Global business, human rights and Indigenous relations, and capstone: a governance and ethics review

Companies that operate across borders face ethical questions that domestic law does not settle. Factories in countries with weak labour protection, mines on land claimed by Indigenous peoples, technology sold to governments that may misuse it, and suppliers several tiers removed from the buyer all raise the question of what responsibilities a company has where the law is weak, unenforced or itself unjust. This lesson introduces the international framework for business and human rights, discusses the relationship between business and Indigenous peoples in Canada and the United States, and then brings the course together in a capstone: a governance and ethics review of an invented company.

Supply chain reporting laws on forced and child labour, such as Canada's Fighting Against Forced Labour and Child Labour in Supply Chains Act and the US Uyghur Forced Labor Prevention Act, are covered in BUS-230 lesson 12. This lesson focuses on the broader responsibility to respect human rights and on governance.

The UN Guiding Principles on Business and Human Rights

In 2011 the UN Human Rights Council unanimously endorsed the Guiding Principles on Business and Human Rights, developed by John Ruggie. They rest on three pillars. States have a duty to protect against human rights abuses by third parties, including businesses, through policy, regulation and adjudication. Businesses have a responsibility to respect human rights, meaning they should avoid infringing on the rights of others and address adverse impacts with which they are involved. Victims should have access to effective remedy, judicial and non-judicial. The corporate responsibility to respect applies to all companies regardless of size or location, and exists independently of whether states meet their own duties.

To meet the responsibility, companies should adopt a policy commitment approved at the most senior level, carry out human rights due diligence, and provide or cooperate in remediation. Due diligence means identifying and assessing actual and potential human rights impacts, integrating the findings and acting on them, tracking the effectiveness of responses and communicating how impacts are addressed. Companies should prioritize impacts by severity, judged by scale, scope and irremediability, rather than by risk to the company. The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, updated in 2023, apply a similar due diligence approach to human rights, labour, environment, bribery and other issues, and governments maintain National Contact Points to handle complaints.

Responsible exit is part of due diligence. Terminating a supplier may seem the cleanest response to abuses, but it can harm the workers it is meant to protect by eliminating their jobs. The Guiding Principles encourage companies to use and increase their leverage, for example by working with other buyers, to bring about improvements, and to consider the human rights consequences of ending a relationship.

Canada created the Canadian Ombudsperson for Responsible Enterprise (CORE) in 2019 to review complaints about the human rights conduct of Canadian garment, mining and oil and gas companies abroad. Civil society groups have criticized its lack of power to compel documents and testimony. Canadian courts have also become more open to claims against Canadian companies over conduct abroad: in Nevsun Resources Ltd. v. Araya (2020), the Supreme Court of Canada allowed Eritrean workers' claims alleging forced labour at a mine partly owned by a Canadian company to proceed, holding that claims based on customary international law could go forward in Canadian courts.

Business and Indigenous peoples

The United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), adopted by the UN General Assembly in 2007, affirms Indigenous peoples' rights to self-determination, to their lands, territories and resources, to maintain their cultures and institutions, and to free, prior and informed consent (FPIC) before the adoption of measures that affect them, including projects on their lands. Free means without coercion or manipulation; prior means before decisions are made and authorizations granted; informed means with full information about the project and its impacts; and consent means the outcome of a genuine process of good-faith engagement. Whether FPIC amounts to a veto is debated: governments and many companies describe it as a standard requiring consultation aimed at agreement, while many Indigenous nations regard it as the right to say no.

Canada endorsed UNDRIP in 2016, and the United Nations Declaration on the Rights of Indigenous Peoples Act, which received royal assent in June 2021, commits the federal government to align its laws with the Declaration and to implement an action plan, published in 2023. British Columbia passed similar legislation in 2019. Section 35 of the Constitution Act, 1982 recognizes and affirms Aboriginal and treaty rights, and the courts have established a Crown duty to consult and, where appropriate, accommodate Indigenous peoples when contemplating conduct that may adversely affect asserted or established rights. Although the duty belongs to the Crown, governments often delegate procedural aspects of consultation to companies, and in practice projects without meaningful Indigenous support face delays, litigation and cancellation. The Truth and Reconciliation Commission's Call to Action 92 asks the corporate sector to adopt UNDRIP as a framework, to engage in meaningful consultation and obtain free, prior and informed consent before proceeding with economic development projects, to ensure equitable access to jobs, training and education, and to provide education for managers and staff on the history of Indigenous peoples. Impact benefit agreements, equity partnerships and federal and provincial loan guarantee programs supporting Indigenous ownership of major projects have become common. In 2025 federal legislation to speed approval of projects deemed in the national interest drew strong criticism from many First Nations, who argued that it weakened consultation; how it is implemented remains a key test of the government's commitments.

Good practice for companies includes engaging early, before key decisions are made; respecting Indigenous governance structures and decision-making processes and timelines; sharing complete information, including about risks; providing capacity funding so communities can obtain independent advice; negotiating agreements that share benefits through jobs, contracts, revenue and equity; respecting cultural heritage and sacred sites; and building long-term relationships rather than transactional ones. Boards should understand the company's relationships with Indigenous nations and oversee them as a strategic matter.

Capstone: a governance and ethics review of Northbank Foods

The capstone applies the course to an invented company. Northbank Foods is a listed food processor with annual revenue of about $2.4 billion, plants in three countries and suppliers worldwide. Its founder controls 58 % of the votes through multiple-voting shares while owning 14 % of the equity; there is no sunset clause. The founder is both chair and chief executive. The board has nine members: the founder, the founder's daughter (head of marketing), the chief financial officer, a retired partner from the company's audit firm who left the firm two years ago, the founder's long-time lawyer, and four independent directors. The audit committee consists of three of the independent directors.

Several issues have come to the board's attention. Executive pay rose 35 % last year while profits fell 10 %, because the board increased base salaries to the 75th percentile of a peer group of larger companies and paid discretionary bonuses after missed targets; the say-on-pay vote received 61 % support. The company's sustainability report highlights a top ESG rating from one agency but discloses no Scope 3 emissions and has no assurance. An investigative report alleges forced overtime and withheld passports at a seafood supplier's facility. The ethics hotline received 14 reports last year, down from 38, after a manager disciplined an employee who reported a food safety concern; two reports alleging retaliation were closed without investigation. A new AI pricing tool raises prices in neighbourhoods with fewer grocery competitors, which tend to have lower incomes. The company plans a new processing plant near a river on land within the traditional territory of an Indigenous nation, which has asked for consultation.

Writing a governance and ethics review follows a consistent structure: summarize the company and its context; identify the stakeholders and their interests; assess each area against standards from law and best practice; analyse the ethical issues using the lenses of lesson 2; prioritize by severity and leverage; make specific, assigned and timed recommendations; and explain how the board will monitor progress. The best reviews connect findings: at Northbank, the weak board, the controlling founder, the pay problems and the retaliation are all symptoms of a governance system that does not hold leadership to account.