Values

Being the “S” in ESG: Tom Wilson Works to Make International Human Rights Everyone’s Business

A once niche approach to investing has gone increasingly mainstream: Many investors are weighing environmental, social and governance (ESG) factors as they evaluate public companies. They’re mindful of the reputational and fiscal risks facing businesses that run afoul of modern regulations and ethical standards.

But while widespread investor interest in ESG is a relatively recent phenomenon, Tom Wilson has been sounding the alarm about the “S” in ESG — social factors — for nearly three decades. Wilson, a labor and employment partner at V&E, includes in his practice a focus on international human rights issues in global supply chains and on international transactions or projects.

He has traveled from Abu Dhabi to Sydney to speak on international human rights to clients, corporations and fellow attorneys. In 2015, he convinced the Texas Bar to create an International Human Rights Committee, which he chaired for two years until he became chair of the International Law Section of the Texas Bar. The Committee’s primary goal is to inform Texas lawyers on the risks to their clients posed by international human rights issues. Wilson is also the newsletter editor for the Human Rights Law Committee of the International Bar Association which shares that same goal but on a worldwide scope.

It’s a calling some might find unusual for a labor attorney based in Houston, a city far from major hubs of international human rights activism like New York and The Hague. But Wilson believes that his colleagues in Texas must be as mindful of international human rights issues as attorneys anywhere else.

“Texas has an incredible amount of international business. We have the second-longest border with a foreign nation in the United States. We have one of the largest ports in the world,” Wilson said, “and we have the energy industry, which is a global industry. Because of all of that, we have to be aware of issues that impact international business.”

Wilson became involved in international human rights when in the early 1990s, he advised a U.S. client on employment matters in an overseas asset acquisition and troubles with a subcontractor began after the closing of the deal. Wilson and the client soon discovered allegations of worker abuse and withheld wages — controversies that led to a labor strike and imperiled operations and productivity.

“Recognizing and addressing international human rights violations is important to our clients because of the impact it can have on their businesses in so many different ways.”

The fact that the alleged abuses happened abroad further complicated matters. At the time, there was little in the way of international standards and best practices that he could rely on to guide him in resolving problems with the subcontractor.

“We could talk about how it appeared to violate the country’s labor laws, but that wasn’t necessarily getting us all the way there,” Wilson recalled. “It was a struggle to get across the point that this was not the way we wanted to do business and that it needed to change.”

Ultimately, with Wilson’s help, the client took major steps to address the issue: The company ended its relationship with the subcontractor and brought previously outsourced operations in-house.

“We made sure there was a real payroll, that people were actually getting paid and that the working conditions were appropriate,” he said. “In bringing the work in-house, we made sure we were doing it the right way.”

But if Wilson faced a similar situation today, he said, he would have handled it differently. Thanks to improved due diligence procedures and awareness of international human rights issues, chances are that the alleged abuses would have been discovered before his client closed its acquisition.

“That would have solved a lot of problems, and maybe avoided some issues,” he said. “If the client opted to continue with the acquisition,” Wilson said, “the process of discovering the issues, trying to make changes, but ultimately terminating the subcontractor and finding better ways to keep operations going could likely be completed in about one month, instead of the several months it took .” “Companies today are eager to resolve such matters quickly,” Wilson added, “in part due to the pressures from ESG-minded investors as well as the heightened risk that any ESG missteps will instantly come to light thanks to technological innovation and lightning-fast communications.”

“If there is a company operating somewhere in the world, and one of its contractors is using forced labor in terrible conditions , all it takes is somebody with a cell phone to take a few pictures and post it to the internet,” Wilson said. Such exposure can be devastating to a business’s reputation and share price. As a result, he said, “there’s much more urgency in discovering and addressing human rights abuses.”

“The world has changed so much,” Wilson added.

Key global changes also include a powerful one made by the United Nations. In 2011, the organization published its Guiding Principles on Business and Human Rights, which provided a roadmap for both nations and companies to, as the UN describes it, “prevent, address and remedy human rights abuses committed in business operations.”

“It was a watershed moment, because now we had a name for what we were talking about for all these years,” he said. “And we had some guiding principles to live by, and some things we could actually talk around that gave us focus.”

Wilson’s focus includes paying attention to violations not just against workers, but among people living in an area where a corporation or its supply chain operates. For instance, he may advise a company to do careful due diligence before partnering with security firms , some of which have a history of violently removing indigenous peoples from their lands. Or, he might work with a company to establish relationships with indigenous peoples who may be impacted by the client’s project.

While many of his matters center on international operations, Wilson stresses that shocking human rights violations can occur within the U.S., too. He cites the exploitation of undocumented workers, for instance.

“A domestic U.S. construction company can have these issues,” he said. “Human trafficking is not just about sex. It’s also about workers. If you’re a large construction company, you’ve got to ask the question, ‘Do I know all my contractors and the workers they’re using? Do I know that all of these people are here on this site of their own free will, and that they’re being paid fairly? Or do I have a risk that some of these people are being forced to work here because they may not have legal status in the United States?”

Wilson raises concerns like these when he speaks around the world, and he finds it encouraging that so many more people are paying attention to the issue of international human rights in business. He recalled attending a presentation by the author of the 2011 UN guidelines, UN Special Representative John Ruggie, which drew an audience of about 1,000 people.

“Several of us were laughing about how we could have had that same presentation a couple years before, and only a handful would have showed up,” he said. “The landscape has changed considerably.”

That’s the good news. The bad news is that, awareness notwithstanding, egregious human rights violations continue to exist and impact the business world. Wilson has made it his mission to help prepare his clients to tackle such challenges with solutions that treat workers and others with fairness and dignity and that allow clients to operate in a responsible manner.

While Wilson’s work has obvious ethical benefits, he explained that’s only part of what drives him. “This isn’t just Tom Wilson trying to do good,” he said. “I can do some good, but at the same time I know that recognizing and addressing international human rights violations is important to our clients because of the impact it can have on their businesses in so many different ways.”

“People are starting to see and understand that,” he said, “and that’s gratifying.”