Business and human rights: key challenges to 2023

In the United States and around the world, the events of the past year have weakened protections for human rights and created greater responsibilities for leading global companies. Here are four human rights-related areas business leaders need to focus on in 2023.

Russia’s Ongoing Atrocities in Ukraine

Russia’s invasion of Ukraine in February had devastating consequences. Tens of thousands of Ukrainian and Russian soldiers and thousands of Ukrainian civilians were killed. The war has created Europe’s largest refugee crisis since World War II, with more than 7 million refugees fleeing the country and another 8 million internally displaced.

The war prompted more than 1,000 global companies to stop doing business in Russia. Some have withdrawn permanently, while others have suspended operations, hoping to return to Russia after the conflict is resolved.

Two things became clear. Companies harboring hopes of a quick return to pre-war operations must now assume longer time horizons and adjust their business plans accordingly. Second, those evaluating corporate behavior need to better distinguish between those companies that contribute to Putin’s war effort, even indirectly, such as India’s Bharat Petroleum or America’s Titan Industries, which makes tires and other Automotive products with military use, and companies that provide basic human needs for the Russian people, such as US-based healthcare providers Zimmer Biomet or Kemin. The purpose of restricting corporate actions should be to punish the war effort, not the well-being of the Russian people .

China’s Mass Persecution of Uyghurs

Xi Jinping was elected as China’s political leader for a third five-year term by the Communist Party’s Central Committee in October. As the most powerful Chinese leader since Mao Zedong, Xi has consolidated his power and that of the Communist Party, expanding the state’s control over every aspect of society and the economy.

Xi Jinping’s authoritarianism has been hit hardest in Xinjiang province, where the government has detained more than a million Uyghurs, a Turkic Muslim minority. Forced labor by Uyghurs and other Turkic minority populations is widespread in factories and agricultural operations in Xinjiang. In response, the U.S. Congress overwhelmingly passed the Uyghur Forced Labor Prevention Act, which became law in June. It prohibits the import into the United States of any products containing components from Xinjiang. The law had an immediate effect on clothing and solar panels that use cotton from Xinjiang (where about 80 percent of China’s cotton comes from), nearly all of which contain polysilicon ingots and wafers from Xinjiang.

The rapid deterioration of the human rights situation in Xinjiang and the crackdown on democracy in Hong Kong have left global companies in trouble. China accounts for nearly 40 percent of the world’s manufacturing, with the United States far ahead at 23 percent. China is also the world’s second-largest consumer market after the United States, and its sheer size of the economy presents an enticing prospect for Western investment firms. These economic opportunities make it difficult for companies to leave China. Yet a deteriorating human rights situation, Xi Jinping’s growing support for Russia’s war effort and his confrontational rhetoric are all making it harder for companies to do business in China in a manner consistent with their corporate responsibility commitments.

At the very least, corporate leaders should not follow the example of hedge-fund mogul Ray Dalio who excused the Chinese government’s authoritarian rule. When asked about doing business in China in light of severe human rights abuses last year, Bridgewater founder Dalio described China as “a country from the top down,”[s] Like a strict parent. ’ Asserting a false equivalence, he asked, ‘Should I not invest in the US because of our own human rights concerns? ” When he was punished for making these comments wall street journal Dalio and others said he “caused misunderstandings” by “hasty answers” to questions posed to him.

Political disinformation on social media platforms continues to pose a threat to democracy

In the United States and some other countries, the continued prevalence of online disinformation and other harmful content continues to fuel polarization and undermine democratic discourse. Several incidents in the last year made the situation worse. Most troubling of all is Elon Musk’s acquisition of Twitter. In his first few months at the helm, he seemed determined to destroy the commercial enterprise while inviting right-wing extremists of all stripes back to spread hate and misinformation on the struggling platform. Musk has recalled thousands of other previously banned Twitter users, including election deniers, anti-vaccination conspiracy theorists, and QAnon followers who still claim Donald Trump won re-election in 2020. Musk’s massive layoffs, including from the team of content moderators, scare off many of the company’s advertisers, who provide the bulk of the company’s revenue. Most recently, he suspended the Twitter accounts of a group of journalists who had written about the company, apparently in a way to upset the owners.

Meanwhile, Chinese-owned TikTok has done little to reassure skeptics who fear it takes orders from Beijing and poses a threat to users’ privacy and possibly U.S. national security.check in New York Times And others have suggested that TikTok’s chief executive, a Singapore-based financial expert, does not set a content policy for the company. TikTok has failed to quell concerns that its parent company, ByteDance, is responsible for the U.S. platform and could use it to spy on user accounts. In October, Democratic lawmakers cited our center’s research when they asked TikTok to clarify its policies and enforcement practices related to the spread of misinformation on the platform. Those concerns haven’t slowed TikTok’s epic growth among younger users, which has outpaced the expansion of Facebook, Instagram and YouTube early on.

Online gaming sites are now also places for harmful content. The 18-year-old man who murdered 10 people in Buffalo in May detailed his plans on Discord, a social media app popular with gamers. Most gaming companies lag far behind major social media companies in moderating communications on their platforms. The gaming industry, which generates more revenue than the music and film industries combined, needs to step up efforts to address the misuse of its products by extremists.

The Debate Over ESG Investing Intensifies

Last year also saw an unprecedented attack on asset managers, which assess the environmental and social impact of companies in which they invest. These efforts have grown considerably in recent years through so-called environmental, social and governance (ESG) frameworks, which now manage more than $35 trillion in assets. Many conservative pundits and politicians are denouncing the legitimacy of ESG measures, accusing any consideration of a company’s environmental or social impact as a form of “sane capitalism”.

Florida Gov. Ron DeSantis was one of several state officials who recently pulled a state pension fund from BlackRock over its ESG offerings. It’s unbelievable to think of BlackRock CEO Larry Fink as a “woke capitalist.” Others, including our center, expressed concern that most existing ESG funds are driven primarily by marketing concerns rather than principles. In rebuilding ESG, the investment sector needs to collect more important data and place greater emphasis on social issues such as worker well-being in global supply chains. There is no doubt that ESG investing will continue to be a controversial topic in 2023. For naysayers like DeSantis, ESG is just the latest battleground in their ideological campaign Again climate and human rights activists, especially those who say ESG doesn’t make sense Until there’s better data, clearer standards and more ambitious policies system to measure the actual performance of the company.

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