Pillar I: state duty to protect human rights

State enterprises and companies in which the state has a shareholding

Implements Principle 4 [page 26]

The state owns important business assets. Although state enterprises and companies in which the state has a shareholding are autonomous legal entities, in reality their operations can be influenced significantly by the state via ministries exercising owner or founder rights. The public is sensitive to this relationship and associates those enterprises’ operations with the state. This link is perceived even more strongly if those enterprises operate abroad. The activities of such enterprises can hold significant sway over the home state’s reputation.

If the state is to guarantee human rights, in the first place it must ensure that there is a high standard of protection at the enterprises it has established and at companies in which it has a shareholding. Both private and state entities have a legal obligation to respect human rights. State enterprises and companies in which the state has a shareholding, however, should comply with fundamental human rights standards even when they find themselves in a situation where the law does not expressly require them to. These sorts of situations might arise in particular if they operate in countries where the law provides for a lower standard of protection. These enterprises should ensure a high level of prevention in order to avoid becoming involved in violations of human rights indirectly (e.g. in supply chains).

Current state of play:

  • State enterprises and companies in which the state has a shareholding are not favored under the law compared to private companies. In proceedings before state authorities, they are of equal status and enjoy no privileges or immunities.
  • In fact, state enterprises and companies in which the state has a shareholding are subject to certain intensified obligations compared to private companies, e.g. in relation to transparency and disclosures.
  • Guidelines on Corporate Governance of State-Owned Enterprises are taken into account in the management of state enterprises and companies in which the state has a shareholding.

Tasks:

  • Recommend that the state’s representatives holding office in the bodies of state enterprises and companies in which the state has a shareholding keep track of best practice relating to respect for human rights in the relevant field of economic activity, and that they ensure that measures are taken to achieve the highest possible standard of human rights protection.

Coordinators: All ministries concerned

Deadline: Running

  • Recommend that state enterprises and companies in which the state has a shareholding insert clauses in new contracts that allow for the contractual relationship to be terminated if the counterparty or supply chain is found to seriously violate human rights or universally recognised ethical and moral standards.

Coordinators: All ministries concerned

Deadline: Running

  • Recommend that state enterprises and companies in which the state has a shareholding, where relevant in view of their size and market position, exceed to the UN Global Compact.

Coordinators: All ministries concerned

Deadline: Running

  • In guidance for local government bodies, disseminate the document “My Business and Human Rights”.

Coordinator: Ministry of Finance

Co-coordinator: Ministry of the Interior

Deadline: Running