The State responsibility to foster a corporate culture respectful of human rights both at home and abroad is a key element of the first pillar of the UN Guiding Principles on Business and Human Rights, the state duty to protect. Corporate law dictates the formation and the activities of corporations, while corporate governance regulates the balancing of interests among a business’s different stakeholders. Corporate law and governance therefore directly shapes what businesses do and how they do it. However, their connection to human rights remains poorly understood, as they are often viewed as distinct legal and policy spheres, populated by different communities of practice, as can be seen in the Report of the Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises. Some of the key concepts and characteristics of corporate law such as legal personality, limited liability, liability within corporate groups, and delegated management have been obstacles to the legal accountability of transnational companies for human rights-related abuses by their subsidiaries and business partners. On the other hand, several aspects of corporate law and governance such as rules on company disclosure, non-financial reporting, directors duties and stakeholder engagement are important for the protection of human rights and remediation of any harms.
The UN Guiding Principles recognise the key role of corporate law and governance in the protection of human rights. According to Guiding Principle 3, in meeting their duty to protect, States are urged to:
“(a) Enforce laws that are aimed at, or have the effect of, requiring business enterprises to respect human rights, and periodically to assess the adequacy of such laws and address any gaps;
(b) Ensure that other laws and policies governing the creation and ongoing operation of business enterprises, such as corporate law, do not constrain but enable business respect for human rights
(c) Provide effective guidance to business enterprises on how to respect human rights throughout their operations;
(d) Encourage, and where appropriate require, business enterprises to communicate how they address their human rights impacts.”+ Read more
The Commentary to UN Guiding Principle 3 adds that States should “consider a smart mix of measures – national and international, mandatory and voluntary – to foster business respect for human rights.” These measures “might range from non-discrimination and labour laws to environmental, property, privacy and anti-bribery laws. Therefore, it is important for States to consider whether such laws are currently being enforced effectively, and if not, why this is the case and what measures may reasonably correct the situation.” Furthermore, “[l]aws and policies in this area should provide sufficient guidance to enable enterprises to respect human rights, with due regard to the role of existing governance structures such as corporate boards.”
Former UN Special Representative on Business and Human Rights, Professor John Ruggie, conducted a cross-national study on human rights and corporate law as part of the “Corporate Law” project. The study sought to identify how corporate and securities law in 39 jurisdictions encourages companies to respect human rights. Observations and trends emanating from the study were published in a report in 2011. The study identified that the respondent States drew a link between corporate law and governance and human rights, citing that “several States recognize through their corporate and securities laws that responsible corporate practice should avoid negative social or environmental consequences, including for human rights.” (Report on Human Rights and Corporate Law)
The extent to which directors are required, allowed, or encouraged to consider the human rights impact of a business’s operations has recently been examined. A middle-ground between Shareholder Primacy and Stakeholder Theory, in corporate governance is the concept of Enlighted Share Value (ESV). ESV is the idea that “corporations should pursue shareholder wealth with a long-run orientation that seeks sustainable growth and profits based on responsible attention to the full range of relevant stakeholder interests”. The United Kingdom legislature incorporated ESV in the director’s duties provisions of the UK Companies Act 2006 to make it possible for directors to take into account the long-term sustainability of the company, and not purely short-term profits. Another interesting development from the United Kingdom is the creation of Community Interest Companies (CICS). A CIC is a limited liability company, with special additional features, created for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage. This is achieved through a “community interest test” and “asset lock”, which are regulated by the Government, and ensure that the CIC operates for the community’s benefit.
Businesses are also undertaking voluntary measures either at their own initiative or in response to shareholder pressure. For instance, 20% of the annual cash incentive compensation for Alocoa’s executive officers is tied to security, environmental and diversity targets. Shareholders are increasingly urging businesses to incorporate environmental, social and governance (ESG) considerations in their operations. Shareholders of ExxonMobil successfully petitioned the company in 2017 to appoint a climate change specialise to its Board of Directors.
Future developments to help corporate law and governance incorporate human rights impacts include increasing the extent to which directors and officials can consider human rights impacts in a business’s operations, linking executive pay to ESG considerations, and possibly redefining the purpose of a corporation (Purpose of the Corporation Project).
Corporate law and corporate governance relate to the following Sustainable Development Goals
- Report of the Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie, “Human rights and corporate law: trends and observations from a cross-national study conducted by the Special Representative”, 23 May 2011
- European Parliament, Committee on Foreign Affairs, Report on corporate liability for serious human rights abuses in third countries (2015/2315(INI)), Rapporteur: Ignazio Corrao, 19 July 2016, available at http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+REPORT+A8-2016-0243+0+DOC+XML+V0//EN
- OECD (2015), G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, available at
- http://dx.doi.org/10.1787/9789264236882-en and at http://www.oecd.org/corporate/principles-corporate-governance.htm
- Business & Human Rights Resource Centre Section: Corporate Law
- J. Armour, H. Hansmann, R. Kraakman The Essential Elements Of Corporate Law: What Is Corporate Law?, Harvard Law School, John M. Olin Center For Law, Economics, And Business Discussion Paper No. 643 7/2009,
- Fried Frank law firm, “Trends in the Use of Corporate Law and Shareholder Activism to Increase Corporate Responsibility and Accountability for Human Rights”, December 2007
- Aspen Institute – the Aspen Business and Society Program; Unpacking the Corporate Purpose: A Report on the Beliefs of Executives, Investors and Scholars, May 2014
- William Davies, How to tame capitalism, New Statesman, 13 September 2004,
- L. Anker-Sørensen, J.Mähönen, and B. Sjåfjell (eds.), Special Issue on Liability in Corporate Groups, European Company Law, Kluwer Law International, October 2016, volume 13 (2016), issue 5
- European Confederation of Directors’ Associations and AIG, A Guide to Directors’ Duties and Liabilities in Europe, 2015
- L. E. Ribstein, Accountability And Responsibility In Corporate Governance, 81 Notre Dame Law Review 4 (2006), pp. 1431 -1493
- Clifford Chance, Corporate Liability in Europe, 2012
- Allens Arthur Robinson (AAR), ‘Corporate Culture’ as a basis for the Criminal Liability of Corporations. Report on for the use of the United Nations Special Representative of the Secretary General for Business and Human Rights, February 2008
- N. Mosunova, The Content of Accountability in Corporate Governance, Adecco Group Russia
- A. BARDEN, US Corporate Law Reform Post-Enron: A Significant Imposition On Private Ordering Of Corporate Governance?, Journal of Corporate Law Studies, Volume 5, April 2015, pp. 167-189
- N. CANKAR, Transition Economies And Corporate Governance Codes: Can Self-Regulation Of Corporate Governance Really Work?, Journal of Corporate Law Studies, Volume 5, April 2015, pp. 285-304
- Wesley Cragg, Human Rights, Globalisation and the Modern Shareholder Owned Corporation, in: T. Campbell and S. Miller (eds), Human Rights and the Moral Responsibilities of Corporate and Public Sector Organisations, Chapter Six, 2004 Kluwer Academic Publishers pp. 105–127.
- Wheeler, D., & Sillanpää, M., The stakeholder corporation: A blueprint for maximizing shareholder value. London: Pittman Publishing, 1997.
- Pilar Giráldez and José Manuel Hurtado, Do independent directors protect shareholder value?, Business Ethics: A European Review, Volume 23, Number 1, January 2014
- UK Companies Act 2006
- UK Corporate Governance Code
- The Corporate Responsibility Coalition and Trade Justice Now, ACT NOW! A Campaigner’s Guide to the Companies Act, September 2007
- UK Community Interest Companies (CICS)
- International Bar Association, IBA Practical Guide on Business and Human Rights for Business Lawyers, Adopted by a resolution of the IBA Council 28 May 2016
- The Equality and Human Rights Commission, Business and human rights: A five-step guide for company boards, 2016
- Advocates for International Development, The UN Guiding Principles on Business and Human Rights A guide for the legal profession, 2013
- D. Chivers QC, The Companies Act 2006: Directors’ Duties Guidance, CORE, October 2007
What National Action Plans say on Corporate law & corporate governance
Action point 4
Promote existing qualitative initiatives on human rights and social responsibility
The Flemish government plans a sustained and sectoral approach to social responsibility as companies operating in the same sector face similar challenges. In consultation with the sectoral organizations, the Flemish authorities will support these organizations and their members in order to sustain their value chains and management of their businesses.
Action point 9
Strengthen collaboration between public services and the various organizations active in the field of human rights and of international entrepreneurship
This section mentions that the regional authorities and a number of Belgian institutions at several levels (such as Ducroire, Finexpo, the Belgian Investment Company, the Belgian Investment Company for Developing Countries, and also organizations such as the Chambers of Commerce among others) that support international entrepreneurship can also obtain information on the ground, through their members, and gain experience in the field of corporate management of human rights issues around the world. An action therefore involves the collection of information from such stakeholders.
Action point 15
Incorporate the principle of “due diligence” into the management of the company, also in the terms of human rights
This section mentions corporate governance. Concretely, the action will consist of contacting those responsible for the two Belgian corporate governance codes in order to examine the possibility of integrating international developments, in particular with regard to human rights, which will entail the attempt to minimize the administrative burden on public authorities or enterprises, but without impairing the application and implementation of ambitious criteria and controls.
Action point 29
Facilitating the circulation of knowledge in the field of human rights and CSR
The government of Walloon will seek to encourage university networks of researchers concentrating on the topic of management of corporate socio-economic aspects on the perspective of the respect for human rights and CSR.
Pillar 1: The State Duty to Protect Human Rights
Strand 8: Legislation, Policies and Incentives
Action Point 8.1. (page 60)
The Ministry of Economy will support the legal provision committed in the Agenda for Productivity, Innovation and Growth seeking to create a legal framework for social business enterprises, by encouraging the incorporation of business and human rights criteria.
Strand 9: State Business Enterprises
Action Point 9.2 (page 49)
The National Oil Company (ENAP), with the support of independent experts, will prepare a baseline to identify eventual impacts on human rights and the promotion and respect actions the company is currently performing. This aims to identify gaps and manage the relevant plans for human rights remediation and mitigations. Priority subjects included in the study will be: life, health, environment, water, communities and workers. This initiative is based on the new Sustainability Policy passed by the Board of Directors in December 2016. It is composed of four strands: consideration of stakeholders, environment, integrated management and human rights.
Action Point 9.3 (page 50)
The Ministry of Economy, Development and Tourism will support the incorporation of the Guiding Principles in the business enterprises forming part of the System of Public Business Enterprises (SEP).
To strengthen coordination between the Ministries forming part of the Inter-Ministerial Working Group, amplify the impact of this Action Plan, and make known its progress, the Group will carry out the following actions: …
2. Encourage the adoption of policies, statements or codes of conduct by business enterprises and urge the implementation of mechanisms of due diligence
Pillar 2: The Corporate Responsibility to Respect Human Rights
Strand 2: Promotion of Corporate Due Diligence in the Field of Human Rights
Action Point 2.1 (page 54)
The Ministry of Foreign Affairs, through the General Directorate of International Economic Relations, will:
- Promote human rights in the management of public funds to promote exports carried out by ProChile, through the progressive incorporation of analysis mechanisms helping to ensure that business enterprises having access to the tools offered by this entity respect human rights. Likewise, it will establish, if relevant, requirements about sustainability and respect for human rights, as criteria to choose the business enterprises participating in programmes to promote exports and corporate activities, including SMEs and micro SMEs. …
Action Point 2.2 (page 55)
The Ministry of Economy, Development and Tourism will: …
- Hold a working group meeting at least once each semester with the Division of Social Economy and Associativity and the Division of Smaller Business Enterprises, with the purpose of identifying the impact of human rights in the management of businesses such as cooperatives and SMEs, and of incorporating the vision of human rights and business enterprises within this type of economic associations. Based on the activities of the working groups, sector guides will be developed to evaluate compliance with human rights issues, with special emphasis on the management of supply chains. …
- Agree, with business enterprises represented in the Social Responsibility Council for Sustainable Development, upon the development of memorandums of understanding, guides, handbooks and guidelines containing best practices, so that they can become an integral part of business and human rights standards in the following subject matters: labour practices, impact on communities, corporate practices and supply chain management. …
- Coordinate technical meetings with SEP, CORFO, SERNAC and SERCOTEC to agree on the incorporation of targets and indicators of compliance with human rights standards in these services.
- Action point 2.2 (p. 12):
“The Colombia Compra Eficiente agency will adjust the current public procurement system to comply with such criteria as for respect for human rights, by including them in their objectives and including measures to make sure that suppliers execute the human rights due diligence.”
- Action point 2.5 (p. 13):
“The Ministry of Commerce, Industry and Tourism and its entities (PROCOLOMBIA) will work to make the Colombian enterprises observe the human rights standards and will strive for incentives in the international market.”
- Action point 2.6 (p. 13):
“The Ministry of Environment, jointly with the National Authority for Environmental Permits, will strengthen the existence of respect for human rights requirements regarding the Environmental Impact Assessment of companies, and the Business Social Risk Management and Human Rights Plans.”
- Action point 4.1 (p. 15):
“The Government will strengthen the subscribing to these multi-actor initiatives: Guias Colombia, Swiss Ethical Committee and the Mining-Energy Committee, as well as the implementation of guides or the provided recommendations by such initiatives.”
- Action point 4.4 (p. 15):
“Within the State Policy for the LGBTI population, which the National Government is preparing, business practices respecting, recognizing and appreciating this population’s diversity will be supported.”
- Action point 4.5 (p.15):
“The Ministry of Labor will advise the businessmen on the labor inclusion of people with disabilities and employment mediation services, in agreement with the National Public Policy on Disability and Social Inclusion.”
- Action point 4.6 (p.15):
“The Council to the President for Women Equality will strengthen the coordination for the application of the international standards on women’s rights, intended to guarantee such rights in the business world.”
- Action point 4.7 (p.15):
“The Ministry of Labor and the Colombian Institution for Family Welfare will strengthen actions intended to provide advice, training and monitoring to enterprises in respect of the integral protection of the children’s rights, as well as the implementation of the children’s rights and business principles in the priority sectors.”
- Action point 5.3 (p. 16):
“Promote the implementation of the United Nations Guiding Principles and other international standards on business and human rights by the trades and the enterprises part thereof, so they may adopt human rights policies. Thus, during the first year of the execution of this Plan, the Council to the President for Human Rights will convene high level meetings with the trades to determine the inclusion goals in the multi-actor initiatives and human rights performance follow-up mechanisms. These actions must be coordinated with the entities of the Working Group, especially with the Ministry of Commerce, Industry and Tourism and in cooperation with the Post-Conflict Directorate.”
- Action point 5.4 (p. 16):
“The Council to the President for Human Rights and the Ministry of National Defense will encourage the implementation of the Voluntary Principles on Security and Human Rights. To that end, they will alternately engage in the areas where such issue is treated.”
- Action point 5.6 (p. 17):
“The Ministry of Commerce, Industry and Tourism will promote the business efforts to adjust their policies to the OECD Guidelines for Multinational Enterprises, for which purposes it will assess, within six month from the execution of this Plan, its strategy to disseminate the Guidelines so as to make them widely known.”
- Action point 5.7 (p. 17):
“The Working Group will assess and analyze the best ways for enterprises to include the reporting of the human rights due diligence in their Sustainability Reports or rendering of accounts. Such assessment will be carried out within the year following the launching of this Plan and accompanied by the several sectors.”
- Action point 6.1 (p. 18):
“The Council to the President for Human Rights, within the following year of this Plan being launched, will encourage business to define and publicly disclose their political commitment to respect human rights.”
- Action point 6.5 (p. 18):
“The Working Group will encourage enterprises to exchange their experiences in order to better understand the human rights and peacebuilding management.”
- Action point 7.1 (p. 19):
“The Working Group, advised by the Expert Committee, will encourage discussion fora to determine the best ways for enterprises to establish easy-to-access, transparent and effective complaint and claims offices or mechanisms for prevention and mitigation and remedy of adverse human rights effects as may be caused by their activities.”
- Action point 7.4 (p. 19):
“The Ministry of Commerce, Industry and Tourism will encourage business enterprises to foster talks with consumers.”
- Action point 7.5 (p. 19):
“The Office of the Transparency Secretary of the Presidency of Republic will support the adoption of transparency covenants by enterprises so as to contribute to the corruption struggles in corporate governments, for which purposes a year will be given upon the Plan’s launching.”
- Action point 7.6 (p. 19):
“The Working Group will tend towards enterprises, through their complaint offices, receiving and diligently managing the citizen and community claims, as considered to be affected by the adverse effects caused by their operations.”
- Action point 7.7 (p. 20):
“The Working Group, advised by the Expert Commission, will encourage companies to have follow-up strategies in place to know about the progress and follow-up to the mitigation of adverse impacts caused by the development of business activities.”
- Action point 7.8 (p. 20):
“The Working Group, advised by the Expert Commission, will encourage business enterprises to assess their risks and impacts on people and the environment as a result of their operation.”
- Action point 8.1 (p. 20):
“The Ministry of Commerce, Industry and Tourism will design a differentiated incentive strategy for large, medium and small enterprises with the purpose of having them to implement human rights policies involving:
- Public commitment
- Due diligence procedure
- Result verification mechanism”
- Action point 8.3 (p. 20):
“The Ministry of Commerce, Industry and Tourism, jointly with the Council to the President for Human Rights will create a Human Rights business incentive to be provided every year and to value the advances the business enterprises might have in adopting the international standards on business and human rights in their operations. This incentive regulation will be developed by the Working Group within the year following this Plan’s launching.”
- Action point 8.4 (p. 21):
“The Council to the President for Human Rights will publicly disclose on its website the advances and good practices implemented by the enterprises in respect of the human rights implementation in the business field.”
- Action point 8.6 (p. 21):
“The Council to the President for Human Rights, jointly with the Ministry of Foreign Affairs and the Ministry of Commerce, Industry and Tourism, will facilitate international exchange among business enterprises for better practices in the implementation of human rights in the business activity.”
- Action point 9.1 (p. 22):
“The Ministry of Commerce, Industry and Tourism, jointly with the Council to the President for Human Rights will support the coordination of corporate human rights policies with the Corporate Social Responsibility institutional programs.”
- Action point 9.2 (p. 22):
“The Corporate Social Responsibility programs are to foster productivity in the areas of influence of their projects to generate the development and economic empowerment of communities under the due diligence and respect for human rights principle.”
- Action point 9.3 (p. 22):
“Increase the recognition of Corporate Social Responsibility and dissemination of good practices by establishing sector platforms for the enterprises and stakeholders to make commitments and jointly supervise progress. The Ministry of Commerce, Industry and Tourism will supervise this process.”
Criminal liability of legal persons in the field of human rights [page 11-12]
“Implements Principles 1 and 3a
Modern business is inconceivable without companies and cooperatives. They facilitate the concentration of funds, limit risk, and create opportunities for professional management. They are a means of implementing major business projects. However, like any other such means, companies may be open to abuse. Those who engage in crime can divide up responsibility for decisions and hide behind convoluted management structures. At large corporations, it can often be difficult to find a specific liable person. The Act on the Criminal Liability of Legal Persons [Act No 418/2011 on the criminal liability of and proceedings against legal persons] resolves this by making it possible to infer that a legal person as a whole is liable.
The most serious human rights abuses can be punished as crimes. According to the case-law of the European Court of Human Rights, too, the state duty to efficiently investigate and ultimately punish infringements is central to human rights protection. However, criminal prosecution is the strongest instrument of power the state can wield, and has repercussions for employees, shareholders, creditors, business partners and others who have nothing to do with criminal activity. In this light, legislation needs to be monitored and evaluated.
While the state carries primary responsibility for human rights protection in its territory, in today’s interconnected age the stringent application of the principle of territoriality is impossible. The Czech Republic has decided that – whether unilaterally or on the strength of an international treaty – it will prosecute certain unlawful conduct by Czech nationals irrespective of where this conduct occurs. As such, it is assuming responsibility for the conduct of its nationals (including businesses) abroad, thus making it possible to fill in the regulatory gap to some extent in those cases where such conduct is not punishable under another country’s law.
Current state of play:
- The criminal liability of legal persons was introduced into Czech law in 2011 and covered and exhaustive set of criminal acts. In 2016, the concept underlying the definition of the criminal liability of legal persons was revised so that a legal person can now be liable for all crimes other than a narrow group of acts expressly precluded by law.
- Czech law allows a Czech citizen or a legal person established in the Czech Republic to be prosecuted even if they committed their crime abroad.
- Foreign nationals and legal persons perpetrating a crime to the benefit of a Czech legal person may also be prosecuted.
- Under Czech law, the most serious human rights violations [The criminal acts listed in Section 7(1) of Act No 40/2009, the Criminal Code] can be prosecuted regardless of the perpetrator’s nationality or where such violations occurred.
- The Czech Republic is party to a number of international treaties on legal assistance and on the prosecution of various types of international criminal activity, including the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
- Evaluate the impacts and practical application of the new text of the Act on the Criminal Liability of Legal Persons. If it transpires that the legislation still has loopholes impeding or preventing the prosecution of serious violations of human rights, propose amendments to the law.
Coordinator: Ministry of Justice
Deadline: 31 December 2018”
Disqualification of a member of a body [page 13-14]
“Implements Principles 1 and 3b
If a company executive orders or, due to negligence or connivance, allows the company he or she manages to encroach on human rights, that executive must be found to be liable. It is always more advisable to prosecute specific culprits rather than a whole company. However, a criminal penalty is not always appropriate. Indeed, criminal prosecution appears to be too strict a response to minor or negligent breaches of the law.
One possible solution is disqualification – banning someone from holding corporate directorships. Professionals recommend disqualification as a lighter form of punishment for a number of acts directly associated with business activity. Disqualification is a punishment that is suitably harsh for the perpetrator without carrying the stigma of criminal prosecution, and does not harm the company as a whole. Furthermore, judicial proceedings in such a case are simpler and more economical.
Although current Czech law does accommodate disqualification, this is restricted to a narrow set of offences and the maximum duration is limited. In this respect, we need to explore whether the present wording of constituent elements is sufficient, i.e. whether it is broad enough for the courts to have sufficient opportunity to apply this instrument, while being definitive enough so that members of company bodies know what acts are prohibited. We should also consider what the maximum duration of disqualification ought to be for the various acts.
Current state of play:
- The disqualification of members of governing bodies from holding such office was introduced into Czech law in 2014 by the Business Corporations Act. This makes it possible to punish those who have bankrupted their company or have repeatedly and seriously breached the tenet of due diligence. They may be disqualified for up to 3 years.
- Members of governing bodies, influential persons and controlling entities may be disqualified. [Section 76(2) of Act No 90/2012 on companies and cooperatives]
- Assess the use and applicability of this concept and consider whether it needs to be revised. In particular, evaluate the breadth of constituent elements, how sufficient the definiteness and precision of the law is, as well as the maximum disqualification period and variations depending on the seriousness of the act, and consider extending this concept to other persons effectively exercising influence over the running of a company. Also consider revising this concept so that it is not limited to companies, but can also be applied to other types of organisation with a different legal form. In these assessments, focus on the punishability of acts where a member of a governing body enables human rights standards to be breached either wilfully or out of gross negligence. If the concept of disqualification proves to be hard to apply in these situations, consider revisiting the constituent elements so that disqualification is easier to impose in such circumstances.
Coordinator: Ministry of Justice
Deadline: 31 December 2020”
State aid, guarantees and subsidies [page 26]
“Current state of play:
- 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.”
Transparency [page 37-38]
“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.”
While there is no explicit reference to corporate law and corporate governance in the Danish NAP, it is possible to read elements of it.
Appendix 1, GP3b
Status in Denmark (initiatives implemented before the UN ratification of the Guiding Principles) [page 26]
“all new legislation is evaluated in terms of human rights consequences. Large parts of Danish national law support compliance with the UNGPs such as legislation on labour issues, the environment, child labour etc. This type of protective legislative framework of Denmark enables business respect for human rights.”
This implies that Denmark undertakes efforts to ensure that all legislation, including corporate law, is evaluated in terms of human rights consequences.
Appendix 1, GP 4
Status in Denmark (initiatives implemented before the UN ratification of the Guiding Principles) [page 28]
“[The Danish Investment Fund for Developing Countries (IFU)]’s overall objective is to promote sustainable economic growth, economic development and a more equitable distribution of income by co-financing private sector investment in developing countries. IFU’s investments in projects should contribute to job creation, good governance, respect for the environmental, higher social standards and community development.”
2 The state and companies
2.1 The state as an economic operator [page 22-23]
“The Ownership Steering Department in the Prime Minister’s Office has set a CSR reporting requirement for unlisted companies that are either majority-owned by the state or entirely state-owned. This also includes human rights. The obligation requires that companies submit reports in accordance with the best practices in the branch of activity concerned and, at minimum, adopting the standards corresponding to those of their central competitors.
As an owner, the state expects that the administration and management of state-owned companies take human rights into consideration in a responsible and transparent manner, both in their own organisation and in their subcontracting chains.
As a follow-up measure, the working group proposes that
- the importance of human rights to the state when serving as a company owner will continue to be emphasised in preparing the next decision in principle on ownership policy.
- When the amended OECD Guidelines on Corporate Governance of State-Owned Enterprises enter into force around the end of 2015, the new definitions of policy will be included in the ownership guidance practices of the Finnish state.
Principal responsible party: Prime Minister’s Office, schedule before the end of 2016.”
Part I, section 1 on activities at the UN level (p12-13), the NAP refers to France’s chairing of the Group of Friends of Paragraph 47 of the Rio +20 Declaration on corporate sustainability reporting, aiming at improving corporate respect for good governance norms, among other (paragraph 1.5, p13).
Part I, section 4 on ISO (p15), the NAP cites France’s active participation of the ISO 26000 norm, which includes a pillar on corporate governance (paragraph 1, p15).
Part I, section 10 on Strengthening of the domestic legal framework (p23-25): The NAP lists recent legal reforms related to transparency and mandatory inclusion of non-financial information in reporting, including article 224 of the 2001 law on new economic regulations, the Grenelle II law of July 2010 which provides for information on the management of corporate governance criteria in companies’ investment policies to be integrated in companies’ reporting (paragraph 2, p24).
Part II, section 6 on reporting (p49-51): the NAP cites the CSR Platform’s 2014 report on how to improve corporate transparency and governance, in footnote n°32, p49.
Part I, Proposed Actions n°1, Ongoing activities, p16:
“France promotes, together with the Group of Friends of Paragraph 47 of the Rio +20 Declaration, the strengthening of company reporting on environmental, social and governance issues, in particular in the process of implementation of the SDGs adopted on 25 September 2015” (paragraph 2, p16).
Objective 25.1.1: Ensure assessment of regulative influence on the market.
Objective indicator: Existence of document assessing influence on market of concrete area before introducing every concrete regulation.
- Creating working group conducting analysis about the influence of regulations on market.
- Defining conditions and criteria of expert participation in working groups.
- Conducting expert activities with the side initiating communication regulatory.
Responsible agency: Government of Georgia, The office of the Business Ombudsman of Georgia.
Partnership agency: Business sector; Global compact Georgia; CIDA.
Objective 25.3.1: Analyse existing situation regarding direct and indirect state involvement and define suggestions for creating effective mechanisms with the aim to prevent discrimination.
Objective indicator: Analytical document of existing situation through experts’ involvement.
- Planning actions of sharing recommendations and implementing them.
- Implementing agreed action plan.
Responsible agency: Administration of the Government of Georgia.
No partnership agency.
Objective 25.6.1: Elaborate appropriate amendment package concerning corporate social responsibility, including women strengthening principles.
Objective indicator: Elaborated legislative amendments package.
Activity: Researching mechanism of probable promotion concerning corporate social responsibility, including the principle of strengthening women.
Responsible agency: Ministry of Economy and sustainable development of Georgia in cooperation with parliament.
No partnership agency.
1.1 Basic rules of economic policy
Bi- and multilateral economic relations
Measures [page 18]
- “The EU Special Incentive Arrangement for Sustainable Development and Good Governance (‘GSP+’) can be used as a format for promoting the observance and application of human rights standards by governments of developing countries. In the forthcoming review process of 2018, the Federal Government will press for further strengthening of that instrument.”
The current situation [page 19]
“the Federal Government has undertaken to implement the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests and has initiated a number of development cooperation projects to assist governments of developing countries in enforcing the land-tenure rights of marginalised groups, in strengthening stakeholders in civil society and in raising awareness among companies, for example those investing in agriculture, and gaining their support for the application of these guidelines with a view to preventing illegal actions such as land-grabbing.”
Enterprises in public ownership [page 26-27]
The current situation
“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 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.”
Annex 1 – List of additional and ongoing actions to be carried out across Government
Development Cooperation to [page 21]
“21. Support developing countries to improve their business and investment environment and continue to promote transparent, accountable and effective governance systems, rule of law, and equitable and inclusive economic growth, including transforming economic opportunities and outcomes for women and girls.”
Section 3: Actions
I. Key commitments to ensure policy coherence across Government [page 16]
“Ensure coherence between the National Plan on Corporate social Responsibility and the National Plan on Business and Human Rights, including by promoting cooperation between the Business and Human Rights implementation Working Group and the Corporate Social Responsibility Stakeholder Forum”
- Department of Foreign affairs and trade, enterprise and innovation
The Irish NAP also provides information on due diligence (see the section on Due Diligence), and corruption (see the section on Corruption)
IV. Government Responses: Current Activities and Future Committments
B. Operational Principles (pg. 12)
General State regulatory and policy functions
In meeting their duty to protect, States should: … b) Ensure that other laws and policies governing the creation and ongoing operation of business enterprises, such as corporate law, do not constrain but enable business respect for human rights…
GP 3 (a)
Recent policies, legislative initiatives and implementation measures adopted by the Government include:
- LEGALITY RATING
The ‘legality rating’ was introduced in 2012 for the promotion of principles of ethical behaviourin business. The Italian Competition Authority (ICA) can issue, on request, a certification of compliance with relevant domestic legislation and of the adoption of good governance initiatives voluntarily adopted by enterprises, which entitles firms to access public funding and easier access to bank credit. One of the main aims of the ‘legality rating’ is to certify the companies’ active compliance with human rights, in particular the adherence to the guidelines provided by the Legislative Decree No. 231 of June 8th 2001 on the administrative liabilities of companies and the adoption of corporate social responsibility within their own modus operandi. The Decree No. 231 introduces essential provisions regulating the relationship between companies and the stakeholders, sanctioning enterprises that through their managers, company’s officers, subordinates (or third parties acting on behalf of the company), commit specific offences, including environmental crimes, unauthorized handling of information and crimes against the person (as listed in the Universal Declaration of Human Rights), and violate the safety rules in the workplace. The complete list of the companies that have obtained a rating, with their score, is published on the ICA website
- THE ADMINISTRATIVE LIABILITY OF ENTITIES
Decree 231 of 2001 has introduced the direct liability of legal entities for specific offences (corruption, money laundering, bribery, fraud, etc.) providing for a special form of liability, which is administrative in nature but to be ascertained by a penal judge and according to criminal law procedures. In order to avoid incurring in liability, the entity shall first demonstrate that it has adopted a sound model of organization, management and control; and secondly, that it has established a mechanism/body entrusted with monitoring and supervising the compliance to the model. Law 231 is both preventive and punitive: the list of crimes falling under the application of the law has been extended over the time and it presently includes specific human rights abuses, among others, the practice of mutilation of female genitalia; child prostitution and pornography; trafficking in human beings and slavery. In 2015, new environmental crimes have been included (environmental disaster, environmental pollution, failure to decontaminate, etc.).
- IRREGULAR WORK AND AGRICOLTURAL SECTOR
The ‘National Action Plan Against Trafficking in and Serious Exploitation of Human Beings’ provides for preventive measures in countries of origin where exploitation and trafficking of migrants in irregular work mostly occurred. Within this framework, a 2014 Decree has established the “Rete del Lavoro Agricolo di Qualità”: a network aimed at countering irregular work in agriculture by connecting companies compliant with specific requirements under labour, social security and fiscal law (such as the application of local and national agricultural sector work agreements). Companies compliant with the requirements under labour, social security and fiscal law may apply for joining the network, and this is rewarded with special incentives. Companies listed in the network receive special benefits, such as being included in a “white list”. This list is taken in consideration by the government enforcement agencies, which prioritize their controls over companies not belonging to the network (the rule does not apply if workers or trade unions representatives ask for intervention or in case of complaints to judicial authority or other administrative authorities). Such reward mechanisms from Public Administration incentivize promising and best practices in the field of countering irregular work in the agricultural sector.
In line with this approach, the Law n. 199 of 29.10.2016 “Disposizioni in materia di contrasto ai fenomeni del lavoro nero, dello sfruttamento del lavoro in agricoltura e di riallineamento retributivo nel settore agricolo” (provisions on countering undeclared labour, labour exploitation in agriculture and wages rebalance in agricultural sector), provides for measures aimed at improving the criminal prosecution of the phenomenon (through the crimes of illicit intermediation and work exploitation) with particular regard to illicit capital accumulation by exploiters and the provision of confiscation of the goods and properties acquired through the exploitation activity. The Law provides for victims’ compensation and the activation of a plan for the treatment of seasonal workers (in particular foreign ones) with the direct involvement and control of Regions on their conditions. The Law is also aimed at controlling the illicit intermediation by favouring the meeting supply and demand of jobs. On this issue a working group (composed of Ministry of Agricultural, Food and Forestry Policies; the Ministry of Labour and Social Policies; the Ministry of Justice; Regions; Industry Associations; Trade Unions and Civil Society Organizations) signed the experimental Protocol “Contro il caporalato e lo sfruttamento lavorativo in agricoltura. Cura-Legalità-Uscita dal ghetto”.
In recent years there have been several social initiatives in the agricultural sector. Social agriculture represents not just an economic opportunity but also an instrument of inclusion and rehabilitation.
The Law 141/2015 is aimed at promoting a legislation framing principles and modalities of recognition/accreditation of practices of social agriculture, with no rigid definition and respecting the diversity of resources and vocations available at local level. The Law has the purpose of promoting social agriculture as a component of the multiple functions of agricultural companies and social cooperatives, with the aim of fostering the therapeutic re-integration of disadvantages and goods production at the same time.
Social agriculture is an operative instrument for local and regional governments – both directly or through ad hoc associations – to apply welfare policies at local level, also by involving a variety of interested parties such as institutions, agricultural companies and citizens.
A Decree of the Ministry of Agricultural, Food and Forestry Policies has established a special agency to apply and promote this legislation, the “Osservatorio Nazionale sull’agricoltura sociale”. The agency, with functions of monitoring and identification of training and promotion programmes in the field of social agriculture, has equal representation of State and Regions in its composition and its members are relevant personalities in the agricultural and social sectors.
The Osservatorio is an opportunity for elaborating future strategies and monitoring an increasing growing sector such the agricultural one. A social agricultural project is characterized by plurality and different professionality. Indeed, among the tasks of the Osservatorio there is the definition of the Guidelines for the activity of the public institutions on social agriculture matters.
- MIGRANTS SMUGGLING AND HUMAN TRAFFICKING
To increase cooperation activities of investigation, intensify financial controls on criminal groups’ profits and ensure punishment for transnational organizations profiting on migrants smuggling and human trafficking, in line with the Legislative Decree 24 of 2014 (transposing the EU Directive 2011/36) on February 2016, the Italian Government has adopted the National Action Plan Against Trafficking in and Serious Exploitation of Human Beings. The Plan is aimed at defining measures and strategies of intervention for the countering and prevention of trafficking, as well as at providing for actions of awareness-raising, social prevention, and social integration of victims.
- DEVELOPMENT COOPERATION
International Development Cooperation represents for Italy an instrument for creating stable relationships between countries and also a means of human rights and solidarity promotion; in this respect, the “General Rules Governing International Development Cooperation” define a ‘governance architecture’ for the development cooperation system, whose coherence and policy coordination will be ensured by the Inter-ministerial Committee on Development Cooperation (CICS), a task force made up of relevant ministries. The National Council for Development Cooperation has also been established, including the main public and private, profit and nonprofit actors in the field of international development cooperation.
Planned Measures (Box pg. 15)
- Conduct a comprehensive study of the Law 231/2001 in order to evaluate potential extension of the scope and application of the administrative liability of legal entities;
- Strengthen the role of the legality rating – primary competence of the Italian Competition Authority – with the aim of taking it into consideration in the elaboration of the ‘rating d’impresa’ – primary competence of the National Anticorruption Authority – with the aim of promoting the respect for human rights in all economic activities;
- Promote the “Rete Lavoro Agricolo di Qualità” with the aim of encouraging the social responsibility of agro-food industry, also with interventions of immigrants protection and through the realisation of projects such as “Villaggio Solidale” e “Buoni e giusti”;
- Strengthen the role of labour inspections for tackling and controlling the emersion of irregular work and caporalato;
- Further develop coordinating measures in the activities of prevention and control of irregular work and extend the scope and potential of the network of the “Rete Agricola di Qualità” in line with legislation that introduces the administrative liability for work exploitation and illegal intermediation and extends the availability of the compensation fund for victims of trafficking also to victims of caporalato;
- Implement the provisions included in the II Program of Action on Disability – currently under approval – with particular focus to line of intervention n. 5 “Labour and occupation” and to the dispositions concerning the definition of supporting measures and of a system of incentives for the I and II level collective negotiations on matters of flexibility, part-time and treatment-work-life balance for persons with disabilities or affected by chronic disease or for caregiver workers for persons with serious disabilities;
- Strengthen – also in line with the implementation of art. 25 of the UN Convention of Rights of people with disabilities – respect of fundamental rights of people with disabilities with regard access to medical treatment in hospitals and their quality, through the promotion and dissemination of the “Carta dei diritti delle persone con disabilità in ospedale” realized by the Coop. Sociale Onlus Spes contra Spem in 2010;
- Promote effective implementation of Legislative Decree n.254/2016 transposing the EU Directive 2014/95 on disclosure of non-financial and diversity information by large enterprises and groups;
- Fully implement the provisions of the new Law on Italian Development Cooperation with particular focus on the relationship between the profit and no profit actors and the definition of specific binding guidelines clarifying the role of business and private sector within development cooperation activities and their compliance with human rights;
- Ensuring the full implementation of Law 221/2015 on green economy, including in particular the elaboration of a ‘Green Act’ to promote environmental sustainability and foster investments in the green economy; these measures will be developed taking into due consideration the development of the relevant European Union frameworks such as the Climate-energy Package 2030 and the Circular Economy Package;
- Proceed to ratification of the 2014 Protocol to the ILO Forced Labour Convention and its implementation to counter activities of work exploitation and slavery;
- Promote an effective implementation of the Recommendation CM/Rec(2016)3 adopted by the Committee of Ministers of the Council of Europe to Member States on business and human rights;
GP 3 (b)
Planned Measures (pg. 16)
- Conduct a systematic review of the existing legal framework for contrasting all illegal forms of labour and labour exploitation in the agriculture, construction, manufacturing and services sectors;
- Conduct a comprehensive review of the existing commercial and civil law to assess and evaluate legislative reform introducing provisions such as the ‘duty of care’ or due diligence for companies;
Objective 1: ensuring State’s duty to protect, defend and respect human rights
A. Legislative measures [page 1]
2. “Reforming legal regulation regarding administrative liability. The aim is to regulate individual administrative liability in the Republic of Lithuania, to separate it from criminal liability, ensuring the main features of the administrative liability: simple fast-track process, preference to non-repressive impact measures, and their adequacy to the committed offence, thus increasing effectiveness of these measures.
The measure is carried out with a view to improving the Draft Code of Administrative Offenses of the Republic of Lithuania, submitted for deliberation to the Seimas of the Republic of Lithuania on 7 June 2012.”
Objective 2: promoting corporate responsibility and respect in the field of business and human rights
A. Implemented and on-going measures for the development of CSR in Lithuania [page 6]
3. “The application of CRS principles to the state-owned enterprises … It was foreseen that state-owned enterprises (hereinafter referred to as the SOE) operating under the principles of good governance may act as examples of socially responsible business. To this end, since 2010, actions were taken to restructure SOEs with a particular focus on corporate transparency and social responsibility.”
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
1.1. 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.
3.4 Transparency and reporting
Reporting [page 30]
“The government continues to call companies’ attention to the need to comply with the Corporate Governance Code and the principle that members of the management and supervisory boards should take account of CSR in fulfilling their duties. The government has pointed out that CSR should be part of the entrepreneurial spirit. It is therefore essential to devote serious attention to CSR within the existing structures and responsibilities of the management and supervisory boards. Their reports should also include more information on their CSR policies.”
Summary [page 8]:
Norway already has sound legislation for safe guarding human rights. In many fields processes have already been started and changes made that are relevant to UN and OECD instruments, for example the Government’s state ownership policy, corporate governance of the Government Pension Fund Global and a number of measures implemented by diplomatic and consular missions.
1. Global developments and CSR
1.3 CSR in the Norwegian business sector [page 10]:
The Norwegian Corporate Governance Board (NUES) has published recommendations that have to be followed by all companies listed on the Oslo Stock Exchange.
2. The State Duty to Protect Human Rights
GP3 [page 18]:
In meeting their duty to protect, States should: (…) Ensure that other laws and policies governing the creation and ongoing operation of business enterprises, such as corporate law, do not constrain but enable business respect for human rights.
Pillar II: The corporate responsibility to respect human rights
2. Dialogue and exchange of knowledge and experience in implementing CSR [page 29]
“There are four categories of corporate activities that relate to corporate social responsibility: corporate governance, employees, the environment, and the product”.
II. Antecedent and Context
Human rights are one of the elements that comprise Corporate Social Responsibility along with others such as social elements; environmental elements; also those relating to the balance of work and family life; good governance; and transparency.
Guiding Principle 2
“The self-regulation codes will also be promoted, taking as an example relevant sector experiences, such as the Global Code of Ethics for Tourism of the World Tourism Organization (WTO) or the Code of Conduct for the protection of children and adolescents against sexual exploitation in the Tourism and Travel Industry, as well as the relevant labor conventions of the ILO.”
“The Government will establish networks among Spanish companies or that the ones that operate in Spain for the promotion of: measures, procedures or internal systems that can effectively contribute to the prevention and/or mitigation of the negative consequences of business activities on human rights; as well as for the dissemination of good practices aimed to avoid these consequences, or to influence their avoidance, reduction or remedy. The establishment of procedures for internal assessment and determination of action will be promoted in a manner that avoids other negative consequences on human rights.”
“The Monitoring Commission will design and submit to the Government the adoption of an incentive system that includes both large companies and Small and Medium Enterprises (SMEs) that carry out policies in the field of human rights. These incentives may be economic, commercial, visibility and image, or other nature, to encourage companies to have policies and reliably certify that they have implemented adequate procedures at a global level according to their size and circumstances, namely:
A public commitment to assume its responsibility to respect human rights in accordance with the provisions of the Principle no. 16;
A process of due diligence aligned with the sectorial guides regarding the OECD (due diligence guidance), and based on the dialogue with stakeholders that allows identification, prevention, mitigation, and accountability of how they address the impact of their own activities and those that are directly related to their business relationships in accordance with the provisions of Principles no. 17 to no. 21;
Some processes that allow to remedy all the negative consequences on human rights that have caused or contributed to provoke according to what is established in Principles no. 22, no.29, no. 30, no. 31.”
Guiding Principle 3
In order to increase transparency, and the confidence of consumers and investors on Spanish companies, the Government will compile the reports that companies write voluntarily, in accordance with the Spanish Strategy for Corporate Social Responsibility, and the Article 39 of the Sustainable Economy Law. It will be encouraged that these take into account the impact of their activities on human rights, including the value chain, introducing a specific chapter for that purpose. Likewise, and in relation to the reports and reports mentioned in the article 35 2 a) of the Sustainable Economy Law, which binds state business corporations, and public business entities attached to the General State Administration, it will be promoted the inclusion of a section on human rights. In addition, the transposition of Directive 2014/95 / EU on disclosure of non-financial information and information about diversity by certain large companies and certain groups will be carried out.
Guiding Principle 28
“The Government will promote the development of practical guides and compile good practices on the establishment of grievance mechanisms managed by companies themselves that respect the criteria identified in Guiding Principle 31.”
Guiding Principle 30
“The Government will support the development of effective mechanisms for access to remedy in the collaborative mechanisms it participates in in accordance with the criteria identified in Guiding Principle 31.”
“The Government will publish the recommendations that are appropriate for the companies to establish or participate in the effective operational level grievance mechanisms available to the individuals affected by their negative consequences.”
The three pillars of the UN Guiding Principles on Business and Human Rights [page 6]
“A clear Swedish profile in this area can contribute to strengthening Sweden as a brand. The Guiding Principles are also fundamental to the corporate governance of state-owned enterprises.”
1 The State duty to protect human rights [page 11]
Criminal law provisions to protect human rights
“Sweden has a number of criminal law provisions for the protection of human rights regardless of the context in which an offence is committed, including in the business context. Through these criminal provisions Sweden also fulfils its international commitments in relevant respects. Examples include: …
Corporate fines entail liability for companies, among others. Although only natural persons can be convicted of a crime, corporate fines may be imposed on a business operator (e.g. a legal entity) for crimes committed in the exercise of business activities. (Chapter 36, Penal Code).”
Annex: Measures taken [page 23-24]
The State as owner
- “According to the government state ownership policy, state-owned companies are expected to set a good example, which means that they must seek to comply with international guidelines such as the UN Global Compact, the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises. They must also be transparent and report in accordance with the Global Reporting Initiative (GRI). State-owned companies must also identify areas of CSR that are relevant to their business strategy and the board of directors must set strategic sustainability targets. The ownership policy applies in companies where the State is the majority owner; in other companies, where the State is part-owner, the State seeks to ensure that the ownership policy is followed, in dialogue with other owners.
- The Government has held seminars for the chairs of boards and managing directors of all state-owned companies on the Government’s expectations regarding the companies’ application of the UN Guiding Principles on Business and Human Rights. A study was carried out in 2013 on the international guidelines from the UN and the OECD, aimed at facilitating companies’ application of the state ownership policy. …
- A business analysis tool that sheds light on relevant areas of CSR, including human rights, has been developed for state-owned companies by the Government Offices corporate management organisation. The analysis increases the owner’s awareness of the companies’ risks and opportunities and how these can be managed. The result of the analysis is integrated in corporate governance and taken into account in the Government’s regular dialogue with the company, in monitoring the company’s development, and in the recruitment and nomination of board members.
- Like other state-owned companies, Swedfund International AB (Swedfund) and the Swedish Export Credit Corporation (SEK) are required to comply with the government state ownership policy for CSR, as described above. Moreover, Swedfund and SEK have social mandates specially adopted by the Riksdag. Swedfund is required to ensure that its investments comply with international standards and CSR principles, within clear and sound corporate structures that do not contribute to tax evasion, money laundering or terrorist financing. SEK is required to take account of conditions such as the environment, corruption, human rights and working conditions in its credit assessments.”
Annex: Measures planned [page 27-29]
Regulations and legislation
- “The interim report Implementation of the EU’s new accounting directive (Swedish Government Official Reports 2014:22) proposes enhanced transparency regarding payments made by some companies active in the extractive industry and in the logging of natural forests. The provisions will require companies to publish annual reports on payments made to authorities in the countries in which they operate. The aim is to combat corruption.”
- The EU has adopted a Directive amending the Accounting Directive on disclosure of non-financial and diversity information. Corporate disclosure of sustainability and diversity policy (Ministry Publications Series 2014:45) proposes that certain companies prepare a sustainability report providing information on, for example, respect for human rights and anti-corruption activities. It is also proposed that the corporate governance reports of certain listed companies disclose the diversity policy that applies to their board.”
The State as owner
- “CSR will continue to be an integral part of the Government’s active corporate governance of state-owned companies. The human rights work undertaken by state-owned companies will be examined in relevant cases in the sustainability analysis and followed up in stakeholder dialogues between representatives of the owner and the companies.”
“The Government’s clear expectation is that companies operating in Sweden or abroad comply with the UN Guiding Principles for Business and Human Rights and other relevant guidelines in this area, and review their due diligence and redress mechanisms. Companies operating in markets where human rights challenges are particularly serious should place special emphasis on work in the area.”
5. National Action Plan on Business and Human Rights
Section 5.7.3 The State-business nexus [page 22]:
PI17 Human rights due diligence by federal businesses and federal government-associated businesses
…Relations between government-associated enterprises and the Confederation are described in the federal government’s Corporate Governance Report. The Federal Council defines its strategic goals for related enterprises every four years. While these goals do not specifically contain criteria for business and human rights, the Federal Council expresses the expectation that related enterprises will pursue a sustainable corporate strategy to the best of their business ability. In 2017, the federal government will draw up a status report on the fulfillment of CSR in its own activities. This is to cover the federal government’s role as an employer, a purchaser, an investor and as an owner of federal government-associated companies (in accordance with the Federal Council’s CSR position paper, activity B.3.1). This interpretive framework should also highlight any need for action in the future, and where appropriate propose measures to the Federal Council.
The UK 2013 NAP provides in the section detailing The existing UK legal and policy framework that [page 9]:
“The UK has created or endorsed a number of instruments that motivate different aspects of good corporate behaviour and respect for human rights. These include:
- the UK Bribery Act where, in line with our OECD commitments, UK companies are now liable in the UK for acts of bribery committed anywhere in the world;
- the Declaration on Fundamental Principles and Rights at Work adopted in 1998 and the 8 core ILO Conventions ratified by the UK on labour standards;
- the OECD Guidelines for Multinational Enterprises, where the UK is generally recognised as having one of the most effective National Contact Points;
- Section 172 of the Companies Act 2006, which makes it clear that, in fulfilling their duty to act in a way which they consider would be most likely to promote the success of the company, directors must think about matters which might have a bearing on that success, including the interests of the company’s employees and the impact on the community of the company’s operations.
The UK 2016 Updated NAP reiterates these instruments [page 7] and makes an implicit reference to corporate law and governance when it raises the issue of the Modern Slavery Act which regulates reporting obligations of certain companies.
The UK 2016 Updated NAP also notes in the chapter on UK Action Plan implementation and further development that [page 24]:
“A non-exhaustive list of the different mechanisms for the promotion of good corporate behaviour, together with the Government departments that lead on them, is available on the online copy of this paper, found at https://www.gov.uk/government/publications/bhr-action-plan”
The U.S. NAP includes a substantial amount of information on this issue, focused largely on corruption and transparency.
Outcome 1.1: Promoting RBC Globally
New Actions [page 8]
“Corruption Consortium: An important deliverable from the International Anti-Corruption Summit held in the United Kingdom in May 2016, State and the U.S. Agency for International Development (USAID) will launch the Global Anti-Corruption Consortium (GACC), a new initiative to support international efforts to expose corruption, raise public awareness, and facilitate action by government, law enforcement, and multilateral organizations. GACC will expand the quality and scope of civil society investigations and reporting by mentoring investigative journalists and facilitating collaboration among anticorruption civil society actors. The initiative will improve civil society’s ability to pursue action by government and international bodies to combat corruption.” – Implementing Department or Agency: State, USAID
Ongoing Commitments and Initiatives [page 8]
“Inter-American Convention Against Corruption: The United States will continue to actively support implementation of the Inter-American Convention Against Corruption, including through active participation in the country review process” – Implementing Department or Agency: DOJ, State, Treasury, Commerce
“Asia–Pacific Economic Cooperation (APEC): The U.S. government has played an important role in numerous APEC initiatives to combat corruption, including the recent APEC Principles on the Prevention of Bribery and Enforcement of Anti-Bribery Laws, as well as the APEC General Elements of Effective Voluntary Corporate Compliance Programs adopted by APEC Leaders in 2014. For example, in August the United States and Peru hosted an all-day APEC Workshop on anti-bribery corporate compliance programs and incentives, organized by the Peruvian High-Level Anticorruption Commission and the Department of Commerce. The U.S. government is also actively engaged in the Business Ethics for APEC Small and Medium Enterprise Initiative, the world’s largest collective action mechanism to strengthen ethical business practices in the medical device, biopharmaceutical, and construction and engineering sectors.” – Implementing Department or Agency: State, Commerce
Outcome 1.2: Utilize U.S. Law, Multilateral Agreements, and Diplomacy to Promote and Enforce High Standards
Ongoing Commitments and Initiatives [page 9-10]
“Free Trade Agreements: … All U.S. FTAs since 2004 also contain transparency and anti-corruption provisions, including requiring our trading partners to criminalize both domestic and foreign bribery. For instance, the TPP includes a historic transparency and anti-corruption chapter. The TPP Parties have also agreed to encourage companies to voluntarily adopt corporate social responsibility principles that the TPP parties have themselves supported or endorsed relating to labor and environment issues.” – Implementing Department or Agency: USTR, State, Commerce, DOL
“Anti-Bribery and the OECD: The United States plays a leadership role in the Anti-Bribery Convention’s monitoring mechanism, conducted by the OECD Working Group on Bribery in International Business Transactions, which has been instrumental in increasing the number of countries enacting and enforcing foreign bribery laws. In the coming year, the U.S. government – led by State, the Departments of Justice (DOJ) and Commerce, and the Securities and Exchange Commission (SEC) – will continue to push for robust country reviews of Parties to the Antibribery Convention and examine obstacles to advancing the global efforts to address international bribery and corruption.” – Implementing Department or Agency: State, Commerce, DOJ, SEC
Outcome 1.2: Utilize U.S. Law, Multilateral Agreements, and Diplomacy to Promote and Enforce High Standards
Ongoing Commitments and Initiatives [page 10]
“International Anti-corruption and Good Governance Act (IAGGA): The U.S. government will continue its commitment to implement the IAGGA.” – Implementing Department or Agency: State, USAID, Commerce
“Federal Funding Accountability and Transparency Act of 2006 (as amended): Under this law’s implementing regulations, federal awardees currently report a variety of data on their first tier sub-awardees. The Department of the Treasury (Treasury) will continue to make this data available to the public on http://www.usaspending.gov/http://www.usaspending.gov/.” – Implementing Department or Agency: Trade
Collaborating With Stakeholders [page 13]
“Through the Extractive Industries Transparency Initiative (EITI), the United States is committed to promoting transparency in the extractives sector by playing an active role on the International EITI Board and Board committees. The U.S. commitment to EITI — both to promote it abroad and to implement it at home — sends a strong signal to our international partners that transparency is critical for countries at all levels of development, and in all regions.”
Outcome 2.1: Enhance the Value of Multi-Stakeholder Initiatives on RBC
New Action [page 14]
“Promoting Rights and Accountability through RBC: In May 2016, USAID launched a new Broad Agency Announcement calling for organizations and companies to collaborate in the development, piloting, testing, and scaling of innovative, practical, and cost-effective interventions to address human rights and anti-corruption in business activities globally. USAID seeks through this announcement to create more strategic, focused, and results-oriented approaches to generate solutions to rights abuses and corrupt practices in global commerce, and form partnerships to target risks and prevent violations. Under this umbrella announcement, USAID will continue its Supply Unchained initiative to better identify — and counter — human trafficking and other labor exploitation at its source.” – Implementing Department or Agency: USAID
Outcome 3.1: U.S. Government Reports
New Actions [page 17-18]
Country-Level Land Governance Profiles: USAID will develop and/or update 15 public country-level land governance profiles, which explain the land laws, land use patterns, gender concerns, land administration, and land markets within a given country. These profiles are an invaluable introduction for businesses that are looking to make land-based investments in a given country, and are conscientious about investing in an ethical and responsible manner. These profiles are also a critical resource for Embassy staff and others who counsel foreign businesses on potential investments.” – Implementing Department or Agency: USAID
Ongoing Commitments and Initiatives [page 18]
“Investment Climate Statements: State has and will continue to increase the focus on RBC in its annual country reports on investment climates. These reports, which have long covered all aspects of global investment climates, now include descriptions of labor rights and corporate responsibility practices.” – Implementing Department or Agency: State
“Country Commercial Guides: Commerce will continue to include an anti-corruption section in U.S. and Foreign Commercial Service Country Commercial Guides.” – Implementing Department or Agency: State, DOJ, SEC, Commerce
“Anti-Corruption Publications: U.S. government agencies will continue to provide information to companies through a number of U.S. and international publications designed to assist firms in complying with anti-corruption laws, including The FCPA Resource Guide.” – Implementing Department or Agency: State
“Responsible Investment in Burma: In 2012, the U.S. government issued the Reporting Requirements for Responsible Investment in Burma, which required U.S. persons undertaking new investment in Burma to report on certain policies related to responsible and transparent business practices. On October 7, 2016, the President signed Executive Order 13742, which terminated the sanctions program with regard to Burma and made compliance with the reporting requirements voluntary. State will continue to host the voluntary reports on the Doing Business in Burma website and use the information collected as a basis for informed consultations with U.S. businesses to encourage and assist them to develop responsible business practices in Burma. State is also working closely with the Government of Burma as it develops and implements standards for responsible business practices.” – Implementing Department or Agency: State, Treasury
Outcome 3.2: Build U.S. Government Officials’ Capacity to Support RBC
New Actions [page 19]
“RBC Training for U.S. Embassies: … U.S. embassies are already engaged in promoting and recognizing RBC via their participation in the Secretary of State’s Award for Corporate Excellence (ACE) process.” – Implementing Department or Agency: State
Ongoing Commitments and Initiatives [page 19]
“FCPA Training: State and Commerce will continue to provide FCPA and related anticorruption training to Commerce’s U.S. and Foreign Commercial Service officers and State Foreign Service officers so that they may raise awareness about corruption and compliance programs and assist U.S. companies as appropriate when confronted with corruption overseas.” – Implementing Department or Agency: State, Commerce, DOJ, SEC
Outcome 3.3: Capacity Building and Technical Support to Promote Enabling Environments
Ongoing Commitments and Initiatives [page 20]
“Engagement with Companies on Anti-Corruption Issues: DOJ, SEC, Commerce, State and other U.S. government agencies conduct outreach to the business community and will continue to coordinate with the private sector on anti-corruption issues. To this end, DOJ will continue to provide businesses, through its FCPA opinion release procedures, the opportunity to seek an opinion as to whether certain prospective, non-hypothetical conduct conforms with DOJ’s enforcement policy. Commerce and State, including through Foreign Commercial Service officers and State Foreign Service officers, will continue to raise awareness about corruption and the importance of effective compliance programs, and assist U.S. companies as appropriate when confronted with corruption overseas. High-level Commerce officials also meet with business leaders around the world and advocate with government officials on rule of law and anti-corruption issues, and the Commercial Law Development Program (CLDP) meets regularly with U.S. businesses to better understand their concerns about, and provide programming in priority countries on, the legal and regulatory reforms needed to reduce corruption and level the playing field in developing countries for U.S. companies.” – Implementing Department or Agency: DOJ, SEC, State, Commerce
Outcome 4.1: Recognize RBC Best Practices
New Actions [page 22]
“Promoting Human Rights in the ICT Sector: … State, working with other agencies and stakeholders, will develop a regular mechanism to identify, document, and publicize lessons learned and best practices related to corporate actions that promote and protect human rights online. …” – Implementing Department or Agency: State
“Modernize the Secretary of State’s Award for Corporate Excellence (ACE): For 17 years the ACE has recognized the best of U.S. business conduct abroad. Until recently, the ACE focused principally on corporate philanthropy rather than a company’s efforts to ensure that its core business is conducted responsibly. In 2015, the ACE was given out in distinct categories for the first time, designed to align with RBC international best practices. Partly as a result of these updates, the ACE ceremony received unprecedented global participation, with a 470 percent increase in Twitter activity, articles in Voice of America and the Huffington Post, and a 100 percent increase in ceremony viewership online. For 2016, the ACE will continue its focus on highlighting RBC best practices, and will be awarded for transparent operations, inclusive hiring, sustainable oceans management, and small or medium enterprises.” – Implementing Department or Agency: State
Annex II: Key Domestic Executive Orders and Regulatory Efforts [page 26-29]
“… The U.S. Foreign Corrupt Practices Act of 1977 (FCPA): In general, the FCPA prohibits certain classes of entities and individuals, including U.S. companies and citizens and companies publicly traded on a U.S. securities exchange, from offering to pay, paying, promising to pay, or authorizing payments to foreign officials to influence their acts or decisions or to secure other improper advantages.
”No Safe Haven” Initiative: The “No Safe Haven” initiative aims to deny entry into the United States and U.S. citizenship to the corrupt, to bribe payers, to those who benefit from corruption, those who commit certain human rights violations, and to human rights abusers and war criminals. The initiative is complemented by Presidential Proclamation 7750, which suspends the entry, in part, of public officials who accept bribes and the individuals who provide them, along with immediate family members of public officials who benefit from the corruption.
Kleptocracy Asset Recovery Initiative: DOJ uses legal tools to trace and recover the proceeds of foreign corruption in the United States. A team of prosecutors works with federal law enforcement agencies to track the proceeds of foreign corruption, prosecute those who launder the proceeds of corruption, and put forfeited assets to use for the benefit of the people of the country victimized by such abuses of public trust. The Initiative ensures that corrupt foreign leaders cannot seek to launder or spend their stolen wealth in the United States. DOJ also participates in various international fora on asset recovery and, along with the Departments of Treasury and State, pushes to strengthen the global implementation of the international anti-money laundering and counter-terrorist financing standards through the FATF. In addition to the Kleptocracy Initiative established in 2010, DOJ has five other anti-corruption programs. DOJ focuses on investigating and prosecuting domestic public integrity offenders, bribe payers, taxpayers who seek to conceal foreign accounts, and money launderers who facilitate the movement, use, and concealment of corrupt funds, and DOJ continues to provide legal assistance to its foreign partners to fight corruption and ensure it is not a profitable enterprise.
Money Laundering and Bank Integrity: Treasury administers the Bank Secrecy Act (BSA), which, among other things, requires financial institutions to maintain effective anti-money laundering (AML) compliance programs. Effective AML programs include, among other things, the ability to detect and report suspicious activity, including corruption, and to conduct due diligence and enhanced measures when banks, broker-dealers, or other institutions deal with senior foreign political figures. DOJ prosecutes criminal violations of the BSA focusing on criminal violations by financial institutions whose actions threaten the integrity of the individual institution or the wider financial system, as well as professional money launderers and gatekeepers. These unique cases reinforce the obligation on U.S. businesses in the financial sector to harden their infrastructure against financial crime—including bribery, misappropriation, and theft—and reinforce the private sector’s role as a strong line of defense against the introduction of ill-gotten gains to the U.S. financial system. …
“Transparency: The U.S. government is engaging in efforts to strengthen financial and corporate transparency to make our country even less attractive for the corrupt looking to spend the proceeds of their crimes. To that end, DOJ has submitted to Congress a package of legislative proposals that will improve the United States’ ability to combat money laundering, particularly when linked to foreign official corruption, and to locate and recover stolen assets and other criminal proceeds. Additionally, Treasury recently announced a final rule to increase transparency in the financial system. The final Customer Due Diligence rule, which was first noticed in 2014 and was subject to a public comment process, will require that financial institutions—including banks and other entities—collect and verify the personal information of the real people (also known as beneficial owners) who own, control, and profit from companies when those companies open accounts. It clarifies and expands BSA obligations and will be fully implemented by financial institutions no later than two years after its effective date (i.e. May 11, 2018). Finally, Treasury, on behalf of the Administration, sent to Congress draft legislation that would require companies formed within the United States to file adequate, accurate, and current information on its beneficial owners with Treasury. The proposed legislation includes penalties for failure to comply and is necessary to prevent the misuse of companies formed under state law. To address potential vulnerabilities in the domestic real estate market, Treasury uses its authorities to require certain title insurance companies to identify the natural persons behind shell companies used to pay “all cash” for high-end real estate in six major metropolitan areas.”