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Business Strategy as Human Rights Risk: the Case of Private Equity
In this article, we apply the UN Guiding Principles on Business and Human Rights to the private equity (PE) business model. PE firms often adopt a controversial, ‘value extractive’, business model based on high debt and extreme cost-cutting to generate investor returns. PE firms own large numbers of...
Autores principales: | , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
Springer Netherlands
2023
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10034887/ https://www.ncbi.nlm.nih.gov/pubmed/37013182 http://dx.doi.org/10.1007/s12142-023-00680-w |
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author | Birchall, David Bernaz, Nadia |
author_facet | Birchall, David Bernaz, Nadia |
author_sort | Birchall, David |
collection | PubMed |
description | In this article, we apply the UN Guiding Principles on Business and Human Rights to the private equity (PE) business model. PE firms often adopt a controversial, ‘value extractive’, business model based on high debt and extreme cost-cutting to generate investor returns. PE firms own large numbers of companies, including in many rights-related sectors. The model is linked to increased human rights risks to workers, housing tenants, and in privatized health and social care. We map these risks and analyse the human rights responsibilities of PE firms. Our analysis has major implications for understandings of human rights responsibility. We argue that value extractive methods are the root cause of eventual harm to human rights, even though they may not harm rights directly. To respect human rights, PE firms must mitigate the risks of these value extractive methods. We define how human rights due diligence (HRDD) could achieve this and argue that given the extent of harm and the lack of a business case for adopting such a view of human rights responsibility, business strategy level HRDD should be a core component of forthcoming HRDD laws. |
format | Online Article Text |
id | pubmed-10034887 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2023 |
publisher | Springer Netherlands |
record_format | MEDLINE/PubMed |
spelling | pubmed-100348872023-03-23 Business Strategy as Human Rights Risk: the Case of Private Equity Birchall, David Bernaz, Nadia Hum Rights Rev Article In this article, we apply the UN Guiding Principles on Business and Human Rights to the private equity (PE) business model. PE firms often adopt a controversial, ‘value extractive’, business model based on high debt and extreme cost-cutting to generate investor returns. PE firms own large numbers of companies, including in many rights-related sectors. The model is linked to increased human rights risks to workers, housing tenants, and in privatized health and social care. We map these risks and analyse the human rights responsibilities of PE firms. Our analysis has major implications for understandings of human rights responsibility. We argue that value extractive methods are the root cause of eventual harm to human rights, even though they may not harm rights directly. To respect human rights, PE firms must mitigate the risks of these value extractive methods. We define how human rights due diligence (HRDD) could achieve this and argue that given the extent of harm and the lack of a business case for adopting such a view of human rights responsibility, business strategy level HRDD should be a core component of forthcoming HRDD laws. Springer Netherlands 2023-03-23 2023 /pmc/articles/PMC10034887/ /pubmed/37013182 http://dx.doi.org/10.1007/s12142-023-00680-w Text en © The Author(s) 2023 https://creativecommons.org/licenses/by/4.0/Open AccessThis article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ (https://creativecommons.org/licenses/by/4.0/) . |
spellingShingle | Article Birchall, David Bernaz, Nadia Business Strategy as Human Rights Risk: the Case of Private Equity |
title | Business Strategy as Human Rights Risk: the Case of Private Equity |
title_full | Business Strategy as Human Rights Risk: the Case of Private Equity |
title_fullStr | Business Strategy as Human Rights Risk: the Case of Private Equity |
title_full_unstemmed | Business Strategy as Human Rights Risk: the Case of Private Equity |
title_short | Business Strategy as Human Rights Risk: the Case of Private Equity |
title_sort | business strategy as human rights risk: the case of private equity |
topic | Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10034887/ https://www.ncbi.nlm.nih.gov/pubmed/37013182 http://dx.doi.org/10.1007/s12142-023-00680-w |
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