Although the idea that businesses should uphold human rights is an appealing one, history shows that voluntary self-regulation more often provides cover for companies seeking profit than meaningful change, allowing them to claim to be acting in the public interest, even as they mostly avoid doing so. Codes allow these companies to focus on ultimately superficial benchmarks that do not address structural issues. It would be ideal if companies could do well by doing good, but voluntary codes of conduct require much too little of them and leave little room for oversight.
The roots of this problem lie in the origins of these codes. Their intellectual progenitors were the Sullivan Principles. Written by an African American Baptist minister named Leon Sullivan in 1977, they were applied to U.S. corporations working in South Africa. Apartheid, the country’s legal regime of racial segregation, denied black South Africans equitable access to health care and education and ensured that the infant mortality rate was among the highest of any country on the continent. As a result, activists called for U.S. companies to refuse to do business with the apartheid regime. Sullivan was personally opposed to apartheid, but he envisioned a way for companies to continue to work in the country and bring pressure for change from within. He had abandoned early calls for corporate withdrawal under pressure from General Motors, where he sat on the board of directors.
The Sullivan Principles were rules by which signatory companies had to abide. They prohibited workplace discrimination, upheld equal pay for equal work, required training for black employees and provided social services for black South Africans. As businesses came under fire from the American public for profiting off the cheap labor and oppression of South African apartheid, they worked with Sullivan to create a system they contended would undermine apartheid by expanding what was considered to be socially possible for blacks, ending hiring discrimination and creating a black middle class. Signing on to the Sullivan Principles was a way for U.S. companies to avoid backlash that might hurt the bottom line back home. In many cases, demands for divestment from these companies cooled because of the codes.
But there was one problem: They were more smoke than fire.
Sullivan and his defenders liked to claim that the Sullivan Principles were effective at breaking down apartheid laws and creating social mobility for black South Africans. In practice, that was not the case.
The number of people who worked for U.S. companies was small, no more than 2 percent of South Africa’s labor force, and the small benefits they accrued did not affect the remainder of the workforce. The amount companies spent on clinics and education was small, and inconsistently applied, so that any benefits were individual or minor. And by giving companies an alternative path for demonstrating opposition to apartheid, the Sullivan Principles, therefore, dissuaded them from joining with activists to actually challenge the regime.
Moreover, even when evaluated by what they self-reported, many companies were judged to be failing. Basic applications of the principles, such as an end to workplace discrimination, were resisted or subverted. In some workplace cafeterias, for example, employees of different contract types ate together, a practice that essentially preserved racial segregation. When unions for black workers were finally legalized in 1979, U.S. companies that had signed on to the Sullivan Principles fought back against unionization.
Sullivan never figured out a way to compel companies into abiding by tougher standards. He occasionally threatened to ask the U.S. government to make the principles mandatory, but companies invariably responded that they would walk out en masse should that come to pass, and the principles remained toothless.
By the mid-1980s, the South African government’s increasingly violent tactics underscored the failure of the Sullivan Principles to peacefully end apartheid. Instead, activist strategies to push divestment began to take their toll on companies’ bottom lines, and violence in the country incentivized companies to depart. Apartheid survived until 1994, when negotiations between the African National Congress and the apartheid government led to multiracial elections.
The failure of the Sullivan Principles to end apartheid or address its injustices did not become a part of their legacy. Instead, business-studies literature today celebrates them as a model for socially conscious investors; and for decades companies have adopted similar codes of conduct to promise investors and the public progress on key issues while evading more radical — or mandatory — changes.
That’s because, although at the time companies resisted their actual implementation, they found that having signed on to the Sullivan Principles was useful in silencing American and South African activists, preserving the U.S. business presence. Anti-apartheid activists argued that Sullivan’s actions inadvertently helped to prolong apartheid by delaying more definitive action and extending the presence of U.S. companies. But Sullivan and his supporters felt they had won some successes by getting companies to agree to support human rights, and they subsequently worked to expand the use of codes of conduct. The Sullivan Principles were followed by the MacBride Principles for Northern Ireland, the Valdez Principles after the 1989 Exxon Valdez oil spill and the Caux Round Table Principles for Business.
In the rest of civil society, these codes were embraced for a variety of reasons. Unions signed on to them in many cases because it kept them at the table with companies and governments, and it seemed better than being on the outside. American churches saw them as a way to remain socially engaged without being too politically controversial and potentially alienating more conservative parishioners. Nongovernmental organizations and civil society saw them as a feasible tactic for advancing human rights, despite the failure in South Africa, and decided to support them.
Today, these codes are commonplace; virtually every major company has one. But they remain just as ineffective today at compelling companies to subordinate the bottom line in favor of social good — for instance, addressing climate change, combating discrimination or upholding safe working conditions — as they were in combating apartheid in the 1970s.
Looking back at the Sullivan Principles can help us to remember that these codes were not effective then and remain ineffective today. At the time, many business executives agreed to them because they feared inaction would ultimately lead to government regulation, and activists supported them because they believed governmental regulation wouldn’t be forthcoming. Sullivan and some of his supporters, even some in the business community, had good intentions, but those intentions were meaningless when it came to curbing the behavior of capital or transforming state policy.
China’s repression of the Uighurs appears to be an enormous abuse of human rights with devastating consequences, and groups such as Human Rights Watch are correct in making their concerns known. But rather than having companies adopt voluntary codes of conduct to put pressure on the regime while protecting their bottom line, businesses and civil society groups should insist on more radical, enforceable changes.