The Working Group’s project is forward-looking. So are the UNGPs. They embody two core strategic concepts that are as relevant today as they were in 2011 when the Human Rights Council endorsed them unanimously.
The first is leveraging opportunities to drive human rights considerations into everyday decisions by businesses and governments.
The second is the need for a smart mix of measures, national and international, voluntary and mandatory, in order to achieve that aim.
In big picture terms, what guidance do they provide as we look ahead? Let’s look first at leveraging human rights into the mainstream.
Today, there is near-universal consensus on the need to build back better from the worst pandemic in a century, and for many countries possibly the worst recession since the Great Depression. Building back better must not become a slogan for some technical fix. It should serve as a call for a fundamental rethink of how things are done, one which puts people at the center rather than treating them as a factor of production.
In addition, for the first time in a half-century, a serious debate is taking place within the business community itself regarding the social purpose of the corporation. Is it merely an instrument to serve the interests of securities holders? Or is it a social entity that should also serve a broader range of stakeholders, including workers and communities – whether they are next door, at the other end of global value chains, or virtual?
Or take yet a third opportunity, the remarkable rise in ESG investing – incorporating environmental, social, and corporate governance criteria into investment decisions. ESG investing, modest in scale until the 2008 financial sector meltdown, now accounts for close to one-third of all assets under management globally. Virtually every theme under the S in ESG addresses human rights: workplace standards, diversity and inclusion, community relations, and so on. But ESG analysts, data providers and asset managers don’t yet seem to be aware of this. As a result, the widely different metrics they use to measure the S factors make it hard to compare performance across firms and sectors.
In short, we are surrounded by opportunities to drive human rights considerations into every-day decisions by business and governments: building back better, the corporate purpose debate, and ESG investing. Let’s seize them.
December 2019 | Video
Keynote Address by John Ruggie at the Conference ‘Business & Human Rights: Towards a Common Agenda for Action’
A smart mix of measures is required to support these transformative opportunities. What would that look like in the context I have sketched out? To make it concrete, let me focus on the EU as an illustration.
A smart mix of measures would begin with consideration of the kind of mandatory human rights due diligence Commissioner Reynders has just described.
It would link the due diligence provisions to the revision of the non-financial disclosure requirements the EU is also undertaking – it makes good sense for the two to reinforce one another. In turn, this means that the materiality construct in the reporting requirement recognizes potentially high impact risks that are emergent but not yet imminent, which is the case for climate change and certain human rights harms.
Furthermore, a smart mix would include drawing on these initiatives to promote greater consistency among ESG standards, for which everyone is clamoring but no authoritative entity is providing.
Finally, this level of policy coherence would provide the EU External Action Service with a robust position for engaging in the ongoing business and human rights debate in Geneva.
Our fragile world is in desperate need of systemic change. Unconnected fragments here and there will not achieve the outcomes we need. Thank you again, and bon voyage to the Working Group as it heads towards a decade of global implementation.
This document contains reflections offered by Shift to the World Economic Forum on its white paper ’Towards Common Metrics and Consistent Reporting on Sustainable Value Creation’. The document is based on Shift’s expertise and experience working directly with companies, standard setters and financial institutions. It focuses on indicators and metrics most relevant to the assessment of impacts on people, and draws on Shift’s work leading the improvement of human rights reporting by companies and Valuing Respect, our current initiative to advance better ways to evaluate business respect for human rights.
Shift, IHRB, The Business & Human Rights Resource Centre and the European Coalition for Corporate Justice have written to Sergio Mujica, Secretary General of the International Organization for Standardization (ISO). In the letter, we make the case for why ISO should not proceed with proposals to revise the ISO 26000 social responsibility standard, nor to establish a technical committee charged with introducing further private standards on responsible business conduct.
The ISO 26000 standard was adopted in 2010 in careful alignment with key international standards on business and human rights, and we are concerned that its reopening will become a major distraction from the development of international and national laws in relation to environmental and human rights due diligence.
Please read the full letter below and share it with your networks.
In February, the European Commission began seeking stakeholder feedback to inform the revision of the EU Non-financial reporting directive (NFRD) as part of its strategy to strengthen the foundations for sustainable investment.
In December 2019, Shift and the Finnish Presidency to the EU Council co-organized the conference ‘Business & Human Rights: Towards a Common Agenda for Action’, a space where businesses, government representatives and civil society organizations engaged in a multi-stakeholder dialogue to discuss business and human rights and, in particular, a collaborative and constructive way forward on this critical agenda.
In his initial remarks, Professor John Ruggie emphasized that while we often hear the term ‘smart mix’ being employed to mean voluntary measures, the concept is broader and should be understood to include mandatory measures. (Watch the full video)
During the conference, participants discussed the role of state financing in promoting human rights due diligence; the role of regulation in a smart mix to foster business respect for human rights; and the use of collective leverage and cooperation to improve human rights outcomes.The conference concluded with the launch of Agenda for Action -the outcome paper of the conference.
Many thanks to the government of Finland for convening this timely and important conference.
It is timely because a new European
Parliament has been elected and a new Commission selected. It is
important because we live in a turbulent world that challenges
foundational premises we had been able to take for granted. The European
Union is one of the most significant governance innovations in modern
times. It all began modestly, with six countries coordinating their coal
and steel sectors in the wake of World War II. Today, the EU – whether
it is 27 or 28 – constitutes an economic and social superpower. Now more
than ever, the EU needs to think of itself in those terms.
I am pleased that Finland chose business
and human rights as the focus of its EU Presidency and of this
conference. It leads us to address the people part of the people and
planet challenges faced by all humanity. The conference agenda asks the
question: How do we most effectively advance action on the EU level? My
job this morning is to sketch out the backstory to our discussions and
suggest some strategic directions.
Let me begin with the most basic question:
What is business and human rights all
about? The answer varies depending on the vantage point. In big-picture
terms, it is about the social sustainability of globalization. Some
years ago, my favorite boss, Kofi Annan, said: “if we cannot make globalization work for all, in the end it will work for none.”
Today, people around the world are telling us that we have fallen
short, that the benefits and burdens of globalization have been
unequally distributed within and among nations. The result is public
resentment and loss of trust in institutions of all kinds.
When seen from the perspective of
enterprises, business and human rights is about ways they can recover
trust and manage the risk of harmful impacts. Undeniable progress has
been achieved by individual firms, business associations, and even
sports organizations. But not enough, and not by enough of them.
For governments, business and human
rights is at the core of new social contracts they need to construct for
and with their populations. This includes decent work and living wages,
equal pay for work of equal value, social and economic inclusion,
education suitable to the needs and opportunities of the 21st century, and effective social safety nets to buffer unexpected shocks to the economy or the person.
For the individual person whose rights
are impacted by enterprises, business and human rights is about nothing
more – but also nothing less – than being treated with respect, no
matter who they are and whatever their station in life may be, and to
obtain remedy where harm is done.
My second point is to remind us that
formal international recognition of business and human rights as a
distinct policy domain is relatively recent. At the UN level, the first
and thus far only formal recognition dates to 2011, when the Human
Rights Council unanimously endorsed the Guiding Principles on Business
and Human Rights.
The state duty to protect against human rights harm by third parties, including business; the responsibility of enterprises to respect human rights, regardless of whether states meet their own obligations; and the need for greater access to remedy
by people whose human rights have been abused by business conduct. The
OECD Guidelines on Multinational Enterprises quickly incorporated Pillar
II virtually verbatim.
The UNGPs comprise 31 Principles and
Commentary on what each means and implies for all actors: states,
enterprises, as well as affected individuals and communities. They are
not merely a text. They were intended to help generate a new regulatory
dynamic, one in which public and private governance systems, corporate
as well as civil, each come to add distinct value, compensate for one
another’s weaknesses, and play mutually reinforcing roles—out of which a
more comprehensive and effective global regime might evolve.
That brings me to the key issue of
strategy – how to reinforce and add to this transformative dynamic. The
Guiding Principles embody two core strategic concepts: advocating a
“smart mix of measures,” and using “leverage.” I’ll take them up in
We often hear the term “smart mix of measures” being employed to mean voluntary measures alone. But that gets it wrong. Guiding Principle 1 says that states must have effective legislation and regulation in place
to protect against human rights harm by businesses. Guiding Principle 3
adds that states should periodically review the adequacy of such
measures and update them if necessary. They should also ensure that
related areas of law, for example corporate law and securities
regulation, do not constrain but enable business respect for human
rights. So, a smart mix means exactly what it says: a combination of
voluntary and mandatory, as well as national and international measures.
A number of EU member states and the EU
as a whole have begun to put in place mandatory measures that reinforce
what previously was voluntary guidance to firms on corporate
responsibility. These include reporting requirements regarding modern
slavery, conflict minerals, and non-financial performance more broadly,
as well as human rights and environmental due diligence. Such
initiatives are aligned with the spirit of the UNGPs, and they are
important steps in adding “mandatory measures” into the mix. Still, many
leave a lot to the imagination – of company staff, consulting firms,
and civil society actors among others. More should be done to specify
what meaningful implementation looks like, in order to avoid
contributing to the proliferation of self-defined standards and
storytelling by firms. Also, with limited exceptions currently no direct
consequences follow from non-compliance. Nevertheless, the ascent of
Pillar I is underway.
A second key strategic concept embedded in the UNGPs is “leverage.”
Here are three examples of how leverage can play into the core question
of how most effectively to advance implementation at the EU level.
First, individual member states and the EU as a whole are economic actors: they procure goods and services, provide export credit and investment insurance, issue official loans and grants, and so on. Each agency involved has particular objectives of its own, to be sure. But in all cases, they should consider the actual and potential human rights impacts of beneficiary enterprises with which they engage.
Second, the UNGPs state that the responsibility of enterprises to respect human rights requires that they avoid causing, contributing to, or otherwise being linked to adverse impacts, and to address them when they occur. This extends throughout their value chains. Of course, all firms, including the suppliers of goods and services within global value chains, have the same responsibility to respect. But parent companies and companies at the apex of producer- or buyer-led value chains should also use whatever leverage they have in relation to their subsidiaries, contractors, and other actors in their network of business relationships. They should establish clear policies and operational procedures that embed respecting rights throughout their entire value chain system. Where leverage is limited it may be possible to increase it, for example by providing incentives or collaborating with other actors.
In turn, home, as well as host states of multinational enterprises, have significant roles to play through laws and regulations that enable and support private international ordering of this sort. Global value chains are exceedingly complex. If parent or lead companies fear that they may be held legally liable for any human rights harm anywhere within their value chains, irrespective of the circumstances of their involvement, it would create the perverse incentive to distance themselves from such entities. It is important that regulation gets the balance right.
A third way in which leverage can play into effective implementation at the EU level is by reinforcing positive trends already underway in the business community, but which need strengthening. Perhaps the most important instance today is ESG investing – investment decisions that combine environmental, social, and governance criteria with financial analytics. ESG investing now accounts for $31 trillion of all assets under management worldwide, or one-quarter of the global total. And while it may not be known to many investors themselves, the S in ESG is all about human rights. It seeks to assess how firms conduct themselves in relation to the broad spectrum of internal and external stakeholders – workers, end-users, and communities. It typically includes such categories as health and safety, workplace relations, diversity and social inclusion, human capital development, responsible marketing and R&D, community relations, and company involvement in projects that may affect vulnerable populations in particular.
But here is the problem: it is now
generally agreed that a major impediment to the further rapid growth in
ESG investing is the poor quality of ESG data provided by raters. Common
taxonomies and templates are still in their infancy and evolving
haphazardly even as demand for ESG products is increasing. This poses
problems for investors who seek ESG opportunities and may be paying a
high price for flawed data, as well as for companies striving to improve
their practices that go unrecognized. The problem is especially severe
in the S category – addressing human rights-related issues.
The EU has developed a comprehensive
taxonomy for investment on climate-related standards, indices, and
disclosure. That should have a significant impact for strengthening the E
in ESG. Also issuing official guidance to the S in ESG investing,
making clear its human rights bases, could have a transformative effect
on global capital markets.
In short, a great variety of
opportunities exists for exercising leverage in order to generate
further positive developments in business and human rights.
Allow me briefly to add two thoughts in closing.
The first is that business and human
rights, by definition, is a domain that requires horizontal vision and
cross-functional collaboration – whether within companies, governments,
or the EU. Within the European Commission the task has been largely left
to the External Action Service, with the support of other
directorates-general. That is too narrow a lens to do justice to the
broad array of challenges, and to have the impact that could be
achieved. One of the singular contributions of National Action Plans for
implementing the Guiding Principles is that they have required the
whole of governments, for the first time ever, to consider business and
human rights as a single policy space. The same holds true at the EU
My other concluding thought concerns the
ongoing negotiations on a binding business and human rights treaty in
Geneva. International legalization is both inevitable and desirable to
help level the playing field in a world of global business. In fact, at
the conclusion of my mandate in 2011, I proposed that governments
negotiate a targeted legal instrument addressing business involvement in
gross human rights violations, coupled with the need for greater
cooperation between states to provide remedy. Some parties objected on
the grounds that this did not go far enough, others that it went too
far. It became the only one of my recommendations that did not get
The current treaty process began in
2014. From the outset, I expressed my doubts about attempting to
shoehorn the entire business and human rights domain into a single,
overarching treaty. In my judgment, this is far too complex and too
contested a domain for such an endeavor to produce meaningful results.
Indeed, the risk is that if it were to “succeed” in the sense of being
adopted by some minimum required number of states, it would be by
locking in lower expectations and fewer incentives for innovative
practical approaches than exist today. Nothing I have seen in the five
years of negotiations suggest otherwise.
Having said all that, I do find it
puzzling that the EU has taken no substantive position in these treaty
negotiations. It is puzzling because the EU was an early supporter of
the “smart mix of measures” idea. This leads me once again to thank the
government of Finland for bringing business and human rights to the
forefront of its EU Presidency, with the aim of contributing to a common
agenda for action. I very much hope that Finland’s successors – as well
as the Commission and Parliament – will continue on this path.
Thank you for your attention, and I look forward to our discussions.
Under Pillar 1 of the UN Guiding Principles, all states “must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises”. To do so, states “should consider a smart mix of measures – national and international, mandatory and voluntary – to foster business respect for human rights.”
Yet despite this encouragement to consider them, mandatory measures have not been a central part of the mix considered by states in the initial years of UNGPs implementation, outside of certain reporting requirements. That is now changing, particularly in Europe. A growing number of states are actively considering the use of mandatory due diligence measures to advance business respect for human rights.
In France, the Netherlands, Germany, Finland, the UK, Norway and Switzerland, we see governments and legislatures adopting or exploring mandatory measures as part of a mix of policy tools to incentivize business respect for human rights. In a growing number of cases, these measures go beyond reporting obligations to encompass comprehensive human rights due diligence. Continue reading…
New York, NY.– Shift is proud to be supporting the Finnish Presidency of the Council of the European Union in convening its flagship conference ‘Business and Human Rights: Towards a Common Agenda for Action’, to take place in Brussels on December 2, 2019. This is part of Shift’s broader support to the Ministry for Foreign Affairs on advancing business and human rights as part of the Finnish Presidency.
The Conference will bring together high-level EU Member State representatives, members of key EU institutions, senior representatives from business and civil society to discuss the present and future roles of different stakeholders in accelerating the implementation of the UN Guiding Principles at Member State and EU level.
Key topics will include state financing for doing business abroad, the role of regulatory measures as part of a mix of state measures, and the use of collective leverage and cooperation to enhance human rights outcomes for those most vulnerable to harm, especially human rights defenders.
The full draft program may be found here and will be updated as speakers are confirmed.
Shift looks forward to working with all the key stakeholders involved, in line with our commitment to advocate for the meaningful implementation of the UN Guiding Principles, in order to build a world where business gets done with respect for people’s dignity.
Shift is the leading center of expertise on the UN Guiding Principles on Business and Human Rights. Shift’s global team of experts works across all continents and sectors to challenge assumptions, push boundaries, and redefine corporate practice, in order to build a world where business gets done with respect for people’s dignity. Shift is a non-profit, mission-driven organization, headquartered in New York City. Visit shiftproject.org and follow us at @shiftproject.
About the Finnish Presidency of the Council of the European Union
Together with the European Parliament, the Council is the main decision-making body of the EU. Its presidency rotates among the EU member states every 6 months. Finland holds the Presidency of the Council from July 1 to December 31, 2019, with the motto ‘Sustainable Europe – Sustainable Future’. The Finnish Presidency will be the first to integrate the new priorities of the Strategic Agenda 2019 – 2024 into the Council’s work. Learn more at eu2019.fi
Shift is pleased to be providing expert support to the SER, and the Dutch Ministry of Foreign Affairs, as part of a pioneering process that has brought together companies, governments, unions and civil society, across key business sectors, to try to prevent human rights risks and ensure responsible business conduct in critical global value chains.
“In our work on fostering sustainable supply chain management among Dutch industry, Shift has been extremely helpful in elevating the policy discussion and business practice in the area of business and human rights. The Shift team’s unique combination of strategic policy advice and practical experience with companies and other stakeholders has been invaluable to our work.”
Mariëtte Hamer, President, Social and Economic Council of the Netherlands
In each sector, parties have identified severe risks that they are facing and developed individual commitments and collaborative approaches to address them. With the support of Shift, the SER has developed guidance -contained in its Advisory Report– to help parties ensure that the measures developed are credible, and aligned with international standards.
The expectation is that parties:
Use credible methodologies, aligned with leading international frameworks, to identify sector-wide human rights, environmental, corruption and related risks;
Identify collaborative approaches to building and exercising the leverage of sectors and their stakeholders to address such risks;
Involve relevant stakeholders in credible, dialogue-based multistakeholder processes.
Over the past years, Shift has also supported implementation of a number of specific agreements, most notably the Dutch Banking Sector Agreement. Our support to the parties involved in that agreement has included:
Facilitating a workshop on human rights reporting, which led to the issuance of the first human rights reports by ING and Volksbank (Dutch) and of a second report by ABN AMRO.
Providing expert input and leading the drafting of paper capturing learning from the “enabling remedy” working group, which among other themes, included exploring the concept of a “remedy ecosystem.”
Supporting the “value chain mapping” working group by helping to shape its methodology and facilitating the process for the cocoa value chain mapping and part of the process for the palm oil value chain mapping.
In 2017, the Dutch Government recommitted itself to the process and is scheduled to undertake an evaluation in late 2019. The coalition agreement includes a provision to consider binding measures in case insufficient progress is deemed to be made. Shift looks forward to being a part of the evaluation process and discussions about what more is needed.
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