Memorandum submitted by CBI
1. The Confederation of British Industry
(CBI) is the national body representing the UK business community.
It is an independent, non-party political organisation funded
entirely by its members in industry and commerce and speaks for
some 240,000 businesses that together employ around a third
of the UK private sector workforce. The CBI's membership includes
the majority of the FTSE 100, some 200,000 small and medium-sized
enterprises (SMEs), more than 20,000 manufacturers and over
150 sectoral associations. It also represents UK business
internationally through membership of international business organisations,
through its extensive network of contacts, and through offices
in Brussels, Washington DC, Beijing and representation in New
Delhi.
THE CONTEXT
2. Issues related to business and human
rights have attracted increased attention from all stakeholders.
Some of the debate surrounding these issues has been divisive,
mainly because it had been impossible until recently to reconcile
conflicting views. In June 2008, the UN Human Rights Council adopted
a report written by Professor John Ruggie, the UN Secretary-General's
Special Representative (SRSG) on business and human rights. This
report, which introduced a policy framework based on the principles
of state duty to protect, corporate responsibility to respect
and access to remedies, and its subsequent adoption by the UN,
marked a turning point. It provided the first widely supported
advance in the ongoing discussions not just because of the rigour
of its analysis, but also because of the exemplary and transparent
multi-stakeholder consultation process that the SRSG undertook.
3. The CBI strongly supports this framework
and the decision of the UN Human Rights Council to extend the
SRSG's mandate for a further three years with a view to operationalising
his framework. We believe that this is the best and most effective
way to address an extremely complex set of issues in a balanced,
objective and practical manner. There were some who called for
the mandate to include a complaints receiving mechanism or to
move towards a global ombudsman approach. We believe the UN Human
Rights Council was right to continue to focus the mandate on where
and how it can make continued progress towards its goals in the
allotted timeframe.
4. Businesses are one of the key building
blocks in society. They generate wealth, create jobs, supply goods
and services, provide tax revenues, raise living standards and
help lift people out of poverty. The vast majority of businesses
are committed to operating in a responsible and sustainable way.
Responsible business conduct has legal compliance at its heart.
In addition, it may include activities that are undertaken voluntarily
which are above and beyond legal requirements. Such initiatives
are commonly defined as corporate social responsibility activity
and are rooted in the fundamentals of the business itself. They
can take many forms and can be global, national, sectoral or company
specific.
5. The CBI believes that business and respect
for human rights are mutually supportive. Responsible businesses
have always taken account of their impact on human rights as well
as the need to support them in the workplace and in the community.
Indeed, many CBI members are employers of choice at home and abroad
because of their approach to human rights. Recently, we have seen
greater, more public activity and interest from business due to
a growing awareness that these are pressing issues, especially
as more and more companies have become involved in complex supply
chains and new markets, a recognition of the important contribution
that they can make to this evolving set of issues and the positive
climate that the SRSG has helped to create. We welcome the Joint
Committee's inquiry, particularly since it is aligned with the
work of the SRSG. The CBI hopes that the Committee's inquiry will
follow the same spirit that has characterised the efforts of Professor
Ruggie as it examines the rights and responsibilities of the UK
Government, businesses and other stakeholders.
STATE DUTY
TO PROTECT
6. Governments are the primary duty bearers
of human rights. This lies at the heart of the SRSG's framework
and the CBI supports the recognition of the obligation on states
to protect human rights. There are clear differences between what
governments must do and what business can be expected to do. Business
can never take the role of nor should it be expected to become
a surrogate government. Attention should continue to focus on
the need for national governments to create the underlying legal
framework that protects human rights as well as ensuring adequate
implementation and enforcement of that framework.
7. In our view, domestic and multinational
companies require the same basic principles and government policies
to protect human rights. These include good governance, the rule
of law, open markets, and sound economic, social and environmental
policies. This will have a positive impact on the vast majority
of the world's companies that are part of a global supply chain
or that are domestic businesses.
8. The failure or inability of governments
to meet their duty to protect is, in our view, the basic cause
of most abuses of human rights. These governance gaps need to
be identified and ways found to close them.
9. Most egregious abuses of human rights
take place in countries or regions with weak governance, limited
political and civil freedoms, endemic corruption or conflict.
Such situations are by their very nature not easy to resolve.
Attempts to do so will require the international community to
work together through government-to-government dialogue, international
co-ordination, and good working relationships between governments
and all stakeholders.
10. It has been suggested by some that the
output of the mandate should be a UN treaty or global legal instrument
covering business and human rights. The CBI does not support this
view. We believe that such an initiative would take a significantly
long period of time to negotiate, it would divert resources away
from the promise offered by the SRSG's current mandate and it
is unclear as to how any such treaty might actually be enforced.
The SRSG has expressed his concerns along similar lines.
11. In his latest report to the UN Human
Rights Council, the SRSG provides further comment about the coherence
of government policies towards human rights across the totality
of its activities. But we would counsel caution that, in examining
these issues, appropriate attention must be given to the reasons
why an instrument, policy or government support is given. For
example, bilateral investment treaties (BITs) provide legitimate
and crucial protection to foreign investors against such things
as illegal expropriation, expropriation without adequate compensation
or arbitrary decision-making. We believe that the correct balance
of interests must be struck and excesses or misuse of BITs avoided.
Without such investor protection, however, the likelihood of a
significant decline in foreign direct investment and capital flows
would loom large.
12. Similarly, care must be taken when looking
at linkages between guidance given to companies and legal penalties
imposed. For example, the OECD Guidelines are obligatory on signatory
governments to promote but voluntary for business. In addition,
the complaints mechanism—the National Contact Point—is
not a judicial body. Taken together, it would therefore not be
appropriate either under the law or otherwise to sanction directly
a company found to be in breach of the Guidelines. It might, however,
be appropriate to consider taking into account these circumstances
in future contacts.
CORPORATE RESPONSIBILITY
TO RESPECT
13. The distinction between state duty to
protect and corporate responsibility to respect is recognised
by the SRSG in the analysis that led to the production of his
framework. We believe this was critical in getting beyond the
log-jam that had existed before the start of the first mandate.
And it will be critical to the success of the current mandate
too.
14. The CBI has been very clear in its leadership
role within the international business community in stressing
that all companies must comply with the law wherever they operate.
They should also respect the principles of relevant international
instruments where national law is absent or poorly enforced. This
applies in equal measure to multinational, domestic, public, private
or state-owned companies. We also see no justification for thinking
that the current economic situation would justify a lessening
of that commitment to respect human rights.
15. At the heart of the responsibility to
respect human rights is effective due diligence and risk management.
This enables a company to ensure that it can meet the SRSG's criterion
to do no harm. The process is an evolving one with an active learning
component, but there are some emerging trends that the SRSG has
identified. These include having a human rights policy and identifying
relevant issues; looking at whether human rights impact tools
might be relevant; integrating the policy throughout the business;
and tracking or measuring performance. The CBI concurs with this,
and with the conclusion that the sphere of influence concept is
not the right way to address corporate responsibility in the context
of human rights.
16. Business is assisted in its responsibility
to respect by a wide range of instruments and tools. Amongst the
leading initiatives are the OECD Guidelines, the ILO MNE Declaration
and the Global Compact. Sectoral and company codes of conduct
often reflect the content of these initiatives but are also tailored
to meet some of the specific requirements of their operations.
For additional due diligence in weak governance zones, the OECD
has produced the Risk Awareness Tool as a complement to the OECD
Guidelines. The International Organisation of Employers, the International
Chamber of Commerce and the Business and Industry Advisory Committee
to the OECD have also jointly compiled a list of issues and approaches
that companies should consider when operating or contemplating
starting to operate in weak governance zones.
ACCESS TO
REMEDIES
17. Following state duty to protect and
corporate responsibility to respect, it is self-evident that there
needs to be effective access to remedies. This is not related
solely to business and human rights issues. It is a general principle
that all parts of society should be able to seek redress for grievances
through either judicial or non-judicial means. In this context,
though, it is important that such mechanisms reflect and are built
upon the principles in the SRSG's report.
18. One of the most persuasive arguments
in the report is that addressing potential grievances at an early
stage may prevent escalation and lead to faster effective resolution
of disputes. The SRSG is developing a non-judicial grievance mechanism
as part of the access to remedies workstream that will include
piloting. We support this initiative.
19. We are, however, uneasy about the potential
for the extension of extraterritorial jurisdiction. Business has
rightly had long-standing principled concerns about extraterritoriality.
Our basic point of departure is that domestic legislation should
not be given extraterritorial reach unless there is a substantive
and demonstrable link to that domestic jurisdiction. In addition,
such a move could promote a growth in forum shopping where claims
are brought in accordance with perceived advantage. This would
send a very negative signal and provide no incentive to those
states that are unwilling to undertake their duty to protect human
rights. Finally, it is open to question whether domestic legal
systems and courts would have the capacity or expertise to sit
in judgement over human rights issues in another jurisdiction.
20. There are some lobby groups that have
called for the creation of a global ombudsman. We do not think
that this idea has merit and it is very difficult to envisage
how it could be made to work effectively. The SRSG's 2009 report
to the UN Human Rights Council explains why he does not believe
that such an idea meets his basic standards of fairness and rigour,
and it would do little to help provide an effective remedy to
those with grievances.
CONCLUSION
21. This is a time of progress in the business
and human rights arena. The reports of the SRSG and his work towards
operationalising his framework of protect, respect and remedy
offer great potential. It is worthy of support and the CBI will
continue to play its part in contributing to the mandate. We hope
that the Joint Committee's inquiry will do the same and reinforce
the validity of its direction and outputs.
CBI
May 2009
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