Summary.    While the court of public opinion can be an effective tool to push companies to avoid involvement with human rights abuses, new research suggests that in certain situations, this mechanism can be insufficient for effectively aligning incentives. In particular, the...

Despite the known moral and practical shortcomings of relying on a “business case” to justify doing the right thing, many organizations continue to act as if bottom-line profits — rather than ethical concerns — must drive all business decisions. In particular, some leaders have argued that the court of public opinion creates a reputational (and thus financial) cost to working with governments or business partners that may have committed human rights abuses. These financial motivations are sometimes implicitly treated as a stand-in for other mechanisms — such as legal requirements — to ensure that businesses respect human rights.

This argument hinges on the idea that customers and other stakeholders will punish companies associated with human rights scandals, and so companies will thus be naturally incentivized to either persuade their partners to stop committing violations and remedy any harm done, or to avoid entering or cease relationships with partners that commit abuses. And this may sound plausible — but our recent research suggests that when it comes to protecting human rights, the court of public opinion may not always be an effective mechanism to align decision-making with legal and ethical standards.

To explore how the public judges different kinds of involvement in human rights violations, we asked 2,420 American adults to react to a series of hypothetical situations, yielding a total of more than 12,000 responses (of course, while American views are not necessarily representative of global sentiment, this analysis still offers substantial insight into one of the world’s largest markets). All the scenarios we used would be considered unacceptable according to the United Nations’ widely recognized Guiding Principles on Business and Human Rights, and yet we found that 40% of the time, the participants in our study felt that the business had not been involved in a human rights violation. What drives this substantial disconnect between whether people see a business as involved in human rights violations and that business’s actual behavior?

We designed the hypothetical scenarios to include a number of different contextual factors that might affect public perceptions, including the type of relationship the company has with the perpetrator, the types of human rights violations involved, whether the company conducted due diligence, the company’s size and industry, and whether the local community condemns the activity. By investigating the degree to which these factors influenced participants’ responses, we were able to explore how the court of public opinion functions — and where it may fall short.

People react more strongly when companies have closer relationships with perpetrators.

First, our participants were much less likely to feel that a company was involved in a violation if its relationship to the entity that committed the violation appeared to be somewhat distant. For example, people were 7 percentage points less likely to judge a company as being involved in a human rights violation if the perpetrator was a supplier than if it was a subsidiary.

This effect was even more pronounced if the perpetrator was a government entity. Our participants were 10 percentage points less likely to feel that a company had done anything wrong if state forces abused human rights in a manner that helped the company, for example by violently repressing protests, than if a company’s subsidiary committed similar offenses — and they were 19 percentage points less likely to see a company as being involved in human rights violations if it remained silent while unrelated abuses happened in a country where it was operating.

People are more forgiving if companies have conducted due diligence.

Next, we found that people were more likely to react positively if a company had attempted to conduct due diligence — that is, to conduct impact assessments, take action to address negative impact, and monitor the effectiveness of those actions — regardless of whether they ultimately succeeded at preventing abuses. When a company identified a potential abuse and tried to prevent it, people were 15 percentage points less likely to judge the company as being involved in a human rights violation than in cases where the company did not even try to identify potential abuses (despite the abuse still occurring in both cases).

That said, people were 7 percentage points more likely to judge a company as involved in a violation if it had identified risks but failed to act on the information than if it had never sought the information in the first place. In other words, proactively seeking to identify human rights risks improves public perceptions, but only if the company makes an effort to address the abuses it’s uncovered.

People react differently to different kinds of human rights abuses.

We also found that the American public is more sensitive to certain types of abuse. Our participants were most likely to view companies associated with child labor as involved in a human rights violation, while associations with partners that failed to pay a living wage, contaminated a community’s land, or engaged in discrimination were less likely to be seen as involvement in a violation. Interestingly, violent repression of protesters was one of the least likely abuses to trigger perceptions of involvement in a human rights violation (despite it clearly violating citizens’ fundamental civil and political rights), and the abuse for which participants were most forgiving was the destruction of a sacred site (again, despite this being a clear violation of cultural and indigenous rights).

Company size and industry have minimal impact on people’s perceptions.

While one might expect the public to hold larger companies to a higher standard, we found that company size had a minimal impact on participants’ reactions: A large conglomerate and a small start-up were judged only marginally differently, despite having drastically different resources and structures. Similarly, people did not differentiate at all between companies in industries with better or worse reputations for protecting human rights. For example, renewable energy companies were judged to be similarly involved in abuses as oil extraction companies, despite these industries’ dramatically different human rights records.

People hold companies to their own standards — not local ones.

Finally, our participants were not particularly sensitive to local views of what constituted acceptable behavior. Even if participants were told that local communities thought it was okay for companies to employ children in certain situations, for instance, their judgments only changed modestly.

The court of public opinion relies more on individual reasoning than reference to law.

After reading and reacting to the hypothetical situations, we asked our participants to explain their reasoning. Their responses indicated that people are far more likely to appeal to their own moral compasses or lay definitions of human rights than to any external reference for what constitutes a human rights abuse. In fact, only 6% of the time did people mention legal frameworks such as those provided by the UN, or even the idea of human rights law, relying instead on their individual feelings and reasoning. And importantly, while people’s own judgments often aligned with widely established definitions of human rights, they did not always.

For example, one respondent judged a company implicated in the contamination of a community’s land as not being involved in a human rights violation because they felt that the incident was “not crossing any major lines.” Similarly, another stated that “destroying a sacred site does not involve human rights,” despite the fact that this clearly violates well-established standards for cultural and indigenous rights. And even opinions that lined up with legal standards often were not framed as such. As one participant explained, “I think it’s morally reprehensible that companies use any type of child labor,” illustrating the role of individual moral positions in driving people’s opinions regarding corporate involvement in human rights abuses.

To be sure, there is certainly a place for individual reasoning. Especially in an area as complex as human rights, in which experts themselves continue to debate legal guidelines, it’s not a bad idea to consider public opinion alongside established frameworks. In fact, our research demonstrates that public opinion regarding human rights can sometimes be highly demanding of companies. However, it’s also important to remember that public sentiment is not a stand-in for internationally-accepted standards — and the court of public opinion can be an inconsistent enforcer of human rights. In particular, the American public is less likely to judge companies negatively when they are involved in certain types of abuses, or when they are more distantly connected to perpetrators, meaning that in certain situations, it may fail to push companies to adhere to international guidelines.

As such, leaders need to carefully consider the factors that may influence how their organizations will be judged in the court of public opinion. While they should certainly pay attention to the public, they must not rely on public opinion alone to guide their decision-making. After all, standing up for human rights can sometimes come with a reputational advantage or financial rewards — but it doesn’t always. It’s leaders’ responsibility to do the right thing either way.