4 THE INTERNATIONAL DEBATE
72. Perhaps unsurprisingly, we received far more
evidence on the operations of UK companies abroad than about the
human rights record of UK firms at home. The international debate
on the impact of globalisation and the cross-border influence
of companies on human rights is more advanced than the discussion
of corporate responsibility and human rights in the UK. Lord
Malloch-Brown, then Minister for the UN and Africa, told us that
UK companies operating overseas were experienced in dealing with
the potential impacts of their business on human rights in developing
British companies understand that the environment
in which they are operating in developing countries is getting
steadily trickier.... It is often not just limited to human rights
issues; it is [
] whether or not corporations are putting
back into the communities where they are operating in terms of
social and other developmental services, a lot more is expected
of the company than before.
73. The Government, UK businesses and NGOs have been
involved in a range of international voluntary initiatives and
programmes designed to address human rights impacts and spread
good practice on human rights and corporate responsibility, including
- OECD Guidelines for Multinational Corporations
- Work of the UN Special Representative on human
rights, transnational corporations and other business entities
- UN Global Compact;
- Voluntary Principles on Security and Human Rights;
- Extractive Industries Transparency Initiative;
- Ethical Trading Initiative;
- Kimberley Process;
- Business Leaders Initiative on Human Rights;
- Institute for Business and Human Rights.
74. We focus on the OECD Guidelines and the work
of the UN Special Representative, below.
The OECD Guidelines
75. The OECD Guidelines are a series of principles
and standards which adhering states, including the UK, undertake
to promote to their businesses. They are the "only multilaterally
endorsed and comprehensive code that Governments are committed
The Guidelines set voluntary standards for business conduct,
including in employment and industrial relations, human rights
and the environment. They provide that multinational enterprises:
should take fully into account established policies
in the countries in which they operate, and consider the views
of other stakeholders. In this regard, enterprises should:
.Respect the human rights of those affected
by their activities consistent with the host government's international
obligations and commitments.
76. The OECD has also produced a Risk Awareness Tool
for Multinational Corporations in Weak Governance Zones. It addresses
risks and ethical dilemmas that companies are likely to face in
weak governance zones, including in respect of obeying the law
and observing international instruments, managing investments,
due diligence about business partners and clients, dealing with
public sector officials, and "speaking out about wrongdoing".
77. Since they were revised in 2000, the OECD Guidelines
have been implemented on a national basis by National Contact
Points (or NCPs). These are generally government offices responsible
for promoting the guidelines and handling inquiries and complaints
against companies. The UK NCP is also responsible for the promotion
of the Risk Assessment Tool to UK companies.
After complaints about its operation and structure, the UK NCP
was subject to reforms in 2006 to enhance its operation.
78. Witnesses told us that the 2006 reforms had had
a significant and positive effect on the operation of the UK NCP.
Others raised concerns about its operation, including a lack
of independence from Government; a lack of guidance for companies
on the standards to be met; and the absence of sanctions against
companies and remedies for individual victims.
Insufficient information in the Guidelines about human rights
obligations has also been the subject of critical comment.
Amnesty International told us that the OECD NCP system
itself was "too flawed" to provide victims of alleged
abuse with a remedy.
79. The latest Final Statement of the UK NCP, dated
26 September, upholding a complaint by Survival International
against Vedanta Plc in respect of its mining operations in Orissa,
India seems to us to support the arguments of witnesses who argue
that there are shortcomings in the investigatory powers of the
NCP. The UK NCP reported that Vedanta did not participate in
mediation, even after an offer of independent professional mediation,
external to the NCP. Other than providing submissions that the
NCP should not accept the case and a copy of its own sustainable
development report, the company did not engage with the examination
and did not submit any evidence in response to that provided by
Survival International. The NCP had no powers to compel Vedanta
to participate and expressed disappointment at the decision of
Vedanta Plc not to "engage fully" with their work.
Vedanta has reportedly rejected the substantive findings in the
report, arguing that it complied with all local regulatory requirements
80. The Government published the result of a initial
review of the NCP in January 2009, looking in particular at the
2006 reforms. It concluded that the "NCPs performance [had]
significantly improved since the revamp
although there remains
room for improvement". It considered that limited resources
remained a risk for the NCP and that higher priority should be
given to promotion of the Guidelines, as opposed to the processing
81. The way the Government reacts to final statements
from the UK NCP will clearly affect the impact made by the statement.
Global Witness told us that the Final Statement in August 2008,
in the case of Afrimex, was a clear example of why the UK NCP
could not provide an effective sanction against a company. Global
Witness brought this complaint to highlight a number of alleged
breaches of the OECD Guidelines by Afrimex in respect of minerals
from the Democratic Republic of Congo ("DRC"). The
NCP upheld the majority of the complaints made by Global Witness
and made a number of recommendations to Afrimex, including for
better due diligence.
Global Witness told us that these recommendations had not been
acted on by Government departments.
82. We asked Lord Malloch-Brown, the then Minister
for the UN and Africa, for further information on the Government's
approach, but he told us he was "constrained" by ongoing
its written submission, the Government explained that it is considering
how to follow up a negative decision of the UK NCP. 
Since the recent UK NCP Statement in the Vedanta case, the High
Court has been asked to consider a challenge to loans offered
to Vedanta by the Royal Bank of Scotland, a bank in which the
Treasury holds a over 70% share.
83. It is unacceptable for the Government not
to have a strategy in place to deal with companies subject to
negative final statements by the UK NCP [National Contact Point].
The credibility of findings of the UK NCP would be enhanced considerably
if the Government had a clear and consistent policy on its response
to final statements. We recommend that such a policy should be
drawn up and disseminated widely.
84. There has been significant improvement in
the way the UK NCP approaches complaints that UK companies have
failed to comply with the OECD Guidelines for Multinational Corporations.
The UK NCP can perform only a limited role, however, as a Government-led
organisation with few investigative powers and no powers to sanction
individual companies. As a non-judicial mechanism for satisfying
individuals who may have a complaint against a UK company, it
falls far short of the necessary criteria and powers needed by
an effective remedial body, including the need for independence
from Government and the power to provide an effective remedy.
There is little incentive for individuals to use a complaints
mechanism which offers no prospect of any sanction against a company,
compensation or any guarantee that action will be taken to make
the company change its behaviour.
85. We recommend that the Government consider
options for increasing the independence of the UK NCP from Government
and enhance the ability of the NCP to promote the OECD Guidelines,
including ensuring that it has the necessary resources and powers
to fulfil this part of its role effectively.
Reform of the OECD Guidelines
86. There is a general consensus that the OECD Guidelines
are out-dated and in need of reform.
The OECD is due to launch a review in June 2010. The UK NCP is
currently consulting on the scope of the review and this consultation
will inform the Government's position in the forthcoming negotiations.
In the light of the development of the debate on human rights
and business over the past decade, the OECD Guidelines are ripe
for review and reform. Reform of the Guidelines should reflect
the work of the UN Special Representative on human rights and
transnational corporations and other business entities. The Government
should take a lead in ensuring that the Guidelines are reformed
to give clearer direction to business about their responsibilities
to respect human rights, especially including operations in states
which do not recognise or respect the rights guaranteed by the
fundamental UN human rights treaties.
The Work of the UN Special Representative
87. Over the past five years, there has been a lively
debate about whether the approach to human rights embraced by
many businesses is sufficiently effective in practice or whether
more binding forms of international regulation than the OECD Guidelines
are required. In 2003, the UN Sub-Commission on Human Rights
adopted the UN Norms on the Responsibilities of Transnational
Corporations and other Business Enterprises (the Norms).
The Norms proposed a more coercive approach, setting out a series
of human rights standards for companies and requiring companies
to respect and promote those rights. The Norms were strongly
opposed by many businesses and Governments on the grounds they
were too broad and too vague.
The debate became polarised and the situation was described
by Professor Ruggie as a "train wreck".
88. The UK played a key role in proposing a way forward
with the appointment of the UN Special Representative, Professor
Ruggie, in 2005. The broad purpose of his mandate was to consider
how to take the debate on business and human rights forward following
the failure of the Norms.
In oral evidence, Professor Ruggie told us that the human rights
challenges arising from the activities of corporate or other business
entities arise from a series of "governance gaps."
Although not simple to overcome, these could each be addressed
by states within their own jurisdictions or by countries working
together. Professor Ruggie's analysis of the debate on business
and human rights and the key drivers for action were broadly reflected
in our evidence.
The main themes include:
- Gaps between the aims of the private sector and
the aims of individual states;
- A lack of policy coherence within individual
Governments in relation to their human rights responsibilities;
- Governments taking on human rights obligations
without ever intending to fulfil them; Governments lacking the
capacity to fulfil their human rights obligations; and Governments
neglecting to enforce human rights standards as they fear competitive
- Corporate governance rules that rarely address
the human rights impacts of companies, something which, in the
words of Professor Ruggie, does not send "the appropriate
signals to companies".
89. In April 2008, Professor Ruggie proposed the
"protect, respect and remedy" policy framework for the
business and human rights debate, based on three core principles:
- the state duty to protect against human rights
abuses by third parties, including businesses;
- a corporate responsibility to respect human rights;
- the need for individuals to have effective access
to remedies for breaches of their human rights.
90. In June 2008, the UN Human Rights Council approved
the framework and extended the mandate of the Special Representative
until 2011. He
has been asked to make practical recommendations on ways to help
states protect human rights from abuses involving businesses,
and to enhance access to remedies for those whose human rights
are affected by corporate activities. In his most recent report,
published in April 2009, Professor Ruggie recognised that further
work is necessary, to:
- address domestic policy incoherence and the failure
of Governments to work together effectively;
- consider the impact of trade and investment agreements
on human rights;
- encourage companies to make human rights due
diligence effective and appropriate for their businesses;
- clarify how to 'demystify human rights' for
- explore the relationship between judicial and
- increase the effectiveness of NCP decisions on
the OECD Guidelines; and
- explore the role to be played by National Human
Rights Institutions, such as, in the UK, the Equality and Human
Rights Commission, the Scottish Human Rights Commission and Northern
Ireland Human Rights Commission (NHRIs).
91. Witnesses who commented on Professor Ruggie's
work welcomed both his mandate and the 'protect, respect and remedy'
example, BP told us that Professor Ruggie had:
helped to bring clarity in this contentious issue
that previously had been characterised by sharply divided opinions
on the scope, scale and accountability of business in the matter
of human rights.
92. Most witnesses recognised that drawing a distinction
between voluntary arrangements and binding legal standards for
business is no longer helpful.
Sir Geoffrey Chandler emphasised that there was a role for both
voluntary and regulatory action:
At the end of the day a framework of law alone
will not make for a responsible corporate world any more than
it can make a moral individual...It is only when principles become
the point of departure for corporate activity that we will have
won, when companies do what is right because it is right.
93. The 'protect, respect and remedy' framework
proposed by Professor Ruggie, the UN Special Representative, is
a valuable and constructive contribution to the debate on business
and human rights. The polarised positions previously taken by
the proponents of voluntary or regulatory initiatives were unhelpful.
While there continue to be many areas of contention over the
respective roles and responsibilities of states and individual
businesses, this framework provides a solid platform upon which
these issues can be debated and, hopefully, resolved. We welcome
the renewed commitment to constructive dialogue that the framework
appears to have provided and call on states, businesses and civil
society to approach any operational recommendations made by the
UN Special Representative in a positive way. It would be disappointing
if the years of work and careful engagement undertaken by the
UN Special Representative and his team were wasted by a return
to the stalemate that arose after the UN Norms.
LIMITATIONS OF THE PROTECT, RESPECT
AND REMEDY FRAMEWORK
94. Some witnesses pointed to limitations of the
Ruggie framework. One criticism was that the 'protect, respect
and remedy' framework treats the role of communities affected
by business activities as a passive one.
Others expressed concern that the framework contained very little
detail on what standards should apply to business conduct to ensure
that rights are respected.
Professor David Kinley told us that as a conceptual framework,
'protect, respect, remedy' was "unobjectionable", but
that it did little to answer the problem which Professor Ruggie
had identified: "in which states are so weak or unwilling
to protect human rights and corporations are so comparatively
strong or conveniently transnational to evade human rights responsibilities".
A joint submission by a number of international academics expressed
a similar view, arguing that the existing division of responsibilities
between states and businesses failed to recognise that the division
must be flexible and that in circumstances where states were unwilling
or unable to fulfil their duty to protect, the responsibility
on companies operating in those countries should be more onerous.
95. While we recognise the value of the 'protect,
respect, remedy' framework, further work is needed to increase
its value to individual states and businesses. We look forward
to the further recommendations which Professor Ruggie is due to
make in 2011. They need to give clear guidance to home and host
states and businesses, on how they should meet their obligations
under the 'protect, respect, remedy' framework. While the value
of consensus in this debate is clear, Professor Ruggie should
not be afraid to tell states and business what positive steps
must be taken to protect human rights, however difficult or unwelcome
his message may be.
96. There is a case for further recognition of
the role of communities in the Ruggie framework. The need for
consultation and engagement appears to form part of the due diligence
process envisaged by Professor Ruggie. However, greater clarity
on the role of individuals and civil society could lend greater
coherence to the development of the framework.
97. We call on the Government to continue to support
the mandate of the UN Special Representative, to encourage UK
businesses and civil society to engage with his work, and to respond
constructively to his recommendations.
WAITING FOR 2011?
98. We asked a number of witnesses whether states
could sensibly take any unilateral action before the Special Representative
completed his work in 2011. Professor Ruggie criticised the notion
that states should ignore business and human rights issues until
he makes his final recommendations.
99. Peter Frankental, of Amnesty International, told
us that both unilateral and multilateral action was desirable
and that the two were not mutually exclusive.
BP, on the other hand, said that it was "imperative"
that businesses and states should not "pre-empt" the
outcome of the work of the Special Representative, adding that
there was "a risk of a multiplicity of new country-based
business and human rights
standards and adjudication systems"
if states acted on their own account. 
100. Sir Brian Fall of Rio Tinto and the CBI also
counselled against unilateral action without coordination by major
The Government shares this view. In oral evidence, Lord Malloch-Brown
said it was "too soon" to start incorporating Professor
Ruggie's work into UK policy.
He explained that the Government thought that what Professor
Ruggie was trying to do was to determine a "conceptual framework"
which tied together strands of work that the UK Government was
already working on, including through its support for voluntary
mechanisms such as the Kimberley Process. He explained that he
did not want to "pre-judge" the conclusions of Professor
Ruggie but that he thought that the Special Representative was
taking an approach which was similar to the view of the UK Government,
that the focus should be on strengthening host state capacity,
rather than introducing any international dimension.
101. We are disappointed that the Government
appears to have ruled out unilateral policy measures to deal with
the human rights impacts of UK companies operating overseas while
the Special Representative carries out his work, particularly
as Professor Ruggie has encouraged states to do more. International
debate should not preclude innovative policies at home.
An international agreement on
business and human rights?
102. A number of witnesses told us that international
agreement was the only way to achieve a global solution to the
problems identified by Professor Ruggie.
The UN Special Representative told us, however, that an international
agreement was unrealistic in the current climate:
I do not want to make it sound as though there
should not be any kind of international legal instruments. I
just do not think that an overarching business and human rights
treaty is around the corner, and therefore we have to look to
other measures if nothing else as an intermediate step to reduce
the risks that they face.
103. Peter Frankental, for Amnesty International
agreed: "such a treaty is unlikely to happen within the next
decade, but that is not a reason not to promote it now.
He argued that an overarching UN treaty was only one aspiration
and that there were a number of other forms of international cooperation,
including through the OECD and the EU, which could address the
impacts of business on human rights.
104. The CBI and a number of businesses do not support
a formal international agreement. The CBI said:
We believe that such an initiative should take
a significantly long period of time to negotiate, it would divert
resources away from the promise offered by the
[of the Special Representative] and it is unclear as to how any
such treaty might actually be enforced.
105. International agreement comes in many forms.
It would be disappointing if the failure of the UN Norms overshadowed
the debate about any future international agreement on the steps
which individual states could take to meet the governance gaps
identified by Professor Ruggie. Although consensus took a significant
period of time to reach on the issue of cross-border bribery and
corruption, the obligations in the UN Convention against Corruption
and the OECD Convention on Combating Bribery of Foreign Officials
are now widely supported. The measures in each of these agreements
have been accepted as positive steps towards meeting a global
problem affecting both the fundamental rights of many communities
and the credibility of international business. A number of the
academics and civil society groups we met in the US urged us to
look at the long process through which these agreements were debated
and agreed as indicative of how a debate on business and human
rights could lead to a broad international agreement in the future.
106. An international agreement on business and
human rights is unlikely in the near future. However, the impact
of business on human rights is a global issue that ultimately
requires a global solution. We are concerned that reluctance
by states to take unilateral action coupled with failure to commit
to an international solution will mean that little progress is
made. We believe that an international agreement should be the
ultimate aspiration of any debate on business and human rights.
There is considerable scope for joint working on a regional level
and globally to agree a consistent approach to business and human
rights. We recommend that the Government develops such joint-working
101 Q385 Back
Further details about each of the other programmes is outlined
in Annex 3. Back
UK National Contact Point Website: http://www.berr.gov.uk/whatwedo/sectors/lowcarbon/cr-sd-wp/nationalcontactpoint/page45873.html Back
OECD General Principles, II, General Policies. Back
For further information, see http://www.oecd.org/document/26/0,3343,en_2649_34889_36899994_1_1_1_34529562,00.html Back
In the UK, the Department for Business Innovation and Skills is
responsible for the NCP. Back
The All-Party Parliamentary Group on the Great Lakes first criticised
the operation of the UK NCP in its 2005 Report, The OECD Guidelines
and the DRC. After the publication of this report, the Government
initiated a review of the OECD Guidelines in the UK. Reforms to
the UK NCP in 2006 included the creation of a Steering Board,
including Government departments, business, NGO and Trades Union
Ev 293; Q111 (Owen Tudor, TUC) Back
Q77.See Q108 (Janet Williamson, TUC), where she explains that
despite 5 challenges to the practices of Unilever in India and
Pakistan, in respect of labour and trade union rights, no change
has been achieved. Back
Ev 170, Q111, Ev 293 Back
Final Statement, Complaint by Survival International against Vedanta
Plc, 25 September 2009, para 17.For further, see http://www.berr.gov.uk/files/file53117.doc Back
The Guardian, Treasury taken to court for RBS loans to Vedanta
resources, 18 October 2009. Back
Q333. See also Ev 213. Back
Final Statement, Complaint by Global Witness against Afrimex,
28 August 2008.For further, see http://www.berr.gov.uk/files/file47555.doc
Ev 262, Q 333.See also Ev 213. Back
Ev 85 Back
The Guardian, Treasury taken to court for RBS loans to Vedanta
resources, 18 October 2009. Back
See for example, Ev 274, para 21, Q165, Q214. Back
UK National Contact Point, UK National Contact Point Stakeholder
Consultation: Update of OECD Guidelines on Multinational Enterprises,
27 October 2009. Back
UN Sub-Commission on the Promotion and Protection of Human Rights,
Responsibilities of transnational corporations and other business
enterprises with regard to human rights, UN Doc E/CN.4/Sub 2/2003/L.11. Back
Daniel Leader, Business and Human Rights, Time to call Companies
to Account, International Criminal Law Review 8 (2008) 447 - 462,
Professor Ruggie, Corporate Social Responsibility Forum, Fair
Labour Association and the German Network of Business Ethics,
14 June 2006. Back
See UN Human Rights Commission Resolution 2005/69, 20 April 2009. Back
Q1.See also Report of the UN Special Representative of the Secretary-General
on the issue of human rights and transnational corporations and
other business enterprises, John Ruggie, 'Protect, Respect and
Remedy: a Framework for Business and Human Rights', UN Doc.A/HRC/8/5,
7 April 2008.Herein "Ruggie Report 2008", paras 11 -
Ruggie Report 2008, para 17. Back
UN Human Rights Council, Resolution 8/7, 18 June 2008. Back
Ruggie Report, 2009. Back
See for example, Q125 Back
Ev 154. See also Q190 (Sir Brian Fall) Back
Ev 107, page 2 Back
Ev 107, page 3, Ev 137, para 29 Back
Ev 217, Ev 274 Back
Ev 218 Back
Ev 146 Back
Ev 217 Back
Q52.See also Q 54 (Action Aid) Back
Ev 154 Back
Q213. See also Q163 Back
For example Ev 107 and Ev 146 Back
Ev 319 Back