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When preparing the first issue of the ECOFACT Quarterly this year, our team had a discussion about what we considered last year’s most important development in the environmental and social risk arena. It was a surprisingly short discussion: We all agreed that it was the traction that human rights norms had gained. There was a consensus that the time of observation had come to an end, and that private-sector companies would now have to actively address certain responsibilities in the context of human rights.
The UN Guiding Principles on Human Rights and Business (Guiding Principles) were endorsed by the UN Human Rights Council in 2011.1 Since then, there has been an ongoing discussion about their potential implications for private-sector companies. In 2013, three main developments altered the pace and importance of that discussion significantly:
- In several sectors, leading companies started dialogs which aim to tailor the key requirements of the Guiding Principles to their specific sectors and value chains. For the financial sector, a discussion paper2 was published by the Thun Group of Banks, an informal circle of seven international banks. In the tourism sector, a group of German and Swiss companies participated in a similar initiative that resulted in a commitment setting out the responsibilities of transnational companies in the tourism industry.3 Interestingly, both sectors have value chains with strong ties to emerging markets and other countries with socio-legal processes that tend to be less developed and reliable.
- In the UK, an amended law4 that requires the directors of listed companies to include information about human rights issues in their annual strategic report to shareholders came into force on October 1, 2013. The strategic report must also include information about the company’s corresponding policies, and their effectiveness. If the report does not cover all of these issues, it must state those that it does not contain.
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1. Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises; John Ruggie / “Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework,” March 21, 2011
2. The Thun Group of Banks, “UN Guiding Principles on Business and Human Rights / Discussion Paper for Banks on Implications of Principles 16 – 21,” October 2013.
3. Roundtable Human Rights in Tourism, “Commitment on Human Rights in Tourism,” October 7, 2013.
4. UK Statutory Instrument, “The Companies Act 2006 (Strategic Report and Directors’ Report), Regulations 2013,” October 1, 2013
5. The implementation of the OECD Guidelines for Multinational Enterprises is supported by a unique mechanism of National Contact Points (NCPs). The final statements were issued by the NCP of Norway in May 2013, and the NCP of the Netherlands in September 2013.
6. According to the commentary on Principle 17, “human rights due diligence (…) goes beyond simply identifying and managing material risks to the company itself (…).” According to Principle 19, only if the company “is unable to increase its leverage” should it “consider ending the relationship (…).”
7. See, for example, the letters of the OHCHR to SOMO and to the OECD: http://www.ohchr.org/Documents/Issues/Business/LetterSOMO.pdf http://www.ohchr.org/Documents/Issues/Business/LetterOECD.pdf