Handbook for Lawyers on Business and Human Rights

This handbook, published by the International Bar Association, aims to assist lawyers who seek to integrate business and human rights considerations into the advice they provide to clients in relation to M&A and commercial transactions. The Handbook brings together in one place a diverse collection of educational resources relating to the roles and responsibilities of legal practitioners with respect to business and human rights, including background context and explanation, case scenarios, discussion exercises, frequently asked questions (FAQs), sample checklists and further reading and resources.

The Handbook builds upon the IBA’s Business and Human Rights Guidance for Bar Associations and its Practical Guide on Business and Human Rights for Business Lawyers (Guidance documents), adopted by the IBA Council in 2015 and 2016 respectively. The Guidance documents aim to support the work of bar associations and law societies with respect to business and human rights, and explore the implications of the UN Guiding Principles for lawyers. In late 2016, the IBA’s Business and Human Rights Working Group issued a Supplementary Reference Annex which provides more detail to support the Guidance documents.

Shift’s John Sherman supported the development of this guidance.

Shift Submission on Potential Modern Slavery Act in Australia

Below is an excerpt from our submission to the Australian Joint Standing Committee on Foreign Affairs, Defence and Trade. Download the PDF to view the entire submission.

Also seeOur explanation of how the UK Modern Slavery Act compares to the expectations of the UN Guiding Principles

Joint Standing Committee on Foreign Affairs, Defence and Trade
PO Box 6021
Parliament House
Canberra ACT 2600

May 19, 2017

Dear Committee Members,

We are pleased to write to you in response to the opportunity to comment on a potential Modern Slavery Act in Australia to tackle a pervasive and severe human rights abuse, which can often be involved with business activity. With the International Labour Organization estimating that 20.9 million people around the world are subjected to forced labor, with 90% of those exploited in the private economy, your leadership in initiating this inquiry is both welcome and timely.

Shift is the leading center of expertise on the UN Guiding Principles on Business and Human Rights, the authoritative global standard on business and human rights, unanimously endorsed by the UN Human Rights Council in 2011. As a non-profit organization chaired by the author of the Guiding Principles, former Special Representative of the UN Secretary-General, Prof. John Ruggie, we work with businesses, governments, investors, regulators, civil society and other key stakeholders around the world to put the Guiding Principles into practice.

Given our experience, our submission will focus on the effectiveness of The Transparency in Supply Chains provision in the United Kingdom’s Modern Slavery Act (Section 54) and how the introduction of a similar measure in Australia could build on the strengths of that provision while also ensuring greater alignment with the Guiding Principles in the actions that businesses are expected to take. Specifically, a Modern Slavery Act in Australia should:

  1. Replicate the requirement in the UK Act for board level approval of, and a director’s signature on, a company’s slavery and human trafficking statement;
  2. Ensure that the senior level attention brought to the issue of modern slavery by this requirement supports the broader goal of businesses introducing and strengthening human rights due diligence processes that identify, prevent, mitigate and account for how they address all of their leading human rights risks, not only modern slavery. The Act should clarify that due diligence processes should focus on impacts in a company’s operations and business relationships throughout its value chain, not just on impacts at the level of first-tier suppliers;
  3. Ensure that businesses report on their broader human rights due diligence processes in their modern slavery and trafficking statements. The Act should highlight the UN Guiding Principles Reporting Framework as practical guidance for companies on how to meet the reporting requirement and ensure they are providing meaningful information when doing so…

Human Rights Reporting: Are Companies Telling Investors What They Need to Know?

Also see: Shift’s reporting program | UNGP Reporting Framework

Failures in governance and lack of appropriate focus still common amongst largest companies

Findings based on our new indicators of maturity for corporate reporting

A key area of focus for us at Shift is corporate human rights reporting. Through our work on the UNGP Reporting Framework and our reporting program, we’re seeing that a smart approach to reporting can be a tremendous driver of improved performance — ultimately leading to real, positive change for people.

As part of our work on this topic, we’ve developed a new methodology to assess the maturity of companies’ reporting on human rights. This methodology, based directly on the expectations set by the UN Guiding Principles and the UNGP Reporting Framework, establishes indicators of mature reporting, distinguishing laggards from leaders along a tiered maturity scale.

Indicators of overall maturity of corporate human rights reporting. Click on the image to see more detail, or see p.10 of the above PDF.

We’ve applied this methodology in the report available on this page, which is an assessment of the maturity of 74 of the world’s largest companies from seven sectors. While the report is primarily targeted at investors, its findings and the maturity indicators can bring value for a range of readers.

Key findings

Our key finding is about the most critical area for improvement: over half of companies provide no clarification about which human rights are most relevant to their operations and value chains. Instead, these companies just refer to certain human rights related issues without any apparent rationale.

This is concerning because it signals that far too many companies are not managing their most severe potential risks to people: neither a good sign for the people affected by the business, nor a signal that the company can create long-term value for investors, severe human rights risks increasingly constitute material business risks as well.

In addition to this top finding, we see a story emerging about various – and for some companies cumulative – failures in the governance of human rights risks, at least based on their disclosure:

  • Lack of oversight: 45% of the companies reviewed do not clearly identify who is responsible and accountable for managing human rights risks.
  • Lack of clarity about internal controls: approximately 90% of the companies do not have a coherent narrative about how risk or impact assessments inform mitigation actions taken, how decisions are made or if senior management is ever involved.
  • Total silence on governance: 16% of the companies provide no information at all about governance of human rights, nor even about governance of broader issues such as “sustainability” or “corporate social responsibility.”

Finally, when we look to actual outcomes, fully 45 percent of companies provide no information whatsoever about how they track their performance on human rights – leaving readers in the dark about whether any of their efforts translate into positive outcomes for people.

Companies’ maturity across the elements of the responsibility to respect human rights. Click on the image to see more detail, or see p.7 of the above PDF.

This study is not a benchmark, ranking or rating. We do not reveal individual companies’ maturity level, but rather focus on trends in corporate reporting: how many companies are least to most mature in the various elements of respecting human rights (according to their own disclosure). Of course we do assess the maturity of individual companies to compile our broader findings. But our purpose here is to drive improvements, not name and shame.

Recommendations for investors and other stakeholders

Based on the analysis conducted for this report, we can derive some overarching elements that can help or hurt the quality of companies’ reporting on human rights. The red flags adjacent to the Do’s and Don’ts are tips for investors about “red flags” to watch out for in corporate reporting. Click on the image to see more detail, or see p.38 of the above PDF.

In addition to this study, our reporting team also writes a short blog-style analysis series, examining trends and sharing insights about the quality of corporate reporting on human rights. This report as well as that insights series are drawn from our UNGP Reporting Database, a public, independent database that shows companies’ human rights-related disclosure mapped to the expectations of the Guiding Principles. Our team of specially trained analysts manually review companies’ entire body of disclosure and offer companies an opportunity to discuss the review with us prior to publishing.

John Ruggie Letter to European Commission President Jean-Claude Juncker

A copy of this letter was sent to European Commission President Jean-Claude Juncker on February 24, 2017. Click the download link above to view the original letter.

Dear President Juncker,

I write as the former UN Secretary-General’s Special Representative for Business and Human Rights and the author of the UN Guiding Principles on Business and Human Rights, which the UN Human Rights council endorsed unanimously in 2011.

My reason for writing is to express concern that this agenda seems today to be increasingly set aside by the European Commission. An EU Action Plan on CSR/responsible business conduct that has long been promised is yet to emerge, despite two calls last year from all Member States for one to be issued. Indeed, work across Directorates-General that could and should support business respect for human rights appears not to have materialized, or has been stalled altogether.

In the past, leadership from the European Commission alongside other EU institutions has been exceedingly important, helping to drive action across Member State governments, industry associations, investor groupings and other institutions within and beyond Europe. In 2011 the European Commission exercised important leadership in its Communication on Corporate Social Responsibility (CSR), setting out a new, clear and simple definition of CSR, namely, “the responsibility of enterprises for their impacts on society.” The Directive stated the Commission’s expectation that all European enterprises should “meet the corporate responsibility to respect human rights, as defined in the UN Guiding Principles.” Among other actions, it announced plans for a legislative initiative on non-financial reporting, which resulted in the directive of 2014 that came into force in January, and which has widely been hailed as a significant contribution to supporting responsible business conduct.

Today, EU leadership is needed as never before. As I observed in my keynote remarks at a G-20 meeting on employment and labor rights in Hamburg just last week, former UN Secretary-General Kofi Annan warned already in 1999, in a speech to the World Economic Forum, that unless globalization has strong social pillars it will be fragile and vulnerable—“vulnerable to backlash from all the ‘isms’ of our post-cold war world: protectionism; populism; nationalism; ethnic chauvinism; fanaticism; and terrorism.” If we cannot make globalization work for all, he added on another occasion, in the end it will work for none.

The prescience of this statement is striking today. Now more than ever, we need governments and business to work together to ensure that those most vulnerable to negative impacts from business activities and globalized supply chains are protected and respected. Never has it been more imperative to understand that business’s single greatest contribution to the ‘people part’ of sustainable development should be through efforts to embed respect for human rights across their operations and value chains.

The G7 recognized this in its 2015 Elmau Declaration where leaders underlined the importance of promoting labor rights, decent working conditions and environmental protection in global supply chains. They expressed strong support for the UN Guiding Principles, welcomed efforts to set up substantive National Action Plans for their implementation, and urged the private sector to implement human rights due diligence.

At this critical time when the fate of globalization itself is at stake, the European Union’s voice is needed on the world stage to reiterate these messages clearly and constructively. Yet, as noted, the anticipated EU Action Plan on implementation of the UNGPs has still not been issued. Commission papers on the SDGs seem divorced from any understanding of the central role that respect for human rights must play in the private sector’s contribution to that agenda. And the Commission’s draft guidance to companies on the non-financial reporting directive dilutes and undermines the language of the UN Guiding Principles, provides negligible guidance on the human rights content of the directive, and fails to reference the sole reporting framework – the UNGP Reporting Framework – that is precisely tailored to help companies improve their human rights disclosure fully in line with the UNGPs.

The Commission’s past leadership on responsible business conduct, and in particular on business and human rights, had a catalytic effect on a whole range of actions, across the EU and beyond, that brought substantive progress in business practices. I respectfully urge you and your colleagues to renew that leadership and help build the foundations for a socially sustainable development without which neither our societies nor our businesses can thrive.

As you know well, we live at a pivotal moment in post-World War II history. Globalization itself is at risk unless and until its social pillars can be significantly strengthened. None of us, least of all the EU, should want a roll-back into the mercantilism that has had such destructive consequences in past eras. Responsible business conduct is a central building block of a socially sustainable globalization. And the EU can and should be a central actor in advancing this aim.

Very truly yours,

John G. Ruggie

NBIM Workshop Report: Implementing the UN Guiding Principles

This report summarizes the discussions from a half day workshop on the UN Guiding Principles on Business and Human Rights facilitated by Shift for Norges Bank Investment Management (NBIM) and investee companies on December 2, 2016 in London. Representatives from 10 investee companies from the apparel and footwear and food and beverage sectors participated in the workshop, along with a number of NBIM staff. The objective of the workshop was to explore the key concepts of the UN Guiding Principles on Business and Human Rights and their practical application to improve human rights risk management.

Doing Business with Respect for Human Rights

This guide is available on its dedicated website, www.businessrespecthumanrights.org. The website features the guide as interactive webpages as well as a downloadable PDF. The multimedia case stories from Indonesia, Mexico, South Africa and Turkey are also available on the website.

Esta guía también se encuentra disponible en español.

If you need to understand what it means to do business with respect for human rights, look no further than this guide.

“Doing Business With Respect for Human Rights” is a comprehensive guide designed for companies of all sizes, sectors and geographies. It is intended to equip readers with practical advice and real-life examples that help to translate the high-level expectations in the UN Guiding Principles on Business and Human Rights into concrete action.

The guide is the joint product of the partners in the Global Perspectives Project, an innovative collaboration between the Global Compact Network Netherlands, Oxfam and Shift, funded by the Dutch Ministry of Foreign Affairs.

From 2014 to 2016, the project partners worked with local Oxfam affiliates and Global Compact local networks to deliver workshops in Indonesia, Mexico, South Africa and Turkey. The workshops brought companies and civil society stakeholders together for frank sharing of perspectives, challenges and ways forward on ensuring greater business respect for human rights.

The resulting guide includes the perspectives of both companies as well as civil society organizations, and draws on learning from those country workshops. It features step-by-step guidance points, pitfalls to avoid and suggestions for small- and medium-sized enterprises. It also includes leading examples of company policies and practices, addresses current discussion topics like the Sustainable Development Goals, and answers tough questions like “Why should companies care about respecting human rights?”. The guide is intended for companies, but should also be useful for their stakeholders, such as civil society organizations and investors.

The guide’s dedicated website (link above) also features multimedia case stories from the four focus countries. These stories share various perspectives about building good relationships with communities around a paper and pulp mill in Indonesia; how a legacy of mistrust with the community damaged the development of a wind farm in Mexico; about making respect for human rights part of a bank’s everyday business in post-apartheid South Africa; and about working to ensure workers’ rights are respected in clothing manufacturing in Turkey.

Business, Human Rights and the Sustainable Development Goals: Forging a Coherent Vision and Strategy

Also read: News announcement for this report | Our short framework for action on how any company can and should contribute to the SDGs

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

The summary below is excerpted from the report.

Summary

The United Nations Guiding Principles (UNGP) on Business and Human Rights set the global standard for what companies need to do to address negative impacts on people’s human rights connected with their business. The Guiding Principles look at how companies make their profits, not how they spend them. They are not a sign-up proposition, nor an optional extra, but an expectation of all companies everywhere and increasingly viewed as part of soft law.

Yet the UN Guiding Principles are often cast as simply a ‘do no harm’ requirement, a matter of compliance or ‘just the starting point’ en route to more mature or innovative approaches to responsible business. This overlooks their tremendous potential to drive positive change for hundreds of millions of the poorest and most marginalised people in our societies – those least able to enjoy the fruits of development.

One of the most transformative aspects of the UN Guiding Principles is their recognition that a company’s responsibility to respect human rights is not just about what happens in their own operations where they largely control outcomes, but it extends also to human rights impacts connected to their products and services through their networks of business relationships. This often means creating and using leverage in those relationships to bring about greater respect for human rights. For many human rights challenges – particularly those that sit in global value chains – that means collaborating to drive change. This is the key to how business can, and should, make its largest positive contributions to the ‘people part’ of sustainable development.

This paper makes the case for the Business and Sustainable Development Commission (BSDC) to take a lead in changing the current outdated discourse on business and social development, by recognising and harnessing this unique potential of the UNGPs. First it reviews some statistical evidence of the scale of populations across global supply chains that are exposed to abuses of their human rights. It then reviews the evidence of the strong and growing convergence between these severe risks to people and risks to business itself – operational, financial, reputational, legal or in staff recruitment and retention. The subsequent sections explore the increasing attention of international leaders – including in the G7, International Labour Organization (ILO), European Union (EU) and the Organisation for Economic Co-operation and Development (OECD) – to human rights risks in global value chains and to the role that implementation of the UNGPs must play if we are to accelerate change. Following a brief review of the UNGPs, the paper explores the evolution in initiatives that use collective leverage to advance respect for human rights. It highlights a new generation of such initiatives in the form of “joint action and accountability platforms”, which focus on specific human rights challenges, involve the key agents of change in setting action-oriented targets that address the issues holistically and incorporate accountability for progress in meeting them.

The final sections of this paper explore why the current discourse on the role of business in social development has skipped over the tremendous scale of positive impacts to be achieved through advancing respect for human rights. They look back at the historical focus on philanthropy and social investment and the more recent preoccupation with new business innovations and models such as “shared value”. The paper argues that while these approaches can bring hugely valuable benefits to societies as well as the companies concerned, they will always remain constrained to certain market opportunities and policy environments.

The paper concludes that the Sustainable Development Goals (SDGs) present an opportunity not just to update our vision of the role of business in sustainable development, but to change it fundamentally. There is no more pressing or more powerful way for business to accelerate social development than by driving respect for human rights across their value chains. The proposition that all companies not only can contribute at scale to development through these networks of business relationships, but that they have a responsibility to do so, is the quiet revolution that sits at the heart of the UN Guiding Principles on Business and Human Rights. The paper closes with a set of specific recommendations about how to embed this vision at the heart of how business gets done.

IBA Practical Guide on Business and Human Rights for Business Lawyers

Shift General Counsel and Senior Advisor John Sherman chaired the IBA Business and Human Rights Working Group that developed the guide over an 18-month global consultation process.

The text below is excerpted from the resource. For more information on this guidance, see our news announcement on its publication and our Guest Viewpoint from IBA President David W. Rivkin.

Also see: International Bar Association Handbook for Lawyers on Business and Human Rights (July 2017)

Introduction 

At its Annual Conference in Vienna in October 2015, the IBA Council adopted its Business and Human Rights Guidance for Bar Associations (‘Bar Association Guide’). The IBA noted that its founding in 1947 had been inspired by the vision of the United Nations, with the aim of supporting the establishment of the rule of law and the administration of justice worldwide. It described the unanimous endorsement by the UN Human Rights Council of the UN Guiding Principles (UNGPs), drafted by the Special Representative of the UN Secretary General on Business and Human Rights (SRSG), Professor John Ruggie. It recalled the IBA’s significant contributions to and support of the SRSG’s UN mandate, and noted that governments have evidenced strong support for the UNGPs as an authoritative policy framework, including through the development of national action plans to implement them. It described the reflection of the UNGPs in international and industry specific standards. And it noted the growing recognition of a strong business case for respecting human rights and the management of risks, including legal risks, resulting in the need for lawyers to take human rights into account in their practice of law.

In order to help bar associations and lawyers better understand these issues, the IBA committed to prepare a Practical Guide for Business Lawyers on the Guiding Principles (the ‘Practical Guide’) that would ‘set out in detail the core content of the UNGPs, how they can be relevant to the advice provided to clients by individual lawyers subject to their unique professional standards and rules (whether they are in-house or external counsel acting in their individual capacity or as members of a law firm) and their potential implications for law firms as business enterprises with a responsibility to respect human rights themselves.’

At the conference, the IBA Council also adopted a resolution approving the Bar Association Guide, looking forward to the Practical Guide’s presentation for approval in May 2016, and stating that ‘in line with the provisions of the UN Basic Principles on the Role of Lawyers as resolved by the UN General Assembly in its ‘Human rights in the administration of justice’ resolution of 18 December 1990 (Basic Principles), nothing in the Guidance for Bar Associations or in the IBA Practical Guide for Business Lawyers (once approved) shall be interpreted as reducing respect for the fundamental human right of effective access to legal services provided by an independent legal profession to all in need of such services, including that all lawyers should always be able to fulfill their duties and responsibilities and enjoy the guarantees provided for by the Basic Principles, consistent with their legal and professional responsibilities.’

This Practical Guide has been prepared to fulfill these purposes. 

Contents of the Practical Guide

The Practical Guide is intended to provide an accessible summary of a complex and nuanced subject by assisting internal and external lawyers who are involved in advising businesses globally through:

  • Explaining the background and core content of the UNGPs, which are also incorporated into other relevant human rights and responsible business practice standards and approaches, such as the OECD Guidelines for Multinational Enterprises, the IFC Performance Standards, ISO 26000 and supports the UN Global Compact responsible business principles (Section 2, infra);
  • Exploring how the UNGPs may be relevant to the advice and other services they – both in-house and external lawyers – provide to business clients (Section 3, infra);
  • Explaining the implications of the UNGPs for the clients’ right of access to, and representation by, independent legal counsel (Section 4, infra);
  • Exploring the opportunities and challenges that the UNGPs present for lawyers who advise businesses, including both internal and external legal counsel (Sections 5 and 6, infra).

Reference Annex

In November 2016, the IBA published additional guidance to support users’ implementation of the Practical Guide. Click here to see the Reference Annex to the Practical Guide.

Improving Accountability and Access to Remedy for Victims of Business-Related Human Rights Abuse

Shift supported two rounds of workshops with member states that fed into this report’s development, particularly the recommendations on cross-border cases. The overview below is excerpted from the report.

Overview

The present report sets out guidance to improve accountability and access to remedy for victims of business-related human rights abuses, following the Accountability and Remedy Project of the Office of the United Nations High Commissioner for Human Rights (OHCHR) and in response to the request by the Human Rights Council in its resolution 26/22.

The report comprises two parts. The first part provides an introduction to the guidance, including an explanation of its scope, potential usage and important cross-cutting contextual issues. This is followed, in the annex, by the guidance itself, which takes the form of “policy objectives” for domestic legal responses, supported by a series of elements intended to demonstrate the different ways in which States can work towards meeting those objectives in practice. The report is complemented by an addendum (A/HRC/32/19/Add.1), prepared as a companion to the guidance, providing additional explanation and context drawn from the two-year research process of OHCHR.

Accountability and access to remedy: the urgent need for action

Business enterprises can be involved with human rights abuses in many different ways; because of the adverse impacts that business enterprises may cause or contribute to through their own activities, or by virtue of their business relationships. Ensuring the legal accountability of business enterprises and access to effective remedy for persons affected by such abuses is a vital part of a State’s duty to protect against business-related human rights abuse.

At present, accountability and remedy in such cases is often elusive. Although causing or contributing to severe human rights abuses would amount to a crime in many jurisdictions, business enterprises are seldom the subject of law enforcement and criminal sanctions.

Human rights impacts caused by business activities give rise to causes of action in many jurisdictions, yet private claims often fail to proceed to judgment and, where a legal remedy is obtained, it frequently does not meet the international standard of “adequate, effective and prompt reparation for harm suffered”.

State-based judicial mechanisms are not the only means of achieving accountability and access to remedy in cases of business-related human rights abuses. Other possibilities may include State-based non-judicial mechanisms and non-State grievance mechanisms, such as operational level grievance mechanisms. However, effective State-based judicial mechanisms are “at the core of ensuring access to remedy”.

Those seeking to use judicial mechanisms to obtain a remedy face many challenges. While those challenges vary from jurisdiction to jurisdiction, there are persistent problems common to many jurisdictions. These include fragmented, poorly designed or incomplete legal regimes; lack of legal development; lack of awareness of the scope and operation of regimes; structural complexities within business enterprises; problems in gaining access to sufficient funding for private law claims; and a lack of enforcement. Those problems have all contributed to a system of domestic law remedies that is “patchy, unpredictable, often ineffective and fragile”.

The challenges are exacerbated in cross-border cases. While many domestic legal regimes focus primarily on within-territory business activities and impacts, the realities of global supply chains, cross-border trade, investment, communications and movement of people are placing new demands on domestic legal regimes and those responsible for enforcing them. 

The experiences of those seeking remedy suggest that there remain serious deficiencies in the implementation by many States of their international obligations with respect to access to remedy. The right to an effective remedy for harm is a core tenet of international human rights law. The obligations of States with respect to this right have been reflected in the Guiding Principles on Business and Human Rights: Implementing the Protect, Respect and Remedy Framework in terms of a “State duty to protect” against business-related human rights abuses, of which providing access to an effective remedy is an integral part.

Rectifying these deficiencies — which, in many cases, are rooted in wider social, economic and legal challenges — will not be straightforward. It will require concerted and multifaceted efforts from all States, encompassing actions relating to law reform and legal development, improvements to the functioning of judicial mechanisms, law enforcement, policy development and closer international cooperation. However, this is essential work towards realizing the imperatives of accountability and remedy for business-related human rights abuses.