hard to see how in a society that's defined by opacity and arbitrariness that that same level of value could have ever been created. So this is a moment for bold leadership, absolutely.

Yeah, and you mentioned Meta there, and that's one of the— I mean, one of your big campaigns is around the accountability of these big tech companies. And perhaps you could just talk us through a bit more kind of what your focus is there and what you hope to achieve.

Yeah, I think we start from the perspective that a recognition that the emancipatory potential of tech is extraordinary. What it means for the democratization of knowledge, access to information and care and education, it's like nothing we've ever seen and it can only benefit society. But those very same technologies obviously have the potential and are causing enormous social harm. And I know that because this is what we do. We track these allegations of abuse. We look at coercive algorithms. We look at the impact of misinformation campaigns, online abuse, the use of surveillance technology by a government against its own citizens, the use of dual technologies in the context of conflict with serious implications for civilians. You know this well. And I think what we're facing is a real call to challenge the idea of tech exceptionalism. Our head of accountable technologies, Gayatri Khandadai, she always says the technology is extraordinary and it is exceptional, but tech companies are not. And it's hard to think of a sector that has such a profound impact on the public interest that is so lightly constrained. And so our work is really about thinking You know, what is the effective answer to that? On one hand, absolutely, it's regulation. Smart, measured regulation and incentives. But it's also about encouraging voluntary corporate action. We need to see business voluntarily demanding higher standards of itself and moving the market towards that. We need some international discussions on guardrails and red lines. What are the lines that we won't cross? And of course, this is a collective action problem. As you're saying, we need investors, we need consumers, we need rights holders and those responsible elements of the private sector to say, hold on, this isn't about limiting innovation and it's not about limiting speed, but it is about directing these technologies towards the public good. And at the moment, we've got nothing.

Yeah, no, very much so. And do you get a sense that these companies are almost too too big to sort of fail or to be challenged. I mean, we're all tied into tech in many ways from when we open our emails in the morning to the television we watch. And perhaps one thing as well that sort of bleeds into other work that you've been doing is also around Gaza and conflict and the role of, you know, the tech companies there that were mentioned in the UN Rapporteur's report. And you'd written an opinion piece with your predecessor, Phil Bloomer, for Sustainable Views, where you mentioned this idea that companies need to be very careful about going into into Gaza. And obviously we've seen that some of the tech companies have already, you know, been accused of being operational there. And so, yeah, I can— I see what you're saying, but how do you sort of start to unpick some of this? Because it is all very messy and all very mixed up in a way that we've perhaps never seen before. You can't say this is a defense company or a tech company or a social media company. It's all intertwined. And so how do you as an organization and say to other businesses, you can work to perhaps change this bit of a tech company, even if you can't change the whole.

Yeah. Yeah, I think, and you're reflecting on the magnitude of the challenge, which is absolutely real, but we also know how to do this. And we have to avoid buying into this idea that because, as you say, every company in some way is a tech company, but the big tech companies have the ability to move the market. And we know that in every way. But that means if we were to start seeing some leadership from some of those more responsible businesses who understand centering human rights in technology development, testing, rollout is not about, again, limiting innovation, but it is about saying that we will depart from this Silicon Valley idea of move fast and break things when what stands to be broken is our social compact, is human rights. Because the long-term consequences of that, and I suppose to get to answer your question, is tech too big to constrain? I think it's too consequential not to. We have to try. And what's interesting is, again, we're starting to see leadership in other jurisdictions outside of the US. The EU is a good example. We're hoping that that remains and we're not seeing an unraveling of the important advancements in tech regulation that the EU has really led on. But Brazil's doing some really interesting work around regulating these Magnificent Seven, you know, the big impacts of big tech. Similarly, South Korea. So these are places again to support investors, to support civil society, to support the policymakers who are being bolder and to empower them with evidence, with information, and yes, vocal support for what they're trying to do. This doesn't have to undermine, you know, the ultimate goals of the industry. But it is our responsibility, all of ours, to be channeling it towards the social good.

And you mentioned the need for some discussion at an international level. I mean, is that the UN, the OECD? Where does that international discussion happen?

Yeah, I think it needs to be happening in a range of places because what we need are kind of agreed-upon guardrails because, of course, tech is borderless. And so while we're seeing this important leadership emerging in certain jurisdictions, we know that the harms cross borders and affect millions of people at pace with a single keystroke or something. You know, I myself am not a technologist, but the reality is those conversations need— and there have been instances. I think the UK hosted a conference a couple of years ago for a range of states to come together and think about AI. But we are going to need— we will need our leaders to be responsive to pressure from the ground. And so when we talk about bold leadership, but we need that same bold leadership from users, from consumers, from civil society. And that's a challenge, I think, for the movement.

Definitely. And you've talked a couple of times about bold leadership. How would you describe that if you were going to speak, if you were speaking to a CEO now, how would you describe that bold leadership that's needed today?

Yeah, I think it obviously depends on the circumstances, but I think being willing to take a long-term view of risk management and value creation, and to be able to stand up and speak out. And I recognize that that is— we all recognize that that's difficult in this moment. We know that there are governments in particular who have enormous power and who can fundamentally change a business in the short term for standing up and speaking out. But we'd like to see more investment in business associations feeling that they are empowered to speak on behalf of major business leaders, to provide that cover, as we saw in the South African example, but also to speak truth to power where we have these businesses like the Magnificent Seven that are acting as geopolitical players in current times. I would like a longer-term view there as well. You know, the Anthropic CEO, I don't know if you saw, published an essay a couple of a couple of days ago, it was really powerful, calling attention to the harms of AI. That's the product that his company produces. And saying this is a moment for action. Regulation, yes, but also, again, voluntary corporate action, speaking out on platforms that matter to administrations that matter. And it's tough, but the long-term consequences, again, are so significant that not to would seem to be foolhardy.

And you've mentioned as well business organizations. I mean, we've seen, to come back to the EU again, but we've seen lots of lobbying against regulation from lots of the business groups in Brussels, from European business groups, but also those representing the US or outside of interest in this sort of call for no regulation that's extraterritorial. I mean, it's a question that I've asked myself several times, but do we need new business organizations. Yes. And how does this come about? Because it's something which has sort of been mentioned on and off over the years in Brussels, but it's never really come to fruition in terms of a big sort of strong group that brings together companies that perhaps are moving forward or are interested in moving forward, or certainly don't want to lobby against, you know, progressive regulation. And we saw, especially around the CSDDD, that various organizations, companies said, actually, no, I'm not in line with what this lobby group is doing on my behalf, but these lobby groups are very powerful. So yeah, how can that happen?

Yeah, I think it's a great idea. Let's do it. But I think we do need an alternative to some of those employer— yeah, some of those business groups that we saw. And the CSDDD is a great example. What we saw at the same time, though, were some really powerful statements throughout the process by individual businesses and investors saying there is real value in raising this standard. And, you know, for me, one of the great lessons— there's many great lessons of the CSDDD process. And I think although, you know, in the end, the directive isn't as broad as many of us would have hoped, it's still much more than we had. So certainly we lost some battles, but the war No, we didn't lose, but I think this is a moment to capitalize on some of that momentum because we did have many responsible investors and business speaking out during that time. And perhaps this is, you know, a new business association that represents businesses that are able to take this longer-term view and that understand that centering human rights in business is both good for business, but also good for society in which business hopefully, I'm sure, will operate for many years to come.

And there's a lot of— when I have these conversations with people, a lot of the time people say, well, there's reputational risk for companies if they don't act on climate change, if they don't protect human rights. Yeah, you've just said, you know, it's good for business.

Yeah.

Are we lacking data or evidence that actually shows this? Because it feels that when policymakers are pushing back against regulation, there's not very much on the other side of the kind of fence saying, well, actually, this is what happened. And do we need— I mean, and are you working on any initiatives to actually bring together these kinds of evidence cases to show that, yeah, human rights protection is good for business as well?

Yeah, I think so. We are in a number of places. The one that comes most immediately to mind is our just transition litigation tracker, because what we're seeing is since the Paris Agreement, a rise in these cases that are challenging unjust transition, not the shift to renewable energy, not the extraction of transition minerals, but the way that these transition minerals are being extracted and the way that the renewable energy installations are rolling out. And the consequence that we're seeing, the majority of those cases are seeking project stop and project halts, temporary or permanent. That's bad for the operation. It's, of course, bad for the broader transition. But these consequences are real and courts are listening. Not every, not every case, but we are seeing, and this is a global phenomenon, judges listening to these rights-based arguments and saying, hang on, actually we're not willing to bless a replication of the extractive model that has underpinned the fossil fuel industry for the last however many years. People, I think, also are more empowered with rights knowledge than they've ever been. And so we are seeing communities and workers taking a strong stand through protest, through litigation, also through negotiation. But the risk to business is real, a failure to respect human rights. And for me, it's kind of a no-brainer because on the other side, it's about stakeholder engagement. It's about being able to listen to defenders, about identifying human rights risks. We can do that. Business can do that. And if that would avoid the long-term increase in your cost of capital, surely shareholders will embrace that. If you're managing to next quarter, it's a different story, but I would assume most businesses want to be around for a longer period of time.

And when you're talking about longer sort of time horizons, are we talking 3, 4 years, or are you looking out to kind of 10, 20 years?

I think both. I think it's, you know, the kind of— we all know about the short-termism phenomenon and, you know, the impacts of that. And, you know, obviously that's going to work in some circumstances. But for businesses that are serious about a long-term life, you know, and sustainability, there's only one answer on human rights. And again, you know, we talk to businesses all the time that reflect that when, you know, when the bottom line is looking good, human rights teams are big. And when margins start to squeeze, then we see human rights teams getting much smaller. And it's precisely the opposite. That would need to happen if you're serious about sustainability. But of course, the quarterly reporting process and returns is another part of the challenge, I think.

Indeed. And perhaps before we finish then, so you've just started this enormous job, I think. So in the next 12 to 18 months, what are the key priorities for you? What do you see as really trying to work and move forward this agenda that you can do with the organisation?

Yeah, you know, I think for this year, you know, you sort of want to do everything because as we talked about, there's so many challenges.

We need like 5 of you.

Yeah, exactly. Luckily, it's an extraordinary team and of course, an extraordinary movement. I think priorities for us are tech accountability. And in the first instance, we're looking at AI and the absolute explosion in AI funding and AI technological advancement, and also AI harm, and really thinking about what does an evidence-based push for smart, effective regulation look like? So more to come there, but for us, it's a key priority, and I think has to be a key priority for the movement because of what you were saying, every business is a tech business now. I think the other piece for us that is of, and for me this year, is really holding onto the gains around the just transition, and I think those are real, But we know that that agenda is again under pressure. There's, you know, consensus around climate change is being challenged, the value of green energy, it's being challenged. And so I think for us, a real focus will be doubling down using evidence-based collective action on the value of a just transition, not a replacement straight across of dirty energy with clean energy, but really highlighting the benefit of a transformation through this transition that can deliver shared prosperity that can deliver an answer to the climate crisis for communities. And then I think maybe just as a third one, supporting brave business, you know, where business is willing to stand up and to speak out, we will be there with the evidence that business requires to make that matter and to make that feel like it is in the interest of the long-term of the private sector. So I think those are 3. Of course, there's many more, but it's an enormously challenging time, but the opportunities are there.

Super. Thank you, Michael. It was really interesting to speak to you, and I'm so glad that you came with that enthusiasm and energy. And if any of our listeners have any ideas for a new Progressive Business Group, I'm sure we'd love to hear it. Oh, I'd love to hear it. Exactly. And to keep up with sustainability, environmental and due diligence regulation and related issues, do go to our website sustainableviews.com to sign up for a free trial of our newsletter and where you can find more information about future editions of our podcast.