Why Business Education Should Include Human Rights Issues

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Thursday, April 27, 2017
By Dorothée Baumann-Pauly, Michael Posner
Human rights challenges pose serious reputational and operational risks for corporations. Are business schools adequately preparing graduates to manage these matters?

Globally operating businesses routinely face human rights issues. However, very few business schools offer programs or even individual classes examining how businesses should address these concerns most effectively.

What should managers of an apparel or sportswear brand do to remedy unsafe working conditions? How can tech companies address the privacy concerns of their users and ensure freedom of expression when they offer their services in closed societies? How can extractive companies ensure the safety of their assets, employees, and the communities when they operate in conflict zones?

These challenges pose serious reputational and operational risks for corporations. Business schools therefore need to ask themselves whether their graduates are being prepared to manage these and other human rights matters.

Corporations as Human Rights Defenders

There is a growing recognition that corporations have a role to play in the implementation of human rights. The U.N. Guiding Principles on Business and Human Rights, which were adopted unanimously by the U.N. Human Rights Council in 2011, conclude that corporations have an explicit responsibility to respect human rights. What now needs to be determined is what “responsibility to respect” means operationally in each different industry.

An increasing number of companies now give cursory support to this responsibility, yet they neglect to alter their business models. But evidence is mounting that there also are strong business drivers for more serious corporate engagement on these human rights issues. A study published by the Harvard Kennedy School and nonprofit human rights center Shift shows how costly it can be for corporations to ignore human rights issues. The analysis of corporate resources required to manage conflict with local communities in the extractive industry demonstrates that anticipating human rights issues and addressing them before they emerge makes good business sense, particularly for companies that want to secure their long-term business success.

Forward-looking corporations are therefore beginning to seek candidates with knowledge of human rights issues and experience in applying that knowledge in a corporate context. Unfortunately, today many companies are learning that candidates with these skills are still hard to find.

At the same time, corporate practitioners are pointing out that adopting a human rights strategy has positive outcomes for attracting talent and for innovation. Progressive companies like Unilever or Nike have therefore already adopted human rights strategies that affect how they organize their business.

Human Rights vs. Corporate Social Responsibility at Business Schools

At business schools, responsible or sustainable management has been a theme for over two decades. The launch of the U.N. Global Compact in 2000 initiated a stream of research on the role of private actors for the production of public goods and gave momentum to “corporate social responsibility” (CSR). Yet, all too often CSR remains a concept with many meanings and is often taught as an appendage to marketing strategies. Further, and only specialized academics seem to be aware of its nuances.

Many companies use the term CSR to describe their charitable efforts, community relations, and a wide range of other corporate activities that fall outside of their core business operations, or how they make a profit. As such, the concept of CSR often does not help to clarify what is expected of corporations, especially in weakly regulated economies. In the worst case, it even allows corporations to use CSR as a façade to hide bad practices. Tobacco companies, for example, have been producing detailed CSR reports without ever addressing the inherent contradictions in their business model or the medical consequences of the products they are producing.

In contrast, the subject of business and human rights (BHR) has a strong normative core. The Universal Declaration of Human Rights established by the U.N. General Assembly in 1948, encompassing now widely accepted principles, provides a clear reference point. Companies can blame resource constraints for their lack of engagement in CSR, but they cannot use the same argument to justify violations of core human rights standards. A BHR approach requires companies to take a hard look at their core business processes. BHR is concerned with how businesses make their money, not how they spend it. As such, BHR is a distinct concept, with separate academic outlets.

What Business Schools Can Do to Advance Business Human Rights

Against this background, a growing number of business schools are developing specific business and human rights programs. Our Center for Business and Human Rights at NYU Stern was founded in 2013 and was the first BHR center to be established at a business school.

Last year Haas Business School at the University of California, Berkeley, followed suit and launched a BHR initiative. Several other schools, like Alliance Manchester Business School and the Geneva School of Economics and Management in Europe, are in the process of introducing a BHR lens to their business education. We are hopeful that this trend marks the beginning of a greater understanding of the importance of the study of human rights in today’s globalized business environment.

Business schools can and should support the growing interest of companies to embed attention to human rights in their core operations by undertaking research and teaching in this area. The choices facing companies in this risky area are tricky and often are best explored in the safety of the classroom. Incorporating BHR interests into business education requires (1) an understanding of the regulatory and cultural context in which human rights challenges emerge, (2) a systematic analysis of the incentive structures that business models create, and (3) a knowledge of industry standards, stakeholder expectations, and available multi-stakeholder initiatives through which human rights issues can be addressed.

The Role of Accreditation Organizations for BHR

Accreditation organizations have been critical drivers for positive changes in business education. By asking for research and teaching of courses in the broader “responsible management” domain, they put emphasis on the need for business to be “an organ of society,” as the preamble of the Universal Declaration for Human Rights puts it.

The understanding that responsible management generally matters for business success and for the world has come a long way. Most prominent business schools today offer at least some version of what responsible management could entail in their curriculum. Yet, we think the time has come to further fine-tune our understanding of the role of business in society.

A BHR frame is clearly focused on issues that are at the heart of business. It does not require stand-alone courses but rather needs to be built into existing core programs of the business curriculum.

Accreditation organizations are ideally positioned to cast a critical eye on how well business education is adapting to today’s business environment. In light of the pressing human rights challenges that some companies are facing, these organizations can specifically require information about whether and how schools are preparing future leaders for the management of these challenges.

In so doing, accreditation organizations can play a very useful role in advancing the emerging BHR field beyond academic audiences and contribute to a foundation for a more just and equitable global economy.

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Dorothée Baumann-Pauly
NYU Stern School of Business, Center for Business and Human Rights
Michael Posner
NYU Stern School of Business, Center for Business and Human Rights
The views expressed by contributors to AACSB Insights do not represent an official position of AACSB, unless clearly stated.
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