We can agree that Malaysia faces human rights challenges when it comes to matters of governance, labour and the environment. The point of contention, however, is how far do we need to go in addressing them?
Answering this question becomes particularly challenging when “sustainability”, in business speak, revolves mainly around compliance within the environmental, social and governance (ESG) framework. But as our recently published National Baseline Assessment on Business and Human Rights in Malaysia (NBA) report shows, ESG does not go far enough and can only do so much. Discussing governance, labour and the environment through a human rights lens – though not exclusively – serves the sustainability agenda far better.
The NBA is a collection and evaluation of data from various stakeholders on critical issues in the business and human rights (BHR) landscape in Malaysia. We assessed the state’s current level of implementation of the United Nations Guiding Principles on BHRs 2011 (UNGPs), a framework that prescribes obligations for governments and corporations to respect, protect and remedy abuses of human rights.
These are presented in three main chapters: governance, labour and environment, with a complementary fourth chapter on special issues. Priority areas for each chapter were selected through a literature review and evaluation of the numerous stakeholder consultations held for this report, alongside an assessment of how urgently the Malaysian government and businesses need to address them.
Finally, we provided recommendations for the formulation of a National Action Plan on BHR (NAPBHR), Malaysia’s first action plan designed exclusively for business and human rights matters.
Consultation feedback: anxiety and confusion
While the consultations surfaced a variety of reactions from businesses, the common threads were mostly anxiety and confusion over how and where BHR fits into the sustainability picture, and how a set of new or enhanced compliance rules may impact their bottom lines.
Businesses often confuse ESG with BHR and want to know if more would be expected of them under the BHR framework. The short answer is yes. While ESG prescribes good practices and is important, most of its measures are not couched in rights. Rights give rise to justiciable claims and empower victims and survivors to go to the courts. Without rights, companies do not hold any duty and cannot be held accountable. Accountability mechanisms in ESG are still in their early stages, primarily centred around the identification of companies that are accused of greenwashing or whitewashing, or downplaying the true consequences of their actions in their reports. These measures are insufficient as they do not adequately address issues related to fundamental human rights.
Another source of confusion for sustainability practitioners is the relationship between ESG and business and human rights. They wonder if the larger umbrella is human rights or ESG, and whether the overlaps mean compliance with either one is sufficient. What was once Corporate Social Responsibility (CSR), then the Sustainable Development Goals (SDGs), then ESG is now BHR, or as some would describe, ESG Plus. Not only is human rights due diligence (HRDD) required, but the BHR framework demands more effective stakeholder engagements and grievance mechanisms, as issues must utilise a rights-based approach. It elevates ESG standards, which does not sufficiently prescribe a rights dimension, and emphasises human rights accountability.
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While ESG prescribes good practices and is important, most of its measures are not couched in rights. Rights give rise to justiciable claims and empower victims and survivors to go to the courts.
There is also often a misconception that human rights, from the perspective of business, is limited to only one area: labour. However, as evidenced by the revisions to the Universal Standard of the Global Reporting Initiative (GRI), disclosures on human rights-related impacts of business operations are central to sustainability reporting and how companies demonstrate accountability. The changes, which came into effect on 1 January 2023, incorporated expectations set out in the UNGPs and made human rights impact reporting applicable to all reporting organisations. The thinking is that with increasing regulations for mandatory human rights and environmental due diligence, human rights must be operationalised in all areas and not just as a standalone intervention.
Barriers and misconceptions
Our consultations cast a spotlight on the shortcomings of domestic law when it comes to human rights. Businesses pointed out that they were already compliant with the law, which should be sufficient. However, Malaysian law and practice do not meet international human rights law and standards, and are neither sufficient nor adequate. For example, the Federal Constitution prohibits forced labour but because Malaysia does not define forced labour in the same terms as articulated by the International Labour Organization (ILO) through its 11 core indicators, the gap results in businesses here failing to stamp out modern slavery practices. Without a revision to the law, forced labour will continue to be an issue as the gap will never be bridged.
Many of the larger companies argue against enhanced or mandatory due diligence requirements as the small and medium-sized enterprises (SMEs) in their value chain would not be able comply with the same requirements. This is the wrong way of looking at it. Big players should lead by example, and help bring on board their supply and value chains. If requirements are made mandatory for the big players, then the SMEs can learn and eventually, through a phased approach, be subject to the same mandatory requirements. But some companies are not even willing to come to the table for the time being, because there is no driver.
Many businesses also object to the lack of common or uniform standards to comply with, making it difficult to know what and how much to do when it comes to BHR. Some may, for example, look at the GRI reporting standards and work backwards from there because reporting is what the regulators require. Although little effort is better than none, such a practice only relegates the entire process into a box-ticking exercise.
Further to that, existing sustainability requirements, while commendable, focus too much on reporting obligations. Despite some companies already exhibiting mature sustainability reports, many of their own sustainability team staff members are not aware of what is being reported and if what was reported is true. This happens when reporting activities are outsourced to third-party consultants. The internalisation of sustainability practices is non-existent. Once exposed, this will lead to allegations of greenwashing and whitewashing.
Our report shows why there is an urgent need to entrench human rights into Malaysia’s domestic laws and institutional and structural practices on governance, labour and the environment, as opposed to merely paying lip service to them.
Mainstreaming human rights
One key finding we highlighted is the major structural gap in the law when it comes to human rights in Malaysia. Our legal system is, in many ways, outdated. Human rights are not expressly recognised in the Federal Constitution and not justiciable per se under any law. Those wanting to seek justice for any rights transgressions are therefore forced to use a patchwork of laws to bolster their cases, but often with little success.
We also need to mainstream human rights in public administration and governance. Human rights should be embraced. Why, for example, should we not consider a new Human Rights Act and a new Ministry of Human Rights and Justice (MHRJ)? They are long overdue.
With the NAPBHR, there must be a better way. BHR can be a tool to maintain social equilibrium as it serves to balance out the power dynamics between the government, business and society on matters concerning human rights. In fact, it will be innovative if the NAPBHR be made into more than an executive decreed action plan but a law in itself, and therefore justiciable in the courts. This action plan will be no different than the rest if there is no willingness to do more. Voluntary measures can only go so far.
Enough time has been given to the government and corporations to do more for human rights. Will companies only act when they are publicly implicated, named and shamed? The NAPBHR must at least impose on businesses mandatory HRDD and establish effective internal and external grievance mechanisms to remedy abuses in the name of corporate accountability.
Conclusion
If I were to summarise the thrust of the report recommendations in three words, it would be these “M”s: mainstream, mandatory, and marginalised (people).
First, we need to take legal, policy and administrative measures to incorporate and mainstream human rights into our governance and laws. Second, we should make certain things mandatory, such as human rights and environmental due diligence. Finally, we must protect vulnerable communities who are marginalised, including women, children, persons with disabilities, refugees, migrant workers, and indigenous groups.
We hope that the government and corporate Malaysia will pay attention to the report and consider our views. Our team remains committed to engaging with rightsholders and stakeholders to advance this important area of work.
The NBA process has allowed us to reimagine a new human rights-f riendly Malaysia, and how we are to achieve that. We hope that through our report, we have in a small way provided a template for that.
This is an edited and updated version of the Briefing Note in the National Baseline Assessment on Business and Human Rights in Malaysia (NBA) report. Edmund Bon Tai Soon was the lead consultant for the NBA report. He is also currently the representative of Malaysia to the ASEAN Intergovernmental Commission on Human Rights and head of chambers (civil) at AmerBON Advocates.
