Allens

International Business Obligations

Focus: UN Guiding Principles for Business and Human Rights

6 April 2011

In brief: Recently, the United Nations Special Representative for business and human rights released the final text of the Guiding Principles for Business and Human Rights. Senior Associate Rachel Nicolson and Lawyer Jess O'Brien look at the Principles and their implications for business.

How does it affect you?

  • The Guiding Principles for Business and Human Rights (the Principles) elaborate on the United Nations' watershed 'Protect, Respect and Remedy' Framework (the Framework) released in April 2008. As outlined in our Focus, the Framework provided the first authoritative statement on the relationship between business and human rights, and provided much needed guidance to States and businesses on their obligations in this area.
  • The Principles outline a number of ways in which businesses can manage legal and related 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.

Background

In 2005, the United Nations appointed Professor John Ruggie to the position of United Nations Special Representative on Business and Human Rights. His mandate was 'on the issue of human rights and transnational corporations and other business enterprises' and involved identifying and clarifying existing standards and practices relating to this issue. In 2008, following three years of research and consultation, Professor Ruggie released the Framework, which aimed to map States' and businesses' international obligations in relation to business and human rights. The Framework was unanimously endorsed by the United Nations Human Rights Council in June 2008. The Framework contains three key pillars:

  • the State duty to protect human rights;
  • the corporate responsibility to respect human rights; and
  • access by victims of human rights abuses by businesses to effective remedies.

Professor Ruggie's mandate was extended until June 2011 so that he could 'operationalise' the Framework. The Principles were created to fulfil this aim by providing guidance to States and business on implementing the Framework and complying with their human rights obligations.

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The State duty to protect human rights

The Principles note that, as part of their obligation to protect human rights, States have an obligation to protect against human rights abuses committed by businesses within their territory/jurisdiction. The Principles also indicate that States should set out clearly the expectation that all businesses domiciled in their territory/jurisdiction respect human rights throughout their operations. The Principles suggest that the regulation of the extraterritorial activities of businesses domiciled in their territory and/or jurisdiction is a grey area, but stress that there are strong policy reasons for States to set out clearly the expectation that domiciled businesses respect human rights abroad. The Principles give a number of examples of how States have approached this, including both domestic measures with extraterritorial implications and direct extraterritorial legislation and enforcement.

The Principles outline a number of steps States can take to fulfil their obligation to protect human rights. These steps include:

  • enforcing laws that require businesses to respect human rights, periodically assessing the adequacy of such laws, and addressing any gaps;
  • ensuring that other laws and policies governing businesses do not constrain business respect for human rights;
  • providing effective guidance to businesses on how to respect human rights throughout their operations; and
  • encouraging, and where appropriate requiring, businesses to communicate how they are addressing their human rights impact.

The Principles note that States should take additional steps to protect against human rights abuses by businesses that are owned or controlled by the State or that receive substantial support from State agencies. States should also ensure that businesses with which they contract respect human rights. The Principles note that the risk of gross human rights abuses is particularly heightened in conflict-affected areas and outline ways of minimising the risk of abuse in such situations. Finally, the Principles emphasise the need to ensure policy coherence on human rights at three levels, namely within governmental departments and agencies, when entering bilateral treaties or contracts with other States or businesses, and when acting as members of multilateral institutions dealing with business-related issues.

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The corporate responsibility to respect human rights

The Principles state that 'the responsibility to respect human rights is a global standard of expected conduct for all business enterprises wherever they operate'. Businesses should avoid causing or contributing to adverse human rights impacts through their own activities. They should also 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. These obligations apply to all businesses, regardless of size, sector, structure, etc.

The Principles state that, to fulfil these obligations, businesses should have in place certain policies and processes. First, businesses should have a statement of policy in which they commit to meeting their responsibility to respect human rights. This statement should be approved by the most senior level of the business, be informed by relevant expertise, stipulate the business's expectations of staff and business partners, be publicly available, and be reflected in operational policies and procedures.

Secondly, businesses should put in place a human rights due diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights. This process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed. Due diligence should be ongoing, as human rights risks may change over time as the businesses' operations evolve. The process should draw on human rights expertise and involve consultation with potentially affected groups and relevant stakeholders. The findings of due diligence processes should be followed up with appropriate action. The effectiveness of these responses should be monitored and businesses should report on their human rights impacts and how they are addressing any risk areas.

Finally, businesses should put in place legitimate processes to remedy any adverse human rights impacts caused or contributed to by the business.

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Access to remedies

The Principles outline that, as part of their duty to protect against business-related human rights abuses, States must take appropriate steps to ensure that when such abuses occur, those affected have access to an effective remedy. This can occur through:

  • State-based judicial mechanisms;
  • State-based non-judicial mechanisms, such as administrative or legislative mechanisms based on mediation or adjudication; and
  • non-State-based grievance mechanisms, such as mechanisms administered by businesses, industry associations, multi-stakeholder groups or international human rights bodies.

The Principles note the importance of businesses establishing or participating in effective operational-level grievance mechanisms so that grievances can be addressed as early as possible and remedied directly. These operational-level mechanisms should be based on engagement and dialogue.

The Principles state that, for non-judicial grievance mechanisms, both State-based and non-State based, to be effective, they must be legitimate, accessible, predictable, equitable, transparent, rights-compatible, and a source of continuous learning.

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Conclusion

The Principles will be presented to the United Nations Human Rights Council in June 2011. If endorsed by the Council, the Principles will provide an authoritative focal point for the international community on the standard of conduct expected of States and businesses.

Businesses can draw significant assistance from the Principles on appropriate internal policy and procedure changes to minimise the risk of human rights breaches.

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