“We need to choose between a global market driven only by calculations of short-term profit, and one that has a human face.”
– Kofi Annan
(Former UN Secretary-General)
Introduction
Businesses worldwide are run by humans and for humans. But do they have a human face? A question that has created contradictions for years now requires a structured answer. A relatively new term “Business Human Rights” (BHR) has emerged lately with the sole purpose of answering these unanswered questions.
The term “Business Human Rights” sounds like a right which might involve both the concepts of business laws as well as human rights. It is an interdisciplinary concept that tries to strike a perfect balance between the commercial world and the humanitarian side of that commercial world.
Definitions and Components
The Business Human Rights consists of three individual words which basically serve as its ingredients. Let us first see the denotative definition of each of them.
- Business: According to Merriam-Webster Dictionary, “a usually commercial or mercantile activity engaged in as a means of livelihood.”
- Human Rights: “A basic right (such as the right to be treated well or the right to vote) that many societies believe every person should have.”
- Legal Definition: As per Section 2(13) of the Income Tax Act, 1961, ‘business’ includes any trade, commerce, manufacture, or any adventure in the nature of trade, commerce, or manufacture.
- UN Definition: Human Rights are “the rights inherent to all human beings, regardless of race, sex, nationality, ethnicity, language, religion, or any other status.”
Human Rights in India
Human Rights are like an ocean — vast and nourishing, touching every shore without discrimination. Article 21 of the Indian Constitution is the cornerstone of human rights law in India. Several landmark cases have expanded its scope.
Landmark Judgments on Human Rights
- Olga Tellis v. Bombay Municipal Corporation (1985): Right to livelihood as part of the Right to Life under Article 21.
- Vaman Rao v. State of Maharashtra (1981): Limited amendment of fundamental rights under the Basic Structure Doctrine.
- State of Madras v. Champakam Dorairajan (1951): Right to equality and prohibition of caste-based discrimination under Article 15.
- Minerva Mills Ltd. v. Union of India (1980): Protection of fundamental rights and judicial review as part of the Basic Structure.
- I.C. Golaknath v. State of Punjab (1967): Fundamental rights cannot be abridged by constitutional amendment.
- Sunil Batra v. Delhi Administration (1978): Prisoners have human rights, including protection from torture and inhuman treatment.
- Francis Coralie Mullin v. Administrator, Delhi (1981): Expanded Article 21 to include the right to live with human dignity.
- Unni Krishnan v. State of Andhra Pradesh (1993): Recognized right to education as part of Article 21.
- Justice K.S. Puttaswamy v. Union of India (2017): Right to privacy is intrinsic to Article 21.
- Bandhua Mukti Morcha v. Union of India (1984): Linked right against exploitation to a dignified life.
Business and Ethics: A Contradiction?
The worlds of enterprise and ethics might seem contradictory. Since the sole purpose of a business house is to make profit, it might seem impossible to merge the idea of protecting human rights with business profitability. But that is precisely what Business Human Rights (BHR) seeks to address.
BHR caters to the need for businesses to have independent responsibilities to respect human rights. The key question: Is this a moral responsibility or a legally binding obligation?
Scope of Business Human Rights
The scope of BHR is vast and includes:
- Organized Businesses: e.g., Companies
- Non-organized Businesses: e.g., a tea seller, a farmer
- Profit-Making Organizations: e.g., a partnership firm, a company
- Non-Profit Organizations: e.g., NGOs
Therefore, any institution that is not part of the government but has the potential to breach human rights falls under the ambit of Business Human Rights.
Friedman’s Theory vs. Human Rights Approach
The concept of BHR contradicts the economic ideology of Milton Friedman. In his 1970 essay “A Friedman Doctrine: The Social Responsibility of Business is to Increase Its Profits”, Friedman argued that a company’s only responsibility is to its shareholders. He believed business exists solely to make profit.
However, the global narrative gradually shifted from a profit-centric enterprise to an ethically sound enterprise. This evolution passed through three distinct phases:
- Business or Human Rights: A belief that the two cannot coexist; businesses must choose one over the other.
- Business of Human Rights: A critique highlighting how even human rights fields have become commercialized (e.g., CSR consultancies).
- Business and Human Rights: The modern interdisciplinary field promoting the coexistence of ethics and enterprise.
Corporate Social Responsibility (CSR) vs. Business Human Rights (BHR)
Though similar in intent, CSR and BHR differ fundamentally in approach. Below is a comparison:
| Aspect | Corporate Social Responsibility (CSR) | Business Human Rights (BHR) |
|---|---|---|
| Nature | Older concept focusing on charity and reputation | Emerging concept focusing on rights and ethics |
| Objective | How profits are spent | How profits are made |
| Approach | Voluntary; may act as a whitewash for violations | Mandatory respect for human rights during operations |
| Legal Backing | Statutorily mandated under Section 135 of the Companies Act, 2013 | No statutory mandate, but evolving globally through UN Guiding Principles |
CSR Under Indian Law
India is the only country that has statutorily mandated compliance with CSR. According to Section 135 of The Companies Act, 2013:
- Companies with an annual turnover of ₹1000 crore, or
- Net worth of ₹500 crore, or
- Net profit of ₹5 crore
…must allocate 2% of their average net profits from the preceding three years for CSR activities.
Responsible Business Conduct (RBC)
Responsible Business Conduct (RBC) is closely related but broader in scope. It is guided by the OECD Guidelines for Multinational Enterprises and includes:
- Human rights
- Consumer rights
- Anti-competitive behavior
- Anti-corruption laws
- Tax compliance
Since India is not a member of the OECD, it is not under a legal obligation to follow RBC, though the principles are increasingly influencing Indian business ethics.
Conclusion
After delving into BHR and its parallel concepts, it can be concluded that Business Human Rights is not just a field — it is a lens through which businesses can analyze and interpret their role in society. It redefines the purpose of enterprise: not just to make profit, but to make profit responsibly and ethically.
The Concept Of BHR
The concept of BHR is still an emerging concept in the world of corporate law. It’s historical evolution dates back to early 1970s. The main three Organisations that primarily dealt with this issue are –
- The United Nations (UN)
- International Labour Organisation (ILO)
- Organisation for Economic Co-operation and Development (OECD)
The United Nations Process
The United Nations started the process but couldn’t adopt anything material, as UN intended to adopt something which would be a binding code of conduct.
Soft International Standards
Fortunately, two soft international standards were adopted :
- OECD Guidelines for Multi-National Enterprises, 1976
- ILO Declaration, 1977
The Global Compact
In the year 1999 the Global Compact was achieved which included 9 principles relating to labourer, human rights, environment and later on one more principle relating to anti-corruption got added. More than 20,000 participants in the world joined this Global Compact which included countries, universities and other bodies as well. The United Nations Development Program (UNDP), 1966 is the Bible .
Historical Evolution of BHR
In the historical evolution of BHR, there has been a continuing cycle of high and low tide.
| Phase | Description | Example |
|---|---|---|
| High Tide Phase | The High Tide phase is when countries are trying to adopt something which is legally binding. | For eg. – the 1990 code of conduct |
| Low Tide Phase | The Low Tide phase is when countries are trying to adopt something which is a soft standard ie. Something which is not legally binding or enforceable. | For eg. – the Global Compact of 1999, the ILO, the OECD guielines |
Following Soft Standards
Now, these soft standards inspite of not being enforceable still needs to be followed by countries who are doing their business in any OECD complied country or have allowed any OECD complied country based business house to run their business in any non-OECD country. Hence, India in spite of not being a member of the OECD still shall follow the OECD guidelines under certain circumstances.
Hard Binding Standards
After this comprehensive analysis of the soft standards, it’s time that the hard binding standards are to be discussed.
Hard Binding Standards
The hard binding standards are basically the legally binding standards. These hard binding standards are given as follows:
1. Mandatory Human Rights Due Diligence (mHRDD)
It was first adopted by France, followed by Germany, Norway, and Switzerland.
2. Corporate Sustainability Due Diligence Directive (CSDDD)
This was adopted by the European Union. It applies to all the 27 member countries of the European Union. It applies to India indirectly (in the same way as OECD guidelines are applied indirectly to India).
In spite of immense backlash that it faced, it is expected to come into force on and from 2026.
3. Import Ban
Various countries follow various regulations and principles which may lead to import bans at times.
For example, if a country makes a regulation that goods manufactured by forced labour or child labour cannot be imported, then those goods are prohibited from entering that country. Hence, this regulation might create an import ban.
4. Tort Law Foundations
There are various tort law cases which work as the foundation of the Business and Human Rights (BHR) law.
- The landmark case of Donoghue v. Stevenson if studied from a different lens, shall serve as a Business Human Rights case. It is not just a case of mere negligence, but also a violation of a basic human right.
- The famous UK Supreme Court judgment in Vedanta Resources Plc and Another v. Lungowe and Others (2019) may also work as a guideline to the law of Business Human Rights (BHR). It stated that if the subsidiary company commits any human rights violation, then the parent company (even if located in another country, such as England) shall be held liable.
Need for Transparency and Accountability
Post the comprehensive exploration of how business and human rights interact, critics might question the measurement and standardization of Human Rights in Business or Business Human Rights.
What can be considered a breach of BHR, and to what extent a breach can lead to legal liability for business houses, may become controversial in the absence of a transparent socio-political audit.
Human Rights and Socio-Political Audit
Hence, a transparent account of the Human Rights Audit or the Socio-Political Audit is the need of the hour to strike the perfect balance between business goals and human rights goals.
Balancing enterprise with human rights is no longer optional—it is imperative. By embedding ethical principles into corporate practices, companies build lasting trust.
Conclusion
It can be concluded that the true measure of progress is not only profit, but also positive human impact. Businesses today are not just economic actors but stewards of human rights.
Therefore, at the crossroads of enterprise and ethics lies a profound responsibility.
