Non-financial reporting

Action point 15

Incorporate the principle of “due diligence” into the management of the company, also in the terms of human rights

Intégrer le principe de « diligence raisonnable » au sein des organismes de gestion de l’entreprise, également en matière de droits de l’Homme

The NAP explains that “the OECD, and the EU, wants to make more non-financial information available. In this context, companies are encouraged to make public their policy on corporate ethics, social affairs, human rights, including, where applicable, in their supply chains, the human rights risks identified, their action plans to prevent any negative impacts and to remedy if necessary, and the measured impact of these action plans.” Alongside the federal government, the Wallonia, Flemish and Brussels governments are committed to encouraging the publication of non-financial reporting by large companies.

Action point 16

Promote social reporting, including human rights

Promouvoir les rapports sociétaux, droits de l’Homme inclus

This is the main action point covering the issue of non-financial reporting. The NAP explains that given the adoption of the new EU directive 2014/95/EU, some major companies will be required to disclose non-financial information in their annual report relating to the environmental, social and human resource issues, respect for human rights and the fight against corruption and bribery. Companies that meet the conditions for making such a non-financial statement but that do not have a policy on one or more of the above-mentioned issues will be required to provide a clear and reasoned explanation of the reasons for this choice and to include it in this non-financial reporting.

Belgium’s actions will include:

• Firm transposition of the directive 2014/95/EU so that it is quickly and clearly established what is expected from companies as part of the non-financial reporting.
• Consult with stakeholders on this issue. In collaboration with employers’ organizations, clear communication will be put in place to inform large companies about the new obligations that will enter into force from 2017 onwards.
• Insist within the European Commission on support measures, for large enterprises that are obliged to publish reports on this issue, as well as for small and medium-sized enterprises and other organizations that wish to do so on a voluntary basis.
• Regarding reporting by public services, the federal public services will have to draw up a social report every second year, with the objective of cross-cutting sustainable development in management of contracts. This report should be prepared in accordance with the guidelines of the Global Reporting Initiative. The reports will be published, inter alia, through the website: http://www.rs.belgium.be/en/

Read more about Belgium

Pillar 1: The State Duty to Protect Human Rights

Strand 8: Legislation, Policies and Incentives

Action Point 8.1. (page 49)

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 9.3 (page 50)

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 3: Non-State-Based Mechanisms

Action Point 3.1 (page 56-57)

The Ministry of Economy will:

• Promote, through the Division of Associativity and Social Economy, strategies and mechanisms of accountability and non-financial reporting for cooperatives, which will include the potential risks of their businesses on human rights. To encourage the use of this practice, an electronic template will be developed in 2017, free of charge and freely available, for these bodies to report to the State and their different target audiences.

Read more about Chile

• Action point 4.12 (p. 15):

 “In the year following the Plan’s launching, the Ministry of Mines and Energy will design a strategy to step forward as for the respect for human rights in the mining-energy sector, which will adjust the Principles and Criteria of the Extractive Industries Transparency Initiative (EITI) to the national needs.”

• 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 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.”

Read more about Colombia

Non-financial reporting [page 21-22]

“Implements Principle 3d

Reporting on the activities of large companies works to the benefit not only of business partners and shareholders, but also other stakeholders. With this in mind, companies are increasingly reporting not only on their financial position, but so on the non-financial aspects of their operations. Information on the impacts that companies’ operations have on the environment, social aspects, human rights and the protection thereof is disclosed in separate non-financial reports or as part of the annual report.

Many companies already engage in non-financial reporting entirely voluntarily because this is regarded as a matter of prestige and an opportunity to improve their market position. Nevertheless, the European Union, having decided to coordinate non-financial information, has issued a Non-financial Reporting Directive. [Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.]

The non-financial reports drawn up by certain large entities could become an important tool for transparency. The auditor examines whether an entity has drawn up non-financial information and disclosed it in the annual report or consolidated annual report, or whether it has produced a separate report. As non-financial reporting shoulders entities with a heavier administrative burden and extra costs, it is not compulsory for smaller entities, who will be able to decide for themselves whether or not to publish a non-financial report.

Current state of play:

• The Czech Republic has transposed the Non-financial Reporting Directive into Act No 563/1991 on accounting (in particular Part Eight thereof). Non-financial information will be disclosed by large public-interest entities with more than 500 employees. Information on respect for human rights will be a mandatory part of the report.
• The European Commission (DG FISMA [Directorate‑General for Financial Stability, Financial Services and Capital Markets Union]) has produced general guidelines for businesses on how to apply the Non-financial Reporting Directive.

Tasks:

• Publish the European Commission’s general guidelines on the websites of the National CSR Portal, the Ministry of Industry and Trade and the Ministry of Finance, and in Finanční zpravodaj (“Financial Bulletin”).
  Coordinator: Ministry for Human Rights, Ministry of Industry and Trade, Ministry of Finance
  Deadline: 31 December 2017
• Provide information on the guidelines as part of training courses or in guidance and informational materials on non-financial reporting.
  Coordinator: Ministry of Finance
  Deadline: Running”

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.”

Voluntary non-financial reporting [page 38-39]

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

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

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

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

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

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

Read more about Czech Republic

2. The state duty to protect human rights

2.2 Recommendations from the Council for CSR on the state duty to protect [page 10]

“In November 2011, the Danish Council for CSR started working on recommendations to the Government on how the UNGPs on the state duty to protect could be implemented. The council finished its work in January 2012 where the recommendations were handed over to the Government. Among other initiatives, the Council for CSR recommended that the Danish Government:
– Expands the existing Danish corporate non-financial reporting requirement to include mandatory reporting on human rights; …”

2. The state duty to protect human rights

2.3 Actions taken

Reporting requirement on human rights impact [page 11]

“Reporting requirement on human rights impact Another priority for the Danish Government has been to strengthen the existing legal reporting requirement for the largest Danish companies and all state-owned companies (GP 3d).

Since 2009, large companies including all state-owned companies and institutional investors in Denmark have been required to report on their work on corporate social responsibility. This means that while Danish businesses are free to choose whether or not they wish to have a CSR policy there is a statutory requirement that they must take a position on CSR in their annual reports.

If the company has a CSR policy, the company must account for this policy in their annual reports, including any CSR standards, guidelines or principles the company employs. Secondly, the company must report how these policies are translated into action, including any systems or procedures used. Thirdly, the company must evaluate what has been achieved through the CSR initiatives during the financial year, and any expectations it has regarding future initiatives. If the company does not have any social responsibility policies, this must be reported.

In June 2012, this reporting requirement was expanded so that the largest Danish companies from 2013 expressly must state in their reports what measures they are taking to respect human rights and to reduce their impact on the climate. This means that if a company has a policy on human rights or climate issues, it must report according to the existing structure; what is the policy, how has the policy been translated into action and what has been achieved through the initiatives. If the company does not have policies for human rights or climate issues, this must also be disclosed. The purpose is to further strengthen Danish companies’ activities in relation to human rights and climate change which will be beneficial to society overall, but also to the individual company.

Three years after the reporting requirement was introduced, analyses show that companies generally appear to have been encouraged to report on CSR. In the course of the first three years of the legal requirement’s existence, nearly 50% of the companies reported on CSR for the first time. Secondly, there have been significant improvements in reporting practices in a number of areas. There is, nevertheless, still room for improvement as regards reporting consistency and reporting on the results of the CSR work. For information on Danish companies reporting on human rights see section 3.3.”

3. The corporate responsibility to respect human rights

3.3 Actions taken

Evaluation of CSR reporting in large and listed Danish companies [page 19]

“In 2008, Danish Government introduced a legal requirement for large companies in the Danish Financial Statements Act (see section 2.3 page 6 for more on the reporting requirement). Since the statutory CSR reporting was introduced a survey on the effects of the legal requirement has been conducted in three consecutive years. The surveys were based on a rolling group of participants, meaning that the same group of companies has been surveyed the previous years. Since the group has been subject to the reporting requirement for three years it includes – in the last survey – very few companies reporting for the first time. As expected, there have also been few changes in the choice of topics and content in the reports.

In the financial year 2010, a significant increase in the number of companies reporting actions relating to human rights (38% compared to 16% in 2009) and labour rights (35% compared to 16% in 2009) was noted. In the 2011 financial year, these reporting topics were as common as in 2010. Due to recent developments in international CSR principles (in particular the development of the UN Guiding Principles on Business and Human Rights), an increased focus on human rights, in particular, can be expected in the future. Following the latest amendment of Section 99a of the Danish Financial Statements Act, companies thus have to report on the topics of human rights and climate with effect from the 2013 financial year.”

Award for Best Non-financial Report [page 19]

“The Danish trade organization of auditing, accounting, tax and corporate finance, “FSR – Danish Auditors” annually announces the company with the best CSR report both for large companies and SMEs. The reports are judged by a panel of selected representatives from Danish businesses, organization, financial sector, educational institutions, etc. As part of the evaluation the judges look at whether companies also report on difficult subjects such as adverse human rights impacts.”

Further on, in the section Recommendations from the Council for CSR on the State Duty to Protect [page 11], the NAP states:

“Among other initiatives, the Council for CSR recommended that the Danish Government:

• Expands the existing Danish corporate non-financial reporting requirement to include mandatory reporting on human rights.”

Appendix 1, GP 3d

Status in Denmark (initiatives implemented before the UN ratification of the Guiding Principles) [page 27]

“Mandatory CSR reporting

As part of the first national action plan for CSR, the Danish Government introduced a reporting requirement to ensure that major businesses, institutional investors and unit trusts report on their CSR work in the management review of the annual reports. The duty to report for major businesses, institutional investors and unit trusts has entailed an obligation to report on their CSR policies and how they implement the policies in practice. Businesses and investors must also report if they have yet to set up policies for the area. This fact must appear from the management review of the businesses’ annual reports.”

Initiatives taken or planned as a dedicated measure to implement the UNGPs (after the UN ratification of the Guiding Principles) [page 27]

“Reporting on human rights and climate 

From 2013 the 1,100 largest Danish companies and all state-owned limited liability companies must report on CSR in their annual reports. The Government will introduce a bill proposing that the largest Danish companies and state-owned limited liability companies in future must expressly state in their reports what measures they are taking to respect human rights and reduce their impact on the climate.”

Appendix 1, GP 10 continued

Initiatives taken or planned as a dedicated measure to implement the UNGPs (after the UN ratification of the Guiding Principles) [page 32]

“The Government has pro-actively supported the European Commission’s proposal for an EU Directive as regards disclosure of non-financial and diversity information. The Danish government finds that the expected European regulation is a timely opportunity for Europe and European companies to further strengthening reporting practices with regard to human rights. In addition it sends an important signal globally that while transparency is important in itself, a leveling playing field is needed.”

Read more about Denmark

1 The state obligation to protect human rights

1.3 Activities in the EU [page 16-17]

NON-FINANCIAL REPORTING

“On 18 April 2013, the European Commission made a proposal to amend the accounting directive for the disclosure of so-called non-financial information of certain large companies.

The proposal shall be applied to companies of significant public interest with more than 500 employees on average on the account closing date. According to the proposal, such companies should include in their annual report a declaration stating material data related to the environment, social affairs, employees, human rights, and the prevention of corruption and bribery. The declaration should contain a short description of the business model, a description of the policies related to the areas mentioned above as well as the due diligence related to them, the results obtained in the policies, the main risks and risk management that apply as related to the areas mentioned above, and the non-financial performance indicators significant for company business. Instead of a declaration attached to the annual report, companies may also publish separate reports on certain conditions.

In February 2014, the negotiations between the Commission and the Parliament reached an agreement on the proposal, and the proposal is likely to be submitted to Parliament in April. After this, it will also be approved by the Council of the European Union. The proposal is due for approval before the end of the parliamentary term in May 2014. If the proposal is approved, it must enter into force in Finland in 2016. In this case, it is estimated that the reporting obligation would apply to the financial year 2017 at the earliest. On a national level, Finland will initiate the preparations to implement the directive as soon as possible.”

2 The state and companies

2.1 The state as an economic operator [page 22]

CORPORATE GOVERNANCE

“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.”

3 Expectations towards companies and support services

3.2 Reporting on corporate social responsibility [page 26]

“Reporting on corporate social responsibility may be a significant factor in monitoring the human rights impacts and risks of companies. In the Resolution on Corporate Social Responsibility, the Finnish Government encourages companies to publish the non-financial data on the social and environmental impact of their activities. The Ministry of Employment and the Economy and the Ministry of the Environment are involved in organising the annual competition for reporting on corporate social responsibility. The competitions have been organised since 1996 with a view to encourage companies to report on CSR. When reporting becomes mandatory for some of the companies (cf. Section 1.3 on non-financial reporting), the question of reforming the competition must be addressed.

International information on the content of companies’ responsibility reports is available in a database maintained by the Global Reporting Initiative (GRI). In Finland, Corporate Responsibility Network FIBS acts as a partner for GRI for all Finnish companies and organisations to register their responsibility reports in the database. By means of the database, companies’ responsibility reports can be compared by branch of activity and by geographical area. The database also provides useful information concerning the international corporate social responsibility standard to which each report refers.

As a follow-up measure, the working group proposes that

• human rights be adopted as the annual theme of the reporting competition.
  Principal responsible party: Ministry of Employment and the Economy, schedule before the end of 2015.”

Read more about Finland

I- The State’s Obligation to Protect Human Rights

The International Framework [page 13]

… France also chairs the Group of Friends of Paragraph 47 of the Rio+20 Declaration. This group promotes sustainable development reporting to better ensure that economic actors respect social, environmental, good governance and human rights standards. This group successfully advocated for reporting to be reinforced and extended to all SDGs.

Actions Underway [page 16]

• Working with the Group of Friends of Paragraph 47 of the Rio+20 Declaration, France supports the reinforcement of reporting requirements in the environmental, social and governance fields, especially with respect to the implementation of the Sustainable Development Goals adopted on 25 September 2015.

The European Framework

7. The European Union (EU) [page 17]

France has played an important role in ensuring that these issues are high on the European agenda, particularly with respect to the adoption of the European directive on binding non-financial reporting, which France actively supported during negotiations …

Footnote: See Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, OJ L 330 of 15 November 2014.

Actions Underway

• France has made human rights a requirement in non-financial reporting following the transposition of European Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.

The National Framework

10. The Reinforcement of Legislation [page 23]

Recent public policies have led France to adopt new legislative measures supporting CSR.

… France also played a key role in developing transparency obligations for companies at the European level. It was the main supporter of the draft directive on non-financial reporting obligations, published on 22 October 2014, which requires large European listed companies to publish reports on their social, environmental, human rights and corruption policies. France encouraged the European Commission to take an ambitious approach when adopting the guidelines discussed in the directive. The directive is currently in the final stages of being transposed into French law. This will reinforce existing non-financial reporting requirements for companies. …

13. The Role of Public Agencies

Actions to be Implemented [page 30]

• Make the [Agence Française de Développement] AFD funding for businesses conditional on implementing or undertaking to implement non-financial reporting and a CSR due diligence plan for projects, or on the enforcement of host country or international standards.

…

15. Economic Sectors and Human Rights

The Financial Sector [page 35]

… One of the instruments France has implemented for businesses is increased transparency by way of non-financial reporting requirements.

There have been a number of voluntary international initiatives by the financial sector to promote human rights (the Equator Principles, UNEP Finance Initiative, the development of Socially Responsible Investment, and the Global Compact). However, France has implemented a regulatory framework that is relatively unique in that some of its provisions specifically target this sector (the Grenelle II Act of 12 July 2010).

Actions Underway [page 36]

• France is examining whether to extend environmental, social and governance reporting requirements for institutional investors in Europe to cover human rights.

II- Businesses’ Responsibility to Respect Human Rights

Introduction

In March 2015, the National CSR Platform agreed on the following points with respect to due diligence [page 38]

• Defining the operational content of reasonable due diligence processes for companies in due diligence plans. These plans would distinguish between subsidiaries and subcontractors given the different due diligence processes applicable to each of these cases. The goal of these plans would be to identify and prevent human rights and environmental risks resulting from business operations. The French NCP’s work on the textile and garment sector could be a useful reference. Parent companies and outsourcing companies would have to disclose the due diligence processes they implement, in compliance with the European directive on non-financial reporting.

1. Charters and Codes of Conduct

Existing Tools [page 39]

• The Human Rights Reporting and Assurance Frameworks Initiative (RAFI);

…

6. Reporting [page 44]

Businesses must monitor the human rights measures they adopt and disclose on their initiatives in this field.

Under European Directive 2014/95/EU, human rights will become one of the pillars of CSR. This position will be reflected in French reporting requirements when the directive is transposed into national law. It should be noted that human rights reporting is already a requirement under the regulatory provisions of the Commercial Code. Decree 2012-557 of 24 April 2012 on the social and environmental transparency obligations of businesses places human rights on an equal footing with other issues.

Actions Underway

• France is continuing to implement monitoring indicators and communicate with external stakeholders on business commitments and enforcement under the UN Guiding Principles on Business and Human Rights.

Actions to be Implemented

• Implement provisions to help transpose the European Directive on non-financial reporting into French law.

Existing Tools and Responsible Practices [page 45]

• The Global Reporting Initiative (GRI) has published G4 guidelines for sustainability reporting.
• Shift and Mazars have developed the UN Guiding Principles Reporting Framework for companies to report on human rights.

Read more about France

There is no mention of non-financial reporting in the Business and Human Rights Chapter of the Georgian Human Rights NAP.

Read more about Georgia

III. Federal Government expectations regarding corporate due diligence in respecting human rights

Reporting [page 11]

“Enterprises should keep information at their disposal and communicate it, where appropriate, to external recipients in order to demonstrate that they are aware of the actual and potential impact of their corporate activity on human rights and are taking appropriate steps to address the situation. The form in which this information is communicated should be tailored to its recipients. Enterprises whose business activity poses a particularly high risk of adverse impacts should issue regular public reports on that subject. Such reporting may be done in the framework of the company’s existing reporting format or take the form of separate reports focused on human rights. At the same time, such reporting obligations should not impose disproportionate administrative burdens on the reporting companies or on the SMEs in their supply chains.”

1.3 State support

Export credits, investment guarantees and other instruments for the promotion of external trade [page 24-25]

The current situation

“Depending on the environmental, social and human rights relevance of a given project, enterprises may have to routinely report on the progress of the project as well as on the human-rights situation. If it receives complaints, the Federal Government may require remedial action.”

Measures

• “In addition, it is planned to introduce human rights due diligence reports into the assessment procedures of the insurance instruments for foreign trade in cases where there is a high probability of serious implications for human rights.”

1.4 Enterprises in public ownership [page 26-27]

The Current situation

“The annual report on federal holdings lists about 700 enterprises in which the Federal Government has a direct or indirect stake. The Federal Government has direct holdings in 60 companies with business activities (as of 31 December 2014), 41 of these being direct majority holdings. Of the companies in which a direct majority stake is held, 13 have more than 500 employees. Among the matters covered by the report on federal holdings are the implementation of the Public Corporate Governance Code of the Federation, gender equality and the general sustainability of the listed enterprises.”

Measures

• “The Federal Government is keen to increase the percentage of enterprises in which it holds a majority share that apply the German Sustainability Code, including its obligation to report on human rights. From the 2018 financial year, the report on federal holdings will list, in its chapter on sustainability, all internationally active enterprises with more than 500 employees in which the Federal Government has a majority shareholding that apply the German Sustainability Code or a comparable framework with compulsory reporting on human rights and those that do not.”

2.1 Ensuring the protection of human rights in supply and value chains

The current situation [page 29]

“The Partnership for Sustainable Textiles, which was initiated by the Federal Ministry for Economic Cooperation and Development, has established an obligation to comply with sustainability standards and to guarantee corporate due diligence in the textile and clothing sector. All members of the Partnership are required to pursue its social and environmental objectives. They submit to a review process, which is conducted by an independent third party and is designed to bring about continuous improvement. Individual schedules of measures (road maps) are compiled annually by all members; the first of these is to be produced by the end of January 2017. A robust sanctions regime and regular reporting on the implementation of the road maps will ensure credibility and transparency. The Textile Partnership creates a reference framework and an independent review system of international scope.”

2.2 Transparency and communication regarding corporate impacts on human rights [page 30-31]

“Transparency requirements for corporate activity are an elementary component of due diligence with regard to human rights. These requirements are not limited to formal sustainability reporting but also entail willingness to engage in open dialogue with consumers, customers and actual or potential stakeholders and to share information on request.”

The current situation

“The number of enterprises that already present regular sustainability reports on a voluntary basis is steadily increasing. For example, the participants in the Global Compact, more than 300 in number, have committed themselves to presenting annual reports. The reports from German enterprises, and particularly from the large enterprises, are mostly based on the voluntary standards of the Global Reporting Initiative (GRI). The Federal Government has also supported the development of a German reporting standard in the German Sustainability Code (DNK). Sponsored by the Federal Ministry of Labour and Social Affairs, the Institute for Ecological Economy Research (IÖW) assesses the quality of sustainability reports from large enterprises and SMEs and draws up a league table for each of these categories. This ranking is intended to stimulate corporate competition in the realm of sustainability reporting and to highlight and propagate benchmarks for high-quality reporting. Through their purchasing decisions, consumers influence the supply of sustainably produced and delivered goods and services. Instruments such as the information platform www.siegelklarheit.de (sustainability standards comparison tool), initiated by the Federal Government, create transparency and help consumers to adopt sustainable purchasing habits.”

Measures

• “On 21 September 2016, the Federal Cabinet adopted the law transposing into German law Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial information by certain large undertakings and groups (the CSR Directive).”

3. Available means of practical implementation support

Measures [page 35-36]

“I. Helpdesk and initial consultation

• The Federal Government will significantly increase the reporting and consultation output of German diplomatic and consular missions in collaboration with the other pillars of external-trade promotion, namely the Chambers of Commerce Abroad and Germany Trade and Invest. To this end, basic and continuing training will also be focused more sharply on advisory skills in the field of business and human rights. …
• In cooperation with business networks, ‘practice days’ for SMEs are offered nationwide. These sessions provide support, information and exchanges with other enterprises on responsible supply chain management and high-quality sustainability reporting.”

Read more about Germany

Section 2: Current legislative and Regulatory Framework

Anti-Corruption [page 13]

“The most recent peer review of Ireland’s implementation of the OECD anti-Bribery Convention made a number of specific recommendations around awareness raising and reporting. Since that report, the Government has introduced the Protected Disclosures Act 2014 which provides a robust statutory framework within which workers can raise concerns regarding potential wrongdoing in the workplace. Ireland will continue to follow up the recommendations of the report to ensure that we fulfil our Convention commitments.”

Non-financial Reporting [page 15]

“The EU Directive on disclosure of non-financial and diversity information (2014/95/EU) 9 entered into force in December 2014. It requires certain companies known as ‘public interest entities’ to include a declaration in their annual management report containing information stating material data related to the environment, social affairs, human rights, and prevention of corruption. This Directive will shortly be transposed into Irish law.”

Section 3: Actions

II. Initial priorities for the Business and Human Rights Implementation Group [page 18-19]

“viii. Encourage business representative bodies to provide examples, templates and case studies to help support companies in their efforts to develop human rights focused policies and reporting initiatives.

x. Encourage engagement with human rights reporting standards, such as the UN Guiding Principles Reporting Framework, the Global Reporting Initiative or the Business Working Responsibly Mark.

xii. Create a fact sheet on the OECD Anti-Bribery Convention, the criminal offences in Irish law on bribery, the reporting systems in place for reporting suspicions of foreign corruption and the protections provided by the Protected Disclosures Act to be distributed by Enterprise Ireland to all Irish companies engaged in trade missions.”

Annex 1 – List of additional and ongoing actions to be carried out across Government

Domestic Framework [page 20]

“1. Transpose the EU directive on Disclosure of Non-financial and Diversity Information (2014/95/EU) into Irish law.”

Read more about Ireland

III. Government Expectations Towards Business

[page 9]

… To this framework, it is important to add the need of disclosure of non-financial information (in this regard, Italy is also intervening with the transposition of the EU 95/2014) and the existence of remarkable standards such as the UNGP Reporting Framework, the OECD Guidelines on Multinational Enterprises and the Tripartite ILO Declaration, as well as other recognized European and International frameworks and standards such as Eco-Management and Audit Scheme (EMAS), the UN Global Compact, ISO26000 and the Global Reporting Initiative.

Planned Measures

[page 16]

• Promote effective implementation of EU Directive 2014/95 on disclosure of non-financial and diversity information by large enterprises and groups.

Planned Measures

[page 22]

• Strengthen the implementation of socially responsible public procurement rules by adopting a comprehensive framework of reference for bidders coordinated by A.N.AC and covering: anticorruption, non-financial disclosure, supply chain, environment, labor, equal opportunities and non-discrimination.

Italy’s Updated NAP

PLANNED MEASURES

(page 15)

8. Promote an effective implementation of Legislative Decree n.254/2016 that transposes the EU Directive 2014/95 on disclosure of non-financial and diversity information by large enterprises and groups, also through a comparative analysis realised on a sample of enterprises and aimed at analyse the effective inclusion of the human rights dimension within the non-financial reports published by business and controlled by CONSOB, also in relation to diversity and gender.

PLANNED MEASURES

(page 22)

34. [text from previous NAP; Within the framework of the monitoring mechanism set in the Plan (see par. V) give special attention to due diligence of business enterprises owned or controlled by the State,] including the non-financial disclosure;

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The Lithuanian NAP makes no reference to non-financial reporting.

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

1. International Context

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.

Part III – NAP

1. Declaration of Engagement (pg. 26)

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

• 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;…
  

3. Government’s Response (pg. 28)

…Regarding companies’ level of commitment, it is interesting to take note of a study on corporate social responsibility that the international consulting firm KPMG published in 2017. For the first time this study also analysed the extent to which human rights were perceived as a business issue in the 4,900 largest companies in 49 different countries (including Luxembourg) and in 250 largest companies in the world. According to the study’s statistics, Luxembourg is among the countries in which companies produce reports on their social responsibility at a lower rate than the world average. While this average is 72 per cent, in Luxembourg only 59 per cent of companies submit CSR reports. It can be concluded that, in Luxembourg, human rights are still perceived as not important to business. Therefore, if the Guiding Principles are to be implemented in Luxembourg and if companies must implement relevant domestic policies and rules on respect for human rights, as well as effective governance to implement them and means to address potential negative human rights impacts of their activities, then an effort of information, promotion and awareness on the part of the government, in the context of the NAP, seems useful and necessary.

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3.4 Transparency and reporting [page 28-31]

“During the consultations, various parties pointed out that companies should be encouraged and/or required to report on their human rights policy and the results achieved. At the same time, they stressed that level of reporting should be proportionate to what it yields, and that account needs to be taken of the administrative burden on the business community.

The UN Guiding Principles devote attention to the importance of transparency and reporting. The responsibility to respect human rights calls not only for internal processes to identify and mitigate risks of adverse impacts (‘knowing’), but also for communication on these risks with the parties directly involved and other stakeholders, such as investors (‘showing’). In this way, companies can account for their policies and facilitate dialogue with all stakeholders.”

Reporting

“As it points out in its policy letter ‘CSR Pays Off’, the government supports the European Commission’s proposal to amend accounting legislation in relation to non-financial reporting. Large companies will be required to disclose information on human rights, environmental matters, social and employee-related matters and corruption. The proposal affects some 600 companies in the Netherlands, which together account for considerable social impact. The new Directive will ensure a level playing field at European level. What is more, it will place a limited administrative burden on the business community, since it is non-prescriptive as regards information provision, and works on the basis of the ‘apply or explain’ principle.

The Netherlands pursues an active policy of encouraging social reporting through the transparency benchmark. This benchmark is carried out every year on the instructions of the Ministry of Economic Affairs to give the 500 largest Dutch companies a rating for transparency on sustainability and CSR. The benchmark’s criteria have been updated and brought in line with international developments such as the UN Guiding Principles and the European Commission’s proposal for a new Accounting Directive. The Transparency Benchmark will now apply to the 600 companies referred to in this proposal. …

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.

During the consultations, attention was again requested for the Production and Supply Chain Information (Public Access) Act (WOK). With this legislation, consumers, members of the public, civil society organisations and other parties who ask companies about the origins of their products and services would be assured of an answer. On the basis of the results of a study by Panteia/EIM15 in 2009, the government then in office concluded that implementation of the WOK was technically feasible, but that it would entail high costs for the business community, and its enactment would probably run into international legal obstacles.

In this light, the government does not feel that this is the right time to enact such legislation, and points to the increasing availability of information on supply chains through instruments such as the Sustainable Trade Initiative and the Sector Risk Analysis project. The SER also devotes considerable attention to promoting supply chain transparency and responsibility in its ICSR committee. Moreover, it is possible to report to the NCP on companies that are insufficiently transparent for a constructive dialogue on CSR.

Burma

“Since the economic sanctions were lifted, the international business community has shown considerable interest in investing in Burma. Despite positive developments and reforms, Burma still faces major challenges, including in the field of human rights. On 1 July 2013, legislation came into force in the United States requiring companies investing more than $500,000 in Burma to publish an annual report on their activities, including their due diligence policies. The Netherlands would like to exchange views and experience on this issue within the OECD. To promote responsible investment, the Netherlands supports the Myanmar Centre for Responsible Business, a local platform for the development and coordination of capacity for business and human rights among all relevant actors in Burma. The platform focuses on promoting and enabling responsible investment in Burma, in accordance with the UN Guiding Principles. To this end, it supplies knowledge, tools and training to enable companies, investors, government authorities and civil society organisations in Burma to fulfil their roles. Through dialogue and consensus, it is drafting criteria to enable companies and investors to pursue effective human rights policies.”

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2. The State duty to protect human rights

2.1 The state as legislator

The accounting act [page 19]: 

Small amendments to Norwegian legislation may be necessary in order to implement the expected new EEA rules corresponding to the new EU Directive (2014/95/EU) on disclosure of non-financial and diversity information by certain large companies and groups, which includes CSR.

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Pillar II: The corporate responsibility to respect human rights

Non-financial Reporting: Implementation of Directive 2014/95/EU to the Issue of Non-financial Reporting [page 32]:

Disclosure of information regarding the application of human rights policies in business practice has been mandatory since January 2017 for a certain group of companies in connection with the transposition of Directive 2014/95/EU into Polish law.

Directive 2014/95/EU on disclosure of non-financial and diversity information by certain large undertakings and groups entered into force on 6 December 2014. EU Member States had two years to transpose the directive into national law.

It is estimated that the provisions will affect about 6,000 entities in the European Union, while in Poland some 300 enterprises may be required to disclose non-financial data. In Poland, the Ministry of Finance was responsible for the transposition. The Act of 15 December 2016 amending the Accounting Act was published on 11 January 2017 in the Journal of Laws (Journal of Laws 2017, Item 61) as the transposition of the above-mentioned Directive with respect to disclosure of extended non-financial information.

The Act entered into force on 26 January 2017 and will apply for the first time to reports prepared for the financial year beginning on or after 1 January 2017.

The implemented provisions of the directive aim to increase the transparency of information with respect to corporate social responsibility (CSR) presented in the activity report (in the form of a statement) or in a separate report on environmental, social, and occupational issues, respect for human rights, and anti-corruption measures. New reporting obligations are addressed to large entities and generally include those that primarily operate in the financial market, including banks, insurance companies, issuers of securities, and large capital groups.

According to the Directive and its transposing law, the companies subject to this obligation may apply any national, EU, or international reporting standards or guidelines, including their own rules.

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The state’s expectations of business enterprises

Several new legal provisions proactively ensure the strengthening of respect for human rights in business, which involves non-financial reporting on the environmental and social impacts of major business enterprises, measures to promote equality, and considering environmental, social and labour law aspects in public procurement. (pg. 7)

Principle 2 – States sets expectation for respecting human rights

The Act Amending the Companies Act of April 2017, introduces non-financial reporting on the environmental and social impacts of major enterprises and measures to promote equality. (pg. 10)

Principle 3d – Non-financial reporting

Slovenia incorporated the obligation of non-financial reporting for large companies into its legal system in April 2017. To create a transparent, effective and clear management system which fosters the trust of investors, employees and the public in the corporate management system, Slovenia has extended the list of companies which are required to include non-financial statements in their annual reports. (pg. 21)

Large companies which are public-interest entities exceeding the average number of 500 employees must include a non-financial statement in the management report. (pg. 23)

Annex I – Human Rights Due Diligence in Practice

EU directive on non-financial reporting for public-interest companies with more than 500 employees (transposed to Slovenian legal order with the Act Amending the Companies Act). (pg. 47)

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South Korea’s NAP makes no reference to non-financial reporting.

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Guiding Principle 2

Measure 8

“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

Measure 10

“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.”

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2 The corporate responsibility to respect human rights [page 14]

“In keeping with the UN Guiding Principles, businesses’ human rights efforts are expected to include the following main points: …

Reporting:

• Be transparent, i.e. report on and communicate the risks and opportunities facing the company, as well as its impact on society, both favourable and adverse …

February 2015 saw the launch of the first comprehensive guidance for companies on human rights reporting in line with the UNGP: UN Guiding Principles Reporting Framework. Five international companies are ‘early adopters’ of the reporting framework: Ericsson, H&M, Nestlé, Newmont and Unilever”

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.

Annex: Measures planned [page 27-29]

Regulations and legislation

• “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.”

How can the State support the business sector?

• “The Government Offices is prepared to consider continued support to the Shift Project for its development of the Reporting and Assurance Frameworks Initiative (RAFI). Companies are encouraged to use the UNGP’s Reporting Framework developed by Shift and Mazars.”

Annex: Links [page 30]

“GRI 4: www.globalreporting.org

Guidance for companies to report on how they respect human rights in line with the UN Guiding Principles: UN Guiding Principles Reporting Framework: www.ungpreporting.org”

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5. National Action Plan on Business and Human Rights

5.7 Pillar 1: state duty to protect

5.7.2 Operational principles: legislative and information policy measures

Guiding Principle 3 [page 20]

PI13 Corporate Sustainability Reporting

EU Directive 2014/95/EU determines that certain large undertakings and groups must publish non-financial information on respect for human rights, diversity, and combating corruption and bribery in connection with environmental, social and employee matters. (…) The Federal Council is closely monitoring developments with regard to the legally binding reporting of non-financial information in the EU. It is prepared to examine possible action, which would be as congruent as possible with international regulation, and intends to draw up a consultation draft on sustainability reporting that will be based on the EU instrument.

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The UK 2013 NAP in the section dedicated to Actions taken to support business implementation of the UNGPs states that [page 14]:

To help businesses to fulfil their responsibility to respect human rights we have so far:

(ii) taken steps to ensure that from 1 October a clarification of the Companies Act 2006 means that company directors will include human rights issues, in their annual reports;

The UK 2016 Updated NAP notes in relation to Government Expectations of Business that [page 14]:

“The Government has supported important industry led initiatives that have gained ground over the last two years, including on reporting, benchmarking performance and practical sector guidance.”

The UK 2016 Updated NAP states in Actions taken to support business implementation of the UNGPs that [page 14-15]:

“To help businesses to fulfil their responsibility to respect human rights the Government has:

(ii) provided guidance to companies on transparency in supply chains and implementing the reporting requirement in the Modern Slavery Act 2015. https://www.gov.uk/government/publications/transparency-in­supply-chains-a-practical-guide

(v) supported the UNGPs Reporting Framework, the world’s first comprehensive guidance for companies to report on how they respect human rights. http://www.ungpreporting.org/ “

The UK 2016 Updated NAP refers to non-financial reporting in the section devoted to the Government Commitments [page 16]:

“The Government will continue to encourage UK companies in their work to respect human rights. We will: (…) ensure the provisions of an EU Directive on non-financial disclosure are transposed in the UK to enable greater consistency and comparability of public information on the human rights policies and performance of listed companies in Europe.”

The UK 2016 Updated NAP, while highlighting the UNGPs Reporting Framework + Unilever human rights report, refers to non-financial reporting [page 17]:

“There is increasing demand for greater formal reporting by companies on their human rights performance, including from regulations such as the EU non-financial reporting directive and the UK’s Companies Act and Modern Slavery Act reporting requirements.”

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Outcome 1.3: Leverage U.S. Government Purchasing Power to Promote High Standards

New Actions [page 11]

“Compliance with Procurement Regulations: Pursuant to E.O. 13673, DOL and OMB will work with other agencies to designate agency Labor Compliance Advisors who will build greater awareness and understanding of RBC by contractors with whom those agencies do business. For example, a labor compliance advisor could support agency review efforts in the event a contractor, in accordance with requirements of the End Trafficking in Government Contracting Act (22 U.S.C. 7104c), reports a trafficking violation in its supply chain to the government.” – Implementing Department or Agency: DOL, OMB

Facilitating RBC By Companies [page 17]

“The U.S. government encourages businesses to treat tools like the OECD Guidelines and the UN Guiding Principles as a floor rather than a ceiling for implementing responsible business practices, and to recognize that implementing RBC should be a continuing process. The U.S. government is supportive of company efforts to voluntarily report on human rights impacts, anti-trafficking measures, transparency and anti-corruption efforts, and other related aspects of their global operations, including the opportunities and challenges they face. Given the heightened risk of serious human rights impacts in conflict-affected areas, the U.S. government particularly encourages corporate due diligence and reporting under such circumstances.

The U.S. government generates and vets relevant information that can be used to conduct appropriate due diligence and risk assessment. While the concept of due diligence is increasingly well understood and accepted among businesses, the tools and resources available to effectively conduct detailed and appropriate risk and impact assessments can be sparse, particularly in many of the complex environments where this type of data is most needed.

To help address those gaps, the U.S. government deploys significant resources to produce and disseminate a variety of reports that help describe the state of human rights, labor rights, commercial, and investment conditions across the world, and produces international company profiles to provide U.S. companies with information to help them vet potential business partners. In certain instances, the government also funds third-party reports that contain information useful to those seeking to promote and implement RBC. As part of the ongoing effort to facilitate RBC, the U.S. government will continue to enhance these resources, making them increasingly user-friendly and easier to find for the purposes of corporate human rights due diligence and social impact assessment.”

Outcome 3.1: U.S. Government Reports

New Actions [page 18]

“Supporting Voluntary Reporting on RBC: Voluntary reporting on RBC by U.S. companies will help them achieve their RBC goals while promoting RBC more widely and helping to build the U.S. “brand.” State and other agencies will welcome and recognize new methods of reporting in support of RBC and create an online resource to that end.” – Implementing Department or Agency: State

Outcome 3.1: U.S. Government Reports

Ongoing Commitments and Initiatives [page 18]

“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

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