Any of our business? Human Rights and the UK private sector - Human Rights Joint Committee Contents


Why do human rights matter to UK business?
1.The principal legal duty to protect human rights will always lie with the state. However, it would be short-sighted to consider that the implications for human rights and the private sector begin and end with this narrow legal construct. The human rights obligations of the UK may impact on the activities of business, just as the activities of UK business may impact on the ability of the UK to meet its obligations. We welcome the Government's recognition that the activities of business may affect the ability of the UK Government to meet its human rights obligations, both positively and negatively. We particularly commend the broad acceptance that certain obligations may require the regulation of business. As we aim to develop a human rights culture within the UK, the importance of understanding human rights principles for all UK residents - both individuals and corporate entities - should grow. There is a strong incentive on the Government to ensure that it has a clear understanding of how its policies on business relate to the human rights obligations of the UK. (Paragraph 20)
Policy reasons for action?
2.We recognise that there are complex legal and policy questions which arise around the cross-border operation of UK businesses, particularly where they operate in countries where states have weaker governance mechanisms than the UK for the purpose of protecting human rights in their jurisdiction. The purpose of this inquiry is consider these complex issues which the UN, major multinational companies and many other states have been grappling with for a decade. We intend to draw attention to the debate, consider the current UK stance on this issue, and put forward our recommendations below. (Paragraph 32)
3. Although the UK's international legal obligations are far from clear, in our view there are good policy arguments in favour of action. The UK is a major consumer of internationally produced goods and provides a home to many major multinational companies. It is well placed to benefit from the experiences and activities of these many successful businesses. The UK is particularly vulnerable to impacts on its reputation when these companies are associated with allegations of human rights abuse overseas. If the UK fails to show leadership in this debate, it suggests to other states that it is not important to address the impacts of business on the fundamental rights of individuals. This may create the perception that the UK cares more about economics than human rights obligations. We recommend that the UK should play a leadership role in this global debate to ensure that multinational firms and other corporate entities respect human rights wherever they operate. (Paragraph 33)
Do human rights matter for small businesses?
4.Human rights principles are relevant to a businesses of any size or type, although their detailed application may differ from case to case. Policy, advice or guidance on human rights should take into account the diverse nature of the UK business community, including small business and consumers of small business services. (Paragraph 37)
What about the recession?
5.The current economic climate should not adversely affect the commitment of the UK Government or UK businesses to human rights. The Government has a responsibility to help businesses understand what a human rights responsible approach means and what it can add to business planning and to the global economic recovery. We welcome the Government's statement that despite the economic climate, there is still a strong business case for embedding human rights in business. This sentiment should be consistently reflected across Government during the recession and thereafter. (Paragraph 41)
Positive impacts
6.We do not underestimate the significant and positive contribution that businesses can make to the communities in which they operate. This clearly has the capacity to enhance the protection of the rights of employees, service users and other local people. Businesses can support the state's ability to protect the economic and social rights of individuals, including for example, the right to an adequate standard of living. However, we also believe that businesses can play an important role in ensuring that individual civil and political rights - including, for example, freedom from inhuman treatment, freedom from forced labour and unjustifiable discrimination, the right to privacy, freedom of expression and the right to freedom of association, including the rights of independent trade unions and their members - are respected. (Paragraph 47)
Negative impacts
7. Our terms of reference do not permit us to conduct a full investigation into any specific allegations against individuals and companies. However, in the light of the seriousness of many of these claims, we are persuaded that further action is necessary and we hope that our conclusions and recommendations will contribute to advancing the debate in the UK, both among parliamentarians and the wider public. (Paragraph 48)
The OECD Guidelines
8.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. (Paragraph 83)
9.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. (Paragraph 84)
10.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. (Paragraph 85)
Reform of the OECD Guidelines
11.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. (Paragraph 86)
The work of the UN Special Representative
12.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. (Paragraph 93)
Limitations of the protect, respect and remedy framework
13.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. (Paragraph 95)
14.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. (Paragraph 96)
15.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. (Paragraph 97)
Waiting for 2011?
16. 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. (Paragraph 101)
An international agreement on business and human rights?
17.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 programmes. (Paragraph 106)
What does the responsibility to respect human rights mean?
18.We welcome the recognition by Professor Ruggie that the responsibility on businesses to respect human rights is not merely voluntary. However, we share the concerns of the UN Special Representative and others that while this responsibility is clear in theory, its practical implications are uncertain. (Paragraph 110)
Due diligence and human rights impacts
19.Many of the steps taken by businesses and their organisations have helped to move the debate on business and human rights forward. Changes in business practice on the ground can have a positive impact on the lives of communities and individuals. We welcome the commitment shown by many companies to respect human rights, wherever their businesses operate. Dealing with the negative impacts of businesses on human rights requires a culture change in the way that businesses think about their responsibilities. We see merit in the argument that business-led initiatives may achieve a credible and lasting change, but this is hampered by the perception that some businesses regard addressing human rights as little more than an exercise in "good PR". Although compliance with the due diligence requirements outlined by the Special Representative - including the need to take action to address identified risks to individual rights - has the potential to benefit more than a business's public image, Professor Ruggie himself recognises that few businesses meet the standards he considers are necessary. (Paragraph 119)
Respect for human rights and corporate social responsibility
20.Given the absence of a straightforward legal framework for business responsibilities regarding human rights, it is understandable that these issues are generally dealt with by businesses alongside environmental issues under the 'corporate responsibility' label. (Paragraph 123)
21.How businesses describe their activities should not matter, provided that businesses take their responsibility to respect human rights seriously. Greater clarity on the distinction between actions required by the social or moral 'responsibility to respect' (i.e. do no harm) and acts of general philanthropy would go some way to reinforce the baseline responsibility identified by Professor Ruggie. The UK Government could encourage such a distinction by adopting the 'protect, respect and remedy' framework and clearly explaining the responsibility to respect human rights and the associated need for due diligence in their work on corporate responsibility. (Paragraph 124)
Voluntary arrangements and multilateral international initiatives
22.The array of multi-stakeholder initiatives and sector-specific arrangements that have been agreed in the past decade show that businesses recognise they must take some action to meet the criticism levelled at a number of multinational businesses. Many of the doubts expressed about their effectiveness have merit. While there is no consistent global agreement on the standards to meet, it is difficult to assess the effectiveness of each scheme or for the outsider to accept that business can self-regulate without adequate scrutiny from active consumers, NGOs and others. We have not classified the arguments we heard as pro-'voluntary' or pro-'regulatory', but there is a clear distinction between those who favour business-led initiatives and those who see a far clearer role for home states. We support the view of Professor Ruggie, that a range of responses is necessary. No single solution will be able to address the complex issues which arise in cross-border commercial operations which impact on human rights. This collaborative approach should not involve a race towards the lowest common denominator, as some witnesses fear. We consider the Government can play a role in supporting and reinforcing the social and moral responsibility of business to respect human rights, through due diligence. (Paragraph 129)
The application of the Human Rights Act 1998 (HRA 1998) to the private sector
23. We have heard nothing new in this inquiry to suggest that we should change our view that legislative change is necessary to restore the original intention of Parliament, that all private bodies performing public functions should be subject to the duty to act compatibly with human rights. We are concerned that the Government's approach panders to the unjustified concerns of some in the private sector in order to maintain the market for contracted-out services and represents a significant shift from its earlier view that the scope of the HRA 1998 should be clarified. In our view, this apparent change of policy represents a failure of leadership by the Government on such an important human rights issue. (Paragraph 136)
24.We are particularly concerned to hear evidence from public law solicitors that cases are being litigated over the exercise of compulsory powers in immigration detention. In our previous correspondence with the Government, we understood that the exercise of any compulsory powers associated with detention would be subject to Section 6 of the HRA 1998. This evidence clearly illustrates the need for clarification of the scope of the HRA 1998. Although the Government considers that the legal position in respect of these cases is settled, we maintain that legislation is urgently needed to resolve the existing uncertainty surrounding the meaning of public authority, putting beyond doubt, in statute, Parliament's original intention. In the meantime, we recommend that the Government produce clear and detailed guidance to relevant Government departments and agencies in order to ensure that all public authorities and relevant contractors understand the scope of their duties under the HRA. (Paragraph 142)
25.The Government's view that the scope of the HRA 1998 is subject only to marginal uncertainty is not correct. We accept its view that in the wider context of the operation of the Act against core public authorities, the application of the HRA 1998 is settled and clear. We also agree that this issue should not detract from the overall success of the HRA 1998. However, we find unacceptable the Government's attempt to dismiss the outstanding problems created by the decision of the House of Lords. (Paragraph 147)
26.The Government has broken its promise to consult speedily on the scope of the HRA 1998. It is disappointing that the Government now relies on further litigation to justify its procrastination. In the time since the passage of the Health and Social Care Act 2008, a consultation could have been completed. An interpretative provision could still be inserted in the Constitutional Reform and Governance Bill. Instead, uncertainty continues for both business and the users of public services, who are forced to litigate to seek clarity. (Paragraph 149)
27.The Government's decision to delay is unacceptable, particularly as it has already published its broad view on the sole issue currently before the courts, and on the wider debate. The litigation in Weaver is over. It is inevitable that litigation on other issues will surface. We are not persuaded that any further public consultation on this issue is necessary and call on the Government to bring forward a legislative solution as soon as possible. If the Government insists on publishing a formal consultation document, we recommend that they do so without delay. Any consultation should be short in duration and focus on a proposed legislative solution. (Paragraph 150)
Offence of forced labour in the UK
28.We commend the Government's acceptance that a specific offence of servitude and forced labour was necessary to meet our international obligations to prohibit and prosecute these acts of modern slavery and welcome the provision included at a late stage in the Coroners and Justice Act 2009. (Paragraph 154)
29.We welcome the Government's commitment to promote awareness of this offence. We recommend that the Government works with the Association of Chief Police Officers and other relevant stakeholders, including business organisations, to ensure that adequate guidance is produced for both police and the wider community in an accessible way. (Paragraph 155)
Labour and union rights
30.The right to freedom of association, the associated right to strike, the right to trade union membership and the right to collective bargaining are rights recognised in the international human rights obligations of the UK and overseen by the European Court of Human Rights, the ILO and the UN Committee on Economic, Social and Cultural Rights. The UN Committee on Economic, Social and Cultural Rights and the ILO Committee of Experts considers that current domestic law on the right to strike and the right to collective bargaining places undue restrictions on those rights. The UK Government has failed to take the recommendations of those Committees seriously. We reiterate our predecessors' recommendation that the UK Government review the existing law in the light of those recommendations. We note that the European Court of Human Rights is increasingly citing the findings of the UN Committee and the ILO in its interpretation of the right to freedom of association guaranteed by Article 11 ECHR. This jurisprudence may be relied upon in the domestic courts to challenge the compatibility of existing law with Convention rights protected by the HRA 1998. This provides an added incentive to the Government to conduct a review without delay. (Paragraph 159)
31.The Government said in 2004 that it intended to ratify the Charter. We recommend that it explain why it has not done so. We repeat the recommendation of our predecessor Committee in 2004: the UK should ratify the Revised Social Charter. (Paragraph 161)
32.We doubt the compatibility of the Government's blacklisting proposals with the UK's international human rights obligations. We recommend that the Government provide a full explanation of its argument that the proposals are compatible. This should include a response to the criticism of the Institute of Employment Rights, that these proposals fail to provide an adequate remedy for those individuals who have already been affected by blacklisting. In the light of the Government's explanation, we anticipate revisiting this issue. (Paragraph 163)
Government Corporate Responsibility Report 2009
33.The Government's latest Corporate Responsibility Report presents a positive overview of the steps which the Government is taking to implement its existing policy. While we commend the steps taken by the Government to promote the business case for corporate responsibility, we regret that the Report does not clearly connect this business case to the responsibility to respect human rights recognised by the UN Special Representative in his work. The language of 'encouragement' found in the Corporate Responsibility Report, while positive, seems out of kilter with the conclusion of Professor Ruggie that many of the steps taken by business to address their human rights impacts are incorrectly viewed as purely voluntary measures. Equally, the Report does not clearly identify that existing compliance and regulatory steps required of business - for example in respect of health and safety, the environment and equality - are designed to meet the human rights obligations of the UK. This suggests that the Government's corporate responsibility strategy is unduly focused on voluntary measures and underestimates the extent to which businesses have human rights responsibilities. (Paragraph 171)
The Private Sector and Human Rights Project
34.We commend the decision of the Government to initiate its Private Sector and Human Rights Project. It seeks informed answers to many of the questions posed by this inquiry, including whether there are gaps in existing guidance and legal and regulatory frameworks relating to businesses in the UK which need to be addressed. However, we are concerned that the project appears to have been limited to gathering the views of UK businesses about their domestic activities. It is unfortunate that other Government departments, including BIS, DFID and the FCO, which are more familiar with the Government's corporate responsibility agenda, have not been more heavily involved. Their experience of the international debate on the cross border impacts of companies could have usefully informed the scoping study. We recommend that any policy options pursued as a result of the Private Sector and Human Rights Project are subject to wider consultation with consumers, employees, NGOs and other stakeholders. (Paragraph 179)
35.At present, there are no planned next steps for the Government Private Sector and Human Rights Project, other than to recommend action by the Equality and Human Rights Commission. We are concerned that this approach appears to indicate a lack of leadership and commitment to taking this debate forward. We make some positive recommendations for further action, below. (Paragraph 180)
The FCO Toolkit on Business and Human Rights
36.We welcome the Government's Toolkit on Business and Human Rights and commend the aim of providing accessible information and recommendations to overseas posts on issues which might arise about business and human rights. We particularly welcome the specific directions given to posts about how they might promote human rights and respond to allegations against UK companies. There are, however, limits to what this short document can achieve. Without promotion and adequate training for relevant staff in what human rights mean for business, there is a risk that the Toolkit will gather dust in embassy in-trays. (Paragraph 188)
37.We recommend that the FCO monitors the use of the Toolkit in practice to assess its value. At present, the Toolkit does not provide a UK contact for posts to consult for further guidance. We recommend that the Government considers how knowledge and expertise on business and human rights issues can be developed centrally, with a view to ensuring best practice is shared within the FCO and across Whitehall. (Paragraph 189)
The draft Bribery Bill
38.In the past, the Government has been criticised for a lack of leadership on bribery and corruption issues, facing accusations that the international obligations of the UK suffer at the expense of short term economic interests. We hope that the publication and enactment of the Bribery Bill during this Parliamentary session will mean that such concerns are a thing of the past. We look forward to scrutinising this measure. In so far as it is designed to reduce bribery and corruption in the UK and abroad, we consider that it is a human rights enhancing measure. We recommend that Parliamentary time be made available to allow this Bill to gain Royal Assent before the end of this Parliament. (Paragraph 191)
The need for a UK Strategy on business and human rights
39.Government policy on business and human rights lacks the coherence called for by the UN Special Representative. We recommend that the Government reviews its approach to business and human rights to develop a more consistent strategy with a clearer message. The forthcoming review of the OECD Guidelines provides a good opportunity for the Government to step back and look not just at the Government position on the Guidelines but at its broader approach to the human rights impacts of business both in the UK and overseas. (Paragraph 194)
40.One approach would be to broaden the cross-Government steering group on the UK NCP so that it could inform and coordinate Government strategy on business and human rights issues. While this steering group includes external members, it also provides an example of a coalition of relevant Government departments not currently duplicated on other issues. We recommend that the Government consider this option. (Paragraph 195)
41.We accept that there are legitimate concerns to be addressed in respect of direct application of extraterritorial standards overseas. We are not persuaded that the same degree of concern applies to all forms of regulation which may have some extraterritorial effects. We consider that the application of conditions to a parent company based in the UK, for the purposes of regulating their relationship with the UK Government or its shareholders in the UK, has a very different degree of extraterritorial effect to the direct application of the jurisdiction of the UK courts to breaches of the human rights obligations of the UK overseas. We recommend that the Government considers which standards it expects UK companies to meet in respect of its own contacts with and support for those businesses. (Paragraph 205)
International standards and legal certainty
42. The Government should not rule out setting clear standards for business to meet where it considers these standards are necessary to meet its human rights obligations. There is merit in considering whether existing standards supported by both businesses and the UK Government could be used to reinforce the responsibility of business to respect human rights in practice. (Paragraph 206)
Competitiveness and the playing field argument
43.We are not persuaded that unilateral steps by the UK would undermine the competitiveness of UK businesses. (Paragraph 209)
44.We recommend that any new Government strategy should build on the work of the Special Representative and the 'protect, respect, remedy' framework. It should also seek to address the criticisms raised by witnesses to this inquiry. In particular, Government policy must be clearer and more coherent. The principal purposes of the strategy should be to meet the Government's duty to protect human rights and to support UK businesses in meeting their responsibility to respect the human rights of others, both within the UK and abroad. Its key aim should be to set out clearly for businesses, consumers and the wider community what the UK expects of UK business. The international human rights obligations of the UK and UK Government policy on human rights should inform its policies for the private sector both within the UK and overseas. The strategy should present a clear and coherent connecting thread between domestic policy, foreign policy and the UK's international diplomacy, including at the EU, the OECD and the UN. (Paragraph 210)
Clearer standards in guidance and support
45.We recommend that the Government should ensure that adequate guidance is available on:
(a) the scope of the HRA 1998, including guidance for private bodies performing public functions on how to meet their duty to act in a Convention compatible way;
(b) the wider implications of human rights law for business;
(c) a human rights based approach to business; and
(d) standards which businesses should apply when doing business at home and abroad.
(Paragraph 217)
46.We recommend that as part of its Private Sector and Human Rights project, the Government considers how additional guidance should be provided on each of these issues. Ensuring that adequate guidance is available in language which is practical and relevant to business should form part of the Government's strategy on business and human rights. (Paragraph 218)
47.The Government should be clear about the human rights standards it expects UK businesses to meet. It should not merely recommend a list of voluntary schemes, but positively advocate for certain standards to be applied. If participation in voluntary or sector specific initiatives is recommended or endorsed, the Government should explain why, and what businesses need to do to participate effectively. Given the need for this direction from Government, we do not consider that this task can be delegated entirely to the Equality and Human Rights Commission or other National Human Rights Institutions. (Paragraph 219)
Public procurement
48.While we reiterate that contract compliance is no substitute for the direct application of the HRA 1998 to all private bodies performing public functions, there is much wider scope for public procurement to reinforce the responsibility of businesses to respect human rights. The Government has immense power as a purchaser and should take responsibility for human rights impacts in its supply chain. The Government's strategy should include clear and detailed measures to ensure that the UK takes a lead as an ethical consumer. This should include working with the Scottish Government and the devolved assemblies in Wales and Northern Ireland to ensure a consistent approach. (Paragraph 226)
49.Vague assertions that public authorities can take steps in their procurement processes to incorporate human rights standards are unlikely to lead to real change. Guidance from central Government will be required to encourage a more proactive approach. This guidance is essential, if public authorities are to have confidence that their responsibility to secure best value fits comfortably with wider social goals under EU public procurement requirements. We recommend that the Government issues guidance on different models, including in particular, use of the OECD Guidelines and negative Final statements by the UK NCP. The UK Government Sustainable Procurement Action Plan provides a valuable precedent, but the Government should not look at ethical procurement only through green tinted glasses. A broader approach is required. (Paragraph 227)
Public investments
50.We regret that the Minister chose to describe the proactive public approach to human rights in investment taken by the Norwegian Government as "proselysation". We accept that individuals responsible for investing taxpayers' money have a number of important and difficult responsibilities to meet. However, as in issues of public procurement, we consider that there is clear merit in encouraging public authorities to adopt an ethical or socially responsible approach. We recommend that when considering its approach to public procurement, the Government strategy should also address its position as an investor. (Paragraph 229)
Export Credit Guarantees
51.The Minister told us that the Government wants to create a framework where UK businesses conduct their business with respect for human rights. We find this difficult to square with his assertion that it would be too onerous to require UK companies seeking the support of the Export Credit Guarantee Department to perform due diligence of the human rights impacts of its application. We endorse the many constructive recommendations made by the House of Commons Environmental Audit Committee in its 2008 Report, The Export Credits Guarantee Department and Sustainable Development. The implementation of its proposals on increased transparency and disclosure in the CIAP process would improve the capacity of the ECGD system to incorporate human rights principles into its decision making and to pursue its statutory purpose more consistently with the Government's wider goals and obligations on sustainable development and human rights. (Paragraph 244)
52.We regret that the Government has rejected most of these proposals, except for a commitment to raise the issue of transparency during the review of the OECD Common Approaches to the Environment and Officially Supported Export Credits in 2010. This response appears to confirm concerns that the ECGD Business Principles, while 'good on paper', do not play a key role in the ECGD decision making process. It indicates that the UK Government is unwilling to show leadership on human rights issues, where to do so might impact negatively on UK business. (Paragraph 245)
53.At a minimum, we recommend that the Government expands its position on the 2010 reviews of both the OECD Common Approaches on the Environment and Officially Supported Export Credits and the OECD Guidelines to ensure that the work of the Special Representative is considered. We recommend that the Government should promote a common position which takes forward Professor Ruggie's recommendation that there should be a logical link between export credit and other forms of support and compliance with the OECD Guidelines. If no common position can be agreed, we recommend that the Government acts unilaterally to ensure that there are clear consequences following a negative final statement of the UK NCP against a UK company, including for any future applications by it for export credit. (Paragraph 246)
54.The ECGD decision-making process has been the subject of criticism by parliamentarians and others for many years. While the introduction of the Business Principles in 2000 has improved the framework for decision making on the human rights impacts of business, it is not clear whether this has had any impact on the decisions of the ECGD. Without increased transparency and openness in the assessment of applications, this impression is likely to endure. If the Government does not agree that the assessment process should follow more open and accountable procedures, we recommend that the Business Principles should be incorporated into the ECGD's statutory framework. (Paragraph 247)
Company law and reporting standards
55.Although the Companies Act 2006 represented a positive step forward for reporting on human rights impacts in the UK, we reiterate our earlier view that it could have gone much further to promote respect for human rights by UK companies. We welcome the recognition by the CBI that the business review process involves UK companies reporting on the human rights impacts of their operations. However, we share the concerns of a number of witnesses to our inquiry that these reforms have a number of limitations. Inconsistent reporting of human rights impacts in the business review will undermine its value. There is a case for clearer guidance on what reporting standards should apply and what issues should be considered material for the purposes of the review. We recommend that the Government should draw up and publish such guidance by the end of 2010 so that it can be informed by the forthcoming review of the Companies Act 2006. We again recommend that the Government considers amending the Act to require companies to undertake an annual human rights impact assessment as part of the business review, in the light of the recommendation of Professor Ruggie that all responsible companies should conduct such an assessment as part of their human rights due diligence. (Paragraph 254)
Investment, listing rules and socially responsible investors
56.Government strategy on business and human rights, including its policy on corporate responsibility, must engage with the important role played by institutional and other investors. While we welcome the recent statement by the Government that pensions fund trustees are legally able to take social, ethical and environmental considerations into account when making investment decisions, we recommend that the Government reviews existing measures and initiatives to support socially responsible investment in the UK and existing measures for the regulation of investment and associated guidance. (Paragraph 262)
Conflict, business and human rights
57.We agree with the UN Special Representative that a particularly firm approach is necessary towards the responsibility of businesses who operate in war zones or areas of conflict. We welcome the Government's participation in Professor Ruggie's working group on business and human rights in conflict zones. We recommend that the Government encourage Professor Ruggie to take a robust approach to his work on business in conflict zones. Further regulation and guidance in this context - whether internationally agreed or otherwise - would be good for both business and the international reputation of the UK. In the meantime, we support the conclusion of the House of Commons International Development Committee, that the operation of UK companies in the DRC illustrates the lack of seriousness with which the UK Government has previously treated the OECD Guidelines. We reiterate our earlier recommendation that the Government should publish a clear policy on following up negative final statements of the UK NCP. We consider that this is particularly important in cases involving operations in conflict zones. We urge the Government to take a strong and proactive approach to UK companies who fail to meet the minimum standards in the OECD Guidelines. Where an appropriate and relevant sanctions regime is in place and a negative final statement by the UK NCP indicates that a UK company is in breach, the Government should report the findings of the UK NCP to the relevant authorities, for example, to the relevant UN Sanctions Committee, or publicly explain why it has failed to make such a report. (Paragraph 268)
Private Military Security
58.We welcome the Government's commitment to an international solution and an agreed set of standards for the operation of private military security companies. However we share the concerns of the House of Commons Foreign Affairs Committee, that the Government's approach to consultation on this issue has been "regrettable and disappointing". We are concerned that this exercise provides another example of the Government citing administrative difficulties and business interests as justification for taking the path of least resistance. The Government should endeavour to secure international or EU agreement on a regulatory scheme for this sector to dispel the disappointment at its unacceptably weak approach thus far. (Paragraph 275)
The role of UK National Human Rights Institutions
59.The SHRC appears to be taking a positive approach to business and human rights work and we particularly welcome its involvement in the International Coordinating Committee of National Human Rights Institutions Working Group on National Human Rights Institutions, business and human rights. (Paragraph 279)
60.The private sector work of the Equality and Human Rights Commission [EHRC] has so far been largely limited to the equality stream. We are concerned that this is indicative of a broader failure of the EHRC effectively to integrate its work on equality and its work on human rights. We explored these concerns further in oral evidence with the Chair of the EHRC, Trevor Phillips, on 10 November 2009. We intend to report the broader findings of our inquiry on the work of the EHRC shortly. (Paragraph 280)
61.We note the recent commitment in the EHRC Human Rights Strategy and Programme of Action 2009-2012 to build business and public awareness of the key human rights issues in the private sector. We look forward to receiving further information on how it intends to develop this strand of their work. (Paragraph 281)
62.In the light of the enforcement elements of its mandate, we consider that it would be inappropriate for the EHRC to charge a fee for formal consultancy services like the Danish Institute for Human Rights. We note that the SHRC has a mandate to charge a fee for advice, guidance, research or training. While it may have the power to take the same approach as the Danish Institute for Human Rights, we accept its view, that charging businesses for consultancy in the UK may not be the right approach. However, we consider that there is far greater scope in the mandate and powers of both of these institutions (and the mandate of the NIHRC) to become involved in the debate around human rights impacts in the private sector. (Paragraph 284)
63. Government should produce such guidance for businesses without delay. We recommend that this is a key area where the expertise of the NHRIs should be used. The content and direction of this guidance should be informed by the outcome of the Ministry of Justice's Private Sector and Human Rights project currently underway and should only be published after consultation with business, business groups, NGOs and other interested parties. (Paragraph 285)
64.We also recommend that the NHRIs play a role in ensuring that the Government produces guidance on the wider human rights issues facing UK businesses in their operations overseas. In our view, the mandate of the EHRC is broad enough to engage with the Government on these issues. (Paragraph 286)
65.We recommend that the EHRC and the SHRC work together with the NIHRC to assist the UK Government to adopt a clear, positive and proactive strategy on business and human rights. (Paragraph 287)
Remedy: the right to a remedy
66. Many of the substantive and procedural barriers to litigation against businesses in the UK are generic problems with the domestic civil legal system, which are exacerbated in these cases because they generally involve multiple claimants who are far away and from whom it is difficult to take instructions, a complex series of facts and an uncertain legal background. These problems are not unique to the United Kingdom. Recommending a change would involve trailblazing in order to make it simpler for overseas claimants to pursue a remedy in the UK. We are not persuaded that we have enough evidence to reach a conclusion on whether changes to the law would be appropriate. (Paragraph 293)
67.Recent recommendations of the UK Civil Justice Council on opt-out group litigation would meet at least some of the concerns raised about the current complexity of pursuing litigation in the courts in England and Wales. We did not have the opportunity to consider with witnesses the Government's response to these recommendations, which rejects the proposal for a generic approach to opt-out actions, because these were published after the close of our inquiry. The Government intends to examine representative actions on a case-by-case basis and to develop a framework for this purpose. We recommend that the Ministry of Justice considers the evidence provided to this inquiry about barriers to litigation against UK companies, when deciding which types of action may be suitable for representative action. (Paragraph 294)
68.We recommend that, in its response to the Jackson Review of Civil Litigation Costs, the Government consider the evidence we received that current costs rules and funding limitations undermine the ability to seek redress of alleged victims of breaches of human rights standards as a result of actions or omissions by UK companies. (Paragraph 295)
Extraterritorial jurisdiction: the Alien Torts Claims Act Model
69.The high-profile operation of the Alien Torts Claims Act and the ensuing corporate fear of US litigation have helped to drive forward the debate on business and human rights. While the creation of a similar cause of action in the UK is superficially attractive, we consider that ATCA style cases would be beset by many of the same substantive and procedural difficulties outlined above. We were not persuaded at this stage of the debate that our inquiry should focus on new judicial remedies. In our view, the highest priority is for the Government to make clear to UK business the human rights standards which businesses should meet to avoid human rights abuses arising. (Paragraph 300)
A UK Commission for Business, Human Rights and the Environment
70.We are sympathetic to the argument that there should be a Commission for Business, Human Rights and the Environment. We have already identified gaps in the current approach of the Government - - including providing guidance and promoting best practice - which are activities which it is proposed that the Commission could undertake. Without a clear Government strategy on business and human rights, or any clear legal framework or defined boundaries for the responsibility of business to respect human rights, we are concerned that such a Commission would have an impossible task. However, for the reasons outlined in the rest of this Report, we do not agree with the Government that the existing UK framework currently provides adequate protection for the rights of individuals against the potential impact of activities of UK companies. We recommend that the Government works with NGOs, business and business organisations to explore the proposal for a UK Commission for Business, Human Rights and the Environment; in order to consider whether some of the tasks which it might adopt can be performed by Government, the UK NCP or the existing NHRIs. (Paragraph 305)
71.We agree that securing a remedy for individuals whose rights are breached is one of the central challenges in the business and human rights debate. In our view, this is also likely to prove the most difficult part of Professor Ruggie's work on which to find a consensus. Witnesses agreed that an international solution would be unlikely in the short-term. We recommend that the UK Government should help develop an international consensus and consider options in the UK for enhancing access to a remedy. In the meantime, the OECD should be encouraged to consider how the OECD Guidelines and the National Contact Point system can be strengthened to give greater specificity on the responsibility of business to respect human rights, greater independence from Government, and the capacity for individuals to secure an effective remedy. (Paragraph 307)
72.Under the Human Rights Act 1998, private sector entities performing a public function are subject to the duty to behave in a Convention compatible way. The Act also has a broader impact on UK businesses: private entities have their own rights guaranteed; human rights arguments arise in business disputes; and the legal and regulatory frameworks in which businesses operate are influenced by the Act. The activities of UK businesses operating abroad also impact on the Government's international human rights obligations. We are therefore disappointed that the Government has no coherent strategy in this area. (Paragraph 308)
73.The UK should provide leadership by ensuring that all UK businesses understand their responsibility to respect human rights no matter where they operate. Unfortunately few businesses understand what relevance human rights principles, or the UK's international human rights obligations, have for their operations. Our intention in this Report is to encourage the Government to develop a new strategy on Business and Human Rights which clearly sets out the standards which UK businesses are expected to meet. In doing this the Government should draw on the work of the UN Special Representative and build on his 'protect, respect and remedy' framework. The goal must be international agreement on an approach to Business and Human Rights and the best way to achieve this would be to work with other countries to agree a consistent approach to business and human rights. (Paragraph 309)
74.  The UK is in a good position to show leadership in this area. This country is a major consumer of internationally produced goods and provides a base for many large multinational companies. The UK's reputation is particularly vulnerable when these companies are associated with allegations of human rights abuses overseas. If the UK takes the international lead in this area it will be beneficial to the competitiveness of UK companies overseas and to the UK's international reputation. By providing consistent leadership the Government can help ensure that human rights are respected more fully. (Paragraph 310)

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