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

Supplementary memorandum submitted by the 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.  During oral evidence, the Joint Committee asked for additional information from the CBI. This submission covers those points.

  3.  The CBI would wish, however, to stress the strong support it has given for the work of Professor John Ruggie, the UN Secretary-General's Special Representative (SRSG) on business and human rights. We believe his mandate is the best and most effective way to address an extremely complex set of issues in a balanced, objective and practical manner. The work that he is undertaking to operationalise the framework of state duty to protect, corporate responsibility to respect and access to remedies will address much of what the Joint Committee is examining. We therefore urge the Joint Committee to ensure that it reflects and reinforces the SRSG's work.


  4.  The London Stock Exchange exists to fulfil a particular role. We doubt that human rights falls within the statutory financial markets regime regulated by the Financial Services and Markets Act and so not within the remit of the London Stock Exchange. Furthermore, we do not see that listing rules can easily and practically be adapted to regulate human rights conduct by companies listed on the Exchange. One suggestion that was made to us in oral evidence included the phrase "firms which have committed or are complicit in human rights abuses". It is not clear to us the basis upon which such judgements would be made and by whom. The CBI would therefore not support this concept.

  5.  There are two other broader points we would make. First, the Companies Act 2006 includes the concept of materiality and the Business Review may include a wide range of issues deemed to be material. Second, it is important to focus on what a company does when it finds out that something has gone wrong, often in circumstances that were not of its making. Any policy response should therefore allow those companies to find ways of resolving the matter and to improve performance.


  6.  It is a matter for the contract framers to consider how they wish to construct a contract, given all the factors that they will have to take into account. This includes the duties they have under various pieces of legislation. Tender documentation will need to reflect any of those duties that will then be passed on to the suppliers.

  7.  Value can be seen as a concept that encompasses multiple elements. Multilateral obligations to which the UK is a signatory, such as those at the World Trade Organisation under the Government Procurement Agreement, embody the principles of transparency, non-discrimination and fair and effective competition amongst contracting parties as key elements of ensuring optimal value.

  8.  In addition, companies have codes of conduct, belong to sectoral or trade associations that run compliance programmes, and are members of schemes that provide kite marks or other endorsements related to sourcing, behaviour and compliance. All these may be drawn upon if the contracting parties so wish and they can serve as important criteria in evaluating bids for public contracts.


  9.  The business community has very severe reservations about the extraterritorial application of legislation. These are both principled & practical in nature. We believe that extraterritoriality undermines basic legal principles whereby a State regulates persons and activity within its borders. In addition, it increases legal and commercial uncertainty; increases the prospects of retaliation, protectionism and political disputes; distorts trade and investment; and produces conflicting requirements that have negative consequences, including enhanced transaction and compliance costs, on business.

  10.  In general, the CBI believes that this argues for a State to refrain from attempts to exercise jurisdiction unless there is a clear, demonstrable and substantial link to its territory.

  11.  In oral evidence, the question of the US Alien Tort Claims Act (ATCA) of 1789 was raised. The CBI wishes to re-affirm that we do not believe that an Act that was passed to deal with the actions of States can be made applicable to other actors. The US Supreme Court has narrowed the scope of the extraterritorial impact of the Act quite considerably when it has been petitioned. As of now, there have been no judgements handed down from US courts involving companies that impose financial or other penalties. Any settlements that have been made have been agreed out of court. This statute will not work for actions for which it was never intended and should not accommodate.

  12.  Finally, we would note in this context the recent statement by the Republic of South Africa welcoming the decision of the US District Court (Southern District of New York) to dismiss claims made under ATCA "based solely on the fact that companies merely did business with the apartheid government". This decision addressed some of the South African Government's concerns. The same statement also welcomes moves to have remaining matters resolved outside the court process in the Republic of South Africa.


  13.  The CBI has discussed the proposal for a UK commission on human rights with the Core Coalition. It seems to be a mix of legal, quasi-legal and non-legal activity. We are unable to support it for significant reasons, mainly because it makes no attempt to analyse current instruments, codes, processes, conventions, how law is enforced, or where the gaps are in any objective manner. In that sense, we are concerned that there is a danger that it could undermine the global solutions that the SRSG is seeking to put in place.

  14.  In addition, the extraterritorial nature of the proposal whereby a UK public entity is set up to judge standards of behaviour in other jurisdictions raises major barriers and problems. This is separate to the issue of upon which and whose standards will such activity be based. We doubt whether the effect of the commission in this area will be anything other than to drive the wrong-doer away from any influence that good practice UK companies can seek to deploy. Even in the area of advising and guidance, which is perhaps the better part of the proposal, we remain to be convinced that the UK-centric basis of such a commission could properly address complex and evolving issues overseas.

  15.  Finally, we believe the commission would undermine the operation of the OECD Guidelines and the National Contact Point (NCP) process at a time when the UK reforms of the NCP have been endorsed by all stakeholders as major advances. Such a move would hamper the ability of the UK to lead opinion in the forthcoming review of the Guidelines, as well as making access to remedies more confrontational and combative.

  16.  For all of these reasons, the CBI strongly endorses the statement of the Minister of State at the Ministry of Justice, Mr Michael Wills MP, who told the Joint Committee in oral evidence on 14 July 2009 that there was no need for a commission as a working framework was already in place.


  17.  In concluding this supplementary submission, we reiterate the positive role that the CBI will continue to play in contributing to the mandate and work of the SRSG.

20 September 2009

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