T

he business operations of transnational corporations (TNCs) have long been deemed to contribute to human rights violations, environment degradation, social conflict and deteriorating labor conditions.

As TNCs can easily relocate their capital to different countries whenever their business interest is at risk, they tend to pay little respect to nonbusiness issues.

Though that situation is correct to some extent, there is a huge potential for TNCs to endorse better human rights in the country where their businesses are located. One of the main reasons for this argument is the financial power they wield.

The most recent haze crisis brings the negative impact of TNCs on the environment, posing health risks internationally as well as locally.

Likewise, not so long ago, the collapse of an underground tunnel in one of the largest mining sites
in Papua resulted in the loss of several lives.

So far, the government has taken action to address both incidents by conducting investigations.

However, this action seems insufficient to prevent similar incidents reoccurring in the future.

The government should begin to think of alternative measures to ensure that TNCs observe human rights, environment protection, health and safety and respect the social lives of local population in conducting their business operation.

To date, there are a number of nonbinding instruments at the international level.

Many TNCs have publicly announced their own standard of conduct in relation to labor, environment, social and human rights issues but violations of these issues continue to occur. Why is this? There are at least two answers.

First, it is argued that TNCs are profit-maximization entities. Therefore, they only consider nonbusiness issues if this conduct increases profitability.

Unfortunately, many TNCs think that doing so would only add costs. This is exactly what happened in the haze incident. Fire is the cheapest method to clear land.

Second, TNCs adopt a '€œself-making'€ human rights, labor and environment standard as part of their marketing strategy.

This standard is merely lip service to show that they have tried to implement the standard but in fact, these standards often lack a regular examination mechanism by an independent auditor.

Therefore, the implementation of these '€œself-making'€ standards cannot be clarified.

The international human rights regime placed the government as the main duty bearer to ensure protection, respect and fulfillment of human rights.

It is the duty of the government to ensure that TNCs, operating within its jurisdiction, do not harm environment or human rights.

In order to fulfill its duty, the government needs to implement an instrument on these issues for TNCs to observe. Among a wide range of standards for TNCs available at the international level, the government should seriously consider to adopt the '€œOECD Guidelines on Multinational Enterprises'€.

There are a number of advantages to adopting this standard. This guideline sets TNC conduct in a wide area of issues, including human rights, labor and environment.

Further, this guideline provides a mechanism for examination and dispute settlement by the National Contact Point for any rights violation allegation by TNCs.

In addition, it has been implemented since 1974 and was updated in 2011 to adjust to the way TNCs conduct operations.

Most importantly, this guideline is endorsed and implemented by all 34 governments of OECD member countries, the home countries of worlds'€™ largest TNCs.

Unfortunately, adopting and enforcing an international instrument, especially a non-binding instrument like the OECD guidelines is not an easy task. This effort may also invite strong resistance from the TNCs. However, there are a number of alternatives to be considered by the Indonesian government.

First, the adoption of the OECD Guideline may be inserted into bilateral investment treaties or other international investment treaties, signed by the Indonesian government and other foreign country governments, especially OECD member countries.

Inserting a nonbinding instrument into a legally binding instrument such as treaty would strengthen the regulatory character of the nonbinding instrument.

Second, the Indonesian government has recently been renegotiating mining contracts with a number of TNCs that hold mining concessions or permits.

This would create momentum for the government to include the implementation of the guideline by TNCs on the negotiation table. The government should grab the opportunity to ensure the commitment of TNCs operating in the mining sector to observe the guideline.

A similar procedure may be followed to other sectors that pose high risk to labor, environment and human rights.

Third, this alternative might be the most contentious, nevertheless, but is worth consideration. The government may consider adhering to the '€œOECD Guidelines on Multinational Enterprises'€.

Adherence to the guideline would show that the government is not discriminative of TNCs operating in Indonesia because every Indonesian company operating overseas must observe to the guideline.

Thus, adherence to the guideline would create a '€œlevel playing field'€ and minimize resistance from the TNCs operating in Indonesia to implement the guideline.

The writer is a lecturer and researcher at faculty of law, Airlangga University, Surabaya.