Institutionalizing Global Principles of Business and Human Rights From Institutional Misalignments to SociallySustainable Governance: The Guiding Principles forthe Implementation of the United Nation’s “Protect,Respect and Remedy” and the Construction of Inter- Systemic Global Governance. Available at SSRN: http://ssrn.com/abstract=1922953 Larry Catá Backer W. Richard and Mary Eshelman Faculty Scholar and Professor of Law Professor of International Affairs email@example.com
Traditional System -- States had a monopoly of political authority exercised through law. -- Economic entities exercised their authority through contract and the web of relationships with their stakeholders-- Social collectives controlled the development of social norms that in turn impacted political choices by the citizens of states and the consumers of and investors in economic collectives
Contemporary economic globalization has destabilized this traditional system.-- Corporations are no longer completely controlled by thestates that chartered them or within complex enterprises, even by those in which they operate. -- Social collectives now operate to change the political cultures that affect the public policy of state and the economic behavior of companies.
Result: Misalignment.These misalignments have the potential to detrimentally affect the welfare of individuals and groups. --thus connection between misalignment and human rights impacts
ISSUE: how to realign governance. Alternatives— i. extraterritoriality ii. enterprise law principles iii. Disclosure regimes iv. Corporate social responsibility v. active investor rulesvi. Attack shareholder maximization model vii. New model of corporate law: benefit corporation. viii. international soft and hard law frameworks
The United Nations’“protect, respect, and remedy” framework. Represents an important development in construction of international framework reduced to a set of Guiding Principles. -- the state duty to protect -- the corporate responsibility to respect, --the obligation to provide access to remedies.This paper critically analyzes the Guiding Principles and its three key parts
OBJECTIVES: --focus on the development of the GuidingPrinciples from conception to articulation.--Examine the Guiding Principles in detail. i. the report introducing the Guiding Principles,ii. section by section analysis of the Guiding Principles themselves, iii. overall assessment.
Normative Element: --From law to governance (changing role for state).--polycentricity as a framework for regulation; governance role for non state actors -- framework seeks inter systemic harmonization that is socially sustainable, and thus stable.--displaces both law as the sole vehicle for governance and the State as the only source of governance rules.
The Guiding Principles٠General Principles -- Describes hierarchy of business and human rights governance ٠States retain primary role in protecting human rights ٠ Business as a specialized organ of society and the need to match rights and remediesInterpretive constraints: (1) document read as a whole in light ofpurposes; (2) not intended to create new international law orlimit state obligations under international law ; (3) non-discrimination in application.
I. The State Duty to Protect Human Rights Foundational Principles The basic standard: States must protect human rights. The mechanism: take appropriate steps to investigate, prevent, punish and redress. The scope: extends to all businesses domiciled in their territory. GP: 1. States must protect against human rights abuse within their territory and/orjurisdiction by third parties, including business enterprises. This requires takingappropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication. 2. States should set out clearly the expectation that all business enterprises domiciledin their territory and/or jurisdiction respect human rights throughout their operations.
I. The State Duty to Protect Human RightsFostering Business Respect for Human Rights Application of state duty to the regulation of business --set out human rights expectations (get the law right) --take steps to implement via voluntary and mandatory rules (law and policy approaches)GP:3. In meeting their duty to protect, States should:(a) Enforce laws that are aimed at, or have the effect of, requiring businessenterprises to respect human rights, and periodically to assess the adequacy of suchlaws and address any gaps; (b) Ensure that other laws and policies governing thecreation and ongoing operation of business enterprises, such as corporate law, do notconstrain but enable business respect for human rights; (c) Provide effective guidance tobusiness enterprises on how to respect human rights throughout their operations; (d)Encourage, and where appropriate require, business enterprises to communicate howthey address their human rights impacts.
I. The State Duty to Protect Human Rights The State-Business Nexus Detail Detail Detail --State Owned Enterprises/State Financing Programs --Outsourced Services --Business PartnersGP:4. States should take additional steps to protect against human rights abuses by businessenterprises that are owned or controlled by the State, or that receive substantialsupport and services from State agencies such as export credit agencies and officialinvestment insurance or guarantee agencies, including, where appropriate, byrequiring human rights due diligence.5. States should exercise adequate oversight in order to meet their international humanrights obligations when they contract with, or legislate for, business enterprises toprovide services that may impact upon the enjoyment of human rights.6. States should promote respect for human rights by business enterprises with whichthey conduct commercial transactions.
I. The State Duty to Protect Human RightsSupporting Business Respect for Human Rights in Conflict-Affected Areas Applying Extraterritoriality to Weak States and Conflict Zones -- The Methodology: Engagement, assistance, public support, law and policyGP:7. Because the risk of gross human rights abuses is heightened in conflict-affected areas,States should help ensure that business enterprises operating in those contexts are notinvolved with such abuses, including by:(a) Engaging at the earliest stage possible with business enterprises to helpthem identify, prevent and mitigate the human rights-related risks of their activitiesand business relationships; (b) Providing adequate assistance to business enterprises toassess and address the heightened risks of abuses, paying special attention to both gender-based and sexual violence; (c) Denying access to public support and services for a businessenterprise that is involved with gross human rights abuses and refuses to cooperate inaddressing the situation; (d) Ensuring that their current policies, legislation, regulationsand enforcement measures are effective in addressing the risk of business involvement ingross human rights abuses.
I. The State Duty to Protect Human RightsSupporting Business Respect for Human Rights in Conflict-Affected Areas Applying Extraterritoriality to Weak States and Conflict Zones -- The Standard: Responding to higher risk of human rights violationsGP CommentaryIn conflict-affected areas, the “host” State may be unable to protect human rights adequately due to a lack of effective control.Where transnational corporations are involved, their “home” States therefore have roles to play in assisting both thosecorporations and host States to ensure that businesses are not involved with human rights abuse, while neighboring Statescan provide important additional support. To achieve greater policy coherence and assist business enterprises adequately insuch situations, home States should foster closer cooperation among their development assistance agencies, foreign and tradeministries, and export finance institutions in their capitals and within their embassies, as well as between these agencies andhost Government actors; develop early-warning indicators to alert Government agencies and business enterprises toproblems; and attach appropriate consequences to any failure by enterprises to cooperate in these contexts, including bydenying or withdrawing existing public support or services, or where that is not possible, denying their future provision.
I. The State Duty to Protect Human Rights Ensuring Policy Coherence -- Horizontal and vertical coherence within states -- Between the State and the International sphereGP:8. States should ensure that governmental departments, agencies and other State-basedinstitutions that shape business practices are aware of and observe the State’s humanrights obligations when fulfilling their respective mandates, including by providingthem with relevant information, training and support.
I. The State Duty to Protect Human Rights Bilateral Relations -- Human Rights Incorporation: --BITS --FTA --Investment ProjectsGP9. States should maintain adequate domestic policy space to meet their human rightsobligations when pursuing business-related policy objectives with other States orbusiness enterprises, for instance through investment treaties or contracts.
I. The State Duty to Protect Human RightsMultilateral Institutions Incorporating the Standard into International Law (from soft to hard law) --Institutions --Law Making GP: -- Incorporation 10. States, when acting as members of multilateral institutions that deal with business related issues, should: (a) Seek to ensure that those institutions neither restrain the ability of their member States to meet their duty to protect nor hinder business enterprises from respecting human rights; (b) Encourage those institutions, within their respective mandates and capacities, to promote business respect for human rights and, where requested, to help States meet their duty to protect against human rights abuse by business enterprises, including through technical assistance, capacity-building and awareness-raising; (c) Draw on these Guiding Principles to promote shared understanding and advance international cooperation in the management of business and human rights challenges.
II. The Corporate Responsibility to Respect Human Rights
II. The Corporate Responsibility to Respect Human RightsFoundational Principles (Principle 11) Standard: Respect Human Rights Definition: Avoid infringement and mitigateGP:11. Business enterprises should respect human rights. This means that they should avoidinfringing on the human rights of others and should address adverse human rightsimpacts with which they are involved.
II. The Corporate Responsibility to Respect Human RightsFoundational Principles Methodology (Principle 12): -- Source: International Bill of Rights and ILO Core Conventions built in tension with the limited scope of the state duty to protect OR Suggest governance polycentricityGP:12. The responsibility of business enterprises to respect human rights refers tointernationally recognized human rights – understood, at a minimum, as thoseexpressed in the International Bill of Human Rights and the principles concerningfundamental rights set out in the International Labour Organization’s Declaration onFundamental Principles and Rights at Work.
II. The Corporate Responsibility to Respect Human Rights Foundational Principles Methodology (Principles 13 & 14):-- Basic Approach: Avoid causing or contributing; seek to prevent or mitigate -- External Scope: Business partners, value chain, all operations -- Internal Scope: all enterprises in all forms GP: 13. The responsibility to respect human rights requires that business enterprises: (a) Avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur; (b) Seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts. 14. The responsibility of business enterprises to respect human rights applies to all enterprises regardless of their size, sector, operational context, ownership and structure. Nevertheless, the scale and complexity of the means through which enterprises meet that responsibility may vary according to these factors and with the severity of the enterprise’s adverse human rights impacts.
II. The Corporate Responsibility to Respect Human RightsFoundational Principles From Standard and Methodology to Application -- Policy Commitment (GP 15) Policy Statement Human Rights Due Diligence Program Remediation ProcessGP:15. In order to meet their responsibility to respect human rights, business enterprisesshould have in place policies and processes appropriate to their size andcircumstances, including:(a) A policy commitment to meet their responsibility to respect human Rights; (b) Ahuman rights due-diligence process to identify, prevent, mitigate and account for how theyaddress their impacts on human rights; (c) Processes to enable the remediation of anyadverse human rights impacts they cause or to which they contribute.
II. The Corporate Responsibility to Respect Human RightsPolicy Commitment The Policy Statement (GP 16) -- Form & Content Senior level buy-in External Expertise Universal Imbedding Publically AvailableGP:16. As the basis for embedding their responsibility to respect human rights, businessenterprises should express their commitment to meet this responsibility through astatement of policy that: (a) Is approved at the most senior level of the business enterprise;(b) Is informed by relevant internal and/or external expertise; (c) Stipulates theenterprise’s human rights expectations of personnel, business partners and other partiesdirectly linked to its operations, products or services; (d) Is publicly available andcommunicated nternally and externally to all personnel, business partners and otherrelevant parties; (e) Is reflected in operational policies and procedures necessary to embedit throughout the business enterprise.
II. The Corporate Responsibility to Respect Human RightsHuman Rights Due Diligence Process (GP 17-21): The Human Rights Due Diligence project as instrument of policy Parameters: Coverage, Situational Complexity, Ongoing NatureGP:17. In order to identify, prevent, mitigate and account for how they address their adversehuman rights impacts, business enterprises should carry out human rights due diligence. Theprocess should include assessing actual and potential human rights impacts, integrating andacting upon the findings, tracking responses, and communicating how impacts areaddressed. Human rights due diligence: (a) Should cover adverse human rights impacts thatthe business enterprise may cause or contribute to through its own activities, or which maybe directly linked to its operations, products or services by its business relationships; (b) Willvary in complexity with the size of the business enterprise, the risk of severe human rightsimpacts, and the nature and context of its operations; (c) Should be ongoing, recognizing thatthe human rights risks may change over time as the business enterprise’s operations andoperating context evolve.
II. The Corporate Responsibility to Respect Human RightsHuman Rights Due Diligence (continued) Outputs: Finding actual and potential adverse human rights impacts -- Identification -- AssessmentGP:18. In order to gauge human rights risks, business enterprises should identify and assessany actual or potential adverse human rights impacts with which they may be involvedeither through their own activities or as a result of their business relationships. Thisprocess should: (a) Draw on internal and/or independent external human rightsexpertise; (b) Involve meaningful consultation with potentially affected groups andother relevant stakeholders, as appropriate to the size of the business enterprise and thenature and context of the operation.
II. The Corporate Responsibility to Respect Human RightsHuman Rights Due Diligence (continued) From Outputs to Action: -- Prevention -- MitigationGP:19. In order to prevent and mitigate adverse human rights impacts, businessenterprises should integrate the findings from their impact assessments acrossrelevant internal functions and processes, and take appropriate action.(d)Effective integration requires that: (i) Responsibility for addressing such impacts isassigned to the appropriate level and function within the business enterprise; (ii)Internal decision-making, budget allocations and oversight processes enable effectiveresponses to such impacts.(e)Appropriate action will vary according to: (i) Whether the business enterprisecauses or contributes to an adverse impact, or whether it is involved solely because theimpact is directly linked to its operations, products or services by a businessrelationship; (ii) The extent of its leverage in addressing the adverse impact.
II. The Corporate Responsibility to Respect Human RightsHuman Rights Due Diligence (continued) Disclosure Obligations (GP 20 & 21): Verification Monitoring TransparencyGP: Reporting20. In order to verify whether adverse human rights impacts are being addressed, business enterprisesshould track the effectiveness of their response. Tracking should: (a) Be based on appropriate qualitativeand quantitative indicators; (b) Draw on feedback from both internal and external sources, includingaffected stakeholders.21. In order to account for how they address their human rights impacts, business enterprises should beprepared to communicate this externally, particularly when concerns are raised by or on behalf of affectedstakeholders. Business enterprises whose operations or operating contexts pose risks of severe humanrights impacts should report formally on how they address them. In all instances, communications should:(a) Be of a form and frequency that reflect an enterprise’s human rights impacts and that are accessible to itsintended audiences; (b) Provide information that is sufficient to evaluate the adequacy of an enterprise’sresponse to the particular human rights impact involved; (c) In turn not pose risks to affected stakeholders,personnel or to legitimate requirements of commercial confidentiality.
II. The Corporate Responsibility to Respect Human RightsRemediation Basic Standard (GP 22) -- Fundamental Connection: Impact/Remediation -- Link to GP31GP:22. Where business enterprises identify that they have caused or contributed to adverseimpacts, they should provide for or cooperate in their remediation through legitimateprocesses.
II. The Corporate Responsibility to Respect Human RightsIssues of Context Operationalization Standards (GP 23) -- Implementation of context specific action principle -- Corporate substitution for State in weak governance and conflict zonesGP:23. In all contexts, business enterprises should: (a) Comply with all applicable laws andrespect internationally recognized human rights, wherever they operate; (b) Seek ways tohonour the principles of internationally recognized human rights when faced withconflicting requirements; (c) Treat the risk of causing or contributing to gross human rightsabuses as a legal compliance issue wherever they operate.
II. The Corporate Responsibility to Respect Human RightsIssues of Context Prioritization Rules (GP 24) -- Prevention first -- Mitigation second -- Factors: Severity, irremediable harmGP:24. Where it is necessary to prioritize actions to address actual and potential adversehuman rights impacts, business enterprises should first seek to prevent and mitigatethose that are most severe or where delayed response would make them irremediable.
III. Access to RemedyFoundational Principle (GP 25) Remedy as a subset of the State duty to protect -- Territorial principle --Rule of law principle -- Strong governance principleGP:25. As part of their duty to protect against business-related human rights abuse, Statesmust take appropriate steps to ensure, through judicial, administrative, legislative orother appropriate means, that when such abuses occur within their territory and/orjurisdiction those affected have access to effective remedy.
III. Access to RemedyState-Based Judicial Mechanisms Judicial Remedies (GP 26) -- Principle of supremacy of International Law in Domestic legal order -- Tension with Constitutional constraints of many states v. US example Avena caseGP:26. States should take appropriate steps to ensure the effectiveness of domestic judicialmechanisms when addressing business-related human rights abuses, includingconsidering ways to reduce legal, practical and other relevant barriers that could leadto a denial of access to remedy.
III. Access to RemedyState-Based Non-Judicial Grievance Mechanisms The State and non-judicial remediation mechanisms (GP 27) -- Standard: Effective and appropriate mechanism -- Supplement rather than substituteGP:27. States should provide effective and appropriate non-judicial grievance mechanisms,alongside judicial mechanisms, as part of a comprehensive State-based system for theremedy of business-related human rights abuse.
III. Access to RemedyNon-State-Based Grievance Mechanisms (GP 28-29)State involvement in business based remedial mechanisms Operational level grievance mechanism as supplement -- Subordination of Corporate Responsibility to State duty -- Supplemental not substitute for either judicial or non-judicial state based remedies; focus on avoidance of harmGP:28. States should consider ways to facilitate access to effective non-State-based grievancemechanisms dealing with business-related human rights harms.29. To make it possible for grievances to be addressed early and remediated directly,business enterprises should establish or participate in effective operational-levelgrievance mechanisms for individuals and communities who may be adverselyimpacted.
III. Access to RemedyNon-State-Based Grievance Mechanisms (GP 30)State involvement in business based remedial mechanisms Collective private grievance mechanisms encouraged -- Collective private remedies treated like company-based mechanismGP:30. Industry, multi-stakeholder and other collaborative initiatives that are based onrespect for human rights-related standards should ensure that effective grievancemechanisms are available.
III. Access to RemedyEffectiveness Criteria for Non-Judicial Grievance Mechanisms (GP 31 a-g) Operationalization Mechanics -- Mandatory standards for authority -- Legitimate -- Accessible -- Predictable -- Equitable -- Rights Compatible (international standards) -- Compatible -- Transparent For text see next slide
Cont.GP:31. In order to ensure their effectiveness, non-judicial grievance mechanisms, both State based and non-State-based, should be: (a) Legitimate: enabling trust from the stakeholder groups for whose use they are intended, and being accountable for the fair conduct of grievance processes; (b) Accessible: being known to all stakeholder groups for whose use they are intended, and providing adequate assistance for those who may face particularbarriers to access; (c) Predictable: providing a clear and known procedure with an indicative timeframe for each stage, and clarity on the types of process and outcome available and means of monitoring implementation; (d) Equitable: seeking to ensure that aggrieved parties have reasonable access to sources of information, advice and expertise necessary to engage in a grievance process on fair, informed and respectful terms; (e) Transparent: keeping parties to a grievance informed about its progress, and providing sufficient information about the mechanism’s performance to build confidence in its effectiveness and meet any public interest at stake; (f) Rights-compatible: ensuring that outcomes and remedies accord with internationally recognized human rights; (g) A source of continuous learning: drawing on relevant measures to identify lessons for improving the mechanism and preventing future grievances and harms;
III. Access to RemedyEffectiveness Criteria for Non-Judicial Grievance Mechanisms Operationalization Mechanics (GP 31 h) -- Optional standards for authority --Dialogue, Engagement, Empowerment GP: Operational-level mechanisms should also be: (h) Based on engagement and dialogue: consulting the stakeholder groups for whose use they are intended on their design and performance, and focusing on dialogue as the means to address and resolve grievances.
Summing Up: Will it work?-- Globalization has made it possible for large multinational corporations toavoid national regulation. There is no global substitute for national regulation.--Multiple sources of governance; goal--can they work together for a commonobjective?-- Human rights has become a key feature of the social political and legal debateabout the responsibility of corporations for their actions and operations.-- Can the United Nations successfully step into the void?-- We have examined the United Nations “Protect, Respect, and Remedy”Framework as a basis for creating a regulatory environment for issues ofbusiness and human rights-- The Framework creates a new form of governing corporations based on aninter-relationship between law enforced by states, business norms enforced bymarkets and international norms that influence both.
Summing Up: Will it work? (Cont.)Articled as a set of dense principles, and whatever its shortcomings, it hasopened a number of significant pathways to development of law andgovernance frameworks. It accepts that there are formal systems ofgovernance beyond those of the state. It begins to make a pragmatic casefor the interlacing of international law and domestic legal orders, itrecognizes the governance aspects of social norm systems and seeks amethod of institutionalizing that role, it broadens the scope of remediationin a systematic way and attempts to harmonize the principles that serve asmarkets of legitimacy and accountability for each. The Guiding Principlesmanage this within a overall framework that still grounds its operation inand through states and which continues to treat corporations and otheractors as dependent on and subject to an exclusive (at least in theaggregate) control of states through law in ways that even states now findtroublesome.
Definitions (Abandoned)For the purposes of these guiding principles: The term business enterprise refers to all companies, both transnational and others,regardless of sector or country of domicile or operation, of any size, ownership form or structure. The term corporate is used in the non-technical sense, interchangeably with ‘businessenterprises’, regardless of their form. Internationally recognized human rights refers at a minimum to the principlescontained in the International Bill of Human Rights (consisting of the Universal Declaration ofHuman rights and the main instruments through which it has been codified: the InternationalCovenant on Civil and Political Rights and the International Covenant on Economic, Social andCultural rights), coupled with the eight ILO core conventions that form the basis of the Declarationon Fundamental Principles and Rights at Work. Human rights risks refer to potential adverse impacts on human rights through abusiness enterprise’s activities or relationships. Identifying human rights risks comprises anassessment both of impacts and – where they have not occurred – of their likelihood. A grievance is understood as a perceived injustice evoking an individual’s or a group’ssense of entitlement, which may be based on law, explicit or implicit promises, customary practice,or general notions of fairness of aggrieved communities. The term grievance mechanism is used to indicate any routinized, state-based or non-state-based, judicial or non-judicial process through which grievances related to business abuse of human rights can be raised and remedy can be sought.