This panel was moderated by our Vice President, Rachel Davis. The panelists were:
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…
“The UNGPs always envisaged that states would adopt a smart mix of measures – voluntary and mandatory – to ensure that businesses respect human rights. We’ve heard the phrase a lot over the last eight years, but it’s mostly been used to describe voluntary measures and states have generally been less willing to explore the mandatory part of the picture. That is now starting to change. As the company, government and civil society voices highlighted here show, there is a growing consensus that we need to get better at talking about what mandatory measures could look like. At Shift, we have made it a priority to support this conversation.”
Rachel Davis – Vice President of Shift
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 keynote speaker will be Professor John Ruggie, Chair of Shift and author of the UN Guiding Principles on Business and Human Rights. The event will culminate in the release of a conference outcome document, an Agenda for Action, with the objective to strengthen the EU’s actions on business and human rights.
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.
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
Seven agreements have been signed as part of this process: garment and textile | banking | gold | natural stone (pilot) | food products | insurance | pension funds |
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.
The process also seeks to address environmental impacts, corruption and taxation practices and other negative impacts covered by the OECD Guidelines for Multinational Enterprises.
“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
This work is being undertaken in close collaboration with the SER – the advisory and consultative body of employers’ representatives, union representatives and independent experts that has been fostering sustainable supply chain management among Dutch industry since 2008. | See our explanatory note on prioritization of human rights risks prepared for the SER
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:
Shift has played a key role in building the capacity of all parties to play their envisioned roles as leaders, participants and conveners of a credible process aiming to assess and address sector-wide risks. This support has included workshops for a number of sector associations, together with expert stakeholders, held in The Hague and hosted by the SER. | Learn more about how Shift facilitates multistakeholder dialogue on business and human rights
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:
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.
To learn more about the Sector Agreements, click here.
There is a growing number of national and international debates around mandatory measures to ensure business respect for human rights, and specifically a) a binding international instrument on business and human rights and b) national legislation on mandatory human rights due diligence. In these debates, the UN Guiding Principles’ expectation of a “smart mix” of implementation measures is often cited. As a contribution to these discussions, Shift has developed the following statement on the role of mandatory measures in a “smart mix”.
Under UN Guiding Principle 1, all states “must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises”. This “requires taking appropriate steps to prevent, investigate, punish and redress human rights abuse through effective policies, legislation, regulations and adjudication”.
This should be understood as a proactive duty. States should actively assess the effectiveness of what is currently in place, understand what gaps there are, and identify ways to address them. Yet most “National Action Plans” on the UNGPs to date reflect a more passive approach; they are a catalogue of existing measures rather than robust assessments of what more is needed.
To fulfill their duty to protect, states will need to use a range of approaches. The commentary to UN Guiding Principle 3 elaborates on this when it says that states “should consider a smart mix of measures – national and international, mandatory and voluntary – to foster business respect for human rights.” States should go beyond enforcing existing laws to “periodically assess the adequacy of such laws and address any gaps” in light of evolving circumstances.
A truly “smart mix” means looking at all four aspects (national, international, mandatory and voluntary), not just the one or two that are most convenient or already in place. It follows, therefore, that the state duty to protect necessarily involves legislative and regulatory measures at the national level, and the supportive infrastructure (such as enforcement, incentives and guidance) needed to make them meaningful in practice. Without these, the UNGPs will never fulfill their true potential.
The UNGPs also clearly contemplate mandatory international measures as a natural part of this “smart mix”. Shift follows with interest the current discussion of a new treaty in this area.
While the UNGPs do not demand that states adopt legislation requiring companies to carry out mandatory human rights due diligence (HRDD), clearly such legislation is entirely in line with the UNGPs.
Some elements of HRDD are already embedded in national laws, such as in health and safety regulations, environmental legislation, privacy laws or in some corporate reporting regimes. However, there are often strong reasons for states to also consider more comprehensive mandatory HRDD legislation.
In Shift’s experience, practical reasons to consider mandatory human rights due diligence can include:
To be effective, such legislation should take account of critical aspects of the responsibility to respect. These include that:
As a senior legal advisor to former UN Special Representative John Ruggie during his mandate, Shift’s Rachel Davis played a key role in the drafting process of the UN Guiding Principles on Business and Human Rights. Seven years into the implementation of the UNGPs, she reflects on the relevance of mandatory measures in the State Duty to Protect and the growing debate around comprehensive mandatory human rights due diligence legislation.
For more, see Shift’s full statement: Fulfilling the State Duty to Protect: A Statement on the Role of Mandatory Measures in a “Smart Mix”
Read our full statement: Fulfilling the State Duty to Protect: A statement on the role of mandatory measures in a “smart mix” when implementing the UNGPs
This briefing paper was commissioned by the United Nations University, as part of the Liechtenstein Initiative for a Financial Sector Commission’s efforts to push beyond the boundaries of compliance towards creative financial sector action to prevent and address modern slavery and human trafficking.
Senior Advisor David Kovick and Managing Director, Rachel Davis provide observations and specific examples of what implementation of the UNGPs and related efforts by financial institutions looks like in practice today, including leading approaches, recurring challenges and immediate opportunities.
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.
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:
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:
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.
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 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.
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.
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.
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.
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.
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.
In closing, we appreciate the opportunity to make this submission and would be pleased to provide any further information that may be of use.
This series took place the week of August 8, 2016 as part of the New Zealand Human Rights Commission inaugural Business and Human Rights Forum.
In collaboration with the New Zealand Human Rights Commission and the New Zealand Superannuation Fund, Shift is pleased to have delivered an education and awareness series about the Guiding Principles for government representatives, parliamentarians, investors, directors, CEOs, company practitioners and civil society representatives in New Zealand. The series took place in August 2016.
Topics that were addressed during the weeklong series in Wellington and Auckland include global uptake of the Guiding Principles, various governments’ actions on business and human rights including in the areas of procurement and disclosure, sharing of leading practices by investors in assessing human rights risks, the role of board directors in overseeing their company’s management of human rights, and exploration of specific business and human rights risks in the New Zealand context. The Australian Human Rights Commission also participated in the program as part of their collaboration with the Commission of New Zealand.
