Sustainability reporting, put simply, is a form of transparency reporting where businesses formally disclose certain information related sustainability, including information on human rights risks and impacts. It helps organisations to measure, understand and communicate their human rights impacts, as well as set goals, and manage change more effectively. Reporting on human rights forms one of the four steps in human rights due diligence, which is explored in here.
“The responsibility to respect human rights requires that business enterprises have in place policies and processes through which they can both know and show that they respect human rights in practice. Showing involves communication, providing a measure of transparency and accountability to individuals or groups who may be impacted and to other relevant stakeholders, including investors. Communication can take a variety of forms, including in-person meetings, online dialogues, consultation with affected stakeholders, and formal public reports. Formal reporting is itself evolving, from traditional annual reports and corporate responsibility/sustainability reports, to include online updates and integrated financial and non-financial reports. Formal reporting by enterprises is expected where risks of severe human rights impacts exist, whether this is due to the nature of the business operations or operating contexts. The reporting should cover topics and indicators concerning how enterprises identify and address adverse impacts on human rights. Independent verification of human rights reporting can strengthen its content and credibility. Sector-specific indicators can provide helpful additional detail.”
Sustainable Development Goal 12 on sustainable consumption and production includes a specific target 12.6 to “encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle”.
Read more
Sustainability or Environment, Social and Governance (ESG) reporting allows businesses to inform stakeholders on the interaction of business operations with impacts on people and plane and disclose human rights policies, risks, and outcomes. It details measures taken by businesses to identify and manage human rights risks, and address human rights abuses where they have occurred.
In an increasing number of jurisdictions non-financial reporting has moved from being a voluntary element of Corporate Social Responsibility (CSR) to become legal requirements.
In 2022 the EU The CSRD, adopted the so-called EU Corporate Sustainability Reporting Directive (CSRD) in December 2022. The Directive outlines sustainability reporting requirements for companies across environmental, social, and governance (ESG) issue areas. Approximately 50000 companies are expectedly covered by the Directive. This includes large listed and non-listed EU companies, listed EU SMEs of a certain size as well as third country companies with activities in the EU above certain thresholds. The directive builds on and amends previous EU regulation on non-financial reporting (NFRD).
The Directive requires covered companies to include in their annual management reports “information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position” (CSRD, Article 19a). This is commonly referred to as ‘double materiality’. It also specifies the reporting topics as they relate to environmental, social and governance issue areas (CSRD, Article 29b).
The Directive is complemented by delegated acts, including one that introduces comprehensive sector agnostic European Sustainability Reporting Requirements (ESRS). The ESRS draw significantly on key international instruments on responsible business conduct, including the United Nations Guiding Principles on Business and Human Rights (UNGPs), the OECD Guidelines for Multinational Enterprises (OECD MNE Guidelines) and contain granular disclosure requirements. In relation to social sustainability these requirements are split by affected stakeholder groups in so-called ESRS S1-S4: workers, workers in value chains, communities, end-users and consumers. In addition to the already adopted ESRS, sector-specific delegated acts are to be adopted as is a delegated act defining reporting standards for non-EU companies.
Importantly the Directive also establishes rules concerning assurance of sustainability reporting. These aim to significantly improve the quality of companies’ sustainability reporting. In the first instance it introduces a requirement for limited assurance with the aim to move to reasonable assurance in the longer term. These provisions are to be complemented by delegated acts outlining EU-wide assurance standards. Finally, the Directive requires sustainability reporting in a digital machine-readable format the creation of a European single access point (ESAP) for public corporate information.
Financial market regulators and stock exchanges across the world have issued guidance and/or requirements to listed companies on sustainability reporting. An example is the Nasdaq ESG Reporting Guide 2.0 (2019), which requires every listed issuer to prepare an annual sustainability report on a “comply or explain” basis following the adoption of internationally accepted reporting frameworks. The Sustainable Stock Exchanges (SSE) Initiative highlights a range of further instruments.
Asides from legislative measures, responsible investors have been encouraging increased transparency and reporting in relation to sustainability or ESG issues by investee companies. The Corporate Human Rights Benchmark is an investor-backed initiatives which assesses the largest publicly traded companies in the world on human rights indicators.
A range of material has been developed to assist in sustainability reporting:
The GRI Sustainability Reporting Standards (GRI Standards), which provides a framework for businesses to report on the broad spectrum of sustainability issues. An overall update of GRI’s Universal Standards brough about significant alignment between the reporting approach and UNGPs.
This action point focuses on due diligence. 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.
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/
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 62)
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: Reports on Human Rights Issues
Action Point 3.1 (page 74)
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.
i. Fundamental Pillar 1: The State’s obligation to protect human rights
Strand 9 [Eje nº 9]: The state as economic actor
(…)
The Ministry of Finance and Public Credit will adopt commitments to respect human rights and good reporting practices (GRI methodology) to monitor company performance.
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:
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
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; …”
2.3 Actions taken
Companies owned or controlled by the state [page 13]
“In 2008 the Danish Government introduced a statutory CSR reporting requirement which obligates all state-owned public limited companies irrespective of their sizes to report on CSR in the management’s review in their annual reports (GP 4)…”
Reporting requirement on human rights impact [page 14]
“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 18]
“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 10], 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.”
“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.
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. (…)”
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.”
… 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. It also promoted the inclusion of social, environmental and governance standards in trade and investment agreements (see section 8 below). It helped to ensure that the conclusions of the Council of the EU under the Dutch Presidency were adopted, supporting the enforcement of the UN Guiding Principles on Business and Human Rights and their integration into development policy. …
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.
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.
The performance of measures adopted by businesses to respect and communicate on human rights can be monitored in the following ways:
By using existing global and sector-specific indicators or new company-specific indicators, and by formalizing internal annual reporting systems for the actions implemented;
By including points to be checked in existing internal supervisory mechanisms;
By monitoring and addressing human rights incidents;
By issuing annual reports that can be viewed by the public.
Existing Tools and Responsible Practices [page 45]
… The Global Reporting Initiative (GRI) has published G4 guidelines for sustainability reporting.
III. Federal Government expectations regarding corporate due diligence in respecting human rights
Reporting [page 9]
“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.”
IV. Key areas for action
1.4 Enterprises in public ownership [page 18-19]
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 20]
“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 21]
“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 23]
“I. Helpdesk and initial consultation
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.”
Section 2: Current legislative and Regulatory Framework
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.
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.”
“The renewed and dynamic entrepreneurial approach is based on corporate governance structures to overcoming short-term financial advantages for environmental, social and human sustainability in the medium and long term in the context of the European Union’s initiatives on the circular economy, biodiversity and sustainable financial growth. At the same time, corporate governance was consolidated through the implementation of Directive (EU) 2014/85 on non-financial reporting, so relevant today. Its revision is in pipeline with the challenges posed by the pandemic and mentioned in the Communications on the European Green Deal and on “Europe’s moment: Repair and Prepare for the Next Generation” for a business vision of the opportunities for economic recovery in the long term.” (p. 12)
IV. Italian ongoing activities and future commitments
Gender dimension
“Italy has domestically transposed Directive (EU) 2014/95 on non-financial reporting through Legislative Decree No. 254/2016 and, in this context, an important inspection and verification activity by CONSOB of non-financial reporting is being conducted. Its ultimate aim is to verify adequate and transparent information along the supply chain, and also on processes of Due Diligence and management of the risk of violation of human and labour rights along the supply chain.” (p. 34)
ANNEX 1 – Accountability Grid and Assessment Tools for the Implementation of the NAP
“16. Further promote an effective implementation of Legislative Decree No. 254/2016 implementing Directive (EU) 2014/95 on the disclosure of non-financial and diversity information by large companies and groups of companies, including through a benchmarking exercise carried out on a sample of companies and aimed at analyzing the effective inclusion of the human rights dimension in non-financial reports published by companies and supervised by CONSOB, including in relation to diversity and gender.” (p. 63)
“34. through new mechanisms of monitoring and recognition of business activities, provide for an analysis of the Due Diligence of public or state-controlled companies, including non-financial reporting” (p. 66)
“35. continuing the promotion and protection of human rights, with a proactive role of the Inter-ministerial Committee for Human Rights, in correlation with the priority lines introduced in the framework of the PNRR and the SNSVS, including – among others – issues such as anti-corruption, non-financial information disclosure , supply chain, environmental issues, decent work and non-discrimination in favour of competing companies in public calls for tender and within contracts stipulated with companies for the purchase of goods and services, with particular regard to (i) Italian companies operating abroad; (ii) Italian companies using foreign suppliers; (iii) foreign companies” (p. 66)”
ANNEX 2 – Summary of the results of the assessment concerning the implementation of the first PAN-BHR
“It has been deemed necessary to ensure the accompaniment of companies in their growth on issues such as social value and sustainability, for example by enlarging the number of companies that have voluntarily published non-financial information in their financial statements and encouraging them to adopt new communication approaches regarding ecological footprint of their products and production processes.” (p. 70)
(3) Measures of the Government Promoting Corporate Responsibility to Respect Human Rights
A. Measures Related to Domestic and Global Supply Chains and Promotion of Human Rights Due Diligence Based on the UNGPs
(Existing framework/Measures taken）
(…)
Japan’s Stewardship Code and Corporate Governance Code refer to grasping the status of investee companies and corporate information disclosure to promote sustainability initiatives, including elements of ESG issues. In addition, the Stewardship Code, which was revised again in March 2020 also includes reference to consideration on sustainability when holding dialogue between institutional investors and investee companies. Furthermore, the Guidance for Collaborative Value Creation was published as a guideline for dialogue and disclosure on voluntary and proactive initiatives of companies on non-financial information, including ESG factors.
(Future measures planned)
(…)
(e） Raise awareness on the Guidance for Collaborative Value Creation
Continue to boost efforts to raise awareness of the Guidance for Collaborative Value Creation, which is useful for holding dialogue and disclosure relating to non-financial information, including ESG factors for investors and corporate managers and directors. The Guidance can be used as a guide for voluntary and proactive initiatives of companies. [Ministry of Economy, Trade and Industry] …
(g）Promote information disclosure by business enterprises in accordance with the Environmental Reporting Guidelines
Promote understanding of environmental due diligence and information disclosure by publicizing the Introductory Guide on Environmental Due Diligence issued in August 2020. [Ministry of the Environment]
CHAPTER TWO: SITUATIONAL ANALYSIS AND THEMATIC AREAS OF FOCUS
2.2 Kenya´s Experience with Business and Human Rights [Page 7]
There is need to embed international human rights standards early into the exploration and drilling contracts, impact assessments, due diligence mechanisms and business reporting. This National Action Plan clarifies the Government’s expectation from concerned businesses in this regard.
2.5 Environmental Protection [Pages 10-11]
The Climate Change Act, 2016 establishes the National Climate Change Council, which is mandated to provide guidelines to private entities on their climate change obligations, including their reporting requirements.
Stakeholders’ consultations during the development of this NAP identified the following concerns related to the impacts of businesses on the environment:
Environmental pollution by business operations, including through discharge of effluent into waterways, air and noise pollution and poor disposal of solid waste, toxic and hazardous substances. These negative impacts compromise the rights to; a clean and healthy environment, health, reasonable standards of sanitation, clean and safe water.
Loss of biodiversity due to destruction and encroachment on the natural environment for commercial purposes negatively impacts livelihoods, health and access to clean and safe water for present and future generations.
CHAPTER THREE: POLICY ACTIONS
3.1. Pillar 1: The State Duty to Protect [Page 16]
Policy Actions
The Government will:
iv. Develop guidelines for non-financial reporting under the Companies Act 2015;
3.2. Pillar 2: Corporate Responsibility to Respect Human Rights [Page 18]
The current voluntary initiatives established and adopted by business associations on different human rights issues do not have strict compliance and reporting mechanisms. They therefore fail to offer businesses that have ascribed to them the required guidance and supervision to ensure that their operations respect human rights. There is no mandatory requirement for human rights due diligence. Businesses, including state-owned enterprises, have not embraced the practice of engaging those whose rights are most likely to be impacted by their operations in any human rights due diligence.
Policy Actions
d) Reporting : Enforce the requirement for businesses to prepare non-financial reports in line with the Companies Act, 2015, and encourage proactive disclosure of their impacts on human rights and the mitigation measures they are taking in this regard.
CHAPTER FOUR: IMPLEMENTATION AND MONITORING
ANNEX 1: SUMMARY OF POLICY ACTIONS
Strategic Objective
Policy Actions
Key Actors
Strategic Objective 1:
Enhance existing policy, legal, regulatory and administrative framework for ensuring respect of human rights by business through legal review and development of specific guidance for business
Develop guidelines for non-financial reporting under the Companies Act 2015
OAG&DOJ, Parliament, KLRC
Strategic objective 2:
Enhance understanding of
the obligation of business
to respect human rights
Businesses to prepare non-financial reports in line with the Companies Act, 2015, and encourage proactive disclosure of their impacts on human rights and the mitigation measures they are taking in the reports.
OAG&DOJ, All businesses in Kenya
ANNEX 2: LEGISLATION PROPOSED FOR ENACTMENT OR AMENDMENT
S/No.
Legislation/Issue
Proposals
1.
Companies Act, 2015
a) Development of guidelines for non financial [sic.] reporting
b) Introduce a requirement for conducting Human Rights due diligence including the particular impacts on gender before approval of licences/permits to businesses.
‘Luxembourg’s NAP does not explicitly address this issue’
The 2020-22 NAP states the second edition of the National Action Plan complements the first NAP. Additional information about the first NAP can be found here.
“A general due diligence obligation, ideally at European level, is the key element in the smart mix of RBC measures. This obligation should not only promote RBC but also respect a level playing field for businesses, prevent fragmentation and enhance impact. The government therefore welcomed the publication on 23 February 2022 of the European Commission’s proposed Corporate Sustainable Due Diligence Directive (CSDDD). This proposal is the first step towards European legislation. It aims to encourage businesses to contribute to respect human rights and the environment in their own operations and throughout their value chains. The Netherlands also has its own responsibilities. The 2021-2025 coalition agreement ‘Looking out for each Other, Looking Ahead to the Future’ details agreements committing the Netherlands to encouraging RBC legislation in the EU and to introducing national RBC legislation that promotes a level playing field with neighbouring countries and implementation of forthcoming EU legislation. The Commission’s proposal will therefore form the basis of a national policy proposal, in anticipation of the forthcoming CSDDD. The aim is for the two proposals to run parallel to each other, so that any anticipated changes to the draft Directive can be included in the national legislative process.
The proposed EU Corporate Sustainability Reporting Directive (CSRD – see next section) is also relevant in relation to due diligence. This revised Directive will require a larger number of businesses to be transparent in their reporting on relevant sustainability criteria and the due diligence processes applied. In addition to this legislative proposal on reporting, the inclusion of a due diligence process is an approach used in several EU instruments, such as the proposal for an EU Regulation to combat deforestation, the planned Batteries Regulation and the Conflict Minerals Regulation referred to above.” P. 56
“Non-financial reporting obligations were applicable to all listed companies with more than 500 employees since 2017. The annual report of these companies must include information on how they respect human rights. The European Commission’s recent legislative proposal51 on CSRD requires a greater number of businesses than before to provide information on the impact of sustainability factors on the company as well as the company’s impact on people and the planet. The draft Directive’s scope includes all large credit institutions and insurance companies, all large enterprises and all listed companies, with the exception of listed micro-companies. In line with the UNGPs, accountability should be given of the due diligence process, including a description of any negative impacts in the company’s value chain resulting from its own activities or from its business relations and supply chain. The Commission’s proposal is that large, listed companies and other large enterprises, banks and insurance companies should start reporting as of financial year 2023, and small and medium-sized listed companies as of financial year 2026.” p. 56.
ACTION POINTS PILLAR 1
Aim
Responsible party
Timeline
Due Diligence and CSRD
Negotiate the Corporate Sustainability Reporting Directive (CSRD)
National implementation of reporting obligations in line with the CSRD.
J&V, FIN
The Directive is expected to be adopted by EU legislators in 2022.
he Nigeria NAP provides a list of existing constitutional obligations, domestic legislation, internation obligations, and police and administrative steps. This breakdown only looks at the list of challenges and the implementation of the 3 pillars of the UNGPs.
8.6 CHALLENGES … “l. Lack of effective, transparent, sustainable grievance mechanisms for businesses to address conflicts with communities including documenting and reporting of activities of settlement … t. Lack of a realistic, implementable business and human rights reporting mechanism for businesses to report on their business and human rights situation.” (p.154-155)
PILLAR 1 – STATE DUTY TO PROTECT HUMAN RIGHTS ACTIONABLE ITEMS A. ESTABLISHMENT OF A NATIONAL WORKING GROUP ON BUSINESS AND HUMAN RIGHTS (NWGBHR) “The Working Group will have the following responsibilities, among others; … iii. Design and agree on a format for reporting human rights and business by stakeholders. iv. Review the reports periodically and provide technical support for stakeholders in their area of need.” (p.157)
PILLAR 1 – STATE DUTY TO PROTECT HUMAN RIGHTS ACTIONABLE ITEMS B. LEGLISLATION AND POLICIES “Government shall improve human rights protection in business through legislation, policy initiatives, programmes and seminars interventions in the following ways: … c. Mandate businesses to communicate how they address human rights impact of their operations.” (p. 157)
M. CAPACITY BUILDING “The following capacity building needs have been identified: … b. Training business operators to be able to develop a coherent, robust and implementable human rights policy; establish, maintain and monitor their grievance mechanisms. Also, build their capacity on monitoring and reporting compliance with the UNGPs.” (p.160)
PILLAR 2 – CORPORATE RESPONSIBILITY TO RESPECT HUMAN RIGHTS ACTIONABLE ITEMS C. REPORTING HUMAN RIGHTS COMPLIANCE “Business operating in Nigeria will be obligated to report on their human rights compliance, annually. The National Working Group on Business and Human Rights will work closely with various regulatory agencies to incorporate human rights reporting and monitoring template in their regulatory framework. Appropriate sector specific template and checklist will be developed for this with input from relevant stakeholders in respective sectors.”
E. GRIEVANCE MECHANISMS “Businesses are obligated to have an Operational Level Grievance Mechanism. A system shall be put in place for the monitoring and reporting of the activities of the grievance mechanism. This will be established in line with the Eight Effectiveness Criteria of the UNGP and in consultation with the target group. A system shall also be put in place for the monitoring and reporting of the activities of the grievance mechanism to identify issues and areas that require administrative, policy or legislative intervention.” (p.162-163)
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.
2.9 International cooperation on CSR [page 27]
Measures:
… seek to ensure that the reporting framework set out in the UN Guiding Principles is incorporated into the United Nations Global Compact and the Global Reporting Initiative.
3.3 External communication and reporting [page 34]
… The Guiding Principles also provide further details on how companies should address the human rights impacts of their operations. It is the company itself that decides how to communicate and report on this in the light of its situation and target groups. We recommend companies to use international reporting frameworks, and to have their reports verified by an independent auditor or other expert. It is also important to publish the reports in the language of the country where the company operates. The company itself chooses the most appropriate reporting framework, and the Norwegian authorities can advise on this.
International reporting Standards
The UN Guiding Principles (UNGP) Reporting
Framework was launched in February 2015. It evolved from the Human Rights Reporting and Assurance Frameworks (RAFI) and is co-facilitated by Shift and Mazars. Business was actively involved in the development of the reporting framework, and many companies began using it during the development process. The High Commissioner for Human Rights (OHCHR), and the Working Group on the issue of human rights and transnational corporations and other business enterprises, have expressed their support for the project but are not involved in it. Norway has supported the project. www.ungpreporting.org
United Nations Global Compact requires its members to report on their eforts to implement its 10 principles in four areas: human rights, labour, environment and anti-corruption. Enterprises’ reports are graded as GC Advanced, GC Active or GC Learner (minimum requirement). Norway supports Global Compact. www.gcnordic.net/ www.unglobalcompact.org
Global Reporting Initiative (GRI) is the most widely used standard for reporting on CSR, and includes human rights indicators. There are three levels of reporting, from A, the most advanced, to C, the least advanced. Independent auditing/verification of the report earns a plus, making A+ the highest level. Norway supports GRI. CSR Norge maintains an overview of Norwegian companies that follow GRI, and regularly holds GRI Certified Training courses. www.globalreporting.org www.csrnorge.no
CHAPTER 3: National Action Plan Priority Areas and Proposed Actions
3.1. General Proposed Actions
Federal and Provincial (pages 16-17)
‘5. Issue and disseminate BHR guidelines for business enterprises in line with the NAP—its priority areas, proposed actions and State expectations of business enterprises—and with regards to non-financial reporting on corporate human rights policies, human rights due diligence, and remedial mechanisms.
Performance indicator(s): (i) Development of Guidelines; (ii) Number of businesses to which Guidelines are disseminated
UN Guiding Principle(s): 1, 2, 3
Relevant SDG(s): Goal 5 – Gender Equality; Goal 8 – Decent Work and Economic Growth; Goal 16 – Peace, Justice and Strong Institutions’
This information is also covered under Appendix 1: Implementation Plan, Proposed Action 5 designating the Ministry of Human Rights; Ministry of Industries & Production; Ministry of Commerce as Leading Entities, and designating the Ministry of Law & Justice; Ministry of Interior; Provincial Human Rights Departments; Securities and Exchange Commission of Pakistan; Ministry of Overseas Pakistanis and Human Resource Development; National Commission for Child Welfare and Development; National Commission on the Rights of the Child as Additional Entities (page 45).
3.2. NAP Priority Areas
3.2.3. Human Rights Due Diligence
Proposed Actions
Federal (page 26)
‘32. Conduct feasibility study of human rights certification and provision of market incentives for businesses which demonstrate respect for human rights across their operations, including conducting human rights due diligence and publicising their efforts.
Performance indicator(s): (i) Feasibility study report
UN Guiding Principle(s): 1, 2, 3, 8
Relevant SDG(s): Goal 8 – Decent Work and Economic Growth; Goal 10 – Reduced Inequalities; Goal 12 – Responsible Consumption and Production; Goal 16 – Peace, Justice and Strong Institutions’
This information is also covered under Appendix 1: Implementation Plan, Proposed Action 32 designating the Ministry of Commerce and the Ministry of Industries and Production as Leading Entities (page 55).
Federal and Provincial (page 27)
‘35. Develop and launch a Human Rights Due Diligence Partnership Project with the private sector, for the purpose of establishing a framework and standards for human rights due diligence reporting.
Performance indicator(s): (i) Launch of Partnership Project
UN Guiding Principle(s): 2, 3, 11, 12, 15, 17, 23
Relevant SDG(s): Goal 5 – Gender Equality; Goal 8 – Decent Work and Economic Growth; Goal 10 – Reduced Inequalities; Goal 12 – Responsible Consumption and Production; Goal 16 – Peace, Justice and Strong Institutions’
This information is also covered under Appendix 1: Implementation Plan, Proposed Action 35 designating the Federal & Provincial Governments, the Ministry of Human Rights, the Provincial Human Rights Departments as Leading Entities, and designating the Ministry of Climate Change; Ministry of Commerce and Textile; Provincial Commerce Departments; Ministry of Communications; Provincial Communications Departments; Ministry of Energy; Provincial Energy Departments; Ministry of Finance, Revenue and Economic Affairs; Ministry of Industries & Production; Ministry of Law & Justice; Provincial Law Departments; Ministry of Inter-Provincial Coordination, Pakistan Environmental Protection Agency; Ministry of Health; Provincial Health Departments; Federal and Provincial Ombudspersons as Additional Entities (page 57).
‘36. Establish voluntary and common standards for conducting and reporting human rights due diligence in business activity, applicable to both the direct operations and across the value chains of public and private enterprises.
Performance indicator(s): (i) Development and dissemination of voluntary standards in line with international best practices
Relevant SDG(s): Goal 5 – Gender Equality; Goal 8 – Decent Work and Economic Growth; Goal 10 – Reduced Inequalities; Goal 12 – Responsible Consumption and Production; Goal 16 – Peace, Justice and Strong Institutions’
This information is also covered under Appendix 1: Implementation Plan, Proposed Action 36 designating the Provincial Governments and the Ministry of Human Rights as Leading Entities, and designating the Ministry of Law and Justice; Ministry of Industries and Production; Ministry of Commerce; Provincial Human Rights Departments; Provincial Law Departments; Provincial Commerce Departments; Provincial Industries and Commerce as Additional Entities (page 58).
3.2.8 Access to Remedy
Proposed Actions
Federal (page 36)
‘63. Conduct a national mapping exercise to identify existing reporting procedures for human rights violations occurring from business activity, and make recommendations for improved effectiveness.
Relevant SDG(s): Goal 8 – Decent Work and Economic Growth; Goal 10 – Reduced Inequalities; Goal 16 – Peace, Justice and Strong Institutions’
This information is also covered under Appendix 1: Implementation Plan, Proposed Action 63 designating the Ministry of Human Rights, the Provincial Human Rights Departments and the National Commission on Human Rights as Leading Entities, and designating the NHRIs and CSOs at Federal and Provincial Levels as Additional Entities (page 69).
CHAPTER 4: State Expectations of Business Enterprises (pages 38-39)
‘To facilitate and guide business enterprises in ensuring compliance with and supporting the effective implementation of the NAP priority areas and the UNGPs, the State of Pakistan expects business enterprises to:
1. Evaluate their compliance with all applicable domestic laws relevant to the respect for human rights in business activity, and provision of corrective or remedial action in response to potential, ongoing, or past human rights violations resulting directly from their activity or through their business relationships across their value chains.
2. Ensure the elimination of child labour, forced or bonded labour, and all forms of modern slavery from their business operations and supply chains. This may be expedited through the utilisation of effective and thorough human rights due diligence.
[…]
6. Establish adequate human rights due diligence mechanisms to identify, prevent, and remedy human rights impacts. Human rights due diligence should consider both internal risks that stem directly from business operations as well as external risks, which relate to all other entities that the business work with across their operations or are linked with through their value chains. Human rights due diligence should be carried out before commercial operations and business activities, proportionate to the size and scope of the enterprise and the scale and complexity of its potential human rights impacts, and on a continuous basis to ensure that integrated findings from impact assessments shape future business decisions. Businesses should also ensure that the risks identified through due diligence and corrective actions taken are adequately reported and communicated to stakeholders, preferably in the form of an annual human rights due diligence report.
[…]
8. Develop key performance indicators corresponding to the achievement of human rights goals and routinely review and update them to reflect national legislative and policy changes.’
ANNEX II | Actions Already Undertaken by Pakistan
A | General Measures Relevant to Business and Human Rights (pages 72-73)
‘The Securities and Exchange Commission of Pakistan (SECP) has provided guidelines on CSR, whereby public companies must report on how their activities protect and promote human rights.
[…]
Protection from environmental degradation is also a priority for Pakistan. Under the State Bank Guidelines for Infrastructure Project Financing, companies must draft a description of environmental impact assessments and must report on health and safety issues to provide information as to the compliance of the project with relevant laws.’
B | Measures Relevant to NAP Priority Areas
iii. Human Rights Due Diligence (page 80)
‘The State Bank has developed guidelines which provide that as a pre-requisite companies must draft a description of environmental impact assessments and must report on health and safety issues to provide information as to the compliance of the project with relevant laws.
In the sustainability reports of businesses within Pakistan, corporate social responsibility (CSR) is a major component. This mostly covers health, safety, and environmental policies.’
2. Ministry of Development Funds and Regional Policy
Responsible business – promoting due diligence standards
[page 11]
“The issue of due diligence in the field of human rights will also be of particular interest to the Advisory Board for Sustainable Development and Corporate Social Responsibility in view of the legislative changes planned at the EU level as regards due diligence in the area of human rights and environmental issues, as well as in the field of non-financial reporting covering, among others, issues concerning the respect for human rights. Monitoring the directions of legislative changes in non-financial data reporting planned at the EU level, as well as work in areas related to non-financial reporting, constitutes one of the tasks of the Working Group on the Development of Non-financial Reporting established on 31 March 2021”
5.Ministry of Finance
Revision of the Non-Financial Reporting Directive
[page 23)
“The Ministry of Finance is participating in legislative work at the EU level, which commenced after the presentation of the Commission’s proposal on 21 April 2021 and the transmission of all national language versions of the draft legislation, i.e. the draft directive as regards corporate sustainability reporting [COM(2021) 189], to the Member States on 16 June 2021. The Commission’s legislative proposal considerably broadens the scope of entities covered by non-financial reporting – according to the Commission’s estimates from about 12,000 companies to 49,000. Furthermore, the draft clarifies the scope of the reported information, also giving it a new name: sustainability reporting. The key changes proposed in the area of sustainability reporting include:
a. extending the scope of entities subject to sustainability reporting obligation to:
i. all large companies,
ii. small and medium-sized listed companies, which would start reporting three years after largeentities, except for listed micro-companies,
iii. large bodies of undertakings;
b. clarifying the scope of sustainability information to be reported;
c. empowering the EC to adopt uniform European standards on sustainability reporting obligatory for reporting entities; the full standard would be obligatory for large companies, while its simplified version – for small and medium-sized listed companies;
d. removing the possibility to report non-financial information in a separate report that is not part of the management report;
e. introducing an obligation to verify sustainability information;
f. introducing an obligation for companies subject to such reporting to prepare financial statements and management reports in the same format as issuers are obliged to use, i.e. the European Single Electronic Format (ESEF).”
9. Ministry of State Assets
Best practices for WSE-listed and State Treasury (ST) companies
[page 28]
“There are plans to develop best practice recommendations for companies listed on the WSE which, in line with global trends, will emphasise the importance of non-financial capital (e.g. human or environmental capital) used by companies and extend the scope of reporting on non-financial factors. Every year, the Prime Minister issues Guidelines for companies with State Treasury shareholding preparing financial statements, containing information on non-financial reporting (part III of the Guidelines).”
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
Slovenia has recently included several proactive provisions in national legislation to foster respect for human rights in business. An example is the Act Amending the Companies Act of April 2017, which 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 has adopted a new legal regulation aimed at increasing the transparency of certain companies and at improving the adequacy, convergence and comparability of non-financial information, increasing the transparency and consequently the diversity in their administrative, management and supervisory bodies, increasing corporate responsibility and efficiency and thereby the effectiveness of the single market, and at improving corporate management.
In accordance with Directive 2014/95/EU, which requires that certain large companies disclose relevant non-financial information to provide investors and other interested parties with a more complete picture of the development, efficiency, status and environmental and social impacts of their activities, Slovenia incorporated the obligation of non-financial reporting for large companies into its legal system in April 2017. In addition, to create a transparent, effective and clear management system which fosters the trust of investors, employees and the general 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)
Planned measures:
Non-financial reporting: In accordance with the Act Amending the Companies Act, which transposed Directive 2014/95/EU into the Slovenian legal order, large companies which are public-interest entities exceeding the average number of 500 employees must include a non-financial statement in the management report, containing information on their environmental and social impacts. Published as part of the annual report (or as a separate report), the statement must contain information at least on environmental, social and human resources issues, respect for human rights, and matters relating to the fight against corruption and bribery. The obligation to report also applies to large companies with the number of employees at the consolidated basis exceeding 500, which have to prepare consolidated annual plans.
In addition, all companies subject to audit have to outline the policy of representation diversity in their management or supervisory bodies (diversity based on gender, age, education). The diversity of skills and positions of members of management or supervisory bodies improves the understanding of business operations and openness to innovative ideas, prevents similarity of views, etc. The above provision is aimed at indirectly contributing, through such diversity, to the more successful management of companies. The monitoring and supervision of implementation of the abovementioned legal provisions will be entrusted to the Ministry of Economic Development and Technology.
As part of drafting policies and measures for restructuring and the transition to a circular economy, the Ministry of the Environment and Spatial Planning, in cooperation with other relevant ministries, will actively promote the use of voluntary environmental labelling instruments at the EU level, such as Ecolabel and EMAS. To this end, targeted expert support and assistance will be offered to companies and organisations through financial incentives and more widely by promoting sustainable production and consumption. (pg. 23)
Annex I – Guidelines on Corporate Human Rights Due Diligence
Monitoring of, and reporting on, due diligence and respect for human rights
One of the basic principles of corporate social responsibility is transparency; therefore, it must be ensured that the enterprise report regularly comprehensively and clearly to stakeholders on its observance of human rights.
The simplest way for an enterprise to report observance of human rights is in its annual report, or a special sustainability report, or a corporate social responsibility report, in which it also reports on other non-financial aspects of business operations.
In planning the scope and structure of the report, the enterprise can draw from some international standards and initiatives that include human rights and have developed basic indicators for monitoring them, inter alia:
EU directive on non-financial reporting for public-interest companies with morethan 500 employees (transposed to Slovenian legal order with the ActAmending the Companies Act),
GRI guidelines on reporting on sustainability in business operations,
ISO 26000 – social responsibility guidelines for enterprises,
SA 8000 Certificate,
Principles of the United Nations Global Compact.
By joining some of the Slovenian initiatives and by acquiring certificates, enterprises can fully or partially comply with requirements concerning human rights. Some of the relevant certificates are: Family-friendly company, Socially responsible company, EFQM excellence model, Golden Thread, Most respectable employer, HORUS – Slovenian award for social responsibility, Leader in social responsibility and sustainable development; alongside other means in support of this field. (pg. 47)
“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.”
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 …
[Footnote: 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.”
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”
Corporate Sustainability Reporting Directive (CSRD) The obligation for companies to prepare sustainable development reports took effect in the EU on 5 January 2023. This directive updates and strengthens the rules on the corporate and environmental information that companies must disclose. To ensure Swiss law remains aligned at the international level, on 26 June 2024 the Federal Council initiated a consultation on new provisions governing corporate reporting. In keeping with the standards in effect in EU member states, the proposed rules will require a larger number of companies to publish reports on the risks their activities pose with respect to the environment, human rights and corruption, as well as on the measures taken to counter these risks.
2.2 Updating the measures contained in the NAP 2020–2023
Measure 7: Reduction in human rights risks associated with gold extraction and trading
Starting on 1 January 2022, Swiss-based companies must comply with due diligence obligations as well as with reporting obligations if they import and process minerals and metals from conflict-affected areas (see Article 964j ff. of the Code of Obligations, and the DDTrO). The Federal Administration informs the private sector of the applicable legal provisions.
Measure 27: Promoting efforts to end all forms of child exploitation in supply chains
Since 1 January 2022, companies based in Switzerland have been required to comply with due diligence obligations as well as with reporting obligations if there is reasonable suspicion that the products or services they offer were produced or supplied with the involvement of child labour (see Article 964j ff.CO and DDTrO). The Federal Administration supports the implementation of these legal obligations by providing an analytical tool and cooperating with child labour-related platforms set up by international organisations
The 2024-27 National Action Plan is supplemental to the 2020-23 NAP. The 2020-2023 NAP explicitly addresses this issue.
Additional Information about the 2020-23 NAP can be found here.
IV. The corporate responsibility to respect human rights
B. Actions taken
Greater information transparency (page 13)
‘Since 2014, the Taiwan government has used legislation to require listed companies matching a certain description to prepare a CSR report each year, and as of 2020 our government — making reference to the non-financial disclosure rules and practices of financial markets around the world — has included environmental, climate change, social, and corporate governance matters in its disclosure requirements in order to ensure that the key performance indicators in non-financial disclosure are more closely linked to the way a company is managed.
At the same time, the Taiwan government has also provided businesses with the tools and guidance needed to implement their CSR policies, and has continually conducted outreach activities to encourage businesses to: voluntarily prepare annual CSR reports; disclose their human rights policies, human rights assessment methods, and supplier risks; and establish internal grievance channels.’
[…]
‘In response to the Taiwan government’s call for companies matching a certain description to prepare a CSR report each year, many private groups and organizations have also begun to assess the quality of CSR reports. For example: (a) A well-known magazine that has adopted the IFRS reporting standards carries out annual assessments of the quality of company CSR reports and presents awards to recognize the best ones. (b) There is a private think tank that collaborates with academia to issue the Taiwan Corporate Sustainability Awards each year, encourage the public to accept volunteer training and participate in the evaluation of enterprise sustainability reports and ESG comprehensive performance, spur enterprises to improve information transparency. Also, in response to the Sustainable Development Goals (SDGs), our government has set up a number of corporate excellence awards to recognize strong performance in such areas as transparency and business ethics, gender equality, and talent development. The purpose is to get companies to strengthen disclosure of non-financial information and implement human rights policies.’
This information is also covered under Appendix 4: Overview of the implementation of the state duty to protect and the access to remedy, The state duty to protect, UNGP3, Actions taken (page 42).
C. Actions planned
Advocate for disclosure of non-financial information (pages 14-15)
‘[…] the Taiwan government will also advocate for disclosure by businesses of non-financial information (related issues will include important environmental, social, and governance (ESG) topics — such as the use of consumer information, the use of energy, waste handling, labor conditions, environmental protection, forced evictions, indigenous land rights, gender equality, and consumer protection measures — all of which are matters of concern to stakeholders). The goal of such a policy would be to ensure that businesses understand that the disclosure of non-financial information can make up for the shortcomings of financial information, thus enabling businesses to effectively identify and manage risks […].’
This information is also covered under Appendix 4: Overview of the implementation of the state duty to protect and the access to remedy, The state duty to protect, UNGP3, Actions planned (page 43).
Appendix 1: Concrete actions taken by Taiwan to fulfill the state obligation to protect
Promotion of corporate social responsibility (pages 26-27)
‘The government may incorporate legally binding non-financial reporting requirements to ensure that companies conduct human rights due diligence. Article 10, subsection 4, item E of the “Regulations Governing Information to be Published in Annual Reports of Public Companies” provides that corporate governance reports shall address CSR elements, such as environmental protection, community participation, social contribution, social services & welfare, consumer rights, human rights, and health & safety.
The Taiwan Stock Exchange (TWSE) has issued the “Taiwan Stock Exchange Corporation Rules Governing the Preparation and Filing of Corporate Social Responsibility Reports by TWSE Listed Companies,” and the Taipei Exchange (TPEx) has issued the “Taipei Exchange Rules Governing the Preparation and Filing of Corporate Social Responsibility Reports by TPEx Listed Companies.” If a listed company is in any of the following circumstances, it shall prepare and file a corporate social responsibility report in Chinese according to these Rules: (a) the company is in the food industry, chemical industry, or financial industry; (b) no less than 50 percent of the company’s total operating revenue is derived from food and beverages; or (c) the company’s capital stock is not less than NT$5 billion. A listed company to which the above descriptions apply shall prepare a corporate social responsibility report for the preceding year, making reference to the Global Reporting Initiative (GRI) Standards and the Sector Disclosure documents issued by the GRI.
The MOEA’s Small and Medium Enterprise Administration has issued the “Principles for Registration of Social Innovation Organizations.” This document calls upon social innovation enterprises to disclose their organizational goals and social missions, and to state how they coincide with the UN’s Sustainable Development Goals and/or Taiwan’s efforts regarding social issues.
To strengthen corporate governance, the TWSE and the TPEx have issued several codes of best practice, including the following:
“Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”: Listed companies are expected to implement CSR measures to manage their economic and environmental risks and impacts.
“Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies “: Listed corporations are required to establish a corporate culture built upon good management and integrity. Corporations shall also consider the background of their suppliers. Corporations are expected to act with high integrity.’
Appendix 2: Concrete actions taken by Taiwan to ensure respect by businesses for human rights
In order to strengthen enterprises’ CSR implementation and enhance human rights awareness, the Taiwanese government and civil society have implemented a number of support measures, including the following: (page 34)
‘…Taiwan’s Asustek Computer, Acer Corporation, Hon Hai Technology, HTC, and TSMC are all members of the Responsible Business Alliance and follow the “Responsible Business Alliance Code of Conduct” to strengthen the management of supply chains.
Asustek, Acer, HTC, and TSMC are also members of the Responsible Minerals Initiative, which helps firms manage issues related to conflict minerals. This includes assistance in due diligence efforts.’
This information is also covered under Appendix 4, Overview of the implementation of the state duty to protect and the access to remedy, The state duty to protect, UNGP7, Actions taken (page 46).
3. The core content of the National Action Plan on Business and Human Rights
3.2 Action plan for community, land, natural resources and the environment
3.2.3 Action Plan (2019–2022)
Pillar 1: State duties in protecting (Protect)
No.
Issues
Activities
Responsible agencies
Time-frame (2019–2022)
Indicators (wide frame)
Compliance with National Strategy/ SDGs/UNGPs
8.
Development of government operations
Establish a report on environmental assessment, critical business situations and cases of human rights violations that occurred, as well as specify protection measures of human rights of villagers in the area
– Ministry of Natural Resources and Environment
– Ministry of Interior
2019–2022
– Established report on environmental assessment, critical business situations and cases of human rights violations that occurred
– Measures to protect the human rights of local peoples
– National Strategy for Public Sector Rebalancing and Development
– SDG 11, 13, 14 and 15
– UNGPs Articles 1, 3, 4, 5 and 7
Consider the establishment of monitoring and evaluation mechanisms for human rights situations with every section involved
– Ministry of Natural Resources and Environment
– Ministry of Interior
– Ministry of Justice
2019–2022
– – Established monitoring and evaluation mechanisms for human rights situations, with representatives from all sectors involved participating
– National Strategy for Public Sector Rebalancing and Development
The UK 2016 NAP states in the Introduction that [page 3-4]:
“Companies understand the business case for respecting human rights and the benefits this brings. They understand that positive action, supported by due diligence, transparency and reporting can:
– help to protect and enhance a company’s reputation and brand value;
– safeguard and expand their customer base;
– help them attract and retain good staff;
– build and maintain sustainable and effective relationships with employees and external stakeholders;
– reduce risks to operational continuity resulting from conflict inside the company itself or with the local community or other parties;
– reduce the risk of litigation for human rights abuses;
– attract institutional investors, including pension funds, who are increasingly taking ethical , including human rights, factors into account in their investment decisions;
– help companies become partners/investors of choice for other businesses or governments concerned about human rights risks;
– support company ethics and values.
Since the UK’s National Action Plan was published there has been an increased emphasis within the business community on the importance of reporting, benchmarking companies’ social and ethical performance, and corporate transparency. These can be an effective complement to regulation and a tool for protecting and promoting corporate reputation, and providing reassurance to both customers and investors.”
The UK 2016 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 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:
(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 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: (…) ii) 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 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.”
Section III: Additional National Action Plan Commitments …
Table 1: Expanding Engagement and Coordination on Responsible Business Conduct Commitments
The Department of State will “evaluate and assess the impact of potential approaches to implementing RBC Reporting Requirements, which would build on previous models of public reporting related to HRDD and RBCrelated issues. The United States and other governments have employed a range of models for public reporting on RBC, noting both challenges companies face in providing information that may be sensitive, confidential, or involve security or other such risks. Public reporting is an integral part of robust HRDD, and State will work with other agencies to identify approaches that can build on lessons learned to assess potential model(s).” (p.15)
Table 7: Anti-Corruption Commitments
The Department of the Treasury will “continue to implement the Corporate Transparency Act (CTA) to enhance beneficial ownership transparency for legal persons in the United States. The continued implementation of the FinCEN rule on beneficial ownership information reporting provisions and the revision of FinCEN’s 2016 Customer Due Diligence Rule will aid in the implementation of the CTA and strengthen beneficial ownership transparency for legal persons, such as shell and front companies, in the United States to prevent their misuse by illicit actors. On January 1, 2024, FinCEN launched a beneficial ownership filing system pursuant to the CTA. Under this new framework, many companies operating in the United States are now required to report information to FinCEN about their beneficial owners – in other words, the real people who own or control them. This effort will make it more difficult for illicit actors – including corrupt officials, terrorist financiers, criminal organizations, and drug and human traffickers – to misuse opaque corporate structures like shell companies to launder the proceeds of crime.” (p.38)
Belgium (2017 - open)
Chile (2017-2020)
Colombia (2020-2022)
Czechia (2017-2022)
Denmark (2014-open)
Finland (2014-2016)
France (2017-open)
Georgia (2018-2020)
Germany (2016-2020)
Ireland (2017-2020)
Italy (2021-2026)
Japan (2020-2025)
Kenya (2020-2025)
Lithuania (2015-open)
Luxembourg (2020-2022)
Mongolia (2023-2027)
Netherlands (2022-2026)
Nigeria (2024-2028)
Norway (2015-open)
Pakistan (2021-2026)
Peru (2021-2025)
Poland (2021-2024)
Slovenia (2018-open)
South Korea (2018-2022)
Spain (2017-2020)
Sweden (2017-open)
Switzerland (2024-2027)
Thailand (2019-2022)
Uganda (2021-2026)
United Kingdom (2016-open)
United States (2024 - open)
