Czech Republic

By Daniel Morris | 25. April 2018

Pillar I. The State Duty to Protect Human Rights

Publication and dissemination of existing documents, education and awareness-raising [pages 9-11]

Implements Principles 2, 3c and 8

Increasing attention is paid to the theme of business and human rights in recent years. Many countries, international organisations and universities have produced numerous documents, model professional and theme-based codes of conduct, examples of good practice, recommendations and guidelines. Examples include recommendations and model codes published by the OECD, EU bodies, the Council of Europe and the ILO, as well as examples of good practice from the business community. However, these documents have not been gathered in one place. Businesses wishing to guard against human rights risks in their operations, perhaps by introducing new internal control mechanisms, adopting a code of conduct or incorporating human rights clauses into their contracts, may find it difficult to look up information.

A sound of response would be to find these documents, collect them in one place, classify them and, where necessary, translate them into Czech so that texts on business and human rights are made available to the general public. When new materials are drawn up, they should be written in plain language that a layman can easily understand.

The world’s universities are also aware of how important this subject is. The “Teach BHR” platform, grouping together those who teach business and human rights at universities, currently has 240 members from 140 institutions in 32 countries. It also offers ready-made study materials, workshops and experience-sharing forums. When it comes to Czech higher-education institutions, the University of Economics, Prague, runs a specialised course called “Business and Human Rights”, and other colleges cover this topic, for example, as part of their business ethics courses.

Current state of play:

The Quality Council of the Czech Republic runs the National CSR Information Portal.
The supreme judicial bodies publish summaries of key rulings, especially those relevant to human rights.
Every year, the Government publishes a Report on the State of Human Rights and numerous other reports and documents analysing respect for human rights in the Czech Republic. Reports in the same vein are also published by other institutions, including the Ombudsman.
The National Contact Point for the implementation of the OECD Guidelines for Multinational Enterprises is responsible for promoting the Guidelines and their instruments (seminars, training, promotional materials, etc.).
The Ministry of Industry and Trade, in cooperation with the Czech Trade Inspection Authority has launched the “Consumer Protection” project to provide information on the latest developments in consumer law.

Tasks:

Propose changes to the website of the National CSR Information Portal.

Coordinator: Ministry of Trade and Industry

Co-coordinator: Ministry for Human Rights

Deadline: 30 June 2018

On the National CSR Information Portal, post documents and materials of business associations (the Czech Chamber of Commerce, the Confederation of Industry, the Confederation of Employers’ and Business Associations of the Czech Republic, industry associations, and others), trade unions and NGOs active in corporate social responsibility for those businesses that take the voluntary decision to subscribe to human rights commitments.

Coordinators: Ministry for Human Rights, Ministry of Industry and Trade

Deadline: Running, following the completion of the previous task

Translate the UN Guiding Principles and other key documents into Czech.

Coordinator: Ministry for Human Rights

Deadline: 31 December 2017

Provide the National Portal administrator with business and human rights documents that the ministries have at their disposal and that concern their scope of responsibilities.

Coordinators: All ministries

Deadline: Running

Assess the vehicles in place to provide businesses with information on human rights risks in countries or regions where they are planning to set up operations.

Coordinator: Ministry of Foreign Affairs

Deadline: 31 December 2020

Pillar II. The Corporate Responsibility to Respect [page 29]

The Government of the Czech Republic expects Czech businesses, whether they operate in the Czech Republic or abroad, to respect – now and in the future – human rights in all of their activities, at least to the basic extent described below. They should not directly cause, contribute to or otherwise be associated in any way with human rights abuses. They should make reasonable efforts to guard against violations of human rights, and should strive to prevent human rights abuses in situations in which they are involved and over which they exercise influence.

The Government of the Czech Republic expects businesses operating in high-risk sectors and areas to take reasonable measures – beyond the scope of their legal obligations – to minimise the risk of human rights abuses.

Commitment [pages 32-40]

A business faced with risks of human rights violations in its operations should make it publicly clear, in the first place, that it is aware of those risks and is ready to tackle them. This respect for human rights is expressed outwardly by a publicly communicated business commitment.

The Government of the Czech Republic recommends that businesses adopt internal commitments in accordance with the recommendations below. It recommends, in the formation of commitments and codes of conduct, drawing on the aforementioned international conventions and Guiding Principles of the UN or other internationally acknowledged standards (such as the Global Compact or the sectoral recommendations of the OECD). The adoption of such commitments should not be reduced to a formal declaration, but should be followed up by specific steps for their implementation. Companies actively subscribing to human rights responsibility set a good example for the entire sector and help to spread the Czech Republic’s good reputation abroad.

What should a commitment encompass?

A definition of whose human rights are affected by the commitment.
Conformity with national law and fundamental international legal standards: If national law is at odds with internationally acknowledged human rights requirements, businesses must find ways of respecting international standards that will not bring them into conflict with national law.
Human rights as a legal compliance issue: Even if the host state’s law does not enforce human rights standards, approach them within the framework of internal decision-making as though they were legal requirements.
Handling of borderline situations: What to do if a commitment cannot be pursued completely, e.g. due to a conflict with the host state’s law or the monopoly supplier’s requirements.
Control, evaluation and implementation mechanisms.
Frameworks for consultation with the groups of the public affected or their representatives (this matter is covered by a separate section below).
Relations with partners: Although an internal document cannot dictate how business partners are to conduct themselves, it can influence them indirectly. In this respect, businesses should specify – as part of their commitment – what standard of care they expect from their partners and suppliers and, status permitting, they should implement that standard in the form of tender conditions of contractual clauses or by other means.
Protection of whistleblowers: This includes, on the one hand, instructions for employees on how to proceed if they detect unlawful conduct and, on the other, protection from retaliation.
Reasonable training, education and awareness-raising
Mechanisms of redress and the resolution of disputes between a business and any victims within the business.
Transparency, provisions on public information.

For a commitment to be effective, it should also comply with the following formal and procedural criteria:

Approval by the highest echelons of management: Board of directors, chief executive officer, etc.
Professional production: For small businesses, it is enough to adopt any of the model documents. Multinational corporations with complex business dealings should devise a built-to-suit commitment.
Specific expectations of specific persons: The commitment should not be a general declaration, but should have specific implications for employees and management alike, including a designation of liability for implementation and checks. It is essential for employees to be acquainted with the commitment and the consequences of breaching it.
Implementation: Other internal policies, directives and instructions should be brought into compliance with the commitment, or new ones should be drawn up. Enforcement within the scope of internal processes is absolutely crucial.
Group-wide scope: If a business as a de facto influence on the functioning of other businesses, stemming in particular from the controlling relations within a group, the commitment should also apply to them.
Updates: The commitment should be regularly revised and updated.

Businesses may – and are encouraged to – modify tenets of the Guiding Principles and tailor them to their operations, provided that there is no loss of substance or purpose as a result. One example of this sort is the sectoral Electric Industry Code of Conduct, which fleshes out and applies the Guiding Principles to the specific needs of the electrical engineering industry. This Code was drawn up by the Electronic Industry Citizenship Coalition and has also been adopted by several companies in the Czech Republic.

A commitment is not merely an internal document. It is a statement by a business that it is aware of and serious about its human rights responsibility. Besides being posted on the corporate website, the commitment should also be incorporated into communications with suppliers, investors, business partners and other groupings. These communications should encompass the following information:

How did the commitment come about?
What target groups (right-holders) does it concern?
How will it be disseminated among those it concerns?
- Among those who are to implement it (employees, suppliers)?
- Among the right-holders who are to protect it?

Due Diligence

The Government of the Czech Republic recommends that businesses consider introducing an internal due diligence mechanism to spot and eliminate human rights risks, or incorporate human rights risks – as another evaluation criterion – into their existing due diligence mechanisms.

The term “due diligence” is broadly known in the business community and denotes in-depth reviews into businesses and or the transactions they are preparing. The UN Working Group on Business and Human Rights defines human rights due diligence as a process to identify and evaluate human rights risks, a series of steps to understand how a company’s activities can affect human rights. It must also include appropriate responses to the findings. A fundamental difference between financial risk and human rights risk is that, while financial audits and financial due diligence explore the ramifications for the business itself, human rights due diligence examines the effects on third parties – the holders of human rights (customers and people living in the vicinity of a business or who are affected by its operations).

The search for and eradication of human rights risks should form part of all major commercial operations, not just because any violations of human rights that are exposed could lead to hefty financial losses (compensation, loss of customers, a tarnished reputation), but mainly because – unlike economic loss – human rights loss cannot be fixed so easily.

An effective due diligence mechanism should meet the following criteria:

Consider the internal risks (stemming from the business’s own operations) and external risks (particularly in relation to business partners and other entities with which the business works).
Identify existing risks (with a view to eliminating them) and potential risks (with a view to preventing any loss or damage).
Adapt the mechanism to the size of the business, the nature of its operations and specific local factors.
Implement the mechanism in the internal management system.
Regularly update the mechanism to reflect evolving conditions.
Leverage the experience and knowledge of independent experts who operate externally or maintain a high degree of personal independence.
Engage employees, as they should have the opportunity to draw attention to risks and provide assistance in the removal thereof.
Engage the public directly concerned, stakeholders in the community and vulnerable groups in the formation of the mechanism.

Public engagement can take many forms. First of all, this may entail consultations with those affected by businesses’ operations (holders of human rights) because these people are best placed to highlight the problems looming over them. Likewise, employees should be involved as they need to know how to deal with the knowledge they accrue in their work. Finally, public engagement may comprise external expert opinions, opposing views, etc.

Most companies have already introduced control mechanisms that can be tweaked so that they also apply to human rights risks. These tend to be compliance mechanisms, used by businesses to keep track of requirements imposed by legislation, regulators, investors and capital markets (the conditions for participating on the stock exchange etc.). Businesses should view the obligation to respect human rights as a legal compliance matter. Even if the duty to comply with human rights in the course of business operations may not derive directly from a particular country’s legal system, businesses should act as though this were the case and attribute the weight of the law to moral and ethical rules in their internal decision-making. This will enable them to incorporate human rights protection into existing mechanisms used to run checks on legal obligations. As a result, businesses will comply with their duty to respect human rights and take due care at minimum extra cost, thereby making big savings.

Human rights auditing should extend beyond the actual business to some extent and touch on the activities of external entities, such as those in the supply chains. Businesses could have a hand in violations of human rights through their own negligence, including via their subsidiaries and suppliers. Such conduct, despite not being wilful or intentional, does not relieve a business of liability as it could be viewed – by the courts and the public – as a form of negligence or failure to engage in appropriate supervision.

Although it is impossible for a business to carry out due diligence at an external entity to the same extent as internal due diligence, those areas that are most at risk should be identified, someone should be singled out as liable for infringements of rights and, where possible and feasible, specific steps to eliminate these risks should be demanded. If external risks identified, businesses should exercise any influence they have to stave off those risks, for example by sharing good practices and their own experience. Businesses lacking such influence should leverage their links with other entities (customers, suppliers, business associations, trade unions and bodies of public administration). If they have no way of influencing such conduct, they should weigh up the option of terminating cooperation.

Businesses who decide to publish the results of due diligence should:

Choose a form that the general public can readily understand. Besides conventional reports, they might consider personal meetings, online discussions and public hearings.
Choose a scope and frequency that enables them to pass on all necessary information without overwhelming the reader.
Publish not only the risks that have been identified, but also the steps to tackle them.
Withhold information that could encroach on the privacy or other legitimate interests of employees and other persons, and refrain from disclosing business secrets.

Removing the effects of loss or damage

The Government of the Czech Republic recommends that businesses who, even if only hypothetically, could encounter human rights risk should have procedures in place in case their operations cause human rights loss. The aim should be to find a peaceful solution to disputes and to provide a remedy.

Although everyone is entitled to take their dispute to a state body, i.e. an authority or a court, for an authoritative decision, judicial proceedings are not always the most appropriate way forward for all types of disputes. What is more, litigation could generate negative publicity for a business. Where the extent and nature of an infringement allow, it is advisable to seek an out-of-court settlement. While this is not suitable for all types of dispute, it can often be faster, less costly and more readily accepted by the victims.

Alternative dispute resolution can take the form of structured dialogue, mediation or arbitration. A wide panoply of remedies is available. Besides cash satisfaction, non-financial remedies should also be offered, in particular a public apology, the restoration of what has been damaged to its previous condition, the commissioning and payment of professional services (e.g. medical services, the clean-up of a water source), and the provision of non-monetary assets (e.g. replacement land, goods). The victims’ wishes and interests are of particular importance when deciding how to proceed. Safeguards to prevent a recurrence of the infringement are integral to this mechanism.

Remedial mechanisms may be applied in cooperation with other (external) entities. For example, it is possible to draw on the services of certain state bodies providing services for the out-of-court settlement of consumer disputes (the Czech Trade Inspection Authority, the Czech Telecommunication Office, the Financial Arbitrator, and the Energy Regulatory Office).

If a dispute does end up in court, businesses should not back themselves into a defensive corner. In many cases, it may be more appropriate to admit to certain individual errors that cannot be disputed and then make an attempt at reaching an agreement or conciliation.

The logical end result is the adoption of measures preventing a recurrence of any such incident in the future.

Transparency

The Guiding Principles set great store by openness and transparency, which in practice means communication with the public, with employees and with other stakeholders. Businesses should make public the fact that they are mindful of their responsibility, that they are not just assuming this responsibility for show, and that they accept it as part of their business ethics. This ongoing communication could include not only the public, but also investors, business partners and potential employees, for whom the business, by following this path, has become a more attractive partner or place to work. Communication may be one way (e.g. various forms of non-financial reporting) or bidirectional (e.g. public hearings on matters of general interest).

The Government of the Czech Republic recommends that businesses where the activities, products, services or business relationships are associated with risks of serious human rights violations formally provide information on how they are dealing with those risks, even in situations where the law does not require them to do so. The government recommends all companies reporting on human rights to take account of the Reporting Framework for the UN Guiding Principles on Business and Human Rights. Reporting should provide information of relevance without overwhelming the reader. The Government also recommends that large-scale projects with a potential major impact be publicly presented and consulted.

Voluntary non-financial reporting

In the European Union, large companies are required to publish certain non-financial information, including information on human rights matters. Small businesses, however, may report voluntarily, especially if they are active in sectors or in countries where there is a heightened risk of encroachment on human rights. Transparency is highly self-regulatory and makes it easier to appoint a responsible person in complex corporate structures. It enables a business to evaluate and map out risks, while making it clear to the public that the company does not underestimate them.

What should be included in a report? Human rights standards, as opposed to financial reporting, which is governed by sophisticated and internationally reputed respected standards, are still inchoate. Even so, the following information should not be left out of a report:

Whether a human rights commitment has been made, how it has been devised, whose rights it affects, how it is communicated, and whether and how responsibility for compliance is addressed within the business.
A specification of key issues, i.e. areas viewed by the company as operationally risky, or in which it is most involved. Information about how such issues have been identified and, if the company has operations in multiple countries, information as to which countries are affected.
Information on how these risks are addressed and what measures have been taken.
Significant events that have occurred in the past year.

A business may publish periodic non-financial reports in numerous forms, either as part of the annual report or entirely separately. In any case, they should be posted online on the business’s website. The non-financial report should not be drawn up just for show, but should shed light on significant information relevant to an impact assessment of the business’s operations. On the other hand, it should remain brief and concentrate on matters of relevance. Parent companies should include information on the activities of their subsidiaries.

Human rights commitments cannot always be assessed with precision. Businesses should retain the option of evaluating commitments according to their own internal schemes and criteria. Nevertheless, where possible standardised indicators, including historical developments, should be used. The application of internationally acknowledged standards for non-financial reporting is recommended. These include:

Non-financial reporting standards based on the Guiding Principles on Business and Human Rights
Global Reporting Initiative, an independent international organisation specialising in the reporting of the impacts of business operations in the fields of human rights, the environment and corruption
Integrated Reporting (IR)

Transparent consultation of matters of general interest

If a business is preparing a major project that could be linked – even if only potentially – with human rights risks, open communication with all stakeholder groups is recommended. Negotiations should be guided by the following principles:

They should take place sufficiently early on.
The top management, or at least those with enough decision-making powers, should be involved.
The form taken by the negotiations should reflect the seriousness of the risks, the scale of the project, and the addressees’ abilities and capacities (an online form, public meetings, personal visits).
Plain language should be used in the negotiations. Complex legal or economic language may not be understood by the uninitiated and could be misinterpreted as an effort to conceal something.
If the direct participation of a particular group is impossible, communication with their representatives or with experts familiar with the situation is an option.

Cooperation

Businesses in the same industry or in the same geographical area are exposed to similar problems, so it is more efficient for them to tackle them together. Cooperation could result in the exchange of good experience and practical examples, and in the creation of new instruments (in particular the conclusion of sectoral agreements or the adoption of sectoral standards). Not only will businesses save money and leverage economies of scale, but will also be in a position to combat unfair competition from businesses that have forgone basic standards.

Chambers of commerce, industrial associations, professional organisations and voluntary initiatives facilitating the sharing of good practice and the exercise of informal influence over other businesses in the sector are ideal platforms for human rights issues. However, projects involving not only businesses, but also other stakeholders are best suited and the most effective here.

The Government of the Czech Republic recommends that industry associations and voluntary business associations raise awareness of the Guiding Principles in their activities and urge their members to incorporate these Guiding Principles into their internal corporate documents.

Documents and sources of information

The Office of the Government of the Czech Republic collects model documents, guidelines and materials intended for businesses to improve the performance of tasks in this chapter, and posts them on the National Corporate Social Responsibility Portal: http://narodniportal.cz/