Small and Medium Enterprises (SMEs) are defined as non-subsidiary, independent firms which employ less than a given number of employees. This number varies between countries, with the most frequent upper limit being 250 employees, as in the European Union. However, some countries set the limit at 200 employees, while the United States uses 500 employees. Small firms are generally those with fewer than 50 employees, while micro-enterprises have at most ten, or in some cases five workers. Financial assets can also used to define SMEs; in the European Union, SMEs must have an annual turnover of EUR 40 million or less and/or a balance-sheet valuation not exceeding EUR 27 million.
The approximately 400 million SMEs are the backbone of economies around the world. They are the main source of job creation globally, accounting for over 95% of firms and 60%-70% of employment. SMEs generate a large share of new jobs in OECD economies, and even more in the EU, where they represent approximately 99% of all businesses, create around 85% of new jobs and provide two-thirds of the total private sector employment. Similarly, in the Global South, growth in overall employment is generally connected to the development of SMEs. [see, OECD Responsible Business Conduct in Georgia]. Considered key to ensuring economic growth, innovation, job creation, and social integration, not least thanks to their close relations with employees, the local community, business partners, for example, they also make an integral part of global supply chains, both as buyers and suppliers [e.g., European Commission: SME portal]. The IFC estimates that globally there are roughly 9.34 formal million women-owned SMEs in over 140 assessed countries and also notes that the credit gap for formal women-owned SMEs across all regions is roughly $2872 billion, which is 30 percent of the total credit gap for SMEs.+ Read more
At the same time, SMEs have specific strengths and weaknesses that may require special policy responses. As new technologies and globalisation reduce the importance of economies of scale in many activities, the potential contribution of smaller firms is enhanced, with many of them being at the forefront of innovative solutions of relevance to human rights (e.g., The LifeStraw). However, many of the traditional problems facing SMEs – lack of financing, difficulties in exploiting technology, constrained managerial capabilities, low productivity, regulatory burdens – become more acute in a globalised, technology-driven environment.
The UN Guiding Principles on Business and Human Rights (UNGPs), Guiding Principle 14, states:
“The responsibility of business enterprises to respect human rights applies to all enterprises regardless of their size, sector, operational context, ownership and structure. Nevertheless, the scale and complexity of the means through which enterprises meet that responsibility may vary according to these factors and with the severity of the enterprise’s adverse human rights impacts.”
The Commentary to Guiding Principle 14 states that:
“[T]he means through which a business enterprise meets its responsibility to respect human rights will be proportional to, among other factors, its size. Small and medium-sized enterprises may have less capacity as well as more informal processes and management structures than larger companies, so their respective policies and processes will take on different forms. But some small and medium-sized enterprises can have severe human rights impacts, which will require corresponding measures regardless of their size. Severity of impacts will be judged by their scale, scope and irremediable character. The means through which a business enterprise meets its responsibility to respect human rights may also vary depending on whether, and the extent to which, it conducts business through a corporate group or individually. However, the responsibility to respect human rights applies fully and equally to all business enterprises.”
Despite clear references in the UNGPs and the role they play in the global economy, the importance of SMEs and their key role in creating a paradigm shift in how business is being done, has been largely neglected in the debate on business and human rights [e.g., ILO report.] Only more recently is attention being paid to the support needed by SMEs to improve working conditions and develop more mature labour relations, such as inexpensive provision of working capital for investment in working conditions and other business practices, as well as training on occupational health and safety standards [e.g., recording of the 2015 UN Forum on Business and Human Rights session on “SMEs, informality and human rights: challenges and solutions”; WebTV].
At the same time, while for being part of the global supply chains, SMEs are often required to integrate and comply with their business partners’ Codes of Conducts, also contributing to behavioral change.
While the majority of the guidance to business is better suited for large corporations, various actors undertook efforts to develop materials and guidance aimed particularly at the SMEs, with the purpose of raising awareness, building capacity and to understand the advantages of respecting human rights, for example, cost reduction or retaining and attracting the best staff or improving productivity and performance, or safeguarding the business’ reputation.
The UK Equality and Human Rights Commission developed guides tailored to the specific needs of small and medium-sized businesses: “The Equality Act: Guidance for Small Businesses” and “Guide to Business and Human Rights”. In 2012, the European Commission published in all EU languages, “My Business and Human Rights: A Guide to Human Rights for Small and Medium-sized Enterprises”. Additionally, the United Nations Global Compact launched the Communication on Progress (COP) to help small and medium-sized enterprises with limited resources to regularly disclose progress on sustainability within their means. In May 2019, Switzerland published the Making Success Sustainable through Responsible Business Conduct: Human Rights Due Diligence of Swiss SMEs. It provides information for human rights risk assessments and an overview of the steps required to implement human rights due diligence.
In order to support women’s empowerment, in 2008, the Dominican Republic adopted a law setting out a program of preferential purchasing to support SMEs and legislated that 20% of purchases through this program should be from businesses run by women.
Under the 2030 Agenda for Sustainable Development, small & medium-sized enterprises are crucial for the achievement of a number of SDGs including SDG 8 on decent work and economic growth, SDG 9 (industry, innovation and infrastructure) and SDG 12 o(responsible consumption and production). They are also relevant for other SDGs aimed at ensuring poverty reduction and access to markets (e.g., SDG 2 (no hunger)), or decent work (SDG 8) among others. Some countries have already launched support programmes for SMEs. These include financial support and guidelines such as Japan’s management plan, for SMEs that also help companies link their actions to SDG implementation; and Denmark’s SDG Acceleration for SMEs established in cooperation with UNDP.
8) Decent Work and Economic Growth
9) Industry, Innovation and Infrastructure
12) Responsible Consumption and Production
What National Action Plans say on Small & medium-sized enterprises
Action point 4
Promote existing qualitative initiatives on human rights and social responsibility
The federal government explains that the Belgian National Contact Point will organize a seminar targeting the fight against corruption for SMEs with the provision of a practical toolbox prepared in partnership with the Belgian Confederation of Enterprises and the International Chamber of Commerce and the Ministry of Justice.
The Flemish government plans a sustained and sectoral approach to social responsibility as companies operating in the same sector face similar challenges. Thus in consultation with the sectoral organizations, the Flemish authorities will support these organizations and their members in order to sustain their value chains and management of their businesses. In 2016, the Department of Labor and Social Economy will launch a call for the reduction of the difficulties of individual organizations (SMEs, social profit and other organizations) for the determination or for taking social responsibility.
On the context of development of SMEs in South Africa, the NAP mentions that the strategy note aims at job creation through the development of SMEs. This priority is based on the recognition that the high unemployment rate in the labor force, especially among young people, is one of the most important underlying causes of inequality in South Africa. The collaboration between Flanders and South Africa therefore provides support services for SMEs in general and in the social economy sector in particular.
The Flemish government is funding the project ‘Job creation through SME Development – A knowledge sharing project’. This project has a duration of three years (ends December 2017) and has the objective of creating a better business climate for SMEs by taking initiatives to facilitate the creation and development of SMEs through knowledge exchange, coordination and collaboration between interested parties.
Action point 10
Belgium is committed to integrating human rights and corporate social responsibility (CSR) criteria into the local private sector development support strategy of Belgian cooperation
La Belgique s’engage à intégrer des critères « droits de l’Homme » et de Responsabilité sociétale des entreprises (RSE) dans la stratégie d’appui au développement du secteur privé local de la coopération belge
This point explains that strategy of the Belgian cooperation for development also aims at improving the access to financing for micro, small and medium-sized enterprises (MSMEs) and capacity building of MSME entrepreneurs. One of BIO’s purposes is to invest, directly or indirectly, in the development of MSMEs and social economy enterprises located in developing countries in the interest of economic progress and social security of these countries, while ensuring an adequate return.
Action point 13
Strengthen and monitor the respect for human rights in public procurement
The NAP states that the Flemish government intends to emphasize innovation, sustainability, professionalisation and access to SMEs within the Flemish public procurement plan for the period 2016-2020.
Action point 14
Evaluate the Belgian label to promote socially responsible production
This point presents “the Belgian label” that was a product label created in 2002 and promulgated by law to promote socially responsible production. While the plan includes a reevaluation of the law, such an assessment will take into account the specificity of SMEs both in the analysis and proposals.
Action point 19
Promote best practice of SMEs that adopt responsible supply chain management, especially through the « CSR Compass » tool
This point has a special focus on SMEs. Actions from the government of Wallonia will include the promoting vis-à-vis companies the ready-made instruments, also covering the CRS compass. Concretely, this will involve setting up workshops for exchanges between companies of the same sector and the creation of a practical guide for SMEs wishing to improve the ethics in their supply chain.
Action point 31
Endorse best practice of businesses
The government of Wallonia mentions an engagement that will consist of publishing the initiatives developed by companies and on the other hand Walloon initiatives supporting the adoption of practices respecting human rights by SMEs.
Action point 32
Train companies in the field of respect for human rights
This point briefly mentions SMEs in the context of Wallonia’s engagement with educational and public policy initiatives. The NAP mentions that “public policy initiatives may target intermediaries to ensure that human rights issues are permanently and actively integrated into education and training activities. In this respect, a link could be set up with the “training voucher” system of the Walloon Region. The aim of this system is to promote the training of workers engaged in SMEs or self-employed persons in the Walloon Region. To this end, they are invited by the Walloon Region to participate in training courses during or outside normal working hours.”
Pillar 1: The State Duty to Protect Human Rights
Strand 1: Training in the Field of Business and Human Rights
Action Point 1.3 (pages 30-31)
The Ministry of Labour will:
- Train businesses (guilds, confederations, associations and SMEs), unions and civil servants on business and human rights, emphasising labour rights.
Strand 3: Inclusion and Non-Discrimination
Action Point 3.3 (page 37)
The Ministry of Mining will generate the conditions for transiting to an inclusive organisational structure that includes the acknowledgement of respect and diversity in their practices. They will do this carrying out the following actions:
- Talks about business and human rights addressed at key actors in the small, medium and large-scale mining industry.
Action Point 3.5 (page 38)
The General Directorate of International Economic Relations of the Ministry of Foreign Affairs will carry out activities concerning best practices for SMEs, with the purpose of making progress in the application of best practices in the areas of inclusion, leadership and family balance.
Strand 6: Strengthening Coherence between Public Policies
Action Point 6.3. (page 45)
The Ministry of Foreign Affairs will:
- Through the General Directorate of International Economic Relations, it will:
- Reinforce the work of committees created pursuant to chapters contained in trade agreements about SMEs, cooperation, gender, environment, transparency and labour matters, so that they include human rights-related objectives in their duties, thus becoming a forum for carrying out relevant dialogues. In line with the above, the General Directorate will encourage the development of specific coordination activities in the committees and promote the development of technical capacities in human rights.
Pillar 2: The Corporate Responsibility to Respect Human Rights
Strand 2: Promotion of Corporate Due Diligence in the Field of Human Rights
Action Point 2.1 (pages 54-55)
The Ministry of Foreign Affairs, through the General Directorate of International Economic Relations, will:
- Promote human rights in the management of public funds to promote exports carried out by ProChile, through the progressive incorporation of analysis mechanisms helping to ensure that business enterprises having access to the tools offered by this entity respect human rights. Likewise, it will establish, if relevant, requirements about sustainability and respect for human rights, as criteria to choose the business enterprises participating in programmes to promote exports and corporate activities, including SMEs and micro SMEs.
- Disclose to business enterprises who are members of ProChile the United Nations Guiding Principles, thus helping, in this was and as far as possible, to incorporate them in their activities. It will do this through information available in the website, talks or sets of tools to strengthen their capabilities, and/or through the publication of handbooks containing the Guiding Principles or another suitable instrument, with special focus on information and training provided to SMEs.
Action Point 2.2 (p.71)
The Ministry of Economy, Development and Tourism will: …
- Hold a working group meeting at least once each semester with the Division of Social Economy and Associativity and the Division of Smaller Business Enterprises, with the purpose of identifying the impact of human rights in the management of businesses such as cooperatives and SMEs, and of incorporating the vision of human rights and business enterprises within this type of economic associations. Based on the activities of the working groups, sector guides will be developed to evaluate compliance with human rights issues, with special emphasis on the management of supply chains. …
- Subscribe in 2017 an agreement with a technical specialised body to develop a system to diagnose and measure the impact of small and medium size enterprises on human rights, through a digital tool of public access.
Strategy “Commitment for the future of Colombia” [“Compromiso por el futuro de Colombia”]
- Job creation: the government seeks increasing employment through a strategy that combines support to Small and medium enterprises (which generate around 90% of employment in the country), acceleration of infrastructure projects, incentives to orange economy [economía naranja] projects_, development in connectivity and digital transformation and support to sector specially impacted by the pandemic such as tourism and the hotel industry.
The general objective of the National Action Plan on Business and Human Rights “Together we make it possible” [“Juntos lo Hacemos Posible”] is the following:
Guarantee that, during the situation caused by Covid-19, as well as in the economic and social reactivation phase to overcome it: the State adequately protects human rights, business activities are respectful of these rights and victims of human rights violations are allowed to have access to effective reparations. This is a fundamental basis for sustainable development and equity in the country.
Likewise, the specific objectives that will develop the general objective mentioned above are the following:
- Encourage respect for human rights in micro, small, medium and large companies.
VIII. FUNDAMENTAL PILLARS
i. Fundamental Pillar 1: The State’s obligation to protect human rights
Strand 5 [Eje nº 5]: Articulating spaces for social dialogue and effective participation
- The Ministry of Agriculture and Rural Development will implement strategies to continue to guarantee the right of association of small and medium producers and participation of farmers in public policy decisions affecting the sector.
ii. Fundamental Pillar 2: The duty of business to respect human rights
Strand 2[Eje nº 2]: Promoting corporate human rights due diligence
- The Presidential Advisory Office for Human Rights and International Affairs, together with business associations, will be responsible for promoting responsible supply chain management in the area of human rights, with an emphasis on small and medium-sized enterprises.
Existing plans, initiatives and strategies [page 8]
“The Czech Republic has long set great store by the topic of human rights both generally and in connection with the activities of businesses. Human rights in a business context is covered, for example, by the following strategy documents: …
Scope and content of the obligation to respect human rights [page 32]
“How should respect be shown? Recommended measures will differ depending on the size of a business, the market on which it is active, the sector, and a host of other factors.”
Due diligence [page 35]
“An effective due diligence mechanism should meet the following criteria: …
Adapt the mechanism to the size of the business, the nature of its operations and specific local factors.”
2. The state duty to protect human rights
2.3 Actions taken
Danish Government’s expectations to companies [page 11]
“… at Danish embassies in emerging markets, the Trade Council in co-operation with the Danish Business Authority holds workshops in responsible supply chain management, especially focusing on small and mediumsized companies and their local business partners (GP 3c). The courses are held on an annual basis. They include practical guidance on how to demonstrate due diligence in business operations in regard to adverse impacts on human rights. To further assist Danish companies in emerging markets, the embassies are also conducting CSR reviews of local business partners. The reviews include a due diligence component (UNGPs 3c).”
Providing effective guidance on how to respect human rights [page 14]
“The Danish Government is committed to continuously improving and promoting guidance provided to companies on how to work with CSR in general and human rights in particular. To ensure that companies have the right tools and the necessary guidance to handle the new due diligence requirements, the Government has updated the existing web tool, the CSR Compass and the Global Compact Self-Assessment Tool in accordance with the due diligence requirements of the UNGPs. The revised Compass includes a guide for small and medium-sized companies on how to exercise due diligence (GP 17) and also gives guidance on ways to solve company conflicts by actively engaging in a dialogue with the company’s stakeholders (GP 29).”
3. The corporate responsibility to respect human rights
3.3 Actions taken
Award for best non-financial report [page 18]
In the section: Award for best non-financial report, the NAP states [page 18]: “The Danish trade organisation 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, organisations, 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.
For more best practice cases on reporting on non-financial issues, see: http://csrgov.dk/communication_and_reporting.”
3 Expectations towards companies and support services
3.3 Training and counselling [page 27]
“… compared to large companies, SMEs have limited resources for acquiring training related to human rights. For this reason, it is important to provide targeted training for SMEs.”
As a follow-up measure, the working group proposes that …
• training related to the theme of business and human rights be provided to companies. The special emphasis is on SMEs operating in branches of activity that pose a high risk for human rights.
Principal responsible parties: Ministry for Foreign Affairs and Ministry of Employment and the Economy in conjunction with business sector organisations, schedule 2014 to 2016.
II- Businesses’ Responsibility to Respect Human Rights
Introduction [page 37]
… Given the complexity of this issue, companies must continue efforts to develop tools and good practices in the human rights field, at all levels of the production chain. Not only does this allow them to meet their obligations, it is also a key factor in their long-term viability and the image they project to investors and the public. To help companies, especially SMEs, manage this logistically and financially challenging process, a wide range of tools and support is available from actors in the public and private sectors. Most of these resources are free, publicly available and adaptable to business requirements. …
2. Training and Information for Businesses [page 39]
… Thanks to the implementation of innovative partnerships between the public, private and nonprofit sectors, regional movements are providing information, raising awareness, offering training and supporting actions to defend and promote human rights. Regional business networks are also committed to human rights, women’s rights and the rights of newcomers, workers, vulnerable populations, etc. These networks, which support multi-stakeholder dialogue and operations, develop tools and initiatives adapted to the needs of businesses (micro, small, medium and large enterprises) using cooperative approaches. …
3. Risk Analysis and Impact Assessment
Practical Tools Addressing Specific Issues
At the European Level
- The CSR Compass (2005), a self-assessment tool supporting CSR policies for Danish businesses, with a special focus on SMEs and businesses with an international presence.
There is no mention of small and medium enterprises (SMEs) in the Business and Human Rights Chapter of the Georgian Human Rights NAP.
The German NAP includes multiple reference to SMEs.
III. Federal Government expectations regarding corporate due diligence in respecting human rights [page 8-13]
Scope and practical structuring of due diligence in the field of human rights
“The responsibility to exercise due diligence applies in principle to all enterprises, regardless of their size, the sector in which they operate, or their operational context within a supply or value chain with an international dimension. …
Depending on the size of the enterprise, the nature of its products or services, the potential risk of particularly adverse impacts on human rights and the operating context, the measures to be taken are likely to vary in scope. It may be appropriate to conduct certain elements of the process in combination with other enterprises within an association or industry, subject to compliance with antitrust legislation. Small and medium-sized enterprises in particular should make use of the advisory and support services to be offered by the Federal Government and business associations under the National Action Plan.”
Procedure for the identification of actual and potential adverse impacts on human rights
“The size of an enterprise, the sector to which it belongs and the nature of its business activity directly influence the risk that its operations will have an impact on human rights. The required depth and breadth of the risk assessment depends on these factors.”
“…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.”
- “The Federal Government expects all enterprises to introduce the processes described above in a manner commensurate with their size, the sector in which they operate and their position in supply and value chains. Their compliance will be reviewed annually from 2018. In the absence of adequate compliance, the Federal Government will consider further action, which may culminate in legislative measures and in a widening of the circle of enterprises to be reviewed (see chapter VI below).”
IV. Key areas for action [page 13]
“It emerged from the process of dialogue and consultation on this Action Plan that the extent to which measures to be adopted to advance the implementation of the UN Guiding Principles would have to be binding would vary between these key areas. In addition to these measures, incentives and support services are to be created which would enable all participants, especially small and medium-sized enterprises, to implement the Guiding Principles successfully.”
2.1 Ensuring the protection of human rights in supply and value chains
The current situation [page 28-29]
“the G7 are to: …
- in particular, assist small and medium-sized enterprises in developing a common understanding of due diligence and responsible supply-chain management.”
2.2 Transparency and communication regarding corporate impacts on human rights
The current situation [page 31]
“… 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.”
2.3 Business activity in conflict zones
Measures [page 33]
- “The Federal Government is pursuing the aim of preventing the use of proceeds from the sale of tin, tantalum and tungsten, of their respective ores and of gold to fund armed struggles in conflict zones and other high-risk areas. It is committed to the establishment of binding due diligence rules, which should be proportionate and should not entail unnecessary red tape, particularly for small and medium-sized enterprises.”
3. Available means of practical implementation support [page 33-36]
The Federal Government would like to assist small and medium-sized enterprises in particular in fulfilling the extensive corporate due-diligence requirements and expectations relating to human rights (see chapter III above).
The current situation
Numerous measures and services are already available for this purpose. A selection of existing and planned measures is described in some detail below: …
- The National CSR Forum, which was launched by the Federal Ministry of Labour and Social Affairs in 2009, consists of currently 41 members – high-ranking experts from business, trade unions, non-governmental organisations and research bodies as well as representatives of the participating federal ministries. Among the main tasks of the National CSR Forum are the provision of advice to the Federal Government on the continuing development of the national CSR strategy and the formulation of recommendations on specific issues. In 2010, the National CSR Forum, with the Federal Ministry of Labour and Social Affairs in the lead role, discussed and developed a National CSR Action Plan. The measures and activities that have been carried out in the framework of the Action Plan have reached numerous enterprises. In a decision taken on 30 August 2012, the National CSR Forum expressed its support for “a smart mix of voluntary policy measures and, where necessary, complementary regulation” (2012, p. 11). Through the ESF promotion scheme for “social responsibility in SMEs”, more than 3,000 SMEs received advice and training in social responsibility, and regional CSR networks have been made permanent. Numerous specialised events have been staged in the framework of the CSR Forum to advise enterprises on the exercise of due diligence. …
- The Federal Ministry for Economic Cooperation and Development makes information and guidance available to enterprises of various sizes from various sectors, particularly by funding the work of the German Global Compact Network. Ever since 2004, the Ministry has been promoting the Network in close consultation with the Federal Foreign Office. The Network unites the German signatories of the UN Global Compact, whose core principles include respect for fundamental human rights and labour standards. As a business-driven multi-stakeholder forum, the Network has been providing training courses for management staff in the exercise of corporate responsibility for human rights ever since 2008.
III. Opportunities for training and dialogue
- 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 1: International Context and Domestic Consultative Process
The UN Guiding Principles on Business and Human Rights – Protect, Respect & Remedy [page 8]
The UN Guiding Principles on Business and Human Rights “are intended to apply to all business enterprises, both transnational and local, regardless of size, sector, location and ownership or structure.”
Section 3: Actions
II. Initial priorities for the Business and Human Rights Implementation Group [page 18]
“ix. Encourage companies and NGOs funded by the State to carry out human rights due diligence as appropriate to their size, the nature and context of operations and the severity of the risk of adverse human rights impacts.”
IV. Italian ongoing activities and future commitments
Administrative liability of companies
“The Ministry of Justice has recently set up a working group with the CNPDS (National Centre for Prevention and Social Defence Foundation), Confindustria and Assonime. The aim is to measure the effectiveness and consistency of regulations on administrative liability for crimes of collective entities within the country. and to assess the appropriateness of any reforming measures. In particular, the working group intends to propose solutions to remedy the following critical aspects of the current legislation:
– insufficient focus on the size and organizational complexity of companies covered by Legislative Decree No. 231/2001, with particular reference to small and medium-sized companies, as well as public bodies (…)” (p. 17)
ANNEX 1 – Accountability Grid and Assessment Tools for the Implementation of the NAP
“2. Update the implementation assessment information of Legislative Decree No. 231/2001 in order to evaluate its extension in terms of objectives and application of the administrative liability of legal persons, and to pursue the following objectives in this area:
– the fight against the crisis and the rate of unemployment suffered by economic sectors most affected by measures to counter the epidemic emergency (catering and the gastronomic sector; tourism/hotel sector; small businesses/individuals in the craft and retail sectors of Made in Italy)” (p. 61)
“29. Promote and encourage multi-stakeholder initiatives involving large as well as small and medium-sized companies in order to facilitate the exchange of information and good practices on business and human rights, moving from a general mapping over companies endorsing the UNGPs and operating in accordance with international standards.” (p. 66)
Chapter 2. Action Plan
1. Fundamental Principles of the NAP
(3) To ensure that business enterprises understand and comply with relevant legislation and policies, it is vital to promote their understanding and awareness of business and human rights. In particular, promoting understanding and awareness among SMEs, which have limited human and physical resources, is critical to increasing the effectiveness of the NAP. (…)
2. Areas of the NAP
(1) Cross-cutting areas
E. Equality before the Law (Persons with Disabilities, Women, Persons of Diverse Sexual Orientation and Gender Identity, and Other Groups)
(Future measures planned)
(b）Promote employment of persons with disabilities
- Promote initiatives to increase opportunities for persons with disabilities to play an active role as a measure introduced under the Revised Act on Employment Promotion Etc. of Persons with Disabilities of 2019. As a measure for the public services sector, this includes making it incumbent on persons with appointive power at national and local government agencies to prepare and publish the Guidelines for Formulation of the Plan on Promoting Dynamic Engagement of Persons with Disabilities. As a measure for employers in the private sector, this includes the establishment of an accreditation system for SMEs with excellent initiatives concerning employment of persons with disabilities, and a special benefits system for employers who employ part-time workers whose weekly working hours are within a certain range. [Ministry of Health, Labour and Welfare]
(2) Measures of the Government as an Actor regarding State Duty to Protect Human Rights
D. Human Rights Education and Awareness-Raising
(Existing framework/Measures taken）
The Government has developed the Basic Plan on Human Rights Education and Human Rights Awareness Raising pursuant to the Act on the Promotion of Human Rights Education and Human Rights Awareness-Raising (Act No.147 of 2000), based on which it has been promoting various forms of human rights education and awareness-raising. In particular, human rights education and awareness-raising seminars for SMEs have been organized across Japan to broaden awareness of business and human rights among businesses.
(Future measures planned)
(d) Continue awareness-raising seminars for SMEs
- Continue to implement human rights education and awareness-raising seminars for business enterprises especially targeting SMEs as part of the Support for Human Resources Development in SMEs. [Ministry of Economy, Trade and Industry]
(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
(Future measures planned)
(f) Steadily implement the Act on the Promotion of Women’s Participation and Advancement in the Workplace
- The revised Act was adopted and enacted at the ordinary parliamentary session in 2019 (effective from June 1, 2020). The expansion of the Act’s scope (to be effective from April 1, 2022) included: expansion of the obligation to develop action plans and to have information disclosure for business enterprises employing 101 or more employees, and the obligation to reinforce information disclosure applied to business enterprises employing 301 or more employees. Going forward, disseminate information on the contents of the revision, and provide support for SMEs to develop action plans for smooth implementation of the revised Act. [Ministry of Health, Labour and Welfare]
B. Support for Small and Medium Enterprises (SMEs) regarding Business and Human Rights
(Existing framework/Measures taken）
SMEs play an important role in Japan’s economy, providing most employment and contributing to local communities and the lives of residents as the key player in society, while also having a role in supply chains. Because SMEs include a wide range of companies in terms of size, sector, and business category, the Government will implement business and human rights efforts with input from the SMEs that reflects the diversity of these enterprises. The Government also recognizes the need to engage in awareness-raising activities to increase understanding and implementation by SMEs, while also being considerate of SMEs’ position in business transactions.
(Future measures planned)
(a) Provide information to SMEs through the portal site on business and human rights
- Set up a portal site with centralized information related to business and human rights to promote efforts regarding business and human rights made by SMEs. [Ministry of Foreign Affairs]
(b) Conduct seminars targeting SMEs in cooperation with economic organizations and civil society
- Continue to implement human rights education and awareness-raising seminars for business enterprises targeting SMEs as part of the project called the Support for Human Resources Development in SMEs and enhance understanding for human rights due diligence. [Ministry of Economy, Trade and Industry]
(c) Include policies regarding business terms and conditions and improvement of business practices
- Continue to boost efforts to improve transaction terms and practices to prevent main contractors from forcing subcontractors to absorb their expenses. [Ministry of Economy, Trade and Industry]
CHAPTER TWO: SITUATIONAL ANALYSIS AND THEMATIC AREAS OF FOCUS
2.2 Kenya´s Experience with Business and Human Rights [Page 5]
Key business and human rights concerns in Kenya revolve around workplace rights, local communities and business relations, human rights and sustainable land use, human rights and sustainable environment and human rights and small- and medium-sized enterprises. There have been allegations of human rights abuse across many business sectors including in the agricultural sector where sexual harassment, poor housing, low remuneration and poor working conditions are common particularly in commercial farms growing tea, coffee and flowers.
The Lithuanian NAP makes no reference to small and medium enterprises (SMEs).
‘The Mexico NAP does not explicitly address this issue’
3.3 Clarifying due diligence
Raising companies’ awareness [page 22-23]
“As an earlier study showed, SMEs operating internationally mainly need practical information [Good Company (2010). Evaluation of the NCP’s promotional tasks 2007-2010. Parliamentary Papers 26 485, no. 101.]. …
The European Commission has also published a guide for SMEs and has developed a number of case studies [European Commission (2012). My Business and Human Rights: a guide to human rights for small and medium-sized enterprises.].”
The Norwegian NAP makes no explicit reference to SMEs.
Pakistan’s NAP does not explicitly address this issue.
|CHAPTER II: THE BUSINESS AND HUMAN RIGHTS SITUATION IN PERU
According to figures from the Ministry of Production (2019), which takes as its source the Single Registry of Taxpayers of the National Superintendence of Customs and Tax Administration (Sunat), in 2019, micro, small and medium-sized enterprises (MSMEs) accounted for 99.6% of Peruvian companies and employed 59% of the employed EAP. Furthermore, in the 2015-2019 period, the number of formal micro and small enterprises (MSEs) increased at an average annual rate of 8.4%. However, a high percentage of informality persists, as 36.9% of MSEs are not registered with Sunat. Furthermore, according to estimates by ComexPeru (2020), using the INEI’s National Household Survey (Enaho), in 2019, MSEs recorded annual sales, which would be equivalent to 19.3% of GDP.
Given the relevance in Peru of MSMEs to guarantee human rights, according to international standards, specialized technical assistance for this sector of the economy is vital, “simplifying requirements […] and offering capacity-building opportunities” and to ensure, in alliance with companies, transnational associations, trade unions, civil society organizations, academia, and other stakeholders, for the respect of human rights in all phases of business supply chains (UN. Working Group on the issue of human rights and transnational corporations and other business enterprises, 2017, §§ 73-77). – page 35
Table 8: NAP strategic guidelines and objectives, and alignment with the axes of the Peru Vision 2050
Strategic guideline No. 1: Promotion and dissemination of a culture of respect for human rights in the business environment in accordance with the framework of international standards of the guiding principles and other international instruments.
Objective No 3: The business sector is aware of and promotes the implementation of the guiding principles on business and human rights and other related international instruments in its activities and responsible business conduct.
Action: Create and implement a permanent training program on GP-RBC and other international standards, from the Justice and Human Rights sector, with special emphasis on meeting the specific needs of the business sector, both private and public, by company size and industry.
Background: In order to guarantee a permanent state training and awareness-raising of the business sector, both private and public, the MINJUSDH will create and implement a training program on GP-RBC and other international standards that will address, in coordination with companies and business associations, their particular needs, with special emphasis and attention to micro and small enterprises. These training activities will take into account, to the extent necessary, the context of the sanitary emergency caused by Covid-19.
Indicator: Number of private and public companies trained in GP-RBC and other international standards, to the extent necessary, taking into account the emphasis on micro and small enterprises. – page 63
Strategic guideline No. 2: Design of public protection policies to prevent human rights violations in the business environment.
Objective No. 3: Review, design, and adoption of national plans and programs to guarantee human rights in the framework of business activities.
Action: To prepare a study that includes an analysis and situational status of child labor in the informal sector.
Background: According to the OECD Study on Public Policies on Responsible Business Conduct, “child labor is still widespread in Peru and is a predominant phenomenon in the informal sector”. In line with the above, it can be stated that one of the main unattended sectors is in the informal sector, which requires the responsible entities to design a comprehensive strategy that goes beyond regulation and should include micro and small enterprises.
Indicator: Study of the analysis and situational status of child labor in the informal sector and production chains. – page 89
Strategic guideline No. 3: Design of public policies that promote respect for human rights by companies through accountability, investigation, and sanction for the impacts of their activities.
Objective No. 2: Technical assistance to companies for the observance of human rights in their business activities
Action: Produce, in coordination with the business sector, organized civil society and the competent state sector, a guide aimed at the micro and small business sector to promote their formalization and, progressively, a culture of due diligence.
Background: The guide will specifically address the principles of GP-RBC in order to promote the formalization of micro and small enterprises and progressively implement a culture of due diligence, taking into account their peculiarities. The guide will be developed with the business sector and civil society, and its implementation and follow-up will be promoted.
Indicator: Due diligence guide for micro and small companies prepared, presented, and implemented. Follow-up reports on the implementation of the guide. – page 107
Action: Provide information and raise awareness on collective labor rights due diligence throughout the supply chain.
Background: There is a need to provide information and raise awareness on the adoption of due diligence measures for the respect of collective labor rights throughout the supply chain. This information should include small and medium-sized enterprises, as well as the context of the Covid-19 pandemic.
Indicator: Information booklet on due diligence measures for respecting collective labor rights throughout the supply chain. – page 117
2017-2020 NATIONAL ACTION PLAN
Pillar II: The corporate responsibility to respect human rights
1. Implementation of the UN Sustainable Development Goals (2030 Agenda] [page 29]:
Key to ensuring success in achieving the Strategic Development Goals is their alignment with business strategies, promotion of a circular economy —environmentally friendly circulation of closed and sustainable value chains—by entrepreneurs, promotion of integrated and long-term thinking, and stakeholder engagement. Attention should also focus on the promotion of sustainable business models and the active involvement of SMEs that have limited business opportunities.
2021-2024 NATIONAL ACTION PLAN
|3. Ministry of Economic Development and Technology
Implementation of the UN Sustainable Development Goals (2030 Agenda)
Entrepreneurs facing unprecedented pandemic challenges need multidimensional assistance and systemic support in their transformation towards sustainable development, e.g. in terms of access to resources and knowledge on sustainable development – most SMEs are still not aware of the concept of sustainable development, lack adequate resources (human, capital) to build responsible business models. – page 13
5. Ministry of Finance
Revision of the Non-Financial Reporting Directive
a. extending the scope of entities subject to sustainability reporting obligation to:
i. all large companies,
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; – page 23
12. Public Procurement Office
The new Public Procurement Law (Journal of Laws of 2021, items 1129 and 1598)
Article 96, provides for the possibility for the contracting body to specify in the contract notice or procurement documents contract performance requirements. These requirements may also cover social aspects such as the promotion of decent work, respect for human rights and labour law, support for social inclusion (including of persons with disabilities), the social economy and SMEs, the promotion of equal opportunities and the principle of ‘accessible and designed for all’, including sustainable criteria along with consideration of fair and ethical trade, – page 34
Principle 10 – Basic Orientations
Slovenia supports the EU approach to environmental and social issues, and will continue to promote the development of micro, small and medium-sized enterprises as major drivers of sustainable development. (pg. 32)
South Korea’s NAP makes no reference to small and medium-sized enterprises (SMEs).
I. Commitment to implement the United Nations Guiding Principles on Business and Human Rights
Many companies in our country have already incorporated this responsibility in the field of human rights into their business strategy. Others, particularly small and medium-sized enterprises, will find in this Action Plan the adequate tools to address this responsibility to respect human rights in the development of their operations.
Guiding Principle 2
The State expects from Spanish companies, in Spain and abroad, a behavior consistent with its responsibility to respect human rights, which implies that they must act with due diligence, depending on their size and circumstances, to avoid the violation of the rights of third parties and to deal with the adverse impacts of their activity.
The Monitoring Commission will design and submit to the Government the adoption of an incentive system that includes both large companies and Small and Medium Enterprises (SMEs) that carry out policies in the field of human rights. These incentives may be economic, commercial, visibility and image, or other nature, to encourage companies to have policies and reliably certify that they have implemented adequate procedures at a global level according to their size and circumstances, namely:
- A public commitment to assume its responsibility to respect human rights in accordance with the provisions of the Principle no. 16;
- A process of due diligence aligned with the sectorial guides regarding the OECD (due diligence guidance), and based on the dialogue with stakeholders that allows identification, prevention, mitigation, and accountability of how they address the impact of their own activities and those that are directly related to their business relationships in accordance with the provisions of Principles no. 17 to no. 21;
- Some processes that allow to remedy all the negative consequences on human rights that have caused or contributed to provoke according to what is established in Principles no. 22, no.29, no. 30, no. 31.
Guiding Principle 3
“In accordance with the recommendations of the EU, the Government will promote information and training of SMEs and social economy entities, through all available means in business associations, and will promote the creation of sectorial forums of learning in order to discuss good practices and to reach commitments of interest for each sector.”
Guiding Principle 6
“The Government will ensure strict respect for human rights by companies in commercial transactions with other companies, establishing the necessary measures so as to: not discriminate against SMEs; respect the provisions of the Treaty of the EU on non-discrimination; equal treatment and transparency: and no administrative charges are to be added to contracting authorities or companies.”
2 The corporate responsibility to respect human rights [page 13]
“The conditions for companies’ efforts to respect human rights vary depending on their size …
In keeping with the UN Guiding Principles, businesses’ human rights efforts are expected to include the following main points: …
Establish an integrated and ongoing process in the company to identify, prevent and manage human rights risks and opportunities, as appropriate to the size, nature and context of the operations, i.e. due diligence”
Annex: Measures planned [page 28-29]
How can the State support the business sector?
- “Central government will enhance its collaboration with the regional CSR networks in Sweden and take particular steps to strengthen the dialogue with small and medium-sized enterprises (SMEs).”
- “Business Sweden (the Swedish Trade & Invest Council) will be instructed to strengthen its implementation of the UN Guiding Principles on Business and Human Rights and, in particular, to support small and medium-sized enterprises in this area.”
Annex: Links [page 30]
“The European Commission has produced a guide to human rights for small and mediumsized enterprises in Swedish, based on the UN Guiding Principles for Business and Human Rights. The Commission has also developed industry-specific guides for extractive industries (oil and gas), temporary-work agencies and the ICT sector. These are available on the Commission website: www.ec.europa.eu”
2 National Action Plan on Business and Human Rights 2020-23
2.2 Pillar 2: the corporate responsibility to respect human rights
2.2.1 Foundational principles
Guiding Principles 11 to 15
SMEs [Small and medium enterprises] are particularly important in Switzerland because they are a major part of the country’s economic fabric. Given their limited human resources and expertise on human rights, the management of potential human rights risks can pose a significant challenge for SMEs. Despite their good practices, they generally lack systemic responses to human rights-related issues. The concepts developed by international bodies like the OECD and UN must be presented in a way that takes into account the limited resources available to SMEs and the business environment in which they operate. SMEs are therefore encouraged to use the support measures provided by the federal government and umbrella associations.
Measure 24: Support for industry initiatives
The federal government will step up cooperation with industry initiatives, associations and chambers of commerce which promote the UN Guiding Principles, and support action taken by businesses to uphold human rights.48 This will involve identifying initiatives and actors which have the potential to substantially further the implementation of the UN Guiding Principles by businesses. Priority will be given to initiatives that contribute to due diligence training for business enterprises or that are developing practical and effective human rights tools for SMEs. All tools developed as part of initiatives supported and recognised under the NAP will be made available to the businesses online.
Measure 26: Promotion of best practices
The federal government intends to hold a Swiss Business and Human Rights Forum as part of its efforts to encourage and promote human rights best practices among businesses. The forum will provide stakeholders with a platform to discuss trends and challenges in implementing the UN Guiding Principles and foster dialogue and cooperation, particularly on the operational challenges faced by certain sectors. The forum will also help identify best practices for SMEs.
Measure 29: Public-private partnerships to promote respect for human rights in the value chain
To promote the implementation of labour rights and human rights by business enterprises, the federal government, together with the ILO, supports the Better Work programme for the textile industry and the Sustaining Competitive and Responsible Enterprises (SCORE) programme to support SMEs in creating decent working conditions. These projects are jointly run by the ILO, governments, the private sector and unions, and are focused on compliance with fundamental labour standards, including measures to combat child and forced labour. The tools developed by these programmes are shared with the private sector
Measure 30: Guides and tools to implement the UN Guiding Principles
Federal government will explore the possibility of translating some of these into the national languages to enable them to be adapted and implemented in Switzerland. The complex nature of these guides means that some companies, especially SMEs, may find it difficult to put them into practice. Easy-to-use online interactive tools could provide a starting point for SMEs. The Swiss government will develop instruments that enable SMEs to carry out risk assessments and identify measures. They also could provide the basis for an assessment of the action needed to improve human rights due diligence.
IV. The corporate responsibility to respect human rights
B. Actions taken
- State encouragement of respect by businesses for human rights (pages 11-12)
The Taiwan government also provides resources and support, including the following: […] it has added a new provision to the “Act for Development of Small and Medium Enterprises” to provide that, when the Composite Leading Indicators are above certain levels, if a small or medium enterprise raises the average salary paid to junior employees, it can receive tax breaks; […]’
Appendix 1: Concrete actions taken by Taiwan to fulfill the state obligation to protect
- Promotion of corporate social responsibility (page 27)
‘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.’
Appendix 2: Concrete actions taken by Taiwan to ensure respect by businesses for human rights
- Governments can provide information and support to enterprises. The Taiwan government has implemented several regulations and measures to provide enterprises with guidance and support, including the following: (page 32)
‘Article 36-2, paragraph 3 of the “Act for Development of Small and Medium Enterprises” provides as follow: “During the period when the Composite Leading Indicators are above certain levels, if a small and medium enterprise raises the average salary paid to the domestic junior employees, it can deduct up to 130% of the incremental annual gross salary payments, excluding statutory basic wage adjustments, to the junior employees from its current year profit-seeking enterprise.’
3. The core content of the National Action Plan on Business and Human Rights
3.4 Action Plan on Cross Border Investment and Multinational Enterprises
3.4.1 Overview of the situation
TDI (Thai Direct Investment Abroad) is not only causing money to flow outside of the country, but if looking at the opposite side, foreign investment will help expand the supply chain and expand export channels for Thai investors in the form of an “Investment-Induced Trade” strategy by creating more value for the economy through investment in potential countries. In addition, in the future, it may be a way to convince small companies that are in the same supply chain to invest more, which will expand the regional supply chain of Thailand to be stronger.
3.4.3 Action Plan (2019–2022)
Pillar 1: State duties in protecting (Protect)
|Responsible agencies||Time-frame (2019–2022)||Indicators (wide frame)||Compliance with National Strategy/ SDGs/UNGPs|
|7.||Business operations||Study and consider imposing incentive measures consistent with the activities of the business sector in accordance with the Thai context of many small establishments, by directly determining incentives for entrepreneurs and labour, such as creating support programmes.
Organize human rights protection activities in small establishments.
|– Office of the National Economic and Social Development Council
– SME Bank
– Office of the Promotion of Small and Medium Enterprise
|2019–2022||An incentive studied and determined
for businesses, entrepreneurs, and labour considering the situation in Thailand of many small establishments
|– National Strategy for Public Sector Rebalancing and Development
– SDG 8 and 16
– UNGPs Articles 1, 3, 4, 5, 7, 8, 9 and 10
- The promotion of implementation of the National Action Plan on Business and Human Rights and mechanisms for monitoring, follow-up and evaluation of the National Action Plan on Business and Human Rights
4.2 Examples of long-term activities (4 years)
|8. Promote the implementation of the NAP and UNGPs among Small and Medium Enterprises (SMEs)||Ministry of Justice||2019–2022|
‘Uganda’s NAP does not explicitly address this issue’
The UK 2013 NAP provides in the Introduction that [page 4]:
“To capitalise on the opportunities of our commercially-networked world, we need all companies – from the biggest to the smallest – to embrace their responsibilities towards society, including respecting human rights.”
The UK 2013 NAP notes in relation to Government expectations of business that [page 14]:
“We recognise that different businesses will need to take different approaches to embedding this approach; that implementation will be progressive; and in particular that implementation will need to be compatible with the resource limitations of small and medium-sized enterprises.”
The UK 2016 Updated NAP mentions SMEs in Government expectations of business section [page 15]:
“Respect for human rights should be at the heart of a company’s core operations, it is not the same as philanthropy or social investment. The responsibility of businesses to respect human rights exists independently of States’ abilities and/or willingness to fulfil their own human rights obligations. Different businesses will need to take different approaches to embedding this approach. Implementation will be progressive and will need to be compatible with the resource limitations of small and medium-sized enterprises.”
Outcome 1.1: Promoting RBC Globally
Ongoing Commitments and Initiatives [page 8]
“Asia–Pacific Economic Cooperation (APEC): … The U.S. government is also actively engaged in the Business Ethics for APEC Small and Medium Enterprise Initiative, the world’s largest collective action mechanism to strengthen ethical business practices in the medical device, biopharmaceutical, and construction and engineering sectors.” – Implementing Department or Agency: State, Commerce
Outcome 4.1: Recognize RBC Best Practices
New Actions [page 22]
“Modernize the Secretary of State’s Award for Corporate Excellence (ACE): … For 2016, the ACE will continue its focus on highlighting RBC best practices, and will be awarded for transparent operations, inclusive hiring, sustainable oceans management, and small or medium enterprises.” – Implementing Department or Agency: State