The rule of law

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 businesses 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. 

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:

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 businesses 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.

Advocacy and Public Policy Engagement

By publicly acknowledging rule of law challenges (such as the existence of corruption) in their operating environment and by acting, 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 

By publicly acknowledging rule of law challenges (such as the existence of corruption) in their operating environment and by acting, 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 

This 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 were 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.

The 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.” 

Article courtesy of Lexis Nexis