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

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.


  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.


  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.


  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.


  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.


  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.


May 2009

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