1. The State Duty to Protect
1.4 Enterprises in public ownership [pages 25-27]
Enterprises in public ownership or under state control within the meaning of this subsection comprise all enterprises subject to private or public law in which federal, state and/or local authorities hold a direct majority share. If a business enterprise is under state control, in other words if a majority stake is held directly by the public treasury, or if its actions may otherwise be attributed to the state, such an enterprise bears special responsibility under the UN Guiding Principles to respect human rights.
The current situation
The general standard of protection given to human rights by enterprises in which the public treasury holds a stake is already very high, since public-private entities in which the state holds a controlling stake and whose organisational form is governed by private law as well as public companies in sole state ownership which are organised in a form governed by private law are directly bound by the enshrined constitutional fundamental rights. The acquisition of shares in enterprises subject to private or public law is done autonomously at the various tiers of government in the federal system – national, regional and local – on the authorities’ own responsibility. Besides being bound by the constitutional fundamental rights in their economic activity, the three tiers of government are also bound by the provisions of ordinary legislation, such as the Federal Budget Code and municipal instruments.
In addition, there is a federal regulatory instrument known as the Public Corporate Governance Code of the Federation (PCGK Bund), comprising recommendations and suggestions for good corporate governance and addressed to enterprises in which the Federal Government holds a majority stake. The federal administration of shareholdings is organised on a decentralised basis and is the task of whichever federal ministry is responsible for the company’s area of activity. Section 1.4 of the Public Corporate Governance Code states that the federal ministry responsible for the shareholding should ensure that enterprises acknowledge and comply with the Code and embody it in their corporate rules. The Code is part of the Principles of Good Corporate Governance and Management of Federal Holdings, which were adopted by the Federal Government and published by the Federal Ministry of Finance in its role as the lead body in this field. They form the foundations for responsible management of federal stakes in enterprises and provide for standardised performance of this task by the various federal ministries. Several federal states and municipalities have separate management codes for their own holdings. The annual report on federal holdings lists about 700 enterprises in which the Federal Government has a direct or indirect stake. The Federal Government has direct holdings in 60 companies with business activities (as of 31 December 2014), 41 of these being direct majority holdings. Of the companies in which a direct majority stake is held, 13 have more than 500 employees. Among the matters covered by the report on federal holdings are the implementation of the Public Corporate Governance Code of the Federation, gender equality and the general sustainability of the listed enterprises.
The Federal Government, in cooperation with the Council for Sustainable Development, will expand the training courses of the federal holding management bodies to include sustainability matters and so focus its attention on responsibility for human rights in the enterprises in which it holds a direct majority share. The scope of the training curriculum of the holding management bodies shall be inserted as part of the next revision into the Public Corporate Governance Code of the Federation. At the annual meeting of the bodies managing federal and state holdings, the states shall be urged to follow this federal practice.
The Federal Government is keen to increase the percentage of enterprises in which it holds a majority share that apply the German Sustainability Code, including its obligation to report on human rights. From the 2018 financial year, the report on federal holdings will list, in its chapter on sustainability, all internationally active enterprises with more than 500 employees in which the Federal Government has a majority shareholding that apply the German Sustainability Code or a comparable framework with compulsory reporting on human rights and those that do not.