Foreign Affairs CommitteeWritten evidence from the Catholic Agency for Overseas Development (CAFOD)

Summary

The UK Government’s focus on business and human rights is timely.

The value of the UN Framework and the Guiding Principles will be the extent to which they change the behaviour of states and companies.

How the UK implements the Guiding Principles will influence the response of other states.

The Government risks making it almost impossible for victims of corporate abuses abroad to access justice in the UK.

Recommendations for the Cross-Government Strategy on Business and Human Rights

Focus on preventing adverse impacts by companies by requiring human rights due diligence as set out in the Guiding Principles.

Consider the rights-holders as well as governments and companies.

Include concrete measures to make policy coherence a reality.

The UK should stick to the “smart mix” of policy, guidance and appropriate regulation set out in the Guiding Principles, not water it down.

Evaluation and monitoring need to be built into the strategy.

1. CAFOD welcomes this opportunity to submit evidence to the Foreign Affairs Committee’s inquiry into the Foreign and Commonwealth Office’s human rights work in 2011. As the official development and humanitarian agency of the Catholic Bishops Conference of England and Wales, we work with over 500 partners in more than 40 countries across the world to tackle injustice and bring hope to poor communities. CAFOD works with people of all faiths and none to reduce poverty and bring about a safer, more sustainable and more peaceful world.

2. From 2005 to June 2011 CAFOD and the CIDSE family of Catholic development agencies participated in the UN level process led by then Special Representative Professor John Ruggie which resulted in the Protect, Respect, Remedy Framework and the Guiding Principles on Business and Human rights.1

3. This submission will therefore focus on the UK’s cross-Government strategy on business and human rights, expected to be published later in 2012, and how it should define the relationship between the FCO’s human rights work and the promotion of UK economic and commercial interests in UK foreign policy.

The UK Government’s Focus on Business and Human Rights is Timely

4. The private sector plays an essential role in development and is at the heart of the UK government’s approach to development.2 Businesses have the potential to impact on almost all human rights, including the right to water, land rights, rights in the workplace, and the rights of indigenous communities. Clearly businesses can have both positive and negative impacts on human rights.

5. The number of companies operating internationally is growing steadily. Globally there are now over 100,000 transnational companies with almost 900,000 foreign affiliates.3 As the operations of multinational companies come into contact with some of the poorest people in the world, there is a clear imbalance in terms of political influence, economic clout, access to information and to legal expertise. John Ruggie identified the “governance gaps” which now exist because international human rights law has not yet caught up with investment agreements and globalised markets.4 This means that in those situations where business–related abuses do occur, it can be very difficult for citizens to defend their rights and bring successful legal actions against multinational companies. The Protect, Respect, Remedy Framework and the Guiding Principles adopted by the UN Human Rights Council on 16 June 2011 represent John Ruggie’s response to this challenge.

The Value of the UN Framework and the Guiding Principles will be the Extent to which they Change the Behaviour of States and Companies

6. The Protect, Respect, Remedy Framework is based on three principles: 1) the state duty to protect citizens, 2) the corporate responsibility to respect human rights and 3) access for remedy for victims of corporate human rights abuses. The Framework is a helpful concept but does not have any binding status in international law—it is up to individual states to adopt appropriate national laws and policies to implement it.

7. CAFOD’s main concern is whether this UN process will drive improvements for the communities and groups on the ground. Will implementing the Guiding Principles lead to changes in the behaviour of states and companies? This is a question raised by partner organisations in Zambia and Mexico. It is an urgent issue for many of the communities with which our partner organisations work. After six years of discussion and development at UN level, communities affected by mining in Peru, the Philippines, Honduras, the Democratic Republic of Congo and Colombia and human rights defenders who have already received death threats need to see concrete results. The Guiding Principles are a useful starting point but much remains to be done to ensure the work to date delivers improvements on the ground. It is important that their actual impact is evaluated and there is scope to develop them further if needed.

How the UK Implements the Guiding Principles will Influence the Response of other States

8. The UK Government has consistently supported the UN Protect, Respect and Remedy Framework on Business and Human Rights and the Guiding Principles developed by Professor John Ruggie and adopted by the UN in June 2011.5 In November 2011, the Prime Minister reaffirmed: “As we deepen commercial links between the UK and Colombia we acknowledge the importance of working with the private sector on human rights issues. We are committed to implementing the UN Guiding Principles on Business and Human Rights.”6

9. In December 2011 the UK submission to the UN Working Group on Business and Human Rights stated:

“The United Kingdom has placed human rights as central to and indivisible from the core values of British foreign policy. We believe the potential of business to impact on the human rights of individuals worldwide has only been fully recognised in recent years. The endorsement by the Human Rights Council of the UN Guiding Principles on business and human rights in June 2011 marks a high point of international consensus on the issue. The Guiding Principles send out a clear message to governments and businesses, with comprehensive guidance on how to ensure that human rights are respected in the corporate context.”7

10. This clear statement is very welcome. Since the UK’s strategy is due to be published this summer, it will be one of the first Government responses on implementation and a reference point for other states. The EU is asking Member States to produce Action Plans on Implementation of the Guiding Principles by the end of 2012. As an influential first mover, the UK has an opportunity to show leadership. However equally if the UK strategy is not particularly strong, this could risk undermining implementation of the Guiding Principles by other states and by companies.

11. CAFOD commends the cross-governmental process begun by the FCO to develop the UK strategy. This joined-up approach will also be helpful for UK-based businesses. While the FCO is the lead department with regard to the UN Framework and Guiding Principles, policies of BIS, Ministry of Justice, DFID and the Treasury all impact on companies’ operations. However CAFOD is concerned that even while the cross-departmental strategy is being developed, other actions taken by the Government in relation to the financing regime for civil legal cases are actively undermining the third pillar of the framework, access to remedy.

The Government Risks Making it almost Impossible for Victims of Corporate Abuses Abroad to Access Justice in the UK

12. Access to justice is a key element of the UN Framework and Guiding Principle 26 explicitly states:

(a)“States should take appropriate steps to ensure the effectiveness of domestic judicial mechanisms when addressing human rights-related claims against business, including considering ways to reduce legal, practical and other relevant barriers that could lead to a denial of access to remedy.”

13. While the Government supports access to remedy in the Guiding Principles, on 22 June 2011 it put a bill before parliament which could make this almost impossible in practice in the UK. CAFOD is very concerned that changes to cost regimes for civil litigation in the Legal Aid, Sentencing and Punishment of Offenders Bill will mean that it is very hard for victims of human rights abuses by transnational companies to bring cases against businesses in the UK.

14. This is because claimants and their lawyers could find it impossible to recover the full costs of researching and bringing these complex cases to court. For example the well known toxic waste case brought in 2006 by Leigh Day as a group action on behalf 30,000 citizens in Cote d’Ivoire against Trafigura Ltd is the kind of case that would be very difficult to finance in future. With other NGOs in the CORE coalition, CAFOD asked the Ministry of Justice in February 2011 to amend its proposals to create a special exemption for cases brought against transnational companies. CORE also lobbied parliament to amend the Bill to create an exception for the small number of human rights cases brought against TNCs. Because of EC regulation Rome II, foreign victims receive much lower damages awarded in line with the local rates in the particular developing country where the abuse occurred. In these types of cases, shifting the burden of payment for success fees and insurance costs from the losing company to the victims risks substantially reducing or even wiping out the damages that the victims receive. In such situations, it may not be financially viable to bring the case in first place.

15. The MOJ has dismissed this concern, claiming that it will still be possible for poor victims of corporate environmental or human rights harm to bring legal cases however it has not shown how these cases will be financed under the new regime.

16. This development is extremely concerning. Actual changes to the law contradict the positive statements of support for the Guiding Principles. If the access to justice impacts of the Legal Aid, Sentencing and Punishment of Offenders Bill are not addressed, this will undermine the UK’s international credibility in terms of implementing the Guiding Principles.

Recommendations

CAFOD has welcomed the opportunity to take part in discussions about the development of the cross-departmental strategy. In our view, the following principles are essential if the UK’s strategy is to be effective in improving business impacts on human rights and providing a good practice example of how to implement the Guiding Principles.

1. Focus on preventing adverse impacts by companies by requiring human rights due diligence as set out in the Guiding Principles

The purpose of the strategy should be to improve business impacts on human rights, reduce instances of corporate abuses and ensure that where they do occur, affected communities can access remedy. Clearly for all parties it makes sense to try to prevent human rights abuses from happening in the first place. By requiring human rights due diligence along the lines clearly set out in the Guiding Principles, the Government can ensure that companies are aware of the possible risks linked to their business operations and supply chains and can take steps to avoid adverse impacts.

2. Consider the rights-holders as well as governments and companies

The principle of the corporate responsibility to respect human rights and the concept of human rights due diligence are helpful aspects of the UN Guiding Principles. It is important however that the strategy emphasises all three pillars of the Framework—the state duty to protect, the corporate responsibility to respect and access to remedy. Professor John Ruggie, who designed the framework, has frequently emphasised that the three pillars are interlinked and interdependent. Therefore to be effective, the UK’s strategy for implementation needs to address all three.

For example, it is important that the views and experiences of rights-holders, including those directly affected by business operations, are taken on board in evaluating the impact of the strategy, as well as in designing the pilot projects on how the Guiding Principles can be implemented in business environment in China, Burma and Colombia.

3. Include concrete measures to make policy coherence a reality

CAFOD has identified a number of concrete measures that the Government can now take to make sure that all the different departments that deal with businesses support implementation of the Framework. It is important to ensure that that other laws and policies do not inadvertently make it harder for enterprises to respect human rights.

For example, by including a stage within the impact assessment of legislative proposals, the Government can ensure that new laws support and do not undermine the UK’s implementation of the Protect, Respect, Remedy framework and Guiding Principles. This will support policy coherence between different Government departments and make sure that consistent messages are sent to companies. Such a step could have identified and avoided the problems caused by the MOJ’s Legal Aid bill early on.

BIS is currently reviewing the aspects of the 2006 Companies Act which deal with environmental and social reporting by companies. This is part of the Coalition agreement. A consultation document with a proposal for companies to report specifically on human rights impacts was published in September 2011. Research by the CORE coalition shows that many companies are currently not reporting on their human rights impacts. This review is the ideal opportunity to make sure that companies know that reporting on relevant human rights impacts and risks linked to their operations is explicitly required. This opportunity should not be missed.

Evidence of human rights due diligence can also be integrated into criteria for access to export credit, insurance support and included within DFID’s approach to development partnerships with the private sector.

4. The UK should stick to the “smart mix” of policy, guidance and appropriate regulation set out in the Guiding Principles, not water it down

The Guiding Principles recognise that a “smart mix” of measures—including policy, soft law and hard law—will be needed to achieve tangible results for affected individuals and communities. However in the section on the Guiding Principles in its Human Rights and Democracy Report 2011, the FCO only references guidance and training as well as signposting to “other voluntary initiatives.”8 CAFOD recognises that it is important that businesses know how to access expertise on human rights impacts and can make use of work that has already been done. For example, signposting to work done by the Ethical Trading Initiative will enable companies to look at how to support freedom of association and avoid exploitation in their supply chains.9 However, adopting an approach based purely on guidance and voluntary initiatives will not be sufficient. This is effectively re-badging the existing status quo. As well as a missed opportunity, it would be a fundamental misinterpretation of the Framework and the Guiding Principles.

If the UK waters down the approach set out in the Guiding Principles, it is hard to see how it can expect other states to take their duty to protect human rights seriously.

5. Evaluation and monitoring need to be built into the strategy

It is important to include information about how the impact of the strategy will be measured and evaluated. The strategy will need to be reviewed and updated at regular intervals. The Government should set up an independent expert group, possibly multi-stakeholder, to monitor progress and make recommendations.

Ultimately we think that there would be value in setting up a robust independent UK Commission on Business, Human Rights and the Environment as proposed by the CORE campaign.10 This would enhance accountability and be a source of expert advice and reference for UK companies keen to address their impact on human rights and the environment.

25 May 2012