UN Guiding Principles for Business & Human Rights

John Ruggie, the Berthold Beitz Professor of International Affairs at the Kennedy School of Government, is currently serving as the United Nations Secretary-General’s Special Representative for Business and Human Rights. This post relates to the final version of the Guiding Principles on Implementing the United Nations “Protect, Respect and Remedy” Framework for Business and Human Rights drafted by the Special Representative, which are available here.

In March, as the final product under my UN mandate as Special Representative to the Secretary-General for Business and Human Rights, I released a set of Guiding Principles for Business and Human Rights. The Guiding Principles seek to provide for the first time an authoritative global standard for preventing and addressing the risk of adverse human rights impacts linked to business activity. The UN Human Rights Council will consider formal endorsement of the text at its June 2011 session.

The Guiding Principles are the product of six years of research and extensive consultations involving governments, companies, business associations, civil society, affected individuals and groups, investors and others around the world. They outline how States and businesses should implement the UN “Protect, Respect and Remedy” Framework in order to better manage business and human rights challenges. That Framework, which I proposed in 2008, was unanimously welcomed by the Human Rights Council at the time, and has since enjoyed extensive uptake by international and national governmental organizations, business, civil society and other stakeholders.

The Guiding Principles highlight what steps States should take to foster business respect for human rights; provide a blueprint for companies to know and show that they respect human rights, and reduce the risk of causing or contributing to human rights harm; and constitute a set of benchmarks for stakeholders to assess business respect for human rights. The principles are organized under the UN Framework’s three pillars:

  • The State Duty to Protect against human rights abuses by third parties, including business enterprises, through appropriate policies, regulation, and adjudication.
  • The Corporate Responsibility to Respect human rights, which means that business enterprises should act with due diligence to avoid infringing on the rights of others and to address adverse impacts with which they are involved
  • The need for greater Access to Remedy for victims of business-related abuse, both judicial and non-judicial.

The Framework provided an authoritative focal point around which the expectations and actions of the various players could converge in this debate – business, government, civil society, investors and beyond. At its foundations is good risk management. Here companies should manage three overlapping sets of risks: the first is to the victims of corporate related human rights harm. The second risk is to companies themselves. This has come to be called stakeholder-related risk, or risks stemming from community challenges and resistance to company operations, typically on environmental and human rights grounds. Such risks to companies include delays in design, siting, granting of permits, construction, operation and expected revenues; problematic relations with local labor markets; higher costs for financing, insurance and security; reduced output; collateral impacts such as diverted staff time and reputational hits; and possible project cancellation, forcing a company to write off its entire investment and forgo the value of its lost reserves, revenues and profits, which can run into several billion dollars in the latter case.

The third risk is the systemic fall-out of the first two. It can take the form of populist resistance, like organized local activity with transnational support that fights an entire industry sector. For example, the World Bank came perilously close to getting out of extractive projects a decade ago and the friction still exists. A second form is resource nationalism, which is on the rise everywhere. And the third is gradual decay in the rules, customs and institutions necessary for sustainable markets. History teaches us that markets pose the greatest risks—to society and business itself—when their scope and power far exceed the reach of the institutional underpinnings that allow them to function smoothly.

The Guiding Principles provide practical and concrete recommendations to governments and companies on the policies and processes they may put in place to manage these risks. And in particular for companies, the systems to help integrate respect for human rights throughout the enterprise to help meaningfully prevent and address their involvement in human rights abuse. In this regard, what I recommend is human rights due diligence.  It can be incorporated within broader enterprise risk-management systems, provided that it goes beyond simply identifying and managing material risks to the company itself, to include risks to rights-holders.

The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.  And it:

  • (a) Should cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships;
  • (b) Will vary in complexity with the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations;
  • (c) Should be ongoing, recognizing that the human rights risks may change over time as the business enterprise’s operations and operating context evolve.

Human rights due diligence should be initiated as early as possible in the development of a new activity or relationship, given that human rights risks can be increased or mitigated already at the stage of structuring contracts or other agreements, and may be inherited through mergers or acquisitions.

Conducting appropriate human rights due diligence should help business enterprises address the risk of legal claims against them by showing that they took every reasonable step to avoid involvement with an alleged human rights abuse. However, business enterprises conducting such due diligence should not assume that, by itself, this would automatically and fully absolve them from liability for causing or contributing to human rights abuses.

I look forward to formally presenting the Guiding Principles at the UN Human Rights Council’s June session. Endorsement by the Council would enable the global community to move beyond the confusion and polarization of the past by establishing an authoritative point of reference that recognizes the central role that States need to play, gives businesses predictability in what is expected of them, and provides other stakeholders, including civil society and investors, the tools to measure progress where it matters most – in the daily lives of people.

The broad range of stakeholders with whom I consulted in preparing the Guiding Principles included corporate lawyers, both in-house and from leading law firms. In particular, the human rights due diligence process was the subject of detailed discussions with corporate law professionals from more than 20 countries with expertise in over 40 jurisdictions.

More recently, I am grateful to the many voices in the corporate governance field who provided feedback as I finalized the Guiding Principles. For instance, Martin Lipton of Wachtell, Lipton, Rosen and Katz has remarked that the “Guiding Principles insightfully marries aspirations with practicality. It identifies a host of tangible opportunities for Nations and businesses to contribute to the goal of preventing human rights abuses. ….. In short, Guiding Principles encapsulates the Special Representative’s stated commitment to “principled pragmatism,” reflecting the world’s fundamental human rights expectations in a balanced way that takes account of the varied, complex global business landscape.”

I encourage the Harvard Corporate Governance Forum’s members to stay engaged in this debate and to work towards building capacity in this field amongst your clients and within your organizations.

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