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International Business Obligations

Focus: UN endorses Guiding Principles for Business and Human Rights

29 June 2011

In brief: The United Nations Human Rights Council has now endorsed the Guiding Principles for Business and Human Rights, entrenching them as an authoritative standard for the conduct expected of both States and business. Partner Annette Hughes , Senior Associate Peter Haig and Lawyer Jess O'Brien report.

How does it affect you?

  • We have previously advised that the Guiding Principles for Business and Human Rights (the Principles) outline how businesses can manage legal and other risks associated with meeting human rights obligations in Australia and overseas. These strategies include preparing a company policy commitment to respecting human rights, carrying out human rights due diligence, and implementing operational-level grievance mechanisms to address human rights breaches or potential breaches.
  • As well as providing guidance on how corporations can meet their 'responsibility to respect human rights', the principles are likely to inform the domestic legal and policy standards applicable to business in the future.
  • Endorsement by the United Nations Human Rights Council (UNHRC) confirms the important role of the principles for States and business worldwide.

Background

Our earlier Focus articles (see International law – a new force shaping corporate conduct and UN Guiding Principles for Business and Human Rights) explain the background to, and content of, the Principles. Briefly, in 2005 the United Nations appointed Professor John Ruggie to the position of United Nations Special Representative on Business and Human Rights. He created the watershed 'Protect, Respect and Remedy' Framework (the Framework), which was endorsed by the UNHRC in June 2008. Professor Ruggie was then asked to 'operationalise' the Framework by giving guidance to States and business on complying with their human rights obligations. The Principles were developed in response to this request.

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Professor Ruggie's presentation to the UNHRC

On 30 May 2011, Professor Ruggie presented the Principles to the UNHRC. He noted that, in presenting the Principles, his mandate was concluded. He then made three recommendations to the UNHRC in relation to its future work on business and human rights.

First, he said that 'capacity building should be a central component of any follow-up activity' by the UNHRC. He pointed out that currently there is no dedicated United Nations mechanism for providing systemic advice and on-the-ground assistance on business and human rights, and said that such a mechanism is needed.

Second, he stated that 'any follow-up activity should retain a meaningful multi-stakeholder dimension'.

Finally, he noted that some groups were advocating that a binding international legal instrument should form part of the next phase. He said that although the law must continue to evolve, he feared that 'any attempt to squeeze all elements of business and human rights into an all-encompassing international legal instrument would quickly take us back to the contentious pre-2005 days, and thus be counterproductive'.

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The future of the mandate

The UNHRC endorsed the Principles on 16 June 2011. To continue the important work of Professor Ruggie beyond the conclusion of his mandate, the UNHRC established a working group on the issue of human rights and transnational corporations and other business enterprises. The working group will consist of five experts from different geographical regions, who will be selected at the UNHRC's next session. The working group will initially operate for a period of three years.

The UNHRC also resolved to establish a forum on business and human rights under the guidance of the working group. The purpose of the forum is 'to discuss trends and challenges in the implementation of the Principles and promote dialogue and cooperation on issues linked to business and human rights, including challenges faced in particular sectors, operational environments or in relation to specific rights or groups, as well as identifying good practices'.

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Conclusion

With the endorsement of the UNHRC, the Principles are now an authoritative document for both States and business. They give practical guidance on how businesses can minimise their human rights-related risks. While the Principles themselves are not legally binding, it is likely that they will have a significant influence on the domestic legal and policy standards that will apply to business in the future, as laws are amended or enacted in line with the Principles. Further, it is envisaged that the Principles will become the new standard for 'best practice' for business on human rights internationally and the touchstone against which businesses will evaluate their culture and response to human rights issues.

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