Czech Republic

Pillar I. The State Duty to Protect

State aid, guarantees and subsidies [pages 24-27]

Implements Principles 4 and 7

The Czech Republic supports exporters via the export bank Česká exportní banka, a.s. (CEB) and the export guarantee and insurance corporation Exportní garanční a pojišťovací společnost, a.s. (EGAP). The state has a duty to make sure that this support does not foster violations of human rights.

On 1 January 2004, the OECD Recommendation on Common Approaches on the Environment and Officially Supported Export Credits entered into force. That Recommendation includes a commitment by all Member States not to assist – through their institutions – environmentally harmful projects. In June 2012, the OECD Council adopted the Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence, which expands and reinforces the original provisions on the environmental and social aspects of officially supported exports. The new Recommendation establishes simpler, more readily accessible procedure for the categorisation of projects according to their environmental and social impact in the countries where they are to be implemented. The main change is the greater stress on the social impacts of projects and the aspects thereof that have a bearing on human rights in the countries of implementation.

Current state of play:

• In its activities, EGAP abides by the Recommendation of the OECD Council on officially supported export credits.
• CEB and EGAP are subject to the European Union’s sanctioning regimes. State aid will not be granted if it is to be directed towards states or individuals who have been sanctioned by the European Union.
• Aid applicants must submit a detailed environmental impact assessment for a selected export where CEB- and EGAP-backed projects have a larger-scale environmental and social impact.

Task:

• Where possible, in subsidy agreements take account of social, environmental and other non-financial indicators and requirements concerning the beneficiary and the beneficiary’s subcontractors.
• Coordinator: All ministries concerned
• Deadline: Running

State enterprises and companies in which the state has a shareholding

Implements Principle 4

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 favoured 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