The case for business to support the rule of law

11 November 2021 13:00 by John de Villiers

The Business for the Rule of Law Framework advances the rule of law by engaging responsible business to support the building/strengthening of legal frameworks, and by promoting more accountable institutions.

Everyone – including government, business, and individuals – is accountable to and benefits from upholding the rule of law. In the case of business, the positive operating environment engendered by the rule of law results in commercial certainty, long term investment and growth, and sustainable development.  When absent, because of, for example lack of transparency in regulatory and rule-making processes; arbitrary or discriminatory treatment by governments; and the lack of recognition of property and contract rights, the opposite is the case. Business therefore has a compelling reason not to engage in corruption, to respect human rights and to avoid fuelling conflict.  As such, the purpose of the Business for the Rule of Law Framework is to advance the rule of law by engaging responsible business to support the building/strengthening of legal frameworks and promotion of more accountable institutions – serving as a complement to, not a substitute for, government action. [1]

To this end business conduct, corporate values, strategies, policies, and processes should aim to respect and support the rule of law.  Respect for the rule of law includes but is not limited to:[2]

  • Respecting the Ten Principles of the UN Global Compact, including those on human rights and anti-corruption.
  • Complying with the letter and spirit of laws and regulations throughout the company’s operations and value chain, and by requiring and supporting business partners to do the same.
  • Complying with tax laws and policies.
  • Honouring contractual obligations and commercial agreements.
  • Honouring dispute resolution procedures and decisions at all levels.
  • Not undermining the administration of justice, or the effectiveness and accountability of institutions.

Respect for the rule of law however needs to be backed up by active participation by business to build and/or strengthen the legal framework or more accountable institutions.  Support therefore can be via:

Core business operations – for example legal resource providers can improve access to the law with their commercially available products and services, by improving the marketplace and access to legal services, providing on the job training and by promoting diversity and inclusion within the legal profession.

Strategic Social Investment and Philanthropy - Businesses can provide financial and/ or in-kind support to governments, academic institutions, communities, and non-government organizations to strengthen the rule of law, such as specialized expertise, volunteering, thought leadership, training or mentoring, or making in-kind contributions of products or services to help address gaps in the legal framework and institutions.[3]

Advocacy and Public Policy Engagement - by publicly acknowledging rule of law challenges (such as the existence of corruption) in their own operating environment and by taking action, independently or collectively, the business community, acting collectively or through other organizations, can play an important role in increasing the effectiveness of rule of law advocacy, and also decrease the resource requirements for individual businesses that participate.

Partnerships and Collective Action - Local networks, professional associations and employer organizations are important settings for businesses to engage in collective action.

Internal and external obstacles may make it difficult for responsible businesses to support the rule of law as part of their strategy and activities. However, by raising awareness, support will be gained for taking a longer-term view of how an enabling environment engendered by a strong rule of law is good for the sustainability of companies.

A stable pre-competitive state – businesses have realised that a strong rule of law makes it harder for example, to avoid corruption with impunity. It is also clear that where important elements of the legal framework are missing such as a system that provides clarity around title to and interests in property, and the ability to enforce contracts, their common interests are affected.

Business also needs to understand what is expected in a given environment.  When enforcement is weak or non-existent, some may be tempted to not comply, putting those who do comply at a competitive disadvantage. The rule of law therefore addresses uncertainty and inconsistency.

In conclusion, strong legal frameworks and institutions, which respect the rule of law, will ultimately result in long term sustainable development for both business and society.

“Advancing the rule of law and making money aren’t mutually exclusive. Without the rule of law, economies cannot develop… advancing the rule of law helps to advance business. If you take a long-term view, it can be good for profit.” [4]

[1] Business for the Rule of Law Framework, United Nations Global Compact, 2015
[2] Business for the Rule of Law Framework at 10
[3] Business for the Rule of Law Framework at 12
[4] James Harper, Head of Legal, UK & Ireland, LexisNexis Business for the Rule of Law Workshop, London, UK, March 2015 at 13