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Guiding Principle 4
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.
States individually are the primary duty-bearers under international human rights law, and collectively they are the trustees of the international human rights regime. Where a business enterprise is controlled by the State or where its acts can be attributed otherwise to the State, an abuse of human rights by the business enterprise may entail a violation of the State’s own international law obligations. Moreover, the closer a business enterprise is to the State, or the more it relies on statutory authority or taxpayer support, the stronger the State’s policy rationale becomes for ensuring that the enterprise respects human rights.
Where States own or control business enterprises, they have greatest means within their powers to ensure that relevant policies, legislation and regulations regarding respect for human rights are implemented. Senior management typically reports to State agencies, and associated government departments have greater scope for scrutiny and oversight, including ensuring that effective human rights due diligence is implemented. (These enterprises are also subject to the corporate responsibility to respect human rights, addressed in chapter II.)
A range of agencies linked formally or informally to the State may provide support and services to business activities. These include export credit agencies, official investment insurance or guarantee agencies, development agencies and development finance institutions. Where these agencies do not explicitly consider the actual and potential adverse impacts on human rights of beneficiary enterprises, they put themselves at risk – in reputational, financial, political and potentially legal terms – for supporting any such harm, and they may add to the human rights challenges faced by the recipient State.
Given these risks, States should encourage and, where appropriate, require human rights due diligence by the agencies themselves and by those business enterprises or projects receiving their support. A requirement for human rights due diligence is most likely to be appropriate where the nature of business operations or operating contexts pose significant risk to human rights
What National Action Plans say on Guiding Principle 4
In the context of Action point 11, Assurer une meilleure coordination entre les autorités fédérales et régionales afin d’intégrer des critères relatifs aux droits de l’Homme et l’entrepreneuriat socialement responsable dans les aides publiques [Ensure better coordination between federal and regional authorities in order to integrate human rights and social responsible entrepreneurship into public aid], the NAP explains that Finexpo, an inter-ministerial consultative committee managed by the Administration of Foreign Affairs, studies the files of companies and/or banks requesting public support for an export credit and issues an opinion to the Council of Ministers, which takes the final decision on the granting of the aid. This state intervention allows Belgian companies to carry out projects in developing countries and thus contribute to growth in these countries. The action specifically involves “bringing together the various public services to exchange information at regular intervals. A common method for integrating the promotion of human rights and other aspects of social responsibility into the evaluation of applications will also be examined in this context. The method will be based on decisions taken in international fora (eg. OECD) on export credit.” Also, the NAP states that “regarding Finexpo, it will be necessary to modify the official questionnaire… in order to introduce references to the promotion of human rights, and to corporate social responsibilities that go beyond issues on the environmental impact, which are already included in the questionnaire. These references will be based on decisions taken in international fora (eg OECD) on export credit.
Action point 13, Renforcer et contrôler le respect des droits de l’Homme dans les marchés publics [Strengthen and monitor the respect for human rights in public procurement], is the main action point on public procurement, and covers specific plans for the federal governments as well as all three Belgian regions.
- The federal government engagements include:
- An examination by the Working Group on Sustainable Public Procurement of the Interdepartmental Commission for Sustainable Development on how to strengthen and optimize the integration of respect for human rights into the purchasing policy of the public authorities. This will include stakeholder consultations.
- The transposition of the EU public procurement directives (Directives 2014/24/EU and 2014/25/EU). Monitoring activities will pay particular attention to the application of award criteria, in particular to the application of price as the sole award criterion.
- The government will analyze the best way to verify and monitor compliance with the criteria set out in the procurement procedure for products and services in several sensitive sectors, some of which are produced in so-called “risk” countries, in order to ensure that the requirements relating to respect for human rights set out in the specifications have been complied with. Existing best practice in European countries will be used as sources of inspiration.
- The Working Group on Sustainable Public Procurement analyzed various case studies on monitoring compliance with ILO clauses and human rights in supply chains in order to test, through pilot projects, whether such an initiative is feasible in Belgium. Implementation and follow-up of this initiative will be carried out in cooperation with the relevant federal, regional and local administrations.
- The Wallonia engagements include:
- As participant of the Working Group on Sustainable Public Procurement the public service of Wallonia will also be part of above-mentioned research with the aim of identifying optimization processes for the integration of human rights in public procurement policy.
- Moreover, the Wallonia and Bruxelles regions have established a portal for public procurement in 2009. A series of tools have been developed and/or gathered into the portal to favour the inclusion of environmental, social and ethical criteria in public procurement.
- In 2013, the government of Wallonia decided to set up a purchasing policy on
sustainable public procurement, in which Wallonian contracting entities are invited to register for their purchases of supplies, services and works.
- Reflections and workshops are conducted to strengthen the environmental, social and ethical clauses in public procurement relating to certain product categories. This includes human rights.
- By the end of 2016 the public procurement plan will be renewed for the period 2017-2019 and will include several actions to make purchases more sustainable in Wallonia.
- Additionnally, Wallonia will organize a competition to promoting public procurement contracts that incorporate ambitious environmental, social and/or ethical criteria, rewarding public purchasers and companies that have concluded such contracts.
- The government of Bruxelles’ engagements include:
- In 2014, the region adopted an order on the inclusion of environmental and ethical clauses in public procurement by regional and local authorities. The aim of including such ethical clauses is the respect for the fundamental rights of persons or social impartiality. Within each contracting authority there shall also be appointed at least one contact person responsible for ensuring the implementation of this order; the implementation of which shall be assessed every 3 years.
- The Flemish engagements include:
- In 2016, the 2016-2020 Plan on Flemish Public Procurement was approved, a plan that emphasizes innovation, sustainability, reduction of human rights violations in supply chains, professionalization and access of SMEs.
- Pilot projects (related to plan mentined above) in this context the political fields of “Employment and Social Economy” and “Chancellery and Public Governance” will, together with the buyers of the various contracting authorities, monitor the credibility of the supporting documents (concerning the respect for human rights, etc.) and the respect for ILO core Conventions. This is necessary in order to verify that the human rights criteria included in the conditions are also effectively complied with. In this respect, the Flemish Authority will concentrate primarily on the procurement of textile products.
- Support buyers in the integration of social criteria in public procurement contracts. It especially includes diversity, accessibility, and the inclusion of people from vulnerable groups. The pilot project aims at giving a practical benchmark instrument to buyers, which can be used systematically in each part of the public contract.
On Action point 20, Promouvoir les entreprises publiques socialement responsables [Promote state enterprises that are socially responsible] the NAP briefly mentions the issue of export credits in a citation of the Guiding Principle 4 “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.” It also states that “Public authorities must perform an exemplary function by the respect, protection and promotion of human rights, as well as the responsible management of its activities, both in within their sphere of influence and more particularly with state companies and/or companies’ receiving public support.”
Pillar I. The State Duty to Protect Human Rights
Strand 9: State Business Enterprises [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.
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
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).
II. The State as an economic actor
Including human rights in the State’s business activity [page 13]
To this end:
2.5 The Ministry of Commerce, Industry and Tourism and its entities (PROCOLOMBIA) will work to make the Colombian enterprises observe the human rights standards and will strive for incentives in the international market.
Pillar I. The State Duty to Protect
State aid, guarantees and subsidies [pages 24-27]
Implements Principles 4 and 7
The Czech Republic supports exporters via the export bank Česká exportní banka, a.s. (CEB) and the export guarantee and insurance corporation Exportní garanční a pojišťovací společnost, a.s. (EGAP). The state has a duty to make sure that this support does not foster violations of human rights.
On 1 January 2004, the OECD Recommendation on Common Approaches on the Environment and Officially Supported Export Credits entered into force. That Recommendation includes a commitment by all Member States not to assist – through their institutions – environmentally harmful projects. In June 2012, the OECD Council adopted the Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence, which expands and reinforces the original provisions on the environmental and social aspects of officially supported exports. The new Recommendation establishes simpler, more readily accessible procedure for the categorisation of projects according to their environmental and social impact in the countries where they are to be implemented. The main change is the greater stress on the social impacts of projects and the aspects thereof that have a bearing on human rights in the countries of implementation.
Current state of play:
- In its activities, EGAP abides by the Recommendation of the OECD Council on officially supported export credits.
- CEB and EGAP are subject to the European Union’s sanctioning regimes. State aid will not be granted if it is to be directed towards states or individuals who have been sanctioned by the European Union.
- Aid applicants must submit a detailed environmental impact assessment for a selected export where CEB- and EGAP-backed projects have a larger-scale environmental and social impact.
- Where possible, in subsidy agreements take account of social, environmental and other non-financial indicators and requirements concerning the beneficiary and the beneficiary’s subcontractors.
- Coordinator: All ministries concerned
- Deadline: Running
State enterprises and companies in which the state has a shareholding
Implements Principle 4
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 favoured 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.
- 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
- 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
- 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
- In guidance for local government bodies, disseminate the document “My Business and Human Rights”.
Coordinator: Ministry of Finance
Co-coordinator: Ministry of the Interior
2. State Duty to Protect
2.3 Actions Taken
Companies owned or controlled by the State [page 13]
In 2008 the Danish Government introduced a statutory CSR reporting requirement which obligates all state-owned public limited companies irrespective of their sizes to report on CSR in the management’s review in their annual reports (GP 4).
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).
Companies that receive susbstantial support and services from State agencies
The Environmental & Social Due Diligence Policy of the Danish Export Credit Agency (EKF) states that EKF is committed to implementing the UN Guiding Principles on Businesses and Human Rights (GP 4).
Since 2007 Denmark has worked actively in the OECD to ensure that export credit agencies have a common approach for evaluating human and labour rights as well as the protection of the environment (GP 10).
For more initiatives on the Danish Export Credit Agency and the Investment Fund for Developing Countries (IFU)
see annex 1 under GP 4 and 7.
When Danida under the Ministry of Foreign Affairs signs contracts with companies, it is a requirement that companies live up to Danida’s anti-corruption policy and to the UN Global Compact. A description of the applicant’s approach to quality assurance and how it will comply with Danida’s anti-corruption code of conduct and the principles of the UN Global Compact during implementation are requested from pre-qualified tenderers and form part of the tender evaluation.
3. The corporate responsibility to respect human rights
3.3. Actions Taken
Expectations to companies and other stakeholders to respect human rights [page 18]
The transparency framework for the major private and public companies is supported by the new non-judicial remediation mechanism where cases involving potential adverse impacts by Danish companies on international CSR principles, including adverse impacts on human rights, can be investigated (GP 4 and GP 27). For more information on the implementation of access to remedy see section 4.
Appendix 1. Overview of the implementation of the state duty to protect
Status in Denmark (initiatives implemented before the UN ratification of the Guiding Principles) [page 28]
- In 2008 the state financing fund, Vækstfonden, has committed to adhere to the UN Principles for Responsible Investment (PRI). The Export Credit Agency (EKF), the Investment Fund for Developing Countries (IFU) and Investment Fund for Central and Eastern Europe) (IØ) has committed to join the UN Global Compact.
- EKF’s Environmental & Social Due Diligence Policy states that EKF is committed to implementing the UN Guiding Principles on Businesses and Human Rights. EKF has also committed to the Equator Principles. These are binding international standards and frameworks for project funding. This ensures that private institutions and banks assess the environmental and social responsibility through a common set of guidelines. EKF works to promote the Equator Principles internationally, especially to institutions in the BRIC countries (Brazil, Russia, India and China). EKF uses International Finance Corporations (IFC) Performances Standards when rating a project which EKF participates in. The IFC Performances Standards mainly covers labor rights but human rights are also covered.
- IFU’s overall objective is to promote sustainable economic growth, economic development and a more equitable distribution of income by co-financing private sector investment in developing countries. IFU’s investments in projects should contribute to job creation, good governance,
- respect for the environmental, higher social standards and community development. IFU has joined the UN Global Compact and is committed to promoting these principles in its investments. Furthermore, IFU’s CSR policy is based on UN, ILO and OECD international conventions and declarations. By promoting these, IFU wishes to contribute to the achievement of the UN 2015 Millennium Development Goals. When conducting due diligence IFU uses the Global Compact Self-Assessment tool, which contains a robust assessment of human rights conditions.
- As part of the approval process, Danida Business Finance analyses potential human rights related risks including local legislation and policies and other CSR issues. Access to finance is based on buyer’s and exporter’s compliance with ILO principles on human and workers’ rights. When Danida signs contracts with companies, it is a requirement that companies live up to Danida’s anti-corruption policy and to the UN Global Compact. A description of the applicant’s approach to quality assurance and how it will comply with Danida’s anti-corruption code of conduct and the principles of the UN Global Compact during implementation are requested from pre-qualified tenderers and form part of the tender evaluation.
- 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)
- The public authorities should assume corporate social responsibility relating to environmental, social and economic conditions as well as human rights in connection with their activities. To obtain this objective, the Government will invite municipalities and regions to jointly prepare guidelines for how public authorities can avoid breaching international guidelines. The guidelines should be used to manage the challenges the public authorities are facing today when acting as a private company.
- The Danish Export Credit Agency (EKF) has a CSR policy which includes taking into account social, economic and environmental issues.
- Companies involved in Danida Business Partnerships are required to integrate CSR strategically in their business operations and to demonstrate CSR due diligence in order to prevent and mitigate adverse impact of business activities.
Government covering note on the UN Guiding Principles on Business and Human Rights National Action Plan
Ownership policy and social responsibility [page 5]
In State ownership steering, companies are required to observe human rights responsibly and transparently both within their own organisations and in subcontractor chains, in full accordance with the UN Principles. The State uses a separate accountability mechanism for dealing with human rights violations committed by State-owned companies. Companies with a controlling interest held by the State assess the human rights risks of their own operations and those of their subcontractor chains, reporting on them and their own tax procedures. In doing follow-up work on the operating principles of social responsibility, consideration should be given together with companies and other stakeholders on how models developed in ownership steering could also be applied in other company functions.
2.The State and Companies
2.1. The state as an economic operator [pages 19-23]
Public Financial Institutions and Financial Instruments Related To Development Cooperation
“The publication of the UN principles and the update of the OECD Guidelines for Multinational Enterprises in 2011 have had the effect in public export credits of increasing the amount of attention being paid to the impact on human rights in the projects guaranteed. Finland’s official export guarantee company, Finnvera, uses policies updated on 1 January 2013 for evaluating the environmental and social effects of projects. When granting export credit guarantees and confirming export credit guarantee conditions, the environmental and social impacts of the project in question are taken into consideration as part of the project’s total risk assessment. The development of Finnvera’s environmental and social impact assessment is continuing in accordance with the OECD Common Approaches agreement As with other public export credit companies, Finnvera also reports on its progress at the expert meetings related to the OECD agreement.
In autumn 2011, Finnfund and twenty-four other providers of development funds signed the principles of good governance and guidelines on how the providers of development funds attempt to promote good governance in the companies funded and thereby support the sustainable economic development of developing countries. In addition, the activities of Finnfund itself and of the companies it funds should be both environmentally and socially sustainable. The same principles of responsibility apply to the activities of both Finnfund and Finnpartnership alike.
In its final report in February 2014, a development group established by the Ministry for Foreign Affairs and the Ministry of Employment and the Economy suggested that a development innovation programme be established alongside the current financial instruments and support services. The programme is intended to compile the monitoring services for know-how and markets both in Finland and in developing countries; to produce support and development services for operators; and to enable a programme of flexible funding through the programme’s own fund. The programme will be launched in 2014.
As a follow-up measure, the working group proposes that:
- a regular dialogue be maintained with public financial institutions on the UN principles, the OECD Guidelines and other Principal responsible parties: Ministry for Foreign Affairs and Ministry of Employment and the Economy, continuous activities.
- in conjunction with companies and non-governmental organisations, the potential for new cooperation initiatives in the field of development cooperation funding be The work carried out in the framework of the development group is used and human rights are emphasised in the new programme for business activities in developing countries that is currently being prepared, and similarly, in the Finnpartnership programme.
Principal responsible party: Ministry for Foreign Affairs, schedule 2014 to 2016.
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.
I. The State Obligation to Protect Human Rights
Proposal for Action No.4
- The State is committed to ensuring that businesses in which it holds shares respect human rights and the environment.
13. The Role of Public Agencies [pages 27-30]
In a 2013 opinion, the CNCDH recommended that the State adopt “measures designed to enable COFACE and its clients to introduce a due diligence process with regards to human rights”. It emphasized that “COFACE’s policies and procedures regarding due diligence should be disclosed, along with the projects they insure” and that “it would also be desirable for the information and assessment process adopted with regard to the impact on human rights of operations insured by COFACE to also fall within the jurisdiction of the Ministry of Foreign Affairs and/or the Ministry of the Economy and Finance, the departments of which are able to provide an analysis for each country with regards to respecting human rights, based notably on the ‘information for travellers’ that they produce.” Finally, it stated that “the annual report on the activities of COFACE submitted by France to the European Commission (in accordance with Regulation (EU) 1233/2011) should be discussed at the National Assembly and/or at the Senate and should be the subject of consultations with civil society.”
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.”
Meanwhile, the National CSR Platform, in its report on the implications of corporate responsibility on businesses’ supply chains (November 2014), recommended that the due diligence measures used by the AFD and COFACE be reinforced, and that these agencies be encouraged to set up mechanisms to deal with complaints from financial beneficiaries in the event of fundamental rights abuses.
– Compagnie française d’assurance pour le commerce extérieur (COFACE)
The French export credit agency COFACE, which provides guarantees on behalf of the State, systematically applies the Recommendations of the OECD Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “Common Approaches”), most recently negotiated in 2012 by the OECD Export Credits Group. These recommendations cover all types of credit insurance transactions with a repayment term of more than two years, and require reasonable due diligence to be undertaken to ensure that each project complies with host country regulations and the international standards of the World Bank and International Finance Corporation (IFC). The Common Approaches establish strict common standards for OECD countries, and are more ambitious than the UN Guiding Principles as they require detailed due diligence determining project impacts on human rights. They also provide for the quarterly publication of a list of projects guaranteed for more than €10 million, and the publication of data on highimpact projects on the websites of credit agencies one month prior to transactions taking place. Discussions with civil society are held regularly at the OECD. Detailed impact assessments must be completed before COFACE awards government guarantees to projects likely to have major impacts on CSR (pollution, population movements, etc.), especially human rights. The inter-ministerial guarantee commission based at the Ministry of the Economy and Finance, which authorizes COFACE to allocate public funding on behalf of the State, also examines these requirements. Impact assessments are published on COFACE’s government guarantees website, and COFACE may request to visit industrial sites while carrying out due diligence or during the guarantee period. These analyses generally result in the inclusion of specific suspensive conditions (financial covenants) and detailed action plans to manage human rights impacts during the credit period. The OECD
Common Approaches only apply to credit insurance transactions of more than two years.
Businesses that request government guarantees from COFACE are systematically given information on the OECD Guidelines. When applying for credit insurance, businesses must confirm they have read and understood the OECD Guidelines.
A group of technical experts from export credit agencies has been mandated by the OECD Export Credits Group to work on the implementation of the Common Approaches, particularly in the field of human rights.
The Agence Française de Développement (AFD)
As mentioned above, pursuant to Article 8 of the French Act of 7 July 2014 France’s strategy for development and international solidarity, the development and international solidarity policy must take into account the social and environmental responsibility of public and private actors. Furthermore, companies must implement risk management procedures to identify, prevent or mitigate social, health and environmental damage and human rights abuses that may arise as a result of their activities in partner countries.
Also pursuant to Article 8, the AFD must incorporate social responsibility into its governance system and operations. It must implement measures to evaluate and control the environmental and social risks of the operations it finances, and to promote the financial transparency of businesses involved in these operations, country by country. Its annual report must mention the ways in which it addresses social responsibility requirements.
The AFD considers human rights when selecting the projects it finances. Every year, it produces a corporate social responsibility report which mentions human rights in accordance with the ISO 26000 standard. It also has an exclusion list which prevents it from financing projects that involve forced labour, child labour, serious environmental damage, the destruction of cultural heritage, the broadcasting of discriminatory or anti-democratic statements, and diamond mining activities outside of the Kimberley Process. Financing agreements with partners and beneficiaries contain binding due diligence clauses, which must mention the duty to respect ILO’s fundamental conventions. From the social perspective, all risks connected with respecting fundamental human rights, as established in recognized international standards, texts and agreements, are considered.
To reinforce this policy, the AFD adopted a 2014-2016 CSR action plan developed with internal and external stakeholders. The goals of this action plan are to increase transparency by consulting with relevant parties and by publishing information on AFD-funded projects and final reports. Other information is available upon request, including social and environmental impact assessments. Since 2015, the AFD has published project data on AFD-funded projects on an open data platform, 17 designed using the International Aid Transparency Initiative (IATI) accountability framework. Since January 2016, the AFD has published information on all sovereign financing.
The owners of projects with the highest social and environmental risks are asked toimplement grievance management mechanisms to deal with alerts, questions, recommendations and requests from all interested parties at any time. In parallel, the AFD and PROPARCO define the structure and organization of specific grievance management mechanisms in the environmental and social fields. These mechanisms will enable third parties affected by AFD- or PROPARCO-funded projects to lodge complaints for environmental and/or social reasons (pollution, destruction of natural resources, human rights, land grabbing, forced displacement, etc.). These initiatives took effect in 2016.
In addition, the AFD is in the process of reinforcing CSR requirements in public works contracts, with the goal of awarding these contracts to qualified companies with experience in managing projects with significant social and environmental impacts. This initiative to include more stringent social and environmental clauses in contractual documents for projects with high social and environmental risks affected 22 contracts in 2015, exceeding the target of 16 set by the Agency’s 2014-2016 targets and resources contract.
The AFD has a set of robust rules and procedures to assess social and environmental risks and impacts for each of the projects for which it receives funding proposals. Recently, these procedures were amended and their scope widened to include an explicit reference to the
World Bank’s Safeguard Policies (PROPARCO continues to apply the IFC standards). Currently, the AFD does not apply Article 5 of Chapter III of the Act on France’s strategy for development and international solidarity, in particular the requirement to implement measures promoting the financial transparency of businesses involved in operations, country by country. Instead, the financial operators and private sector actors with which the AFD Group and PROPARCO work are encouraged to disclose information on their turnover, profits, employee numbers and taxes paid in each country they are based in. This measure, called “country-by-country reporting”, is already compulsory for European banks.
Proposal for Actions No.5
- COFACE Government Guarantees and the Ministry of the Economy and Finance are currently examining whether to implement an IT module widening the scope of checks, to highlight at-risk industries or countries in the short, medium and long term. This would make it possible to check compliance with the UN Guiding Principles by reviewing all credit insurance operations and assessing human rights risks. – COFACE is continuing efforts to make information on reasonable due diligence in the social and environmental fields (which include human rights) visible and accessible on its website.
- When evaluating extractive industry projects, the AFD ensures that funding recipients comply with the Extractive Industries Transparency Initiative (EITI), without excluding those who respect EITI standards but are not based in EITI countries.
- The AFD supports the implementation of universal social protection and the promotion of initiatives to develop decent work (the creation of decent jobs, skills upgrading, training and the transition towards sustainable employment) in accordance with the AFD’s partnership with the International Labour Office and the priority areas in the ILO-France partnership agreement.
- The AFD has implemented a grievance management mechanism to deal with environmental and social complaints.
- The AFD is reinforcing CSR and human rights criteria in 80% of pending public works contracts with high social and environmental impacts.
- The AFD is working to reduce gender inequality in AFD-funded operations The AFD is reinforcing the human rights focus of social clauses. – The AFD seeks to ensure that this policy regarding “non-cooperative jurisdictions” is respected.
Actions to be implemented
- Allocate the resources necessary to raise business awareness of the OECD Guidelines in AFD- and COFACE-funded operations.
- Make AFD funding for businesses conditional on implementing or undertaking to implement non-financial reporting and a CSR due diligence plan for projects, or on the enforcement of host country or international standards.
1. The State Duty to Protect
1.3 State support [page 22-27]
Subsidies always require special justification and regular effectiveness tracking, because long-term arrangements that benefit one side at the expense of others have adverse effects as a rule. For example, by altering relative prices over a sustained period, subsidies can send the wrong economic signals and lead to inefficient resource allocation. Competitive enterprises may be forced out of the market by subsidised enterprises.
- The Federal Government will examine to what extent the sustainability assessment for which the Subsidy Policy Guidelines provide is consistent with the requirements set out in the UN Guiding Principles and how enterprises receiving significant subsidies can be subjected to a future obligation to apply the elements of due diligence described in chapter III above.
For these reasons, subsidies must not be granted unless they are necessary and reasonable and do not restrict competition. Subsidisation, moreover, must not conflict with other political aims, such as protection of human rights.
The current situation
To increase the transparency of subsidisation, the pressure to justify it and the scope for controlling it, the Federal Government follows Subsidy Policy Guidelines, which constitute a voluntary commitment by the Federal Government in connection with subsidy measures under its remit. In the run-up to the 25th Subsidy Report, the Federal Cabinet reinforced the Subsidy Policy Guidelines in January 2015, adding a sustainability assessment and an evaluation of subsidies, which will normally be conducted on a regular basis. By introducing the sustainability assessment, the Federal Government is underlining its intention to take more account of the sustainability principle in its subsidisation policy. The assessment is essentially based on the goals of the National Sustainability Strategy and focuses on long-term economic, environmental and social impacts.
Export credits, investment guarantees and other instruments for the promotion of external trade
The instruments of external-trade promotion in Germany provide assistance for German enterprises in accessing and safeguarding foreign markets. The range of instruments includes the provision of advice by German diplomatic and consular missions, the network of German Chambers of Commerce Abroad and the Germany Trade & Invest (GTAI) agency. The Federal Government also supports participation in trade fairs abroad, arranges visits by delegations and funds hedging instruments such as export credit guarantees, known as Hermes guarantees, to insure export transactions, federal guarantees for direct investments abroad (DIAs) and untied loan guarantees as insurance for banks against the risk of default.
The current situation
The processing of export credit guarantees, DIA guarantees and untied loan guarantees is undertaken on behalf of the Federal Government by the mandated companies Euler Hermes and PwC. Respect for human rights is already an element in the assessment of applications. Where there is reason to do so, environmental and social aspects as well as human rights considerations are closely examined.
How closely depends on the potential impact of the project. The minimum requirement for the assumption of a guarantee is compliance with the national standards of the target country. Projects with a considerable impact on human rights are subjected to a more thorough examination.
In the case of projects falling within the scope of the OECD Common Approaches and for investment guarantees with far-reaching environmental, social and human rights implications, compliance with international standards such as those of the World Bank Group, particularly its sectoral Environmental, Health and Safety Guidelines, is required in addition. In projects with such implications, compliance with these standards must be checked and confirmed by an independent assessor. The decision to give a guarantee is taken jointly in the competent interdepartmental committees by the Federal Ministry of Economic Affairs and Energy, the Federal Ministry of Finance, the Federal Foreign Office and the Federal Ministry for Economic Cooperation and Development. Depending on the environmental, social and human rights relevance of a given project, enterprises may have to routinely report on the progress of the project as well as on the human-rights situation. If it receives complaints, the
Federal Government may require remedial action.
- The Federal Government will ensure that human rights, which have hitherto been an element of the environmental and social impact assessment, are given more specific consideration and a higher profile in assessment procedures. It will measure the existing assessment procedures against the requirements set out in chapter III above and make adjustments where necessary. One particular priority will be measures for better identification of risks to human rights as part of the assessment process.
- Better information and greater transparency will serve to draw corporate attention, as early as during the initiation stage of projects, to the great importance attached to human rights due diligence and to the OECD Guidelines. In particular, the Federal
Government will extend its support for the affected enterprises in the form of information material.
- In addition, it is planned to introduce human rights due diligence reports into the assessment procedures of the insurance instruments for foreign trade in cases where there is a high probability of serious implications for human rights.
- The National Contact Points for the OECD Guidelines (see subsection 4.2 below) will be upgraded to become the central grievance mechanism for external trade promotion projects.
- The detailed procedure for assessing applications for the provision of export credit guarantees, guarantees for direct investments abroad and untied loan guarantees will be further reinforced as regards respect for human rights; this will entail measuring the procedure against the specific requirements set out in the NAP. To this aim, human rights will be treated as a separate point in future project assessments.
The aim is to ensure that enterprises which avail themselves of foreign trade promotion instruments exercise due diligence. In particular, this includes participation in grievance proceedings initiated against them before the German National Contact Point for the OECD Guidelines for Multinational Enterprises.
1.4 Enterprises in public ownership
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.
- 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.
II. Initial priorities for the Business and Human Rights Implementation Group
The State Duty to Protect Human Rights [page 18]
- Encourage and support awareness of effective human rights due diligence by state owned or controlled companies
- Encourage and support effective human rights due diligence in the context of state support to business and NGOs.
- 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.
Annex 1 – list of additional and ongoing actions to be carried out across government
Trade and Investment [page 20]
Ensure awareness of the international Finance Corporation (IFC) performance standards among state owned companies that invest in or manage projects, outside of OECD high income countries, which exceed the euro equivalent of us$10 million.
IV. Government responses
Current Activities and Future Commitments [page 21]
B. Operational Principles
The State-business nexus
Guiding Principle 4
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;…, operate in full compliance with human rights enshrined in domestic legislation, international regulations and standards, and soft law instruments.
Export Credit Agencies and Investment Insurance Agencies (ECAs) provide government-backed loans, insurance and guarantees to support business enterprises industrial projects abroad, especially with regard to complex and risky environment. The strategic role of these public agencies (SACE and SIMEST) make them more exposed to the risk of being associated or linked with human rights infringement: they both apply the OECD Recommendation on Common Approaches and Environmental Due Diligence and conduct risk analysis on environmental and social impact in their operations.
Planned Measures [page 22]
To achieve the goals set in Principles 4…, and within the overall framework of the implementation of EU directives, 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;…
II. Objectives and Measures
Objective 2: promoting corporate responsibility and respect in the field of business and human rights
A. lmpłemented and on-going measures for the development of CSR in Lithuania [page 6]
3. The application of CRS principłes to the state-owned enterprises. One of the objectives of the CSR Programme approved by the Government in 201O 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 I O, 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.
3. Results of the consultations and government response
3.2 Policy coherence [page 16]
(…) 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 ILO labour standards 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.
Due diligence by government [page 27]
A point raised in the consultations was that the government should also apply due diligence to its own activities, for example in providing support for companies in the form of grants or other types of finance for activities abroad, export credit insurance and trade missions. In all these cases, the government requires the companies concerned to apply due diligence. For some time now the government has applied ICSR frameworks for risk assessment (due diligence) to all applications for support. These frameworks differ, depending on the goals and the nature of the instrument in question. For example, the ICSR framework for trade missions differs from the frameworks
for project grants or export credit insurance. Assessment is based on the risk profile of the project or instrument, so that high-risk projects are subject to more thorough assessment than projects with fewer risks. Companies should always take responsibility for their activities and the ICSR assessment frameworks provide guidance in this respect. Participation in a voluntary CSR agreement will of course help companies wanting support from the government to fulfil the requirements set out in the frameworks.
BOX – ICSR in relation to export credit insurance
Under CSR policy on export credit insurance, both the government and companies are required to take responsibility for CSR. Companies using export credit insurance sign a declaration that they will seek to abide by the OECD Guidelines. The export credit agency Atradius DSB is responsible for carrying out a due diligence risk analysis of applications for insurance. The companies concerned are responsible for supplying the necessary information. If they are unable to do so, insurance will not be provided for the export transaction.
International agreements on the due diligence procedure for export credit insurance are set out in the OECD’s common approaches for export credit agencies.14 The common approaches apply to all OECD member states and, in terms of assessment of environmental and social impact, safeguard a level playing field between the member states’ export credit agencies. In the context of the common approaches, the OECD member states represented in the Export Credit Group have agreed that projects with potential adverse environmental and social impacts will always be screened for compliance with the IFC Performance Standards. The OECD Export Credit Group, in which all member states with export credit facilities are represented, is working on a strategy for assessing project-related human rights. The Netherlands plays an active part in this group, which is responsible for improving risk assessment.
2.The State duty to protect human rights
2.3 State ownership and practice for supporting the business sector [pages 21-24]
Direct state ownership in multinational enterprises is relatively extensive in Norway. We also have the world’s largest sovereign wealth fund, the Government Pension Fund Global, which is invested in around 9000 enterprises worldwide.
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.
Through the Government Pension Fund Global (GPFG) and the Government Pension Fund Norway (GPFN), Norway has financial investments both in Norway and the world at large. The role of the Fund is that of a financial investor, and the overriding objective is to achieve the highest possible return at moderate risk.
Under the GPFG investment strategy, 60 % of the capital is invested in equities, 35 % in bonds and up to 5 % in real estate. The GPFG may not own more than 10 % of any single company in its portfolio. The investment strategy for the GPFG has been expressed, inter alia, through benchmark indices. Its benchmark indices for equities and bonds are based on broad and easily available indices from leading index providers. Norges Bank may only deviate to a small extent from the benchmarks (1% expected tracking error). The management of the GPFG thus follows closely the broad market indicies as set by the Ministry. This also means that the fund is invested widely and with small holdings in the global markets. At the end of 2014, the fund’s average holding in the global equity market was 1.3 %. This means that the fund is a minority shareholder in a large number of companies.
The Government attaches importance to transparency and ethics in the management of the Government Pension Fund. In the management of the fund, emphasis is also given to respecting values shared by the beneficial owners of the Fund. Guidelines have been drawn up for observation and exclusion from the GPFG portfolio of companies that contribute to or are responsible for certain gross violations of norms, including human rights violations. Expectations from different perspectives are being expressed on the best way to fulfil the funds` ownership role. However, it is important that the fund keeps to its role as financial investor: there is broad political consensus that the fund is not a foreign or environmental policy tool. The state has other and more effective instruments in these fields.
The Ministry of Finance is responsible for the management of the Government Pension Fund, including the framework of responsible management. The operational responsibility for management of the GPFG and the GPFN lies with Norges Bank and Folketrygdfondet respectively, which operate in accordance with mandates decided by the Ministry of Finance. The Ministry reports to the Storting on the management and on planned changes in the framework in an annual white paper (see e.g. The Management of the Government Pension Fund in 2014 (Meld. St. 21 (2014–2015)).
In the management mandate set by the Ministry it is stated that a good long-term return is considered dependent on sustainable development in economic, environmental and social terms, as well as well-functioning, legitimate and efficient markets. The mandates laid down by the Ministry of Finance to Norges Bank and Folketrygdfondet require that these considerations are integrated into the operational management strategies. Within the framework decided by the Ministry, Norges Bank and Folketrygdfondet make investment decisions and exercise their ownership rights independently of the Ministry.
The work on responsible management is an integrated part of the investment process and Norges Bank uses a variety of tools in its responsible management. They can be divided into three main groups: standard setting, ownership and risk management. Norges Bank’s responsible investment management is, as a starting point, based on international principles and standards, such as those set by the UN in the Guiding Principles on Business and Human Rights and the OECD in the Guidelines for Multinational Enterprises. When the UN Guiding Principles were adopted, Norges Bank endorsed a campaign by investors in support of the principles.
When Norges Bank assesses markets and country risks, it includes violent conflicts, human rights violations and political terror in its analyses. Human rights may also be a part of the risk monitoring at sector and company level.
In its capacity as owner and minority shareholder in over 9000 companies worldwide (by the end of 2014), Norges Bank has chosen to focus on certain areas in order to achieve the best and most effective risk management and exercise of ownership rights. At present the bank has three focus areas that are directly linked with environmental and social conditions: children’s rights, climate change and water management. It has set out expectations in each of these areas for how companies can manage risks and report on their activities. The expectation documents are publicly available.
In its 2014–2016 strategy document, Norges Bank stated that it may add additional focus areas towards the end of the period. The Ministry of Finance will follow up the Storting’s recommendation to verify with Norges Bank whether an expectation document on human rights can be drawn up, including which areas of human rights can be expected to be included. The Ministry of Finance has asked Norges Bank to respond by 1 February 2016, and will report on the subject in its spring white paper to the Storting on the management of the Government Pension Fund.
However, it should be emphasized that Norges Bank’s work on responsible management is not confined to these areas. In its annual report on responsible management for 2014 the bank has elaborated on how it deals with a number of other issues and areas as well, including social conditions such as human rights and workers’ rights. In recent years the bank has also made risk-based divestments based on an overall financial assessment of companies that includes environmental and social issues. Such divestments are made within the limits set out in the mandate from the Ministry of Finance.
To further strengthen its work on responsible management, in February 2015 Norges Bank presented for the first time a separate report on its activities in this area. The aim of the report is to provide a broad and coherent overview of the bank’s work on assuring responsible management and in this way increasing the transparency of the management of the GPFG. The report is published on http://www.nbim.no/en/.
A system has also been established for observation and exclusion of companies. The system is intended to ensure that the GPFG is not invested in companies that produce certain products or contribute to or are responsible for grossly unethical conduct. The Ministry of Finance has appointed a Council on Ethics to advise Norges Bank on exclusion or observation of companies in the fund’s portfolio on the basis of the criteria in the guidelines for observation and exclusion. The criteria are laid down by the political authorities.
The Council on Ethics can recommend exclusions or observations in cases where there is an unacceptable risk that a company contributes to or is responsible for serious or systematic violations of human rights. The companies are identified by means of, among other things, systematic reviews of sectors or issues, approaches from interest groups and reports in the media. Another criterion concerns serious violations of individual rights in war or other conflict situations. In 2014, the council reviewed a number of cases of human rights violations in connection with extraction of natural resources, agriculture, food production and textile manufacturing.
It follows from the mandate from the Ministry of Finance to Norges Bank that in certain cases the GPFG is prevented from investing in government bonds. The GPFG is not a foreign policy instrument, and only in special cases of comprehensive international sanctions or measures that Norway has endorsed, has such restrictions been imposed on investing in government bonds.
The Ministry of Finance has asked Norges Bank to consider whether it can draw up an expectations document for human rights, and which areas of human rights it would consider including, by 1 February 2016. The Ministry will report on this subject in its spring white paper to the Storting on the management of the Government Pension Fund.”
Conditions for government support for business promotion and private sector development
The state is responsible for exercising due diligence when it provides significant economic support or other types of benefits to the business sector. This particularly affects the Norwegian Export Credit Guarantee Agency (GIEK), Export Credit Norway, Innovation Norway, Norad and the Foreign Service. The expectation that companies will observe a high standard of CSR reduces the risk that those that receive credit, loans or other financial support fail to respond correctly in difficult situations, which would affect Norway’s credibility and reputation as well as that of the company concerned. Responsible business conduct also constitutes a competitive advantage.
The Government wishes to expand its cooperation with the business sector in private sector development policy. The cooperation would include financial support for projects with a development effect in particular developing countries, and strategic cooperation between the Norwegian authorities, Norwegian companies and third parties such as the recipient country, multinational institutions or NGOs. In such cases expectations and in some cases requirements will be set for business conduct compatible with the practices of other public institutions.
- give companies with international operations that apply for public funding or services18 adequate and coherent information and guidance on the Government’s expectations concerning respect for human rights;
- expect companies that are to receive financial support or servicesto respect human rights;
- continue to classify all export transactions19 for which public funding is sought according to the risk of human rights violations.
BOX: Due Diligence by GIEK, Export Credit Norway and Innovation Norway [page 24]
“GIEK and Export Credit Norway often provide financing for the same projects, and have established formal cooperation on CSR. The cooperation includes human rights due diligence based on the expectations of export credit institutions set by the UN Guiding Principles, and is an integrated part of GIEK’s and Export Credit Norway’s loan and guarantee activities. All projects for which financing is being considered are submitted to an internal risk classification, even projects where this is not required16 by the OECD Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence.17 On the basis of the risk classification and considerations relating to opportunities for exerting influence, appropriate measures are taken to avoid, reduce and/or remedy potentially negative outcomes. In markets where there is a high risk that human rights will not be safeguarded in connection with business operations, it may be logical for example to require business enterprises to have adequate systems and strategies for risk assessment and follow-up.
Innovation Norway practises environmental and social due diligence when dealing with all financing applications from business enterprises. The information on the company and the project for which support has been requested is assessed on the basis of a red flag checklist and a checklist based on the 10 principles of the UN Global Compact and adapted to Innovation Norway’s mandate and target groups. The red flags are: risk of corruption, the nature of the company’s activities in low-cost countries, ethical dilemmas and environmental pressure from commercial activities. CSR scores reflect the level of CSR-related risk connected with the project or whether CSR may be a reason for giving the case priority. One of the conditions laid down in the contract with the client is that the enterprise must have high ethical standards and avoid contributing to corruption, human rights violations, poor working conditions or adverse impacts on local communities or the environment.
Pillar II. The Corporate responsibility to respect human rights
4. Investment strategy and an ideal investor’s profile [page 31-33]
The development of the objectives of the Investment Strategy and investment support tools, including the amendment of the Programme for Supporting Investments of Significant Importance for the Polish Economy in 2011-2023, constitutes one of the measures implementing the Responsible Development Plan and the Strategy for Responsible Development.
Defining the criteria for obtaining government assistance by selected investors who meet certain criteria (the so-called good practice catalogue) that, at the same time, are consistent with the concept of corporate responsibility, is an important element of the investment strategy from the perspective of respecting human rights. Apart from the elements of a purely economic nature, assistance should be granted to investors who not only contribute to the economic development of the country, but who also affect its development in the social, environmental, and work culture areas.
Special assistance will be offered to investors who provide or plan to provide specialised workplaces under employment contracts. This requirement is consistent, e.g., with the content of the International Labour Organization’s Philadelphia Declaration, whose signatories commit to conducting programmes to implement policies on pay and earnings, working hours, and other working conditions designed to ensure equitable distribution of progress for everyone and minimum remuneration for all employees, or whenever this kind of protection is necessary. This is a particularly important condition for ensuring the personal development of employees and realizing their full potential, which directly translates into the social and economic progress of the country.
From the perspective of the right to decent work, the level of remuneration of employees is also important. At the same time, special importance in this context is given to entrepreneurial investors who declare their willingness to support their employees in improving their qualifications.
Such activities contribute to increasing the potential of employees and their development, not only in the professional field. They make employees feel greater satisfaction and motivation in all fields of their activities and thus shape their pro-social attitudes.
The ideal investor should engage in broad employee care activities (e.g., by offering additional healthcare programmes or the ability to use in-company preschools and crèches). This contributes greatly to building responsible entrepreneurship and to recognising the role of entrepreneurs as actors of particular importance in the process of building civil society.
In addition, of special importance will be those investors who provide employees with tools that enable or facilitate saving. Investors should act in accordance with the UN principles for responsible investment and positively affect the regional communities and their immediate economic environment.
5. Corporate social responsibility in companies with State Treasury shareholding
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, pro-social, 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.
6. UN Guiding Principles in the operations of the Export Credit Insurance Corporation
The Export Credit Insurance Corporation (KUKE) draws upon the UN Guiding Principles on Business and Human Rights in the course of the environmental procedure related to credit insurance and export contracts guaranteed by the State Treasury. The procedure following the current OECD Recommendation published as TAD/ECG(2012)5 of 28 June 2012 and adapted to Resolution No 2/2013 of the Export Insurance Policy Committee of 6 February 2013 takes into account broader human rights issues, including the UN Guiding Principles.
The issue of respecting human rights in the operations of export credit agencies was raised both in the work on the 2012 Recommendation (modification of the 2007 document) and during several years of its revision, culminating in the adoption of the current version by the OECD Council on 6 April 2016. The current version of the Recommendation, officially published on 3 April 2016 (TAD/ECG (2016) 3) takes greater account of the requirements for respecting human rights in a procedure known as due diligence in the social and environmental aspects, e.g., in the classification of export undertakings and risk assessment.
The implementation of the UN Guiding Principles in light of the Recommendation is based on the Corporation’s growing experience in the application of appropriate methods of assessment of human rights observance in individual importing countries. The exchange of experience with the cooperating institutions and as part of the Export Credit Group is a great help.
III. Areas of Actions and Measures
Pillar I. The State Duty to Protect Human Rights
Operational Principles [pages 17-18]
Guiding Principle 4
In this context, it should be recalled that Spain supports the OECD Council Recommendation on common approaches for export credits which benefit from official support and social and environmental due diligence.
- 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.
- The Government will carry out an raising-awareness and training campaign on the Guiding Principles directed at all government departments and agencies, and other state institutions that support the internationalization of the Spanish companies.
- 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.
- The Government will support the inclusion of human rights considerations in financial institutions for regional and international development.
1. The State Duty to protect
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 [page 23]
- 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.
Action by government agencies
- The Swedish Export Credits Guarantee Board (EKN) has been instructed in its appropriation directions to pursue continuous development of its work on human rights, working conditions, the environment, corruption and internet freedom, based on OECD recommendations in these areas (‘Common Approaches’ and ‘Bribery and Officially Supported Export Credits’). EKN also has instructions to ensure that its activities comply with, and information has been provided about, the OECD Guidelines for Multinational Enterprises, the principles of the UN Global Compact and the UN Guiding Principles on Business and Human Rights. In its ‘Common Approaches’ recommendations, the OECD prescribes a method that the EKN (and its equivalents in other OECD countries) should follow when assessing the environmental and human rights impacts of projects in particularly sensitive sectors to which it guarantees deliveries by Swedish companies. Over and above the projects and sectors covered by the OECD’s ‘Common Approaches’ recommendations, the EKN has requirements and processes in place for conducting due diligence with respect to the environment and human rights in all other business transactions. The EKN also produces country risk analyses for many countries (www.ekn.se). The due diligence and any more in-depth review proceed from the potential seriousness of the impact of a business transaction and depends on the size of the transaction.
- Business Sweden (the Swedish Trade & Invest Council) is required to follow the UN Guiding Principles on Business and Human Rights, the principles of the UN Global Compact and the OECD Guidelines for Multinational Enterprises. It is also required to actively inform and encourage companies in their CSR work, in accordance with established global guidelines.
- The Swedish International Development Cooperation Agency (Sida) has developed forms of cooperation with the private sector with a view to mobilising additional resources for development. CSR is a precondition for cooperation. Based on the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises and the principles of the UN Global Compact, a due diligence tool has been developed for assessing and facilitating dialogue with potential partners on business and human rights. Sida works actively with the business community on human rights, including by cooperating with companies on poverty reduction projects. This is also the starting point for discussions and activities in Swedish Leadership for Sustainable Development (SLSD), a network that encompasses around twenty large corporations with links to Sweden.
- Starting in 2015, the formal governance of Sida has made it clear that activities are to be conducted in accordance with the OECD Guidelines for Multinational Enterprises, the principles of the UN Global Compact and the UN Guiding Principles on Business and Human Rights.
- The Swedish Institute (SI) has a management programme that provides leadership training for young leaders from Europe, China and India. By offering individuals in leading positions – established business people and opinion-makers in the private and public sectors – an advanced management programme in CSR, SI brings together people who are interested in advancing these issues in their particular areas of business. At the same time, this creates a business network for CSR in which Sweden is an active and natural party.”
Annex: Measures planned
How can the State support the business sector? [page 28]
- Based on the human rights clauses in the policy instruments governing the Swedish Export Credits Guarantee Board, the Swedish Export Credit Corporation, Swedfund and other relevant state actors regarding their human rights work, continuous reviews are conducted to assess whether further improvements are needed.
Annex: Measures planned
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 state-owned 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.
5. National Action Plan on Business and Human Rights
5.7 Pillar 1: state duty to protect
5.7.3 The State-business nexus
Guiding Principle 4 [page 22]
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 rights62. Federal government-associated businesses should serve as examples of good practice63. 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 fulfilment 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:
PI17 Human rights due diligence by federal businesses and federal government-associated businesses
Relations between government-associated enterprises and the Confederation are described in the federal government’s Corporate Governance 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 ability65.
In 2017, the federal government will draw up a status report on the fulfilment 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.
PI18 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.
The UK 2013 NAP
The State’s Duty to Protect Human Rights
The existing UK legal and policy framework
iii) negotiated and agreed the OECD 2012 Common Approaches, including a requirement for Export Credit Agencies (ECAs) to take into account not only potential environmental impacts but also social impacts, which is defined to include “relevant adverse project-related human rights impacts.” The OECD 2012 Common Approaches also require ECAs to “consider any statements or reports made publicly available by their National Contact Points (NCPs) at the conclusion of a specific instance procedure under the OECD Guidelines for Multinational Enterprises.” UK Export Finance will consider any negative final NCP statements a company has received in respect of its human rights record when considering a project for export credit. UK 2016 updated NAP
2. The State’s Duty to Protect Human Rights
Actions taken [page 8]
17. To give effect to the UN Guiding Principles, the Government has: (…)
(ii) implemented the requirements of the OECD 2012 Common Approaches, and considered relevant adverse project-related human rights impacts in providing applicable Export Credit Agency (ECA) support through UK Export Finance (UKEF). UKEF will consider any reports made publicly available by the UK National Contact Point (NCP) in respect of the human rights record of a company when considering a project for export credit. The UK has been involved with the discussions, and negotiations, on the implementation of the OECD 2012 Common Approaches and the need to amend this, in respect of ongoing experience on project-related human rights. The UK continues to be involved in negotiations on any agreed clarifications to the OECD 2012 Common Approaches
The National Action Plan
Leading by example
Outcome 1.4: Conducting Due Diligence in U.S. Development Funding and Trade Finance [page 12]
Enhancing Overseas Private Investment Corporation (OPIC) and Export-Import Bank of the United States (EXIM) Standards: OPIC and EXIM will enhance existing procedures and standards that require companies receiving their support to implement RBC principles. OPIC is reviewing its Environmental and Social Policy Statement, while EXIM has developed an improved mechanism for interested parties to provide comments, complaints, or suggestions on the environmental and social consequences of its pending and currently approved transactions, including reviewing ways to improve the new portal for online submission. Implementing Agency or Department: OPIC, EXIM
Social Safeguards for U.S. Development Assistance: 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. USAID will also establish a resource library of tools and human resources that can be deployed for various social analyses; conduct a gap analysis to identify topics not addressed by current guidance; convene stakeholder consultations regarding recommendations for future guidance or policies; and pilot the social safeguards assessment tool with interested USAID missions. These actions will be in line with international best practice, existing G-7 commitments, and safeguard policies already in place by U.S. agencies. Implementing Agency or Department: USAID
Land Tenure in Development Assistance Activities: The U.S. government reaffirms its support for the consistent implementation of the Voluntary Guidelines on the Responsible Governance of Tenure (VGGT), which provides a global framework for improved land and resources governance. The U.S. government will commit to adhering to and aligning its relevant overseas development assistance activities to the VGGT. Implementing Agency or Department: USAID