Conscience incorporated: pursuing profits while protecting human rights
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Welcome to the LSE events podcast by the London School of Economics and Political Science. Get ready to hear from some of the most influential international figures in the social sciences. OK, welcome, everybody. Thanks for giving up this lovely May evening to come to the lecture.

So this is a hybrid event. My name is Duncan Gree and I have two roles at the LSE. I'm a professor in practice in the International Development Department and I run a shiny new program on activism, influence and change. And we were really happy when Mike's team got in touch and said could we host something at the school because this is exactly the kind of conversation we want to promote at the new program. So that's brilliant.

A little bit of housekeeping. Mobile phones on silent. You no longer have to turn them off because we want you to tweet and the hashtag is #LSEevents. There is apparently a fire assembly point. I have no idea where it is.

But if there's a fire, go to that assembly point. Alright. We're here today to listen to Mike Posner. I'll give you a short bio and then we'll get into the substance of it. So Mike is the Jerome Kohlberg Professor of Ethics and Finance at NYU, New York University's Stern School of Business.

He's the director of the Center for Business and Human Rights at the school, the first ever human rights center at a business school, and part of the reason for the book he was just telling me is to get a few more schools to pick this issue up, right? Prior to joining NYU Stern, he served in the Obama administration, remember them? From 2009 to 2013 as Assistant Secretary of State for the Bureau of Democracy, Human Rights, and Labor.

In 2010 he chaired the UN Voluntary Principles on Security and Human Rights. And from 1978 to 2009 he led Human Rights First, a New York-based human rights advocacy organization. So he's an amazing CV. He's got extraordinary stories which he tells in, I'll hold it up for the first several times, in his new book, which will be on sale outside, okay, and which I've read and heartily recommend.

So Mike is going to talk for 15 minutes or so. We're not going to do lecterns and PowerPoint or any of that stuff. And then we're going to have a little chat together, and then we're going to go to Q&A with a roving Mike. Let me see if there's anything else I've got to tell you. Hold on. We're going to aim to end at 7.30.

If you're online, there'll be a chance for you to ask questions. Put your questions in the Q&A feature at the top left of your screen. I hope that's there. I can't see it. And it'll come through magically to the iPad here so I can pass it on. And I'll let you know when we open to questions. Raise your hand and we'll take a question. If it's a stupid question, we'll then take a bunch of three. If it's a good question, he'll answer it. Is that okay? That's a rough way of asking.

Okay, I've just got myself into trouble there, haven't I? Right, I think that's enough. Mike, do you want to take over? Sure. Well, first of all, Duncan, thank you. It's a pleasure to be here. I'm actually going to just say a few words by way of background as to how I got here and how I wrote the book, and then I'm keen for us to have a conversation and engage you.

As Duncan said, I spent time in the nongovernmental world, and then I worked for almost four years in the U.S. State Department running the Bureau on Democracy, Human Rights, and Labor, part of the government that's now under siege in the United States. We can talk about that.

But coming out of government, one of the things that was really striking to me was that the human rights debate, human rights discussion that I'd been part of for many years focused overwhelmingly on the role of governments. Governments created the United Nations, created the Universal Declaration of Human Rights in 1948, and there are now a dozen or more treaties that apply to governments.

And when I was in the State Department, in government, I realized how, in a sense, we were living under a kind of fictitious belief that governments would solve the problems of the world. And so I would go to these meetings. We'd all have our flags behind us and the placards with our country's name on

And we would sit around and talk about terrorism or we would talk about poverty or we'd talk about economic issues, whatever. And I kept thinking to myself, you know, we talk about terrorism or extremism and ISIS or Al Qaeda, they have flags, but they're not at our meeting. In fact, they're trying to undermine the system that we're talking about.

When you look at the humanitarian world, the world, the development world that Duncan comes out of, it's absolutely clear that even the richest governments don't have the ability to deal with an Ebola crisis or COVID or hurricanes, any number of natural disasters. And so we rely on Oxfam or the Red Cross or Médecins Sans Frontières to basically supplement what governments do.

And then the third bit of the conversation to me had to do with the relationship between governments and the private sector. And so I looked at the, I sort of started looking at how big are governments, how big are private companies? If you economists hate this, but I'd say,

If you compare revenues and gross national product, gross domestic product, Walmart, which is the largest company by revenue, about 630 billion U.S. dollars, is roughly the equivalent of Belgium's GDP. And so, in fact, if you look at the top 100 economies of the world, 50 of them are not states, they're private companies.

And so we've been having a conversation about what governments can do. In a globalized world, these big companies are playing an outsized role, and especially in countries where there's what I would call a governance gap, where governments are not willing or able to do what they're supposed to do to protect their own people. So we all want to live in a world where there are 193 governments doing their job. Then I go out of business.

But a majority of people in the world don't live in those states. And so then the question is when Walmart goes to Bangladesh or when Shell Oil goes to Nigeria or when Glencore and the auto companies look for cobalt for electric vehicles in the Congo.

What's the relationship of government and the private sector? So that's, I came to NYU a dozen years ago with a colleague from the State Department, and we really started to explore these as 21st century business issues that ought to be taught in business schools, which is why I'm traveling around talking to business schools that are not teaching this, which seems to me kind of crazy in this day and age.

And also looking for ways to thread the needle between what governments ought to be doing, what companies might be doing, and how you sort of mix that in a way that makes sense. The book is, and I am an optimist, I think there's lots of progress being made, but there's also huge challenges.

There are surprisingly still to me very few companies that regard human rights in the same way they do their top business priorities. Businesses want to have a high return, highest possible return on investment. They want to have

be productive, they want to be efficient, they want to return and make sure that they have a high rate of worker satisfaction so that workers don't leave the company. All of those things they measure when it comes to the issues relating to human rights. We're still a long way from that happening.

And so part of what I do in the book, it's a lot of stories about different companies, those that have done a better job, those that are laggards. But it's really an effort to kind of generate a real discussion about what's, here we are, 2025, what are the things that companies ought to be expected to do? What are the things that are going to motivate them to do so? And what are the things that governments need to do to provoke that discussion?

So let me stop with that. I mean, I could go on and on about the book, but I'd much rather have a conversation. I'm sure. Again, okay, so, I mean, the fictitious belief in the role of the state is something that NGOs, I was 20 years at Oxfam, NGOs have a bit of that as well. Also, fictitious belief in the role of civil society, but that's another discussion. So what do you do if you're a mining company in the DRC?

and you've got this enormous demand for cobalt for all your mobile phones and a lot of that cobalt is being mined by people who international law considers children but maybe Congolese don't and it's messy and people really want the work including the children. I wrote a book on child rights ages ago where children said we don't want to be put out of a job we just want a better

better conditions. And I got into terrible trouble with the trade unions for recording what they said. So what do you do? Let's get some specifics on the table. Sure. It's a great example of the kind of thing where I think there is a way forward. It just requires some discipline and some commitment. So the Congo.

80% of the world's cobalt is mined in the Democratic Republic of Congo. It's one of those places, when I talk about a governance gap, it's a country that has not functioned for a very long time. It's very weak central government, a lot of corruption. There's a lot of, there have been numerous wars, eight different African countries,

have gone to war in the Congo, not because they particularly care about what happens to the Congolese people, but because it's rich in minerals. So if you're building a electric battery, let's say to power a car or a truck, which is the future, you have to go to the Congo.

And something on the order of 75 or 80% of the cobalt that's mined in the Congo is mined by bringing in these giant machines that dig up the earth and collect big chunks of cobalt. That's basically the norm. But the other 20%, which is where the people are working, are what are called artisanal or informal mines.

And they may be a thousand feet from the machines. It's the same mine site. These mine sites are gigantic, miles wide, miles long. People come where the machines are because they know there's cobalt there. And they bring their families and a shovel. And they spend all day digging a hole, digging a tunnel. And they send their eight-year-old, we can debate the age, but they send their young kids down the tunnels because the tunnels are small.

They're not reinforced. They're collapsing every day. And so there are safety issues, mine safety issues, and there are the issues of children. The U.S. Labor Department estimates there are 25,000 kids mining cobalt in the Congo. This is not a small problem. It's a huge problem. Why do these families come onto the mine site?

They come on because it's the best way for them to make ends meet. These are very poor people living in the copper belt of the Congo near Lumbumbashi. There really aren't a lot of alternatives. And so the companies, whether it's the big auto companies or electronics firms or the companies that make batteries, are living with an inconvenient truth.

The inconvenient truth is that there is no such thing as a cobalt supply chain that doesn't include this informally mined cobalt. It's almost guaranteed, I would say it is guaranteed, because if you're in this informal site and you're digging up cobalt, putting it in a burlap bag, you're selling it to a trader who's standing right outside this place.

And they're walking those thousand feet and selling it to the people with the machines. And if for some reason it doesn't get mixed there, which it almost certainly will, something on the order of 80 or 85 percent of all cobalt is actually processed in smelting operations in China.

So you more or less have to assume if you have an electric battery, you have a battery for an Apple phone, whatever it is, this is your problem. And so the answer, interestingly, is that it is possible to formalize the ASM sites. And in the book I talk about... Those are the artisanal small mines. The small mine. Yeah.

There's a Swiss trading company in 2019 called Trafigura. You've probably never heard of it. It's a privately held company, but with $200 billion of revenue. It's a giant trading company. And they made a judgment that the cost of this is not so prohibitive, that they would work with an NGO called PACT and with a local mine operator, and they would formalize the mine.

And so they did this until COVID hit, and then the economics of the industry forced them to close it. But for 18 months, two years, they had guards at a site that was fenced off. They were giving protective equipment. And an interesting piece of this was that in the Congo, there's a kind of superstition that women are bad luck.

And so historically, women were never involved in these informal sites. When they formalized it, Trafigura and PACT said, we're going to insist that women be allowed onto the site. What that meant was families were getting twice as much income, and they were able to send more of their kids to school.

So it solved multiple problems. Safer, kids were kept off the mine sites, and the families had money to buy for the clothes and the books and so forth to send multiple kids to school. So that's the right thing to do, and yet it doesn't happen because it's risky, because everybody's just decided it's easier to pretend that ASM cobalt is not in my cell.

And was the company listed or privately owned? Privately owned. Because some of our students did some really interesting work on mining and human rights, which showed that you got a much bigger spread of behaviors in privately owned companies.

So you had the nastiest mining companies and the nicest were privately owned, whereas the listed ones were in the middle of these things. Here's an interesting footnote to that, though. We went three years ago to Microsoft, which is a huge, now maybe the world's biggest firm in terms of assets under management. They are now part of this effort.

And so they've joined with us with traffic or they sent a representative to the DRC to see what's going on. They have said publicly, this is our problem.

And so it changes the discussion. There's a giant electronics firm. They're not the biggest buyer of cobalt, but everybody's heard of Microsoft. And so the question is, how do you get in? Last month I was in Berlin with my colleague Dorothy Baumann-Pauly, who's written two really wonderful books about this, reports. And we spent an hour and a half with 40 people at Volkswagen.

And they, again, you know, they're trying to get their arms around this. They don't want to be the only one. But they know fully, and the companies, the auto companies know full well, this is not a problem they can ignore. So one more question on this, and then we'll move on.

There is a pattern in this where the informal economy, the informal sector produces abuses and the answer is to formalize it. And that's been true of waste pickers, of market vendors. And what tends to happen is you formalize a bit, but then another bit pops up. It's like whack-a-mole. So I'm thinking that more Congolese people are going to turn up and start digging.

outside the... in a different bit. So is your hope that this will somehow influence the state or some wider part of the Congolese system? Or are you just looking to get some clean cobalt out?

No, I think our theory of the case here is if you could get the three or four biggest auto companies and the three or four biggest electronic firms to make a judgment collectively, this is what we're going to do. And then went to the various operators. There's only, I don't know, 15 or 18 giant mining sites in the Congo. It's not 1,000.

And you went to the people running those sites and said, this is what we expect. It's cost of doing business. I think you could change this actually very quickly. Okay, so then I lied. One more question. Of course. So the Harkin Bill, a famous example from the US and Bangladesh where a bill which proposed...

to ban imports from garment companies in Bangladesh using child labour had totally negative consequences, or not totally, but had some negative consequences. A lot of kids were sacked, ended up doing worse jobs in the domestic market. How do you avoid those kind of negatives coming up? It's a really good question. I tell my students, when we're done with 13 weeks of class, you're going to be more confused than the day you walked in here.

And so, such as it is with child labor. If you're looking at the cocoa industry in West Africa, or as you're saying, garments in Bangladesh, the best intention efforts to say no child labor

need to be cognizant of the social economic consequences in a particular place. I was involved years and years ago in Sialkot in Pakistan where they made the best soccer balls, footballs. And they were all made by kids. They'd give them whatever, 12 pieces of leather and some string and they'd go home and they'd be paid whatever it was, 30 cents, 50 cents for a ball.

And a number of the big companies, Nike, Adidas, and others, came together with the ILO and governments and said, let's find a new way to do this. Let's create a stitching center and have a factory where this is done by adults.

And then it turned out, when people actually got their arms around it, that there were no schools in Siakam. So if the kids weren't at home stitching these soccer balls, they had nothing to do. So that required another round of conversation. The government of Pakistan wasn't ready to pay for it. Anyway, the long and short is, yes, it's more complicated than yes and no.

But you want to do the right thing. And eight-year-old kids should not be shimmying down a tunnel that's about to collapse in the Congo. If you start with the issue of safety, it just doesn't make sense for families to feel compelled to use their kids that way to make a living.

Okay, we'll leave it there. It's a big one. It's a big one. If you start with a child rights lens, you go interesting places. I want to move on to a different topic, which is Trump and the age of carnage, which we're currently in. I mean, I was trying to identify what we would call your theory of change, right? And your theory of change appears to be that risks emerge for companies. Activists within civil society and state, all the companies themselves, can then leverage those risks...

to get companies to take human rights more seriously. Either they identify win-wins and everybody's happy, or when there aren't any win-wins, when the companies fail or move too slowly, then you move to the state and regulation of laws. And that's a lovely, comforting theory of change. But now you're in a situation where, just as in aid, it's not just a question of Trump

crushing USAID, but lots of other countries, including the UK, jumping on the bandwagon and slashing their aid budgets. Something similar seems to be happening on corporate responsibility, the closing down of DEI. So is your very Democrat theory of change, how do you need to adjust it, or are you just waiting for better times? So first of all, let me put the facts on the table as I see them.

We are in a democracy crisis in the United States. I call it a five-alarm fire.

We have a president who is morally, ethically challenged, doesn't really have a moral north star. Everything's transactional. He's basically decided to eviscerate or hollow out the federal government, including USAID, to threaten the media, to threaten universities, etc.,

So we're in a terrible place, and there's no sugarcoating of that. If I'm trying to get companies to do the right thing, it's harder in the age of Trump when they're being told by the federal government, you don't have to worry about diversity, you don't have to worry about environment and human rights. Everything is transactional. If you want to do business with us, ours is the way forwards.

That's where we are. At the same time, we see a different dynamic happening in Europe. It's not linear. It's not going to happen overnight. But there's no question that there's going to be more regulation of companies, including companies, any companies that do business within the 27 states of the European Union.

Some of that has been delayed. We can have a discussion about how's it going to happen. I'm going to be in Brussels Wednesday and Thursday talking to people at the European Parliament and Commission. But the overall trend is that governments are going to be more involved in these things for a couple of reasons. There's more attention to these issues in the public.

It's easier to get information about things going wrong in the Internet era. Young people, women, care more about this than old white guys. And so I think there's a – if you sort of take a 10-year view, I take a long view of this. Trump is clearly looking backwards now.

I'm looking forwards and saying, if I'm gonna talk to a company, I'm not gonna talk to them about how do you react to Trump.

I'm going to talk to them about what's your company going to look like, your industry, in five or ten years, and do you want to wait until you're hit over the head with the regulation and penalties, or do you want to try to figure out how to do a better job? I wrote an article about eight years ago talking about the business case for human rights. The business case, I don't want to do the win-win thing because I think that's a little bit superficial.

You're going to do everything I want you to do, and you're going to have increased profits in the next three months. Milton Friedman and I don't get along on that. I mean, we're in a very different place. I think in the long term, companies that want to have great employee relations, that want to hire the best people and retain them, that have good systems in place, and that are basically...

you know, now preparing for a more regulated global economy, those are companies that are going to be successful. The companies that I see that are doing the best on this are doing the best across the board. They're profitable, they're efficient, they have the best workforce, they have the best retention, and they take human rights and climate change as part of their corporate DNA.

Okay. A couple of short ones and then I'm going to go to the Q&A. Sorry, I'm hogging quite enough already. So, gaps, elephants in rooms, Gaza and the disinvestment movement. Was that a question of timing? The book was published in December 2024, so long after the war in Gaza began. Any comments on what that means for the US private sector or for corporates more generally?

I'm generally, and this is not just relating to the Middle East, I would say in general, I'm an engager rather than a boycotter. China. China has huge human rights problems. I don't think it's reasonable, it's certainly not realistic, to think that companies are going to stop producing things in China. 40% of the world's manufacturing is done in China.

And it's the second biggest consumer market in the world. And so if you're running a consumer products company, one way or another you're going to say, I can't afford not to be in China. That doesn't mean that you go in there with your eyes closed or pretend there isn't forced labor in Xinjiang or that there aren't all kinds of other human rights issues there. But I think, for me at least, I want companies to be

engaged in the world. I think globalization has improved the human condition over 50 years. Two billion people have been lifted out of poverty. And that's not USAID or DFID or the World Bank. It's jobs. And so the private sector has changed people's lives. People have gone from rural

to urban, from farms to factories, they've improved their living conditions. Now we can debate, do they have a better life in those factories? That's a fair question. But I think at the end of the day, I want companies, big global companies, to be engaged in the world, to be in lots of places that are tough.

but to do it with their eyes open and to do it in a way that is mindful. A subtitle of the book is Make a Profit and Act Responsibly. I think it's possible for companies, big companies, to make a healthy profit, maybe not the maximum profit, but a healthy profit, and at the same time be acting in a responsible way.

Back to Gaza, and then I'll let you go. Sure, of course. So I understand you can't boycott China in most industries, but the weight of companies, say, investing in the West Bank or occupied territories is not the same. So is your advice the same on the issue of disinvestment in Israel-Palestine as it would be for China?

Well, let me put it this way. There are a number of companies, including some of the tech firms, some of the caterpillar. They're companies that are directly assisting the military operation in Gaza. I think those companies need to be reevaluating and really making a judgment. We do not want to be part of that effort.

Is it the same thing to say, you know, should McDonald's be selling hamburgers in Tel Aviv? That to me is a more attenuated. I wouldn't go that far.

But we can debate that. But I do think companies, and it's true in Russia, it's true in any place where there's a war going on and there are serious human rights or humanitarian law violations, if you're part of that operation, I think you've got to really take a very hard look at what you're doing. Okay. Last one from me.

I remember going to Bangladesh to write an angry report about exploitation in garment factories. And I went to the Nike, the place producing stuff for Nike, and there was a queue all the way around the block of women trying to get jobs there. And you went inside and it was pristine, nice canteen, really good conditions. And then you went to the domestic garment manufacturers and they were everything you read about Bangladesh. They were terrible, right? So is it the case that with...

Western activism which necessarily tends to focus on Brands and things you can get a campaign going and things who which have recognition that you actually Sometimes target the best Conditions in a country rather than the worst that can happen But let me give you the the added bit to the Bangladesh story. We came I came to NYU

in March of 2013. Five weeks later, there was the massive factory collapse at Rana Plaza. 1,100 garment workers killed, most of them young women, 2,500 injured. It's the biggest industrial accident since Bhopal. And as you say, a lot of the big brands hold the factories to a higher standard.

And they, in fact, in two agreements, one called the Accord, another the Alliance, more than 200 global companies paid for factory visits.

And they went to 2,500 factories. And those tended to be, as you're putting it, the best factories. They weren't so great either on fire safety and in general. All of those factories were judged to be deficient virtually. They didn't have fire doors. They didn't have sprinklers, et cetera. But they went, two things. They went to the factories and said, we've now discovered the problems of

Your job is to fix it. So there's a question, what I call outsourcing of responsibility. All those big global brands came and they said, we've decided you're deficient. Now you go pay for it if you want to do business with us. I don't like that system. Second thing relating to your division of the factory universe, almost every big company that is operating in a place like Bangladesh and elsewhere

recognizes that they're making agreements that their core business partner can't possibly meet. So Nike says we want 500,000 t-shirts by October 15th. They walk into a factory and there's 500 sewing machines.

They know if they work 24 hours, seven days a week, they couldn't do that. And so rather than sort of challenging that, they say, well, sign the contract, and then they'll go to some of those smaller local factories you're describing and subcontract. That's the dirty secret. And one of the buyers said to me, you know, we do this with one eye open and one eye closed. Hmm.

And so that's the reality of the situation. And at the end of the day, you know, I've said this multiple in multiple interviews and conversations. The day after Rana Plaza collapsed, every one of the big global brands sent people to the site to go through the rubble to find out if their brand labels were in the rubble. They had no idea.

And so that's, to me, if we're serious about trying to figure out how to fix these things, we've got to be honest about the business environment, the business model, in this case outsourcing to subcontractors. And we have to have shared responsibility. So if a company, as part of the accord or the alliance, sees a factory where they need to put in fire doors...

The big global brands ought to be contributing to the fund. They can't pay for all of it. But it shouldn't just be left to the local business partners, the local factory owners to make things right. I get a strong suspicion that I haven't asked you anything that you haven't answered a million times before. Let's see if the audience can do any better. So I've got a couple of things online, a couple of questions online. Anybody? Okay, great. Let's take a couple in the room and then a couple online. Woman in the black over there.

Now, back to the event.

Thank you so much. Hi. My name is Romita and I'm a journalist from India. I'm very glad you talked about mining and child labor.

I wanted to talk about formalizing economies, formalizing these businesses as you said. So last year I published an investigation with The Guardian which was about sandstone mining in India. We know that there's a problem of child labor there and there's been a lot of pressure from international governments, nonprofits, lots of people basically.

So during my investigation, I found out that, so these companies, international companies, multinational companies, some of them are based in the UK, they've been claiming that we have cleaned up our supply chains. There's a formal economy, but I found out that instead of, you know, calling children to the mines, they had started dumping rocks outside their villages, basically turning it into a cottage economy.

Right? So my question is, and I have tried to, I have tried for months, you know, I was trying to understand

how these supply chains work. They're super complicated and obscure, deliberately made obscure actually. So I don't really see in a situation like that how do you formalize a business like that. Secondly, the second part of the question is what roles do... I want to ask the first question, how do you formalize a business model? What's the question?

Yeah, how do you formalize a business model where the supply chains are so obscure and basically where industries know how to stay ahead of us? You know, they'll find a way anyway to bring in children. Yeah. So it's a good question and it isn't as though I have the answer, but I would say two things. One, governments, western governments need to be more vigilant and

That's part of what the EU is trying to do. Real cost, there has to be real accountability. And for me it starts with having industry leaders come together, pushed by government, to create standards and metrics and a means of evaluation and accountability. At the end of the day we've spent way too much time

talking about, you know, sustainability teams in Western companies and, you know, what's on the website and internal processes. I'm with you. I want to look at what's the outcome, what's the change in workers' lives because these things are in place.

So, first thing is, governments need to be pushing companies in an industry like that to come together to develop standards that are real

and then evaluate those standards in a meaningful way so the companies aren't just deciding, we're doing the best that we can. It has to be more aggressive than that. And companies left to their own devices are not going to be eager to do it. They're trying to shave costs, make a buck, make money. I helped start an organization 25 years ago called the Fair Labor Association.

And the premise of it was, the Clinton administration in the US, the premise was sweatshop labor in apparel. We're going to bring together, the government brought together, you know, companies, big apparel companies, unions, NGOs, and universities to come up with a common standard. We've been at it 25 years.

There's 40 companies in the apparel industry, 112 brands, and now 10 in agriculture. Companies you've heard of, Nike, Adidas, L'Oreal, Nespresso, I mean big companies.

They're held to a standard. We've agreed on a standard. We have metrics. There's routine evaluation. And companies that don't meet the mark are found to be noncompliant. Some have been kicked out. Others put on probation. That's the right model for what you're describing. We have to be more rigorous.

than just saying we hope companies will, of their own good will, decide they're going to exercise due diligence. We'll let them figure out what that is. We've got to move beyond that. That's clearly not worked as well as it should. We'll come back for your second question if there's time, if that's okay, because there were quite a few hands up, if that's all right. Women in the image over there.

Do you think there's an actual feasible way to implement human rights laws when there are so many countries that are openly kind of violating human rights law and international law? Do you think the standard for human rights will change as certain countries, their kind of crimes are being kind of waived without punishment? Thank you. So what you're asking is are human rights diminished or are they going to increase?

You know, I think I sort of come from the world having watched this for a long time. The world was very ambitious in 1948 when the Universal Declaration was adopted. It was a smaller world. It was 65 states. But over time, every government in the world has said, this is something we believe in. Now, we know that saying it and doing it are two different things.

So one thing, there's a lot of conversation about let's expand the universe of what human rights are. Human right to peace, to development, to a clean environment. I'm a strict constructionist on that. I think we've bit off a pretty big set of things in the existing UN treaties and agreements. They're just not being applied.

And so the first thing is, how do we begin to sort of develop more of a culture of compliance? And what are the disincentives to countries that decide they can flaunt this? So to me, that's where I start if we're talking about government. It doesn't mean that rights can't evolve. Nobody in 1948 was talking about the rights of LGBTQ population.

We've evolved. It doesn't mean that every government's going to do that initially, but that's a healthy kind of thing. Rights of women were sort of in the discussion, but not to the extent they are today. So I'm in favor of evolution, but the big question, the biggest question to me is,

How do you get a majority of people in the world live in places where their governments are absolutely either unwilling or unable to protect their own people? How do we address that in a meaningful way? We're seeing pluses and minuses. I've been around this discussion for a long time. I've seen a lot of progress.

We had apartheid in South Africa. We had the troubles in Northern Ireland. We had military dictatorships all over Latin America when I started working in this, and the Soviet bloc. So there are things that have changed.

but we've also seen some backsliding in places like my country, in the United States. We have a threat to human rights that I've never experienced in my life. And so we'd be foolish to pretend, oh, it's under control. It's not under control at all. The Orbans, the Erdogans, the Modes, there's a lot of governments now

the Trumps are basically challenging this order that I'm talking about. And I think that's what we've got to start by doing. We have to fight this notion that authoritarian, there's an authoritarian model that works better. I don't think it works better. And it's certainly not good for people living in those countries.

Okay, I've got a couple of questions online, so I'm going to go to those. Then when I come back, and this is not an aspersion on the questions, we're going to go to two by two just because there's a lot of people I want to ask, okay? So two questions for you. One from Nicola Venucci.

And these are seriously nerdy questions. I don't understand them, but I think you may. What is, in your view, the most persuasive argument that one can use to convince companies to protect and promote human rights, in particular when OECD countries themselves are giving contradictory signals, US but also EU, on CSDDD?

And he's a necessity professor, you'll be surprised to hear, and general counsel at the OECD. And then the second question, Anthony, an LSE external alum, what can be done about oil company backsliding? The concept of enough. A Shell CEO a few years ago said they would get enough profits as part of People Planet Profit. But he was moved on, and BP have given up on its Beyond Petroleum branding and is back to petrol.

Very small. Easy question. So to deconstruct this, CSDD is the Corporate Sustainability Due Diligence Directive. I knew that. This is the...

sort of central law that the European Union proposed last year with the idea that all 27 members of the union would adopt essentially their own national laws dealing with supply chains, environmental sustainability and the like.

There's been a real pushback against it, and I think the question goes to that. And the fact is that now, several months ago this year, they've decided to postpone the implementation of that by two years.

In addition, the new German government has come in and said, not only that, but we're no longer going to even pursue our existing law, which is a supply chain law. So there's a sense that there's backsliding. Absolutely true.

But at the end of the day, I'm less nervous about that because the general trend is to have more regulation of this. You have the Digital Services Act and Digital Market Acts affecting the tech companies. You have regulations on mining. You have a whole set of different regulations, all in the last five years.

They're overlapping, they're a bit inefficient. So companies are rightly saying, I think, boy, this is a morass, it's too complicated, too many reporting requirements. All fair points, but at the end of the day, my answer to that question is, this is not going to be linear.

But there's no doubt that there's going to be more regulation, either from the EU or from the UK or the Australian government or Singapore. There's a whole bunch of governments, the state of California, that are feeling pressure from their own publics

to say we've got to begin to get this under control. So the long term, there's going to be regulation. Short term, there's going to be a lot of confusion and a lot of people saying, oh my God, the sky is falling. The sky is not falling. It's just that we're not going to move forward as quickly as people hoped. So the arc of history bends towards regulation. Absolutely. And without regulation, we're never going to get to where we need to be because companies are always going to be

inhaling profits. And that goes to the second question about the oil industry. There's no doubt that the oil industry is regressive. And if the goal is to reduce carbon, you have to start with fossil fuels. And so there was an initiative by the U.S. Securities and Exchange Commission two years ago to capture what are called Scope 3 emissions.

And that means, you know, not just the things that happen in your factory or in your office, and not just your immediate business partners, but the effect of your products on the environment. Well, obviously, the oil companies, Exxon has beautiful offices in Texas, and the lights go out if you walk out of your office. So that's fine. They can get A grades for their office.

but the product is lethal. So the last thing they wanted was to capture their scope three emissions. That's what governments need to do. They need to regulate that industry and regulate starts with greater transparency and disclosure. What's the actual effect on carbon of fossil fuels?

Okay, hands up. We'll go to two. Person in the stripy top there on the second row and person in the middle of the two rows back. Gemma. Okay, it's Gemma. Right, stripy top first. Thank you. Thank you very much for the insights you've shared so far. I have a question about your views on the role of strategy litigation including jurisdictional shopping in order to bring out big landmark cases against companies not human rights.

You're talking about strategic litigation? You know... Are we going to take two? That's okay? Oh, sure. We've got that. One more. Thank you so much. One thing I'm still struggling to understand is the overarching statement of balancing making a profit with acting responsibly. And I'm specifically thinking about this in the context of arms companies in the face of genocidal conflict, as well as oil in the face of the...

the main climate crisis. So I'm wondering, what does this balance look like then? Is the balance of what we're looking for in these two? - It's a fair question. Let me talk about strategic litigation. These issues are never gonna be resolved by one strategy.

I think that in many instances litigation is a very useful way both to highlight what's going on, less frequently to get a resolution against a big company.

And so I'm a lawyer, I was trained as a lawyer. I have seen a lot of effort go into litigation against big companies that's unbelievably labor intensive and takes a very long time. I was involved in a lawsuit as an expert witness on behalf of families from Indonesia who were affected by a

massacre of army operation on a mining site, an oil mining site for Exxon. 21 years of litigation. And so I thought to myself, boy, you know, cost-benefit analysis, ultimately the company, only because a judge finally said enough is enough, this is going to trial next week, then they settled.

But so many of those suits don't settle. Now, I think it's a useful tool, and I'm glad that some people are doing it. I just don't put all my eggs in that basket. So I would say pursue it if you've got a good case and you're representing people who've been aggrieved. It's a useful thing to give them a sense that somebody's paying attention, they're having their day in court,

But you have to temper your expectations. Again, if you're dealing with a big mining company, oil company, or a big company, Fortune 500 company, the odds are they have a lot of lawyers. They have all day. The name of the game is delay. And they're really good at it. I've seen it over and over again. So I'm not squashing your instinct. I'm just saying that's not enough.

The litigation is a tool. It doesn't get you where you want to go all by itself. On the issue of companies, what were the examples you gave? Arms companies or oil companies. Look, there are plenty of industries. We've taken a look at and I teach about in the United States there's private companies now running prisons.

And I think to myself, does that make any sense? I don't think it does. We're looking now at private equity and health care in the United States. Hospitals, hospices are being taken over by private equity firms. Their method of operation is to come in quickly, cut costs like crazy, build up debt,

Is it likely that if you're a patient in one of those hospitals, you're going to get better medical care? I don't think so. So there are both industries. Maybe the arms industry is one I would just assume not, you know, I mean, they need to, I guess, provide arms for police and the military. I'm sort of of the view that the rest of us probably can do without that. But there are certainly industries that are playing a negative role.

And I think they have to be regulated. Again, we were just talking about the oil industry. At a minimum, the oil industry needs to be held publicly accountable for the extent to which their products are contributing to climate change, to the rise in temperature. You can't do that if you don't know what the numbers are.

So, again, I'm an engager. I think you have to pick every industry where it is and figure out what can be done. But there's a lot of room for more regulation of those sorts of industries to make sure. I'm not saying put private equity out of business. I am saying there ought to be some rules of how many doctors and nurses for every patient. And if private equity says that doesn't work for our model, okay, you've got to get out of the business.

Okay, now this is what's going to happen. We're going to take two more questions.

And then I'm going to rush Mike upstairs to the book signing area so you can't mob him on the stage. If you want to ask him a question and you haven't got it in, you're going to have to buy a book. And then you get a free question. It's brutal, but that's how it works. All right. So you've been... I'm going to take one from the front and one from the back in a completely random choice. So the person in the back. Yeah, um...

- So thank you so much for this very insightful sharing. I have a question regarding the role of CSR and ESG professionals in companies. So I'm curious to know, over time, do you see an increasing trend in their involvement or in their influence? Because we've always been very familiar with the news that they are always doing some window dressing, where you have the social auditors identify the reports and you have the same problems, but you don't have the authority

solve them. So over time, based on your experience, do you see a change or like a positive or anything that give us this pessimistic reasons to believe that there will be more influence or involvement of these people? And one from here and then one of the back. It's going to be three this time because I know you'll want to answer this one. How important do you think it is for business schools to ensure students learn about the UN guiding principles for business and human rights? And then there was somebody there. Yeah, thanks.

- One industry that we haven't really touched on has been like big tech. And so I'm curious as to your thoughts on some of the biggest challenges that are being posed in that arena, like not electronics, but more like the meta, the X, the TikToks of the world. I'm curious as to where you stand on human rights issues occurring there. - ESG, two questions, two comments in response.

One, ESG was set up 20 years ago by a bunch of banks and the UN and the World Economic Forum basically to create a set of investment models that would appeal to younger people, women again, who care about the environment or care about social human rights issues. It's always been a...

It's always been a bit of disinformation, honestly. It's really about risks to investors, not to people on the planet. And so the measures are not entirely clear. There's not enough data. We did a study once of 12 of the ratings agencies for ESG, 1,700 metrics.

This is like GRI and SASB and FTSE for good, et cetera. If you have 1,700 metrics, you know that nobody knows what they're doing. And so we need to change that. And I think with all the pushback now in the US in particular against ESG, I think there's actually an opportunity to go back to the drawing board and say, how do we do this for real? We've recommended something that we call values-based investing.

not value investing, but asking these big investment firms to set up a system where you're actually, and you could take apart the E and the S, you could talk about diversity, you could talk about supply chains, you could talk about tech.

and basically come up with real data and give people a choice and say, if you want to invest in a values fund, you're going to get a lesser return, but we're going to tell you the 25 best companies in terms of the manufacturing sector and labor or best in terms of climate.

That would be a real change, but we're not there yet. Second thing to say, ESG sustainability has been a backwater in a lot of companies.

So there's somebody out there doing ESG. It's a little bit of charity, philanthropy. It's a little bit of public relations. It's a little bit of environment and human rights sort of sprinkled in. But the people that are running the company, the people that are doing procurement, the people that are managing how the companies make money, they're not listening to those people.

And so we need also to have a structural rethink of how big companies operate. ESG and sustainability ought to be the same office. The sustainability people ought to be embracing ESG. Right now, ESG people are begging the sustainability people, can we have five minutes of your time? That just doesn't work.

Second question. Business schools? Huh? Business schools? Yeah, business schools, yes. I mean, the answer, yes, broadly. I'm very much of the view, and we've been the last seven or eight years trying to recruit people teaching in business schools to take human rights, either in their teaching or in their research. We've now got at least somebody in more than 100 schools in 47 countries.

So it's beginning to take hold, but often it's a lone professor who's doing something else, and out of the goodness of their heart, they try to teach something related to human rights. We've got to make it more systematic. The question was about teaching the UN guiding principles on human rights.

That's a piece, but frankly, it's only the foundation for a much richer conversation that we're now having 14 years later. So I would go farther. On tech, yeah, we've done a lot of work on this. It's the most difficult industry I've ever dealt with.

Silicon Valley people think that they are the smartest people on earth. There's a libertarian streak that is wild there. We just had a meeting. We've done a report on 26 regulations now of tech, and it's dealing with things like disinformation and all the things coming out of the social media companies you mentioned.

They hate regulation. They don't want to be regulated. And especially by Europe. The idea that some bureaucrat, this is what they would say to us. We have people there from Google and Meta. Some European bureaucrat is going to tell us how to behave?

They've never met a regulation that they can't find a way to denounce. And yet they have to be regulated. There's an arrogance that is tied to a business model. The business model is engagement.

They're basically advertising companies. We're their product, and they know full well that we respond to things that are emotionally evocative. Negative emotions trump positive emotions. The algorithms are feeding hate and fear. As soon as you give some inclination that there's something you're afraid of or hate, all of a sudden that's coming onto your screen.

That is a terrible thing for democracy. It's a terrible thing for our society. It's causing a lot of social harm. And the companies ought to be ashamed of themselves, frankly. And so we've got to do something about that. And I am a big believer in free speech. I don't want to see governments telling companies, take this down, put this up. We have to look at the... We have to have greater transparency. We have to look at the design of the algorithms...

and we have to look at the overall way they operate. Meta ought not to be outsourcing content moderation to censure, and a censure paying 13-year-old girls in the Philippines and India $3 an hour to sit in front of a screen for 18 hours and get PTSD.

big subject, those are companies that need to be held accountable. I feel like we're just getting started here. I wish you had another hour because you're seriously departing companies with a book. This is great. This is powerful stuff. So my positive, that was a magisterial

set of responses to some great questions. You can always rely on LSE to come up with brilliant questions. Thanks very much for coming. As I said, I'm now going to whisk him upstairs, but first can we give him a round of applause? APPLAUSE

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