What Do the UN Sustainable Development Goals Have to Do With Corporate Respect for Human Rights?

Also seeOur short framework for action that any company should and can follow to contribute to the SDGs

Update: In January 2017 the Business and Sustainable Development Commission published a position paper on business’s role in sustainable development, Better Business, Better World. That position paper draws on a report authored by Shift and strongly supports our message that respect for human rights must be at the heart of any company’s efforts to contribute to the Sustainable Development Goals.

The UN Sustainable Development Goals (SDGs) are currently a big feature on global agendas — and they include a call to business to play a role in their implementation. Since the establishment of the SDGs, however, many companies have asked us what their connection is to the UN Guiding Principles on Business and Human Rights. Are the SDGs an alternative to or substitute for the Guiding Principles? Are they separate ideas with separate implementation needs?

The simple answer is no: contributing to the SDGs is neither a substitute for, nor unrelated to, implementation of the Guiding Principles. In fact, the two are interwoven in the same fabric. For business to realize its full contribution to sustainable development, it must put efforts to advance respect for human rights at the heart of its strategy.

When companies drive respect for human rights across their operations and value chains, they can have a sustained and large-scale positive impact on the lives of the people most desperately in need of development.

More clarification on the connection between the SDGs and the Guiding Principles is available in a November 2016 paper published by the Business and Sustainable Development Commission and authored by Shift. Its key points include:

  1. When talking about the “planet” part of sustainable development, companies focus above all on how they can reduce their negative impact on the environment, and the important positive outcomes that will generate. But when it comes to the “people” part, most companies dismiss discussions about reducing negative impacts as mere “compliance” and focus their energies on strategic philanthropy, social investment, shared value and similar efforts. 
  2. This misses the point about respect for human rights. When companies drive respect for human rights across their operations and value chains, they can have a sustained and large-scale positive impact on the lives of the people most desperately in need of development. “Diversity and inclusion” programs address problems of discrimination, yet we recognize the positive outcomes they bring for so many groups in the workplace and broader society. It’s no different when it comes to other human rights.
  3. Moreover, under the Guiding Principles all companies have a responsibility to use their influence to drive respect for human rights through their value chains. When we consider the millions of people working in and affected by those global supply chains, for whom abuses of their human rights are a barrier to even basic opportunities, we start to see the true potential for how every company, large and small, can make a major contribution to sustainable development.

In September 2016, I gave a webinar to the World Business Council for Sustainable Development about the connection between the SDGs and the Guiding Principles. See my explanation below.

Forging the Path as Wise Counselors

by David W. Rivkin, President IBA

Also see: News announcement of publication of IBA Practical Guide | Practical Guide in our resource library 

New! On November 1, 2016, the IBA published a reference annex to the Practical Guide for business lawyers.

On May 28, 2016, the International Bar Association (IBA) adopted the IBA Practical Guide on Business and Human Rights for Business Lawyers. The Practical Guide is the product of extensive research; its insights are founded on consultations with lawyers across practices and bar associations spanning the globe. As IBA President, it has been my distinct privilege to support John Sherman and his dedicated IBA Working Group in their tireless efforts.

I firmly believe that the Practical Guide marks a watershed in the disciplines of human rights and corporate law – disciplines we now recognize as related and interwoven.

In the Practical Guide, we sought to, “enable lawyers around the world to understand how best they can serve their clients,” at a time when successful businesses must navigate a multitude of risks grounded not only in government regulations, statutes and judicial decisions, but also in ethics, public expectations and international norms. Faced with this rapidly evolving business environment, it seemed only natural that the role of lawyers should evolve accordingly.

We cannot now – if we ever could – conceive of our role exclusively as technical specialists in black-letter law. Rather, our clients need us to be wise counselors, who integrate legal, ethical and business concerns in all our advice.

The Practical Guide considers this evolution in terms that are clear and reasonable. The widespread endorsement of the UN Guiding Principles on Business and Human Rights has practical implications for business lawyers across disciplines. These implications are neither revolutionary nor vague. Corporate governance may include systems to manage human rights risks; non-financial reporting may include disclosure on well such systems work; resolving disputes effectively may turn on non-judicial grievance mechanisms and a more holistic consideration of business interests; and, contracts may be drafted to bring precision and certainty throughout global value chains. The IBA will shortly publish a Reference Annex, also being prepared by the Working Group headed by John Sherman, which explores these and other implications of the Guiding Principles in more detail.

The overarching message for lawyers as business advisors is straightforward and powerful. We cannot now – if we ever could – conceive of our role exclusively as technical specialists in black-letter law. Rather, our clients need us to be wise counselors, who integrate legal, ethical and business concerns in all our advice. Embracing that role should not, of course, come at the expense of our entrenched and unique professional obligations to our clients. But we serve our clients best by ensuring that we are able to advise them on what is legal and what is right.

The Practical Guide also sheds light on the responsibilities of law firms as business enterprises in their own right. The issue is complex. While the Practical Guide emphasizes the importance of clients’ right to counsel and the independence of lawyers, it also properly speaks about law firms’ responsibility to consider the Guiding Principles in their own operations and value chains. Integrating respect for human rights across legal advice and law firm operations – all the while balancing our professional ethical obligations – will take time and effort. The Practical Guide marks the crucial first step of the journey.

I hope and expect that the Practical Guide will serve as a beacon for lawyers across disciplines and across the world. I, for one, am committed to building on its lessons at the IBA and integrating them in my practice. At Debevoise & Plimpton, we have already begun to implement the Practical Guide with the launch of a dedicated Business Integrity Group, which integrates human rights, environmental and anti-corruption advice across our practice areas. I have been delighted by our clients’ enthusiastic response to this effort to reduce the legal and financial risk that arises from the leading integrity standards like the Guiding Principles, the US Foreign Corrupt Practices Act and the UK Modern Slavery Act.

As a practitioner and policy maker, I am very optimistic about the future of business and human rights as a legal discipline. It will not be long, I suspect, before all lawyers strive to be the wise counselor to our clients. Our profession will long be indebted to the Practical Guide as we forge ahead to become more than technical specialists and endeavor always to be guardians of our clients’ integrity.

David W. Rivkin is President of the International Bar Association and Partner at Debevoise & Plimpton. | Read David’s full bio

Shift Submission to Public Consultation on Italian National Action Plan

Below is the text Shift submitted to the Italian government as part of the public consultation. | Learn more about Shift’s engagement with regulatory and policy developments

Submission for the Public Consultation on the Italian National Action Plan on Business and Human Rights

Shift is pleased to submit these recommendations to the Italian Government as part of its public consultation on the revision of its National Action Plan on Business and Human Rights (“NAP”). We support the initiative of the Government to review and build upon its first NAP and further its commitment to implementing the UN Guiding Principles on Business and Human Rights (“UN Guiding Principles”). The revision of the NAP should encourage greater uptake of the UN Guiding Principles in Italy and facilitate stronger cooperation between companies, government institutions and their stakeholders.

As one of the first countries to develop a NAP on the UN Guiding Principles, the Italian Government now has the opportunity to assess the effectiveness of its approach to date. Owing to the fact that many goods and services found around the world are produced by Italian companies – which operate both within Italy and abroad – the revision of the NAP is also an important opportunity for the government to show critical leadership on business and human rights.

This submission responds to the draft published by the Inter-Ministerial Committee for Human Rights (CIDU) at the Italian Ministry of Foreign Affairs and International Cooperation. It addresses three areas that we believe are particularly important in considering the revision of the NAP:

  1. Advancing the State Duty to Protect, in Italy and Abroad
    Suggestions on advancing business and human rights within the institutions of the Italian Government, both in Italy and abroad. 
  2. Facilitating the Corporate Responsibility to Respect
    Assisting and where appropriate requiring Italian companies to respect human rights throughout their operations, including through the use of formal reporting that helps to drive improved performance. 
  3. Improving Access to Remedy
    Further building capacity within the Italian Government in understanding the UN Guiding Principles and responding to cases involving business-related violations of human rights, both within Italy and through the impact of Italian business abroad. 

Further building capacity within the Italian Government in understanding the UN Guiding Principles and responding to cases involving business-related violations of human rights, both within Italy and through the impact of Italian business abroad. 

1. Advancing the State Duty to Protect

The National Priorities set out in the draft NAP suggest an ambitious program to tackle several key areas that pose significant risk to human rights. We welcome the inclusion of issues such as dealing with irregular or grey work (ex. caporalato) in the agricultural sector within Italy, and bolstering human rights in Italy’s development cooperation.

In strengthening the NAP, there are several areas which could be explored at greater length to highlight the role and responsibilities of Italian companies in respecting human rights through their business operations and business relationships. One particular instance includes the “Legality Law” (or “Rating”) and its strength in addressing a company’s respect for human rights. At present, the “Rating” is assigned in the form of a certificate released by the Italian Antitrust Authority as a certification of adhering to various aspects of responsible business. Designed to evaluate business ethics, banks and other financial institutions in Italy may consider a company’s rating in granting access to finance. Yet at present, the rating process and indicators used to measure ethical standards of firms do not require companies to proactively seek to address or mitigate human rights risks in their supply chains, whether their operations are within Italy, our outside of the European Union. 

  • A government-sponsored certification scheme connected with responsible business conduct provides a natural opportunity for companies to demonstrate how they seek to respect human rights in line with the UN Guiding Principles. In order to strengthen the consideration of respect for human rights as part of the rating’s evaluation of responsible business conduct, we encourage the Italian Government to explore how to link “human rights due diligence” to the criteria.

A growing number of national Development Finance Institutions (DFIs) and Export Credit Agencies (ECAs) are bringing a human rights lens to bear on their existing environmental and social due diligence, including by adopting new policies and human rights due diligence procedures informed by the expectations of the UN Guiding Principles. Given this context, we are pleased to see that the NAP references both SACE, the Italian ECA, and SIMEST, the Italian DFI. Drawing on our work with the IFC, as well as with various countries’ ECAs (such as those of Norway and Canada) and DFIs (such as those in the Netherlands, Germany and France), we see a growing number of financial institutions strengthening their existing environmental and social due diligence approaches to incorporate human rights due diligence more directly. This is first and foremost about preventing risk to people, but it can also help prevent risk to the investments at issue.

  • A general focus on conducting social and environmental impact assessments, as currently set out in the NAP, is likely to be insufficient to fully explore human rights risks connected to individual clients or transactions. We encourage the Italian Government to commit to reviewing the existing approaches of SACE and SIMEST through the lens of human rights due diligence and identifying how to proactively incorporate human rights due diligence into their approaches. This will be essential as part of Italy’s implementation of the revised OECD “Common Approaches” for all OECD member states’ ECAs.
  • We also urge the government to build the capacity of the Italian Trade Agency (ICE) to deal with business and human rights and understand the breadth of the UN Guiding Principles in operationalizing trade support and promotion, following the lead of other countries such as the UK.

Shift is pleased that the Italian NAP includes critical reference to both state owned enterprises (SOEs) and public procurement. Just as businesses are expected under the UN Guiding Principles to include their supply chains in their human rights due diligence processes, so too should the government, including its (public) enterprises. A tangible step would be to require suppliers to demonstrate that they have adequate human rights policies in place as well as the necessary processes to identify and address the most severe risks to people that their operations may pose. Given the large number of suppliers to the Italian government and its SOEs, those suppliers whose sectors, countries of operation, products or services are known to carry particularly significant risks to human rights could be prioritized for scrutiny. This would align with the approach being taken by the world’s biggest procurer of goods and services, the US Federal Government, through the Federal Acquisition Regulation requiring due diligence in relation to the risks of slavery and trafficking in the supply chain.

Shift welcomes the progress in transposing the 2014 EU Procurement Directives that allows contracting authorities to take into account social considerations. At the same time, we believe that more is needed to ensure that human rights are appropriately considered when purchasing goods, works and services. As indicated in the NAP, the Italian Anti-Corruption Authority (ANAC) has a leading role here. While anti-corruption is crucial to responsible business conduct, it is also closely associated with heightened human rights risks.

  • We recommend that the Italian Government take advantage of the transposition process to commit to develop clear guidance for relevant authorities on how to integrate consideration of human rights into the bidding process for public sector contracts, beyond anti-corruption risks alone, as well as what the appropriate consequences should be where human rights are not respected in practice by business suppliers.
  • In supporting the uptake of the social and environmental amendments to the Procurement Directive, Shift recommends that the Italian government provide support to public authorities on procurement within the context of business and human rights. Other countries have developed, or are in the process of developing, guidance and e-learning tools on this topic which could be built on.

With Italy’s long industrial and commercial history in certain sectors, human rights risks may be particularly relevant in some of those sectors such as agriculture and textiles. In terms of the former, addressing the caporalato is a welcome initiative. Undeclared, grey or seasonal work which is not supported by decent work measures can result in extreme risks to people and also in material risks to enterprises themselves. In relation to the textiles sector, there are known human rights risks in the textile supply chain, including for luxury brands, within Italy. In addition, a high concentration of firms within – or associated with – the textile sector in Italy increasingly source from countries outside of the European Union, which can pose different and additional human rights risks. Shift is aware that a number of leading Italian companies associated with the textile sector would welcome greater guidance and support on how to meet their responsibility to respect human rights.

  • Shift recommends that the Italian government, supported by the Italian Ministry of Foreign Affairs, Ministry of Economic Development and the Ministry of Labour and Social Policy, provide sector-based support to businesses that pose the highest risks to human rights (for example in agriculture and textiles), looking both at domestic risks as well as risks in business relationships/supply chains abroad.

Regarding development cooperation, the recently reformed Italian Agency for Development Cooperation (AICS), linked to the Italian Ministry of Foreign Affairs, provides an excellent opportunity to align Italy’s development agenda – including its commitment to the Sustainable Development Goals – with decent work in global supply chains. Further, Italy committed to supporting a better application of labour, social and environmental standards in global supply chains at the the G7 in Elmau, Germany in 2015. These commitments also reflect the EU Council Conclusions on Responsible Global Value Chains, agreed upon by all EU Member States in May 2016. Shift welcomes the suggestion that this might be a priority area of work.

  • We urge the Italian government to extend the expectation of human rights due diligence to AICS’ technical areas of economic development (i.e. private sector development and trade), human development, rural development and environment/natural resources. The current horizontal focus on human rights with respect to gender and youth is notable, however business and human rights extends far beyond these areas. The various technical areas/work steams could be strengthened to include reference to business and human rights and decent work. These measures could also link to sectoral initiatives as suggested above (such as in agriculture and textiles).

2. Facilitating the Corporate Responsibility to Respect, in Italy and Abroad

States have a range of tools at their disposal to encourage, incentivize and require companies to respect human rights. This includes, as Guiding Principle 3(d) makes clear, the role of the state to: “Encourage, and where appropriate require, business enterprises to communicate how they address their human rights impacts.” There have been several significant developments on human rights reporting in Europe and the United States, including the EU Directive on Non-Financial Information Disclosure 2016, the UK Companies Act 2006 and the UK Modern Slavery Act 2015. In the US, the California Transparency in Supply Chains Act 2010, the Dodd-Frank Act’s provisions with regard to conflict minerals due diligence, and the State Department’s Myanmar Reporting Requirements have all contributed to heightened expectations of companies.

Disclosure requirements can help drive accountability and improved performance: they focus senior management minds on what the company is (or is not) doing, and they provide the information necessary for better engagement by the company with stakeholders on how it is managing its human rights impacts. But they only do so if the expectations for disclosure are meaningful. To date, human rights reporting has been by far the weakest area of company reporting. This is a key reason why Shift, together with our project partner the international accountancy firm Mazars, led the development of the UN Guiding Principles Reporting Framework.

The Reporting Framework is the first comprehensive guidance for companies to report on how they respect human rights in line with the UN Guiding Principles. As Professor John Ruggie stated at its launch, “The business community very strongly endorsed the UN Guiding Principles when they came out, but until today they haven’t had the actual reporting tool that enables them to know and show that they respect human rights.”

The Reporting Framework is designed to help all companies, regardless of size, sector or operating context, to see how far they have progressed in implementing their responsibility to respect human rights and how to communicate that publicly. The Framework is organized according to a phased approach that incentivizes companies to improve over time. It also includes linkages to other broader reporting frameworks, including those of the Global Reporting Initiative, the International Integrated Reporting Council and UN Global Compact, and issue and industry-specific initiatives to show how responding to their requirements can help answer questions in the Framework.

Since its launch, the Reporting Framework has received strong support from a broad range of stakeholders including businesses, civil society and other EU Member States. A current summary can be found on the website. Importantly, the UNGP Reporting Framework has the support of an investor coalition representing USD $4.8 trillion in assets under management worldwide, and a number of governments have recommended (Sweden, Norway, UK) or are considering recommending the Reporting Framework in their NAPs. The UN Working Group on business and human rights supported the development of the Reporting Framework.

The translation of the UNGP Reporting Framework has been made possible by a number of organizations and governments. Support has been received for translations into French, Spanish and Chinese. Funding from the German government has allowed for its translation into German and a Polish translation has been facilitated by the Polish Institute for Human Rights and Business (PIHRB). Shift is actively exploring translation opportunities beyond these languages, subject to funding.

  • We urge the Italian Government to consider the particular relevance of the UNGP Reporting Framework in providing guidance to companies with regard to the human rights requirements of the EU NFI directive and the provisions of the “Legality Law/Rating.” We also invite the Government to consider recommending the use of the Reporting Framework to Italian companies more broadly as a tool to help them meet their responsibility to respect human rights under the UN Guiding Principles.

3. Improving Access to Remedy

Guiding Principle 25 affirms the need for effective state-based remedy, both judicial and non-judicial, as the foundation of a wider system of remedy for business-related human rights harms. Guiding Principle 26 identifies common legal and practical barriers to accessing judicial remedy for such harms.

Guiding Principle 26 could only address barriers to judicial remedy in very broad terms because their precise nature, and the most appropriate solutions to them, must necessarily be determined at the national level. Doing so requires detailed analysis and review of the existing situation, taking into account broader access to justice considerations that go well beyond the business and human rights sphere, and will necessarily involve difficult judgments. Yet it is essential to meeting the duty to protect in practice. It is therefore very concerning that no existing NAP fully engages with this principle. The recent EU Council Conclusions on Business and Human Rights have reaffirmed this notion, and called upon EU Member States to proactively address the issue of remedies for victims of business-related human rights abuses within their National Action Plans.

Further, in March 2016, the Council of Europe (CoE) adopted  recommendations for CoE Member States on human rights and business (Recommendation CM/Rec(2016)3 on human rights and business). The reccomendations provide specific guidance to assist CoE Member States, of which Italy is an actice member, to prevent and remedy human rights violations by business enterprises. The reccomendations illustrate a recommittment to meaningful action on access to remedy, specifically access to judicial remedy. In addition, the Office of the UN High Commissioner for Human Rights’ Accountability and Remedy Project has developed concrete guidance for states on how to advance implementation of the UN Guiding Principles’ provisions on state-based remedy.

In terms of non-judicial state-based remedy, it is important that negative findings by such mechanisms are linked to meaningful consequences for the businesses involved. A recent example can be found in the revised Canadian Extractive Sector CSR Policy, which formally links poor corporate performance and refusal to cooperate in various dialogue processes, including those of the Canadian National Contact Point (NCP), to limitations on export credit and other official trade promotion support.

  • We urge the Italian government to specify concrete steps with regard to reviewing and addressing any gaps in access to state-based remedy, including judicial remedy. We also encourage the Government to consider appropriate consequences for companies that refuse to engage with the Italian National Contact Point or are subject to negative findings and do not take the necessary steps to address the concerns. For example, such instances should inform decision-making by SACE and SIMEST.

In closing, we appreciate the opportunity to make this submission and would be pleased to provide any further information that may be of use.