The Sharing Economy: Lessons Learned from Globalization

This blog originally appeared in Quartz.

Who is responsible for safety in the sharing economy? This question is at the heart of a heartbreaking recent story by freelance journalist Zak Stone, who tells of his father’s accidental death during a stay at an Airbnb rental.

Stone’s father was killed while sitting on a rope swing; the tree trunk snapped, striking him in the head. The tragedy is just one example of how the sharing economy, in ushering a new way of doing business, has yet to come to grips with where its responsibility to customers and workers begins and ends.

As a human rights advisor to businesses, I am struck by the parallels between the growth of the sharing economy and rise of globalization. Both the global economic expansion of the 1980s and 1990s and the more recent dawn of the sharing economy have created new opportunities for many people to make a living. By driving down costs and creating innovative new business models, each made goods and services more accessible to the masses. And both have benefited from, and led to significant advancements in, technology.

Yet both developments have exposed gaps in the governance systems meant to protect the most vulnerable participants in the economy. The evolution of international and national laws and standards has not kept up with the pace of globalization. This governance gap has led to human rights problems including poor working conditions, particularly in developing countries, and lax safety standards in global supply chains.

The rapid rise of the shared economy has exposed a governance gap as well. A regulatory system developed over decades oversees hotel companies, taxi services and retailers, attempting to protect the health, safety and security of the people who use those services. But these rules and regulations largely do not apply in the sharing economy. Airbnb is a hospitality service that does not own any rooms. Uber is a transportation company that does not own any cars. The immense popularity of these and many similar companies underscores the need for an appropriate framework governing safety and other critical issues in the sharing economy.

Regulators are increasingly seeking to limit the ability of sharing economy companies to operate. San Francisco, for example limits how often people can rent out their living space online to 90 days per year when the host is not present (stricter limits were defeated by voters there this month).  In Nevada, taxes and licensing fees up to $500,000 for vehicles, seek to limit ride sharing services.  These rather blunt regulatory measures have been accused of protecting traditional businesses rather than consumers.  So where should sharing economy companies turn for guidance?

I believe that the effort to address negative impacts of globalization offers an important lesson that can be applied to the sharing economy today. Specifically, the sharing economy should look to the United Nations’ Guiding Principles on Business and Human Rights (UNGPs) to understand a company’s responsibility to respect the rights of those touched by their products and services.

Established in 2011 to address the governance gap exposed by globalization, the UNGPs do not provide specific guidance for the shared economy. But they do distinguish between human rights risks stemming from a company’s direct operations and those that the company is merely linked to through its business relationships. 

In the latter scenario, the principles call for companies to use any leverage over business partners--such as Airbnb hosts and Uber drivers--to support the protection of human rights. This can include setting clear expectations through user codes of conducts; conducting audits to ensure that partners are meeting basic expectations; and providing resources and training programs to enable business partners to meet all standards and expectations.

These steps, which some companies have already started to take, can help sharing-economy companies address safety concerns—for example, encouraging Airbnb hosts to install smoke and carbon monoxide detectors and Uber and Lyft drivers to install panic buttons in their cars.

They could also help companies address some of the other human-rights issues facing the sharing economy. For example, lawsuits against ride sharing services Lyft and Uber allege that disabled customers with guide dogs or wheelchairs were denied service, raising concerns about discrimination.. On the other hand, the Uber ride sharing app has also been praised for improving the ability for black customers to hail cabs as they select the driver and not the other way around, showing how technology can battle discrimination in the first instance. 

Regardless of whether it is the platform or the drivers that should be held accountable for acts of discrimination, the UNGPs guidance can be helpful in addressing these issues.  By adopting human rights policies, assessing the risks of potential discrimination, and addressing findings – for example by ensuring that vehicles can accommodate guide dogs and wheelchairs, the companies can help lower the risk of discrimination.

The lessons learned from globalization can provide a useful starting point for the sharing economy. But real progress will need to come from startups themselves. If startups can disrupt everything from laundry to cleaning to groceries, surely they can harness that same spirit of innovation to advance human rights.