International legal scholars address corporate sustainability at Nathanson Centre event

Law professors (L-R) Markus Krajewski from Germany, Nicolas Perrone from Uruguay and Anil Yilmaz Vastardis from the U.K. participating in a panel discussion at the Oct. 27 Nathanson Centre conference on corporate sustainability.
Law professors (L-R) Markus Krajewski from Germany, Nicolas Perrone from Uruguay and Anil Yilmaz Vastardis from the U.K.

As the climate crisis worsens, leading legal thinkers from around the world gathered in person and virtually at the Nathanson Centre Oct. 27 to consider how transnational business laws could be changed to make global corporations more sustainable.

The international event, titled Addressing the Sustainability Impacts of Corporations, took place just weeks before the critical UN climate conference in Dubai, which starts Nov. 30, and brought together respected experts in business and international law from Canada, the United States, Europe, South America and Australia.

“We know that corporations routinely violate human and environmental rights,” said Osgoode Professor Barnali Choudhury, director of the Jack & Mae Nathanson Centre on Transnational Human Rights, Crime and Security, during the first panel discussion.

Instead of looking at the problem through regulatory silos, Choudhury said, the key question behind the conference and her current research is whether corporate sustainability problems should be viewed more holistically through the interconnections between corporate, international and foreign investment law.

The layering of those legal regimes, she said, has created regulatory gaps that allow corporations to pit different levels of authority against one another. That porous legal construct, which she called “transnational business law,” is “the regime that allows a corporation to form, establish a profit- maximizing purpose and take that purpose with them as they become an international actor.”

On the world stage, she added, such corporations “move easily from one jurisdiction to another and then use the legal protections that have been given to them to operate without regard to other interests and to operate with very little oversight or accountability.”

Making companies more sustainable could begin by fashioning laws that create a new kind of corporation, said Peter Muchlinski, professor emeritus in international commercial law at the University of London’s School of Oriental and African Studies (SOAS).

“We perhaps need new forms of business association that put societal benefit at the forefront,” he added. “With the climate emergency, human beings don’t have much of a choice, but we still have the huge political grinding horse that’s there to stop us.

“We’ve got lots of crises, lots of problems,” he added, “but I still remain moderately optimistic that we’re moving in the right direction.”

One cause for optimism is the adoption of mandatory human rights due diligence (mHRDD) laws in several European countries, said Markus Krajewski, dean of the Institute for German, European and International Law at Friedrich-Alexander-University in Erlangen-Nuremburg, Germany.

“What we’re seeing in Germany now and in Europe is that the adoption of due diligence laws is changing business,” he said during a Q&A session. “All of a sudden, there are jobs now for human rights officers at companies and CEOs are listening to them.”

But there is still a long way to go, several panellists said. The investor-state dispute settlement (ISDS) process still lacks public transparency and is too one-sided in favour of corporations – even permitting frivolous claims, in some cases. In addition, ISDS damages, when awarded, are often overblown, they said.

“International investment law protects fossil fuel investments, which is problematic with regard to climate action because we need to decarbonize,” said Anil Yilmaz Vastardis, a senior lecturer at the Essex School of Law and Human Rights at the University of Essex in England.

Sheri Meyerhoffer, the Canadian Ombudsperson for Responsible Enterprise (CORE), noted during a session dedicated to Canada that Canadian efforts to make corporations more accountable have so far fallen short, including in the creation of her own office in 2019. The ombudsperson, for example, has no powers to compel companies to provide information or to testify, she said.  Reflecting international norms, corporate human rights and sustainability efforts are largely voluntary. In addition, she added, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, which became law in May of this year, is too narrow in scope.

Still, James Yap, president of the Toronto-based Canadian Lawyers for International Human Rights (CLAIHR), said that measures like mandatory supply chain disclosure do not always deter companies from doing business with human rights violators. He noted that major global corporations like Ford Motor Company, Tesla, Apple, Dell Inc. and IBM have disclosed that they have sourced gold from Eritrea, which imposes forced labour on its citizens and engages in human trafficking, according to the U.S. Department of State.

“I think people need to start going to prison for things,” he said of Canadian corporate executives who knowingly engage in human rights violations. “I think we need to step up the frequency of criminal prosecution for all kinds of corporate criminal behaviour in Canada.”

In the annual Or’ Emet Lecture, which kicked off the conference on Oct. 26, public international law expert Robert McCorquodale, an emeritus professor of international law and human rights at the University of Nottingham in England and vice-chair of the UN Working Group on Business and Human Rights, spoke on the increasing regulation of business for their human rights impact and what it means for businesses today.