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Business and human rights: The UN’s principles and OECD guidelines

Companies would be well-advised to adhere to future binding obligations on human rights standards, writes Miranda Rushton

25 October 2016

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In recent years there has been growing acceptance of the relevance of human rights norms to how businesses, particularly multinational enterprises, conduct their operations. Initiatives such as the UN Guiding Principles on Business and Human Rights, as well as the human rights chapter of the OECD Guidelines for Multinational Enterprises, have been instrumental in the development of this area.

While these documents do not impose binding obligations on businesses, there have been attempts to increase accountability, for example, by providing for complaints to national contact points under the OECD Guidelines. Businesses need to be aware of the potential impact of such complaints on their reputations, and put in place standards and due diligence procedures to avoid admonishment. The recent discussion in the mainstream media of the protection of human rights or otherwise in the context of the proposed TTIP agreement between the EU and the United States demonstrates the importance of this.

The guiding principles were formulated, following extensive consultation with stakeholders, by John Ruggie, the UN secretary-general’s special representative on business and human rights. They were subsequently endorsed by the UN Human Rights Council in June 2011. The guiding principles are based on three complementary and interdependent pillars: the state duty to protect against human rights abuses by third parties, including business; the corporate responsibility to respect human rights; and the need for greater access by victims to effective judicial and non-judicial remedies.

The OECD guidelines are recommendations addressed by governments to multinational enterprises operating in or from adhering states. They are therefore non-binding but provide principles and standards for responsible business conduct consistent with applicable laws and internationally recognised standards.

Updated guidelines adopted in May 2011 included a new human rights chapter which draws on and is consistent with the UN’s guiding principles. The OECD requires adhering states to set up national contact points to promote and implement the guidelines; in the UK, the contact point sits in the Department for International Trade. Such points have the dual function of raising awareness of the guidelines with businesses, trade unions, and non-governmental organisations, and implementing the guidelines’ complaint mechanism. Any interested party can file a complaint with the government department.

Though neither of these documents is binding, they have considerable moral force. Their significance lies in the reputational consequences of perceived or actual breaches with shareholders, the media, and NGOs.

Meanwhile, there have been calls for binding obligations. In reality, this will need to be achieved at the domestic level since international law operates only between states and in general contains no mechanism for the imposition of binding rules on non-state actors. However, political will at the international level could lead to the introduction of binding obligations at the domestic level.

Indeed, there has been progress towards an international treaty on transnational corporations and other business enterprises with respect to human rights. The second session of an intergovernmental working group on the subject is taking place at the UN Human Rights Council this week.

The mandate of the group is to elaborate an international treaty that ‘should require states to adopt legislation and other measures requiring transnational corporations and other business enterprises to adopt policies and procedures aimed at preventing, stopping and redressing adverse human rights impacts wherever they operate or cooperate’.

There have also been recent calls for investment treaties concluded between states to include obligations on investors to adhere to certain human rights standards (though, of course, investors are not parties to such treaties and so any obligations would need to be imposed upon them through other means).

In the future, therefore, companies may well be subject to binding obligations requiring them to adhere to human rights standards, and they would be well-advised to put measures in place to ensure that they do so.

Miranda Rushton is a senior associate at Carter-Ruck

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Human rights

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human rights company business UN Guiding Principles on Business and Human Rights OECD Guidelines for Multinational Enterprises TTIP UN Human Rights Council