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Luxembourg – corporate law

Part I – Rational Framework for the development, adoption and implementation of the NAP

1. International Context

1.1. United Nations (UN) (pg. 12)

The UN Global Compact supports businesses to carry out their activities in ways that are responsible by aligning their strategies and operations with the ten principles of human rights, labour, the environment and anti-corruption. The Global Compact is recognized as a major proponent of the UN Guiding Principles on Business and Human Rights. Luxembourg companies have adopted the ten principles enacted by the Global Compact. It should also be noted that in 2017 CSR Europe (The European Business Network for Corporate Social Responsibility) signed a Memorandum of Understanding with UN Global Compact. IMS Luxembourg (Inspiring More Sustainability) is the representative of CSR Europe in Luxembourg. The National Institute for Sustainable Development and Corporate Social Responsibility (INDR) and IMS are in the talks with the UN Global Compact to represent the local network.

 

1.2. European Union (pg. 13)

Directive 2014/95 /EU concerning the publication of non-financial information and information on diversity by certain large companies and groups dates from 22 October 2014. This text, transposed into national law by the law of 23 July 2016 concerning the disclosure of non-financial and information relating to diversity by certain large companies and groups, provides an obligation to report on the respect of human rights for companies with more than 500 employees, including listed companies, banks, insurance companies and other companies identified by national authorities as public-interest entities. The goal is to help investors, consumers and policymakers assess the non-financial performance of these companies and encourage them to develop a responsible business approach.

 

1.4. International Labour Organization (ILO) (pg. 14)

As of March 17, 2017, the ILO has revised the Tripartite Declaration of Principles on multinational enterprises and social policy. This text provides guidance to companies on how to contribute to the realization of decent work for all. The principles set out in the Declaration are recommended for the attention of governments, employers’ organizations and multinational enterprises, and directly references the UN Guiding Principles on Business and Human Rights and implementing the Terms of Reference “Protect, Respect, and Remedy.”

 

1.5. The Organisation for Economic Co-operation and Development (OECD) (pg. 14)

Responsible business conduct is an important aspect for a well-functioning space of trade and international investment. The establishment of a responsible business environment is in the interest of all stakeholders. It is in this context that Luxembourg, by adopting the OECD Declaration on Investment and Multinational Enterprises in 1976, also adhered to the OECD Guidelines for
multinational companies, which were its corollary, and which for the first time instituted an international standard for responsible business for companies actively working internationally.

These Guiding Principles have since been adapted and developed five times, most recently at the OECD’s 50th Anniversary Ministerial Meeting, on May 25, 2011. On this occasion, the OECD Guidelines for Multinational Enterprises received a specific chapter on human rights, the wording of which was aligned on the United Nations Guiding Principles on Business and Human Rights. From a human rights perspective, the 2011 revision is a fundamental step and, by opening up its scope, has particularly widened the access to remedies since currently the complaints addressed to National Contact Points (NCP) in OECD Member States cover about a quarter of violations on human rights.

The OECD Guidelines represent a comprehensive and global framework for the responsible management of companies, which cover all aspects including, in addition to human rights, labour law, the environment, transparency, the fight against corruption, consumer interest, competition, taxation and intellectual property. The OECD Guidelines are still the only instrument for an international approach to corporate social responsibility involving a mechanism – the network National Contact Points (NCPs) – to ensure its implementation.

 

1.6. Trade and Investment Agreements (pg. 16)

All trade and cooperation agreements with developing countries include a clause on human rights specifying that these rights constitute a fundamental aspect of relations with the EU, which has repeatedly imposed sanctions for human rights violations.

 

2. National Context

2.3. Foreign Policy Statement to the Chamber of Deputies (pg. 17)

In general, the mission of the Ministry of Foreign and European Affairs states that “the Luxembourg diplomacy defends the values of … good governance and the rule of law… with a view to preserving and strengthening the framework of international law within which international relations develops.”

 

Part II – Process of the NAP

1. Initiation

1.1. A formal engagement from the Government for a NAP (pg. 20)

… [The UN Guiding Principles] emphasize the steps that States must take to encourage businesses to respect human rights; they provide companies with a blueprint for managing the risk of negative impacts on human rights and offer the actors involved a set of benchmarks for assessing the respect of human rights by businesses. At the heart of the process is the concern to make companies aware of the guiding principles, to facilitate cooperation between the concerned actors and to propose a framework for assessing the implementation of the Guiding Principles. In this respect, it is important to emphasize that the Guiding Principles do not impose new legally binding obligations on companies.

 

Part III – NAP

1. Declaration of Engagement (pg. 26)

… the Government [of Luxembourg] recognizes the implementation of the UN Guiding Principles as the primary vector for preventing negative impacts on human rights from companies’ activities and, where appropriate, for accessing remedy in lieu of their consequences. As such, the Guiding Principles form the basis of this NAP.

In addition, the Government expects companies to fully respect human rights, and in particular:

  • to prevent human rights violations as a result of their activities;
  • to provide the necessary governance instruments for this purpose, in particular by introducing a due diligence system. Due diligence means the process that, as an integral part of their decision-making and risk management systems, enables businesses to identify and prevent the actual or potential negative impacts of their activities, as well as to report on how they approach this issue. The nature and the scope of a due diligence that is reasonable for a particular situation depends on factors such as the size of the company, the context in which its activities take place, the specific recommendations of the Guiding Principles and the seriousness of the negative impacts. When companies have a large number of suppliers, they are invited to identify the general areas in which the risk of negative impacts is most significant; then, from this risk assessment, to exercise due diligence as a matter of priority for certain suppliers;
  • to redress any negative impacts of their activities on human rights.

The overall objective of this NAP is to strengthen the protection and promotion of human rights in the context of corporate policies, governance and economic activities. In this spirit, the NAP aims to raise awareness of the United Nations Guiding Principles on companies and human rights, to see them applied at company and value chain level ​​and to monitor their implementation.

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