Corporations, Human Rights and Poverty

Globalization has brought unprecedented power and influence for corporations. But, when corporations’ activities abuse human rights and drive people deeper into poverty there is often no effective means to hold companies to account or to ensure redress for those affected.

Companies have an enormous impact on the rights of individuals and communities. This impact can be positive, for example the creation of new jobs and an increase in state revenue that can be used to fund basic services. Yet all too often, human rights are abused as corporations exploit weak and poorly enforced domestic regulation and the lack of international accountability mechanisms to devastating effect in developing countries.

Allegations of human rights abuse are particularly high in the extractive industry. This is not surprising, given the impact that such operations have on land and water resources. Communities may be forcibly relocated to make way for extractive activities. Traditional livelihoods – and lives – can be destroyed or threatened as land is contaminated and water supplies are polluted or overused.

The arrival of well-resourced companies seeking to win over local communities can also lead to increased violence and social conflict, as some people are excluded from the benefits of economic development. This can be exacerbated by the lack of transparency in the way companies award community contracts and payments.

Affected communities are frequently denied access to information about the impact of company operations and excluded from participating in decisions that affect their lives, increasing insecurity and deprivation.

When abuses do occur, the situation is further compounded when communities are denied access to justice, and governments cannot or will not hold companies to account. The consequence is continued abuse, further entrenching the cycle of poverty.

In the name of economic efficiency, states have privatized many state services including those critical for the realization of human rights, such as the right to education, health, and water. However, states often fail to ensure that companies deliver these services without discrimination.

Public service contracts cannot be a way for states to contract out of their human rights obligations. They must ensure that all companies operate within the bounds of human rights law.

Economic globalization has expanded the reach of companies across national borders. However, regulation of companies has failed to keep pace. A system of regulation must urgently be put in place that ensures redress for those affected and prevents the pursuit of profit at the expense of human rights.