Principle 1
Understanding "Sphere of Influence"
Sphere of influence is not defined in international human rights law. Instead, its meaning is evolving from company practices, the work of international organisations, non-governmental organisations (NGOs), academics and national jurisprudence of what constitutes a company’s sphere of influence in relation to complicity and how it affects the scope and content of the commitment made by companies participating in the Global Compact.
Various attempts in this regard focus on people and situations in political, contractual, economic or geographic proximity. One view of companies’ spheres of influence comes from a publication by Amnesty International and The Prince of Wales International Business Leaders Forum, which provides the following framework, in order of priority:
- Core Operations includes, but is not limited to, human rights compliance under labour laws and in the direct use of security forces.
- Business Partners includes ensuring that all contracts with partners and suppliers are in compliance with human rights and that compliance is subject to independent monitoring and verification.
- Host Communities includes stakeholder engagement and consultation, and partnership activities based on equity, transparency and mutual benefit.
- Advocacy and Dialogue with Government applies to transnational corporations having considerable economic leverage with a government.
Amnesty International and The Prince of Wales International Business Leaders Forum, Human Rights: Is It Any of Your Business? (London: Amnesty International, 2000).
The Emergence and Characteristics of the Concept of Sphere of Influence
Current trends in the globalization of business are marked by the emergence of core firms at the centre of large networks of business relationships. This network is made up of a firm's global value chain and its relationships with possible joint venture partners and government authorities in different regions where it operates. The firm plays a key role as the driver of change within its global value chain. It has substantial influence not only on its own employees, but also on upstream suppliers and downstream customers. The concept of "sphere of influence" encompasses this combination of relationships, and the firm's central position as the leader of its global value chain.
Large companies typically have a wide sphere of influence, covering a range of partners, issues, and operations. They may also have a significant degree of influence over some local and national governments, especially those keen to attract new investment.
The degree of influence a company has may vary significantly from partner to partner, issue to issue, and operation to operation. The largest degree of influence is clearly within a company's core operations.
In order to more effectively be able to address human rights issues in their sphere of influence, companies may consider joining or forming industry associations or engage in partnerships with other affected stakeholders.
- For instance, in 2002, the global chocolate and cocoa industry, in partnership with organized labour unions and NGOs, established the International Cocoa Initiative - Working Towards Responsible Standards for Cocoa Growing. This initiative had one primary goal; the elimination of abusive child labour practices in cocoa cultivation and processing.
Global Compact & Sphere of Influence
The scope of the commitment made by companies in the global compact to support and respect human rights and to avoid complicity in human rights abuses is limited to those who are in the company's sphere of influence. The extent of a company's ability to act on its human rights commitment may vary depending on the human rights issues in question, the size of the company, and the proximity between the company and the (potential) victims and (potential) perpetrators of human rights abuses.
However a company does not have complete control over every business partner, and cannot be held responsible for the actions of partners over which it has little influence. The closer a company is to actual or potential victims of human rights violations, the greater will be its control and authority over their lives. This implies that a company is expected to support and respect more strongly the human rights of proximate populations.
Similarly, the closeness of a company's relationship with authorities that may abuse human rights may also determine the extent to which a company is expected to react to such abuse by supporting human rights in its sphere of influence.