State Owned Enterprises/ Public Private Partnerships

In accordance with UN Guiding Principles on Business and Human Rights, Principle 4, states have to ensure that business enterprises that they own, control, or are closely related to them respect human rights.

The OECD Guidelines on Corporate Governance of State Owned Enterprises (SOEs) define SOEs as “any corporate entity recognised by national law as an enterprise, and in which the State exercises ownership, which includes joint stock companies, limited liability companies and partnerships limited by shares”. SOEs operate in sectors such as energy, utilities, infrastructure, transport, telecommunications and banking. The proportion of SOEs among Fortune Global 500 companies has grown from 9.8% in 2005 to 22.8% in 2014, with US$389.3 billion of profit and US$28.4 trillion in assets. Although SOEs’ activities have traditionally been domestically-focused for the provision of public services, over the past decade, they have also rapidly internationalised. Asian SOEs, for example, are playing an increasingly large cross-border role, both via exports and financing for development activities.

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The World Bank defines a Public Private Partnership (PPP) as “a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance”. In 2015, the Addis Ababa Action Agenda, adopted at the Third Conference of Financing for Development, recognised that both public and private investment have key roles to play in infrastructure financing, including tools and mechanisms such as PPPs, which should share risks and reward fairly, include clear accountability mechanisms and meet social and environmental standards.

SOEs have been using the PPP model to invest in development projects. In China in particular, SOEs have emerged as the main partners of local government, rather than private investors. Governments can also offer indirect support through guarantees to reduce specific project risks such as payment, revenue, and exchange rate guarantees.

According to a 2016 World Bank report, Brazil, China, India, Mexico and Turkey were the top five states in terms of local investment commitment in infrastructure PPPs during the period 1991-2015. Brazil and India, for example, have each recorded over 850 PPP projects since 1990. Many of the PPPs were implemented in the electricity sector including the Mundra Ultra Mega Power Plant in India and the Belo Monte Hydro Power Plant in Brazil. China has recorded 1301 PPP projects since 1990 in areas such as railways and electricity for projects such as the Hangzhou – Taizhou Inter-city Passenger line and the Shandong Zhonghua Power Plant.

Allegations of human rights abuses by SOEs in their home countries and in their operations abroad have been documented and included labour-related abuses, environmental damages, land rights violations and intimidation and defamation of human rights defenders. These abuses may entail a violation of the State’s own international law obligations. As the UN Working Group stated on its 2016 Report:

“UN human rights treaty bodies suggest that States may breach the duty to respect or to protect under international human rights law owing to human rights abuses by State-owned enterprises…Given the nature of relationships between SOEs and States, it is more likely that abuses by a SOE could lead to attribution of State responsibility than those by private businesses”.

Key instruments in the field include:

The OECD Guidelines for Multinational Enterprises (2011) notes that State-owned multinational enterprises are subject to the same recommendations as privately owned enterprises, but public scrutiny is often magnified when a State is the final owner”. Likewise, the OECD Guidelines on Corporate Governance of State-Owned Enterprises (2015) recommend that the state ownership policy fully recognise SOEs responsibilities towards stakeholders and request that SOEs report on their relations with stakeholders, as well as to make clear any expectations the state has in respect of responsible business conduct by SOEs. Additionally, they recommend, and rely on the Board of Directors to the executive management, extensive measures to report on foreseeable risks, including in the areas human rights, labour, the environment, and risks related to corruption and taxation. Lastly, they note that state’s expectations on responsible business conduct should be clearly defined and communicated via the ownership policy. The OECD has also adopted in 2015 a Policy Framework for Investment, which recommends that governments lead by example and model responsible business conduct principles and standards in their own practices, i.e. as employers, business partners, through procurement and contracting practices, and in commercial activities. This includes the activities of SOEs.

The Council of Europe Committee of Ministers has recommended that:

“Member States should apply additional measures to require business enterprises to respect human rights, including, where appropriate, by carrying out human rights due diligence, that may be integrated into existing due diligence procedures, when member States:…own or control business enterprises”.

Several states have adopted legislation setting human rights expectations of SOEs, including Sweden, Denmark, Chile, Norway, Finland and Ghana.

The European Commission approved the Guidelines for Successful PPP in 2003 as a tool for PPP practitioners in the public sector faced with the opportunity of structuring a PPP scheme to define current or future policy. Development Banks are also assisting countries in designing PPP and creating a balanced regulatory framework to ensure a more efficient and sustainable provision of public services and infrastructure.

References

OECD, Global Forum on Responsible Business Conduct, Session Note, Responsible business conduct and state-owned enterprises, 2017: https://mneguidelines.oecd.org/global-forum/2017-GFRBC-Session-Note-RBC-SOEs.pdf
Asian Development Bank, Public-Private Partnership Monitor, 2017: https://www.adb.org/sites/default/files/publication/381681/ppp-monitor.pdf
Reuters, Fitch: PPP to Drive China Infrastructure Investments, SOE lead, 2017: https://www.reuters.com/article/fitch-ppps-to-drive-china-infrastructure/fitch-ppps-to-drive-china-infrastructure-investments-soes-lead-idUSFit989432
Council of Europe, Human Rights and Business, Recommendation CM/Rec(2016)3 of the Committee of Ministers to Member States, 2016: https://edoc.coe.int/en/fundamental-freedoms/7302-human-rights-and-business-recommendation-cmrec20163-of-the-committee-of-ministers-to-member-states.html
Office of the High Commissioner for Human Rights, State-owned enterprises must led by example on business and human tights, New UN report, 2016: http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=20123&LangID=E
World Bank, State of PPPs, 2016: file:///Users/carlapoletti/Downloads/State_of_PPPs__Report-FINAL_July16.pdf
Human Rights Council, Report of the Working Group on the issue of human rights and transnational corporations and other business enterprises, 2016: http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/32/45
Addis Ababa Action Agenda of the Third Conference on Finance for Development, 2015: https://sustainabledevelopment.un.org/content/documents/2051AAAA_Outcome.pdf
OECD, Policy Framework for Investment, 2015: http://www.oecd-ilibrary.org/docserver/download/2014041e.pdf?expires=1521184995&id=id&accname=guest&checksum=0BDCA59B3D7DC799DCC89511AB448FBB
OECD, Guidelines on Corporate Governance of State-Owned Enterprises, 2015: http://www.oecd-ilibrary.org/docserver/download/2615061e.pdf?expires=1520944025&id=id&accname=guest&checksum=A9FA038483435C8F9FE845701B2D13F1
OECD, Guidelines for Multinational Enterprises, 2011: https://www.oecd.org/corporate/mne/48004323.pdf
European Commission, Guidance for Successful Public Private Partnerships, 2003: http://ec.europa.eu/regional_policy/sources/docgener/guides/ppp_en.pdf

What National Action Plans say on State Owned Enterprises/ Public Private Partnerships

Belgium

Chile

Pillar 1. The State duty to protect human rights

Strand 1: Training in the Field of Business and Human Rights

Action Point 1.5 [page 32]

The Ministry of Social Development will:

Through the Division of Public-Private Cooperation, include the focus on business, human rights and sustainable development in training activities about Public Incentives to Benefit Social Development by means of:

Train public and private business enterprises to include inclusive for disabled people in inductions and training programmes.

Strand 4: Transparency and Participation

Action Point 4.2 [page 40]

The Public-Private Cooperation Division of the Ministry of Social Development will include questions about the Guiding Principles in the 2017 Study about Social Performance of Business Enterprises, as well as the result of these variables in the final performance report, which will include an analysis of the results and their relationship with the SDGs. Medium and large-size public and private business enterprises will participate in the study.

Strand 9: State Business Enterprises

Action Point 9 [pages 49-50]

One of the focus areas of the Guiding Principles are public business enterprises and their special duty of care and diligence regarding the respect for human rights -because public business enterprises have the duty to lead by example.

Action Point 9.1

The National Copper Corporation (CODELCO) will carry out a due diligence pilot project about human rights in one of its operations, in accordance with the commitments set out in the Corporate Sustainability Policy passed in December 201640

Action Point 9.2

The National Oil Company (ENAP), with the support of independent experts, will prepare a baseline to identify eventual impacts on human rights and the promotion and respect actions the Company is currently performing. This has the purpose to identify gaps and manage the relevant plans for human rights remediation and mitigations. Priority subjects included in the study will be: life, health, environment, water, communities and workers. This initiative is based on the new Sustainability Policy passed by the Board of Directors in December 2016. It is composed of four strands: consideration of stakeholders, environment, integrated management and human rights. 9.3 The Ministry of Economy, Development and Tourism will support the incorporation of the Guiding Principles in the business enterprises forming part of the System of Public Business Enterprises (SEP).

Colombia

The Enterprise Duty to Respect Human Rights

VIII. Respect for Human Rights as a competitive advantage [page 20]

8.2 The Ministry of Commerce, Industry and Tourism, supported by the Council to the President for Human Rights, the Direction of Post-conflict and the National Authority for Environmental Permits, will incentivise the establishment of public-private alliances for the creation of social and environmental quality enterprises, particularly in the unfocused rural field.

Czech Republic

Pillar I: state duty to protect human rights

State enterprises and companies in which the state has a shareholding

Implements Principle 4 [page 26]

The state owns important business assets. Although state enterprises and companies in which the state has a shareholding are autonomous legal entities, in reality their operations can be influenced significantly by the state via ministries exercising owner or founder rights. The public is sensitive to this relationship and associates those enterprises’ operations with the state. This link is perceived even more strongly if those enterprises operate abroad. The activities of such enterprises can hold significant sway over the home state’s reputation.

If the state is to guarantee human rights, in the first place it must ensure that there is a high standard of protection at the enterprises it has established and at companies in which it has a shareholding. Both private and state entities have a legal obligation to respect human rights. State enterprises and companies in which the state has a shareholding, however, should comply with fundamental human rights standards even when they find themselves in a situation where the law does not expressly require them to. These sorts of situations might arise in particular if they operate in countries where the law provides for a lower standard of protection. These enterprises should ensure a high level of prevention in order to avoid becoming involved in violations of human rights indirectly (e.g. in supply chains).

Current state of play:

State enterprises and companies in which the state has a shareholding are not favored under the law compared to private companies. In proceedings before state authorities, they are of equal status and enjoy no privileges or immunities.
In fact, state enterprises and companies in which the state has a shareholding are subject to certain intensified obligations compared to private companies, e.g. in relation to transparency and disclosures.
Guidelines on Corporate Governance of State-Owned Enterprises are taken into account in the management of state enterprises and companies in which the state has a shareholding.

Tasks:

Recommend that the state’s representatives holding office in the bodies of state enterprises and companies in which the state has a shareholding keep track of best practice relating to respect for human rights in the relevant field of economic activity, and that they ensure that measures are taken to achieve the highest possible standard of human rights protection.

Coordinators: All ministries concerned

Deadline: Running

Recommend that state enterprises and companies in which the state has a shareholding insert clauses in new contracts that allow for the contractual relationship to be terminated if the counterparty or supply chain is found to seriously violate human rights or universally recognised ethical and moral standards.

Coordinators: All ministries concerned

Deadline: Running

Recommend that state enterprises and companies in which the state has a shareholding, where relevant in view of their size and market position, exceed to the UN Global Compact.

Coordinators: All ministries concerned

Deadline: Running

In guidance for local government bodies, disseminate the document “My Business and Human Rights”.

Coordinator: Ministry of Finance

Co-coordinator: Ministry of the Interior

Deadline: Running

Denmark

2. The State Duty to Protect Human Rights

2.2 Recommendations from the Council for CSR on the state duty to protect [page 11]

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

Requires state-owned companies and governments agencies which distribute significant government funds to incorporate due diligence in their business activities;…

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 stateowned public limited companies irrespective of their sizes to report on CSR in the management’s review in their annual reports (GP 4). The same year state owned companies were required to join the UN Global Compact principles and the Principles for Responsible Investment (PRI). Businesses must accede to the Global Compact as a group, in which the parent company accedes. The parent company then reports on the group’s observance of the principles on behalf of the subsidiaries (GP 4). The Danish Government believes that public authorities, including companies owned or controlled by the state, should live up to the same requirements that private companies are expected to fulfill. Therefore, the non-judicial remedy mechanism can also examine complaints involving public authorities (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.

Annex 1: Overview of the implementation of the state duty to protect

GP4 State Duty to Protect [page 28]

States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence.

Status in Denmark (initiatives implemented before the UN ratification of the Guiding Principles)

In 2008 the state financing fund, Vækstfonden, has committed to adhere to the UN Principles for Responsible Investment (PRI)…

With the 2008 national action plan for CSR a number of state owned companies were committed to join the UN Global Compact, among other DONG Energy, DSB, and Post Denmark. The national action plan also introduced a CSR reporting requirement for all state owned companies (see GP 3d). Initiatives taken or planned as a dedicated measure to implement the UNGPs (after the UN ratification of the Guiding Principles)..

Finland

2. The State and Companies

2.1 The State as an economic operator

Corporate Governance [page 22]

The Ownership Steering Department in the Prime Minister’s Office has set a CSR reporting requirement for unlisted companies that are either majority-owned by the state or entirely state-owned. This also includes human rights. The obligation requires that companies submit reports in accordance with the best practices in the branch of activity concerned and, at minimum, adopting the standards corresponding to those of their central competitors. As an owner, the state expects that the administration and management of state-owned companies take human rights into consideration in a responsible and transparent manner, both in their own organisation and in their subcontracting chains. As a follow-up measure, the working group proposes that:

-the importance of human rights to the state when serving as a company owner will continue to be emphasised in preparing the next decision in principle on ownership policy.

– When the amended OECD Guidelines on Corporate Governance of State-Owned Enterprises enter into force around the end of 2015, the new definitions of policy will be included in the ownership guidance practices of the Finnish state. Principal responsible party: Prime Minister’s Office, schedule before the end of 2016.

France

I- The State’s Obligation to Protect Human Rights

The National Framework

13. The Role of Public Agencies [page 27]

… In addition, the CNCDH recommended that “representatives of civil society and users of those services that are likely to be the subject of public-private partnerships (PPPs) be given a more central role as part of an approach designed to protect and promote the most vulnerable of populations. Indeed, in order for PPPs to be useful for development purposes, it is essential that all stakeholders, including the State, community representatives and users, be kept informed and consulted at all stages of the PPP creation process.” It added that, “in accordance with Guiding Principles nos. 4 and 6, the French State should, by means of its development aid network (the AFD, PROPARCO, the Ministry of the Economy and Finance, the ADETEF, etc.), fulfil its obligation to protect by imposing a series of specifications that include exhaustive impact studies regarding human rights.” …

Georgia

Objective 25.14.1: Prepare manual document concerning human rights protection for companies existing in state property.

Objective indicator: Conducted respective informational campaign.

Activity: Conducting informational campaign for employees of companies belonging to state property regarding human rights protection, including strengthening women economically.

Responsible agency: Human Rights Secretariat of the Administration of the Government.

No partnership agency.

Objective 25.15.1: Define relevant issues of human rights protection for companies providing public services and ensure retraining of respective members of staff.

Objective indicator: Conducted respective research; number of retrained members of staff.

Activity: Conducting respective research and trainings.

Responsible agency: Human Rights Secretariat of the Administration of the Government.

Partnership agency: Office of Public Defender.

Germany

1. The State Duty to Protect

1.4 Enterprises in public ownership [pages 25-27]

Enterprises in public ownership or under state control within the meaning of this subsection comprise all enterprises subject to private or public law in which federal, state and/or local authorities hold a direct majority share. If a business enterprise is under state control, in other words if a majority stake is held directly by the public treasury, or if its actions may otherwise be attributed to the state, such an enterprise bears special responsibility under the UN Guiding Principles to respect human rights.

The current situation

The general standard of protection given to human rights by enterprises in which the public treasury holds a stake is already very high, since public-private entities in which the state holds a controlling stake and whose organisational form is governed by private law as well as public companies in sole state ownership which are organised in a form governed by private law are directly bound by the enshrined constitutional fundamental rights. The acquisition of shares in enterprises subject to private or public law is done autonomously at the various tiers of government in the federal system – national, regional and local – on the authorities’ own responsibility. Besides being bound by the constitutional fundamental rights in their economic activity, the three tiers of government are also bound by the provisions of ordinary legislation, such as the Federal Budget Code and municipal instruments.

In addition, there is a federal regulatory instrument known as the Public Corporate Governance Code of the Federation (PCGK Bund), comprising recommendations and suggestions for good corporate governance and addressed to enterprises in which the Federal Government holds a majority stake. The federal administration of shareholdings is organised on a decentralised basis and is the task of whichever federal ministry is responsible for the company’s area of activity. Section 1.4 of the Public Corporate Governance Code states that the federal ministry responsible for the shareholding should ensure that enterprises acknowledge and comply with the Code and embody it in their corporate rules. The Code is part of the Principles of Good Corporate Governance and Management of Federal Holdings, which were adopted by the Federal Government and published by the Federal Ministry of Finance in its role as the lead body in this field. They form the foundations for responsible management of federal stakes in enterprises and provide for standardised performance of this task by the various federal ministries. Several federal states and municipalities have separate management codes for their own holdings. The 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, in cooperation with the Council for Sustainable Development, will expand the training courses of the federal holding management bodies to include sustainability matters and so focus its attention on responsibility for human rights in the enterprises in which it holds a direct majority share. The scope of the training curriculum of the holding management bodies shall be inserted as part of the next revision into the Public Corporate Governance Code of the Federation. At the annual meeting of the bodies managing federal and state holdings, the states shall be urged to follow this federal practice.

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.

Ireland

Section 3:

Actions

Initial priorities for the Business and Human Rights implementation group

The State Duty to Protect Human Rights [page 18]

iii. Encourage and support awareness of effective human rights due diligence by state owned or controlled companies.

vii. Promote awareness of relevant multi-stakeholder and multilateral initiatives such as the UN global Compact, the Principles for Responsible investment and the Children’s Rights and Business Principles among state owned or controlled companies.

Italy

A. Foundational Principles

[page 11]

Enterprises domiciled and/or operating in Italy must respect human rights throughout all their activities: the respect of fundamental human rights is a cornerstone of the economic activities as well, carried out either by public or private companies…

The State-business Nexus

[page 21]

States have particular duties with respect to companies that they own or control and should take additional steps in relation to their duty to protect: states have the means to ensure that policies and regulations respecting human rights are monitored and implemented, and as a matter of coherence, Governments should lead by example by adopting the same behaviours expected from private companies. Italy is committed to ensure that business enterprises that: i) are owned, controlled by the State; ii) receive support, benefit from services from Government agencies; iii) contract and conduct commercial transactions with the State, operate in full compliance with human rights enshrined in domestic legislation, international regulations and standards, and soft law instruments…

Planned Measures

[page 22]

… the Italian Government will conduct the following activities to be jointly developed and monitored by CIDU and A.N.AC:

Within the framework of the monitoring mechanism set in the Plan (see par. V) give special attention to due diligence of business enterprises owned or controlled by the State. …

Lithuania

1. Objectives and Measures

Objective 2: promoting corporate responsibility and respect in the field of business and human rights

A. Implemented and on-going measures for the development of CSR in Lithuania [page 6]

1. National Strategy for Sustainable Development…The implementation of the principle of participation of enterprises and social partners provides for closer social dialogue, stronger CSR, public and private sector partnership, as well as sustainable consumption and production.

3. The application of CRS principles to the state-owned enterprises. One of the objectives of the CSR Programme approved by the Government in 20IO is to develop methodological tools for the application of CSR principles, to ensure their dissemination and the exchange of best practices. It was foreseen that state-owned enterprises (hereinafter referred to as the SOE) operating under the principles of good governance may act as examples of socially responsible business. To this end, since 20 I0, actions were taken to restructure SOEs with a particular focus on corporate transparency and social responsibility. SOEs provide important public services as regards energy, water supply, public transport, electronic communications, health, education, social services and others. The application of the tools of socially responsible business may not only ensure that the highest return for the public is generated but can also make a positive impact on social stability and the promotion of business and human rights principles.

Lithuania already has SOEs engaged in socially responsible business initiatives. Model CSR application plan and its implementing guidelines for state-owned enterprises were prepared in 2012 aimed to facilitate introduction of CSR in state-owned enterprises, and to promote the use of CSR principles in their operations. This document lists examples of good practise of CSR in Lithuanian state-owned enterprises, naming among others AB Lesto, AB Lietuvos Gelezinkeliai, and Vilnius International Airport.

Luxembourg

Part III – NAP
3. Government’s Response

3.1. A dialogue with non-governmental actors (pg. 29)

The proposed method of working to ensure the effective implementation of the Guiding Principles together with non-governmental actors builds on the guidance issued by the United Nations Working Group on Business and Human Rights. Dialogue with all public and non-governmental actors is organized and coordinated by the Interministerial Committee for Human Rights, under the direction of the Ministry of Foreign and European Affairs. The proposed working method also takes into account the specificities of Luxembourg and is characterized by its inclusive, multi-stakeholder and multidisciplinary approach. It is inspired by the model of a public-private partnership and is based on purely voluntary participation. Participants share the above general objective, but act according to their own individual and/or institutional reasons and motivations.

Netherlands

3. Results of the consultations and government response

3.2 Policy Coherence [page 16]

The government recognises that it must be consistent on the subject of human rights and business and in pursuing and implementing policy at both national and international level. The policy letter ‘CSR Pays Off’ clarifies the CSR framework. The OECD Guidelines provide an overarching framework for what the Dutch government expects of companies in terms of ICSR. The Guidelines incorporate other relevant provisions such as the Corporate social responsibility in economic missions, House of Representatives 26 485, no. 166, July 2013. ILO labour standards7 and the UN Guiding Principles on business responsibility to respect. State-controlled companies are expected to comply with the Guidelines and to report on their CSR policies. To monitor their progress, these companies are always included in the Transparency Benchmark. Companies in which the government invests in a different way, for example through export licences, are also expected to comply with the Guidelines.

Norway

2. The State Duty to Protect Human Rights

2.3 State ownership and practice for supporting the business sector

Principle 4 concerns the business activities of state-owned enterprises and enterprises that receive economic support or other services from state agencies:

State ownership [page 21]

In 2014, the Government presented a white paper on the importance of ownership for diversity and value creation (Meld. St. 27 (2013–2014)), which discusses the state’s expectations of enterprises in which it has a direct ownership interest, including expectations based on the UN Guiding Principles. The expectation that state-owned enterprises will exercise CSR is based on the belief that this is desirable in itself and that it helps to maintain the state’s shareholder value. Enterprises are exposed to different levels of risk and face different challenges. This means that they can adapt the “comply or explain” principle and the materiality principle to their own operations. The “comply or explain” principle applies to cases where a company’s practice deviates from the state’s expectations. There may be good reasons for this, and the board of directors must provide a public explanation of the reasons for the lack of compliance. The materiality principle implies that companies work with and report on factors that are of major importance to the way its operations affect people, communities, climate and the environment. The Government has noted that there is a need to focus more strongly on the responsibility of the boards also of enterprises in which the state has an ownership interest and their approach to CSR, including human rights. We believe that greater involvement by company boards will improve risk management and thereby help to maintain shareholder value. The follow-up of CSR and human rights performance is conducted through the owner dialogue in quarterly and/or annual meetings on CSR. In special cases it may be necessary to follow the company’s activities more closely. The work of companies and boards on CSR, including human rights, is taken into account in the election of board members.

Poland

Pillar II: The Corporate Responsibility to Respect Human Rights

2. Corporate social responsibility in companies with State Treasury shareholding [page 32]

All businesses share the same responsibility for respecting human rights regardless of the title of ownership. State-owned companies should serve as a model for socially responsible business practices and should conduct business based on ethical, prosocial, and environmentally friendly principles across the board. These entities should promote a modern model of operations based on social responsibility and sustainable development in order to ensure their long-term economic viability. With that in mind, the Ministry of Treasury published the document Good Practices in the Scope of Corporate Social Responsibility in Companies with State Treasury Shareholding, which: – groups the expectations of the Minister of Treasury regarding actions in the field of corporate social responsibility, in accordance with the UN Guiding Principles; – specifies the guidelines for corporate social responsibility in companies with State Treasury shareholding; – presents recommendations for the managing bodies (management and supervisory boards) of companies with State Treasury shareholding and detailed recommendations for companies with State Treasury shareholding. As Poland ratified the Protocol of 2014 to Forced Labour Convention No 29 of 1930, it is necessary to initiate measures that will require employers in the public and private sectors to provide information under their reporting procedures on implemented procedures, processes, and standards for counteracting forced labour.

10. Planned and ongoing activities [page 37]

1) Promoting good practices in human rights and business, including with respect to state-owned enterprises and enterprises commissioned by the state..

Slovenia

South Korea

Spain

Guiding Principle 4

Measure 1

Within one year after the approval of this Plan, a Working Group will be created within the framework of the Strategic Plan for the Internationalization of the Spanish Economy, which will develop a specific Action Plan to examine the coherence of policies to support business internationalization, and its alignment with the Guiding Principles. The Working Group, which will present its conclusions to the Government, will study how cooperation for development, official credit agencies, export credit and official insurance or investment guarantee agencies of all administrations are able to condition, modulate or revise its support for investment based on the exercise of the responsibility to respect human rights by the beneficiary companies, both inside and outside of Spanish territory.

Measure 3

Regarding public sector companies, the Government will promote the principles of Socially Responsible Investment, and must value this investment, in particular, from the perspective of respect for human rights, both within and outside Spanish territory.

Guiding Principle 21

Measures 2

The Government will develop awareness and training actions based on the United Nations Guiding Principles on Business and Human Rights, the National Plan for Business and Human Rights, and the expectations of the State in matters of business and human rights. These actions can be organised, among others, with the National Contact Point of the OECD Guidelines for multinational companies, business associations, networks of the United Nations Global Compact, and civil society organisations. This action will be directed as a priority to those companies in which the State has participation, or to which it provides financial, diplomatic, or other support…The awareness actions will be directed to the personnel of the companies at different decision-making levels, including the boards of directors and governing bodies.

Measure 5

Likewise, an awareness-raising strategy will be carried out on how to avoid discriminatory practices in public and private companies (by distinction, exclusion or preference) because of gender, age, ethnic origin, race, religion, disability, political affiliation or union, sexual orientation, nationality, marital status, socioeconomic origin or any other personal distinction.

Sweden

1. The State duty to protect human rights

The State’s role in protecting human rights [page 9]

In its role as owner, the State acts to ensure that state-owned companies set a good example in the area of CSR and that their conduct in general instils public confidence, for example by striving to comply with international guidelines such as the UN Guiding Principles.

Annex: Measures taken

The State as owner [pages 23-24]

According to the government state ownership policy, state-owned companies are expected to set a good example, which means that they must seek to comply with international guidelines such as the UN Global Compact, the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises. They must also be transparent and report in accordance with the Global Reporting Initiative (GRI). State-owned companies must also identify areas of CSR that are relevant to their business strategy and the board of directors must set strategic sustainability targets. The ownership policy applies in companies where the State is the majority owner; in other companies, where the State is part-owner, the State seeks to ensure that the ownership policy is followed, in dialogue with other owners.

The Government has held seminars for the chairs of boards and managing directors of all state-owned companies on the Government’s expectations regarding the companies’ application of the UN Guiding Principles on Business and Human Rights. A study was carried out in 2013 on the international guidelines from the UN and the OECD, aimed at facilitating companies’ application of the state ownership policy.

A CSR network has been established for the discussion of relevant CSR-related issues and to allow companies to exchange knowledge and experience. The international guidelines with which the companies are expected to comply were discussed at one of the network meetings. The Government Offices corporate management organisation has also held a workshop for the companies on the UN Guiding Principles on Business and Human Rights.

A business analysis tool that sheds light on relevant areas of CSR, including human rights, has been developed for state-owned companies by the Government Offices corporate management organisation. The analysis increases the owner’s awareness of the companies’ risks and opportunities and how these can be managed. The result of the analysis is integrated in corporate governance and taken into account in the Government’s regular dialogue with the company, in monitoring the company’s development, and in the recruitment and nomination of board members. • Like other state-owned companies, Swedfund International AB (Swedfund) and the Swedish Export Credit Corporation (SEK) are required to comply with the government state ownership policy for CSR, as described above. Moreover, Swedfund and SEK have social mandates specially adopted by the Riksdag. Swedfund is required to ensure that its investments comply with international standards and CSR principles, within clear and sound corporate structures that do not contribute to tax evasion, money laundering or terrorist financing. SEK is required to take account of conditions such as the environment, corruption, human rights and working conditions in its credit assessments.

Annex: Measures planned

The Government aims to raise its ambitions in foreign trade, including in CSR and implementation of the UN Guiding Principles on Business and Human Rights. To achieve these aims, a number of concrete measures will be implemented by 2017.

The State as owner [page 29]

CSR will continue to be an integral part of the Government’s active corporate governance of state-owned companies. The human rights work undertaken by state-owned companies will be examined in relevant cases in the sustainability analysis and followed up in stakeholder dialogues between representatives of the owner and the companies.

Knowledge about the UN Guiding Principles on Business and Human Rights, due diligence and redress mechanisms will be promoted in state-owned companies through a series of workshops. Each occasion will provide an opportunity for experience exchange between the companies and highlight tools and good practices for implementation by the companies in their own operations.

The Government will work to increase knowledge about the UN Guiding Principles on Business and Human Rights in stateowned companies and will ensure that these companies, where appropriate, conduct human rights due diligence in order to assess and address any significant risk to human rights.

Switzerland

5. National Action Plan on Business and Human Rights

5.7 Pillar I: state duty to protect

5.7.3 The State-business nexus

Guiding Principle 4 [pages 22-24]

Guiding Principle 4 concerns the activities of business enterprises that are owned or controlled by the federal government (referred to below as federal government-associated businesses), or which receive considerable support and services from federal agencies. Given its direct influence on the activities of these companies, under the UNGP the federal government has a particular obligation to ensure that these federal government-associated businesses protect human rights, for example by conducting human rights due diligence. Where the acts of a business enterprise can be attributed to the federal government, abuses of human rights may entail a violation of Switzerland’s own international law obligations to respect human rights.

The Federal Council acknowledges its particular responsibility to ensure that federal government associated businesses respect human rights. Federal government-associated businesses should serve as examples of good practice. The Federal Council regards its expectations towards these enterprises as the benchmark that is mentioned in section 4.3 of the Federal Council report in fulfillment of postulate 12.3503 Eine Ruggie Strategie für die Schweiz [‘A Ruggie Strategy for Switzerland’].

The federal government will employ the following policy instruments (PI) to implement Guiding Principle 4:

PI 17 Human rights due diligence by federal businesses and federal government-associated businesses

Relations between government-associated enterprises and the Confederation are described in the federal government’s Corporate Governance Report64. The Federal Council defines its strategic goals for related enterprises every four years. While these goals do not specifically contain criteria for business and human rights, the Federal Council expresses the expectation that related enterprises will pursue a sustainable corporate strategy to the best of their business ability.

In 2017, the federal government will draw up a status report on the fulfillment of CSR in its own activities. This is to cover the federal government’s role as an employer, a purchaser, an investor and as an owner of federal government-associated companies (in accordance with the Federal Council’s CSR position paper, activity B.3.1). This interpretive framework should also highlight any need for action in the future, and where appropriate propose measures to the Federal Council.

PI8 Requirement that business enterprises covered by Swiss Export Risk Insurance (SERV) conduct human rights due diligence

The sustainability guidelines that have existed since 2003 are regularly updated and enhanced by the OECD. Switzerland is also part of this process. The guidelines are intended, among other things, to improve protection against human rights abuses by business enterprises, and they are largely recognised as an international standard by export credit agencies and export insurance providers.

Swiss Export Risk Insurance (SERV) attaches great importance to sustainability and thus also to human rights. The SERV Act and SERV Ordinance have undergone a partial revision, with the changes entering into force as of 1 January 2016. The latest change to the Ordinance expressly set out the insurance applicant’s duty to provide information on human rights66. Unlike many other export credit agencies, SERV does not grant any export credits themselves (known as direct lending), but instead offers only insurance and guarantees (known as pure cover). SERV does not grant cover, neither can it accept any liability in the event of a claim, if the project being supplied or financed by the policyholder does not meet international human rights standards. The revised Ordinance entered into force at the beginning of 2016. In cases of elevated risk, SERV will require applicants to conduct human rights due diligence in the sense of the UNGP and the expectations towards companies that are described in Section 4.3. When deciding whether or not to grant cover, SERV also factors in the findings of investigations made by the National Contact Point for the OECD Guidelines for Multinational Enterprises.

PI19 Human rights due diligence by the authorities in public-private development partnerships

In March 2015, the SDC published guidelines for assessing the risks of partnerships with the private sector. They factor in impacts on human and labour rights, government structures and the environment. The guidelines propose a three-stage due diligence process: first a brief analysis by the SDC, followed by a detailed external analysis, and finally dialogue with the partner. The SDC will not work with partners that have repeatedly been involved in human rights abuses and that cannot make a convincing case that they have substantially reduced human rights-related risks.

In implementing the new guidelines for assessing the risks of public-private partnerships, the SDC works with external partners, which conduct the detailed risk analysis. The SDC also ensures that it does not enter into any public-private development partnerships with business enterprises, which refuse to work with the National Contact Point for the OECD Guidelines for Multinational Enterprises.

United Kingdom

The UK 2013 NAP

2. The State Duty to Protect Human Rights

The existing UK legal and policy framework

New actions planned

The Government will do the following to reinforce its implementation of its commitments under Pillar 1 of the UNGPs:

(iv) Review the degree to which the activities of UK State-owned, controlled or supported enterprises, and of State contracting and purchasing of goods and services, are executed with respect for human rights, and make recommendations to ensure compliance with the UNGPs.

The UK 2016 Updated NAP

The UK 2016 Updated NAP does not make an explicit reference to State-Owned Enterprises – PPP.

United States

The National Action Plan

Leading by example

Outcome 1.2: Utilise US law, Multilateral agreements, and diplomacy to promote and enforce high standards

Ongoing commitments and initiatives

Free Trade Agreements [page 9]: The United States has sought to promote the role that governments can play in encouraging companies to engage in RBC in the context of 21st century free trade agreements (FTAs). For example, the Trans-Pacific Partnership (TPP) countries agreed to establish a TPP Development Committee that would promote public-private cooperative initiatives to help certain TPP partners reach their development goals, which include the promotion of broad-based economic growth; enhanced opportunities for women in domestic and global economies; and education, science and technology, research, and innovation. Implementing department or agency: USTR, State, Commerce, DOL

Outcome 1.4: Conducting Due Diligence in U.S. Developing Funding and Trade Finance

Social Safeguards for U.S. Development Assistance [page 12]:USAID will develop a social safeguards screening questionnaire that Missions may use as an assessment tool when designing new projects (including public-private partnerships) to ensure due diligence on social and human rights issues. Implementing department or agency: USAID