Overview of legislative developments – Human Rights Due Diligence from multilateral soft law to unilateral hard law

Overview of legislative developments – Human Rights Due Diligence from multilateral soft law to unilateral hard law

To prepare for the UN Forum on Human Rights & Business I compiled some interesting legislative intiatives which are an indication of the transfer from multilateral soft law (i.e. UN Guiding Principles & OECD Guidelines for Multinationals). All focus on the central concept of CSR or Human Rights Due Diligence, or similar forms of supply chain responsibility. Sometimes there is a focus on a narrower set of Human Rights issues like Slavery (in a broad definition, including forced and child labor). Of course this is not a limitative list. (This is no endorsement of the specific proposals by the way, just to flag a trend.)

France

French Due diligence proposal. Broad on OECD Guidelines & UNGP. Prime Minister Valls recently said he supports this law.

https://friendsoftheoecdguidelines.files.wordpress.com/2014/11/pion1897societesmeresfiliales.pdf

PROPOSITION DE LOI 1897 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre,(

Switzerland

Parliament Motion 14.3671

« Umsetzung des rechtsvergleichenden Berichtes des Bundesrates über die Verantwortung von Unternehmen bezüglich Menschenrechten und Umwelt »

Prof Ruggie on Motion 14.3671 http://business-humanrights.org/en/swiss-foreign-affairs-committee-calls-for-mandatory-human-rights-due-diligence-for-companies-0#c106965

United Kingdom

Modern Slavery Bill (proposal)

https://friendsoftheoecdguidelines.files.wordpress.com/2014/11/modern-slavery-bill-15051.pdf

Interesting: Part 6, section 51 Transparency in Supply Chains

California

Transparency in Supply Chains Act of 2010

https://friendsoftheoecdguidelines.files.wordpress.com/2014/11/california-slavery-in-supply-chain-act-164934.pdf

European Union

General on reporting (on International Standards that include Human Rights Due Diligence)

http://ec.europa.eu/finance/accounting/non-financial_reporting/index_en.htm

Specific on Conflictminerals (all building on OECD Due Diligence Guidance)

(http://mneguidelines.oecd.org/mining.htm)

 

European Union

EU regulation: Proposal for a Union system for supply chain due diligence self-certification of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflictaffected and high-risk areas (proposal)

https://friendsoftheoecdguidelines.files.wordpress.com/2014/11/eu-proposal-conflict-minerals-tradoc_152227.pdf

 

United States

Dodd Frank (well known)

Rwanda, DR Congo, Burundi

OECD Due Diligence Guidance of conflict minerals (includes human rights due diligence) is made hard law in Democratic Republic of Congo, Rwanda and Burundi.

Canada

Bill C-486: Conflict Minerals Act (proposal)

http://openparliament.ca/bills/41-2/C-486/

Specific on Myanmar

US Investments in Myanmar/ Burma

United States Department of State ‘Reporting Requirements on Responsible Investment in Burma

Dr R. Nieuwenkamp

Chair OECD Working Party on Responsible Business Conduct

The road to responsible investment treaties

by Roel Nieuwenkamp and Kimmo Sinivuori

Originally published by Columbia FDI Perspectives  Perspectives on topical foreign direct investment issues, No. 134 November 10, 2014, Columbia Center for Sustainable Investment.   Available in English and Chinese.

As the OECD Guidelines for Multinational Enterprises, first adopted in 1976 and
updated for the fifth time in 2011, are approaching middle age, it is appropriate to
reflect on how the use of these far-reaching recommendations for responsible business
conduct can be promoted in international investment agreements (IIAs). During the
Guideline’s almost four decades of existence, the landscape of the global economy
has continuously evolved, and securing sustainable development has become a key
international issue.

The OECD Guidelines is a unique tool to address this issue, as they provide voluntary
principles and standards for responsible business conduct in areas such as
employment and industrial relations, human rights, environment, information
disclosure, combating bribery, consumer interests, science and technology,
competition, and taxation.

Economic growth is essential for achieving sustainable development, and private
investment — both domestic and foreign — is its engine. The fundamental question
then is how to ensure that such investment is environmentally sound, promotes labor
standards and respects human rights.

The main aim of IIAs has been, and remains, the protection of legitimate foreign
investors and their investments in the contracting parties. IIAs have so far imposed
obligations on contracting parties only, and not on investors. The rationale of this
approach has been that investors’ obligations must come from domestic legislation, be
it environment or labor-related, and that foreign investors must respect that legislation
in order to be protected by the treaties.

With this in mind, governments have so far encouraged foreign investors to do more
than they are obliged to under the law, based on instruments such as the OECD
Guidelines and the United Nations Guiding Principles on Business and Human
Rights. The question today is whether we can use IIAs to advance the same objectives
as these instruments. Our answer is that we can, if we introduce some carefully
drafted, smart clauses to new treaties.

An approach would be to introduce into an IIA a reference to the OECD Guidelines.

This can be done by preamble language where the parties to a treaty would recognize
the need to promote the Guidelines. This would most likely be the easiest solution —
but at the same time would not create binding obligations on the parties. A stronger
alternative would be to introduce a provision that would oblige the parties to promote
the Guidelines. It could also include an obligation to set up a non-judicial grievance
mechanism that would assist companies and complainants in finding a solution to
issues related to implementation of the Guidelines, through mediation or conciliation.

However, the legally non-binding nature of the Guidelines raises the question of
whether the obligation can only be placed on the contracting parties and only to the
extent that it would cover promotion and a non-binding grievance mechanism. The
legitimate concern has been that a voluntary instrument would be made mandatory
indirectly through another binding international agreement.

Nevertheless, we are in favor of exploring a solution that would stipulate that only
those investors that can demonstrate compliance with the Guidelines would be
eligible for protection under IIAs. This is easier said than done and involves many
complex procedural and substantive issues. It is, however, conceivable to exclude
protection for investments that are linked to corruption. Another option worth
exploring is to include a provision that specifies that materially relevant breaches of
the Guidelines are taken into account by a tribunal when deciding on the merits of a
claim or on potential damages awarded.

The abovementioned approach needs to be complemented by actionable clauses in
treaties that would ensure compliance from a contracting party to implement specific
measures related to the environment, labor standards and human rights. A treaty could
stipulate, for example, that the contracting parties would undertake to become party to
and implement relevant international agreements or standards related to environment,
human rights and labor standards.

To conclude, we believe that, through the addition of clear and smart clauses or
preamble language, it is possible to advance responsible business practices in IIAs
while at the same time protecting the interests of responsible investors and their
investments against maltreatment.

Canada Introduces Enchanced CSR Strategy for Extractives

This week Canada announced their new CSR strategy “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad.”   This strategy reaffirms Canada’s commitment to implementation of strong ethical standards in business and makes explicit reference to OECD instruments.

For example key elements of the strategy include:

”’In situations where parties to a dispute would benefit from formal mediation, the CSR Counsellor will make a referral to Canada’s National Contact Point,  the robust and proven dispute resolution mechanism, guided by the OECD MNE Guidelines on responsible business conduct, and active in 46 countries; (…)

Inclusion of benchmark CSR guidance released since 2009, namely the United Nations’ Guiding Principles on Business and Human Rights, and the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (…)”

Full text of the strategy and relevant links are available here. 

OECD’s Human Rights Grievance Mechanism as a Competitive Advantage

The link between the National Action Plans for Business and Human Rights and the OECD Guidelines

Currently the UN Working Group is seeking consultation on what substantive elements should be included in National Action Plans (NAPs) for business and human rights. NAPs are strategy documents that States are encouraged to develop as part of the State responsibility to disseminate and implement the UN Guiding Principles on Business and Human Rights (UNGPs).[1] Several states have already developed and submitted NAPs. While such plans will vary according to specific state contexts, some overview of the elements that should  be covered within the plans will be helpful in achieving coherence on principles for strengthening implementation of the UNGPs.

UN Guiding Principles for Business and Human Rights, OECD Guidelines for Multinational Enterprises and National Contact Points

The 2011 update of the OECD Guidelines for Multinational Enterprises (‘the Guidelines) included a stronger human rights chapter fully aligned with the UNGPs. Countries adhering to the Guidelines, currently comprising 46 nations, are required to set up National Contact Points (NCPs). The role of NCPs is to raise awareness on expectations covered under the Guidelines and to serve as good offices for resolution of issues, or ‘’specific instances’’, arising from the alleged non-observance of the Guidelines. Thus, through the vehicle of NCPs, the Guidelines are a de facto implementation mechanism of the UNGPs. Since 2011 the chapter on human rights of the Guidelines has been cited in 54 specific instances brought to NCPs and has been the most frequently cited chapter of the Guidelines over the last two reporting periods.[2] As such NCPs should be a principle component of NAPs.

NCPs are also valuable in that they can provide guidance on related OECD tools which promote human rights, for example the OECD Due Diligence Guidance for Responsible Mineral Supply Chains, which aims to end the financial and commercial support of armed groups and militias and stop the most egregious human rights abuses associated with mining in high-risk and conflict-affected areas. Where relevant, these types of tools should likewise be incorporated into NAPs and can be reinforced by NCP mechanisms.

clouds

National Contact Points: an effective and non-adversarial platform for dialogue

The NCP mechanism has a growing track record of agreements resulting through mediation. Just recently the UK NCP resolved a complaint brought by the World Wildlife Fund based on the activities of Soco, an oil exploration company, in Virunga National Park, a World Heritage Site located in the Democratic Republic of the Congo.  With respect to human rights the NCP recommended dialogue on whether the level of Soco’s human rights due diligence was appropriate to the context of the DRC.  The mediation resulted in agreement amongst the two parties including agreement by Soco to cease its operations, to never again jeopardize the value of any other World Heritage Site and to conduct environmental impact assessments and human rights due diligence in line with international standards.[3]

The Soco case is just one of many examples of the added value NCP procedures could have in the area of human rights and business. As a non-judicial mechanism the NCP mechanism provides a unique venue for resolution of issues related to human rights and business. This mechanism not only contributes to strengthening implementation of the UNGPs, specifically through providing access to remedy, but also serves as a useful tool for businesses themselves. Specific instances brought for mediation to NCPs are not legal procedures; likewise NCPs are not legal authorities, or a ‘CSR court’. Utilizing the NCP mechanism provides a venue for enterprises to discuss and explore issues regarding responsible business conduct in a low-cost, non-adversarial manner, which can avoid further escalation of disputes.

Many companies are still somewhat wary of the NCP procedure. Their hesitance reminds me of former US President Ronald Reagan’s famous quote: “The most terrifying words in the English language are: ‘’I am from the government and I am here to help”. On the other hand, a growing number of companies appreciate the assistance NCP’s can provide. [4]

Furthermore avoiding NCP procedures by refusing to come to the table can be harmful to a business. A refusal to cooperate will not make existing issues or campaigns disappear, rather it can harm relationships between the company and parties seeking mediation and result in a lost opportunity to discuss disagreements in a neutral and proactive environment.  Thus, businesses should take advantage of the good offices of NCPs and engage in mediation when issues arise. Experience shows that a problem solving approach to conflict works much better than a legalistic and defensive approach; when it comes to dispute resolution private sector representatives have communicated that it is important to keep lawyers away from the issue for as long as possible.

National Contact Points, an integral component of National Action Plans

The unique role of NCPs as an implementation mechanism of the UNGPs coupled with their ability to provide a neutral and effective platform for dialogue and dispute resolution makes them an important tool for business as well as government.  A good NCP can provide a competitive advantage in the business climate. It contributes in levelling the playing field for business, it raises awareness of expectation and assist when problems arise. However NCPs only represent a competitive advantage if they are sufficiently resourced and active. Governments adhering to the Guidelines that neglect to set up well-functioning and accessible NCPs or that are overly restrictive in accepting cases for mediation are denying an important service to industry and related stakeholders. They are also denying themselves of an effective mechanism for implementation of expectations under the UNGPs and the Guidelines.

Thus the role of NCPs should be a central feature of NAPs of countries adhering to the Guidelines. Countries that do not adhere to the OECD Guidelines are recommended to set up a similar mechanism, for example one linked to their National Human Rights Institute (NHRI).[5] As more countries developed their NAPs in the coming months I look forward to seeing this feature adequately integrated into national strategies.

This article was originally published on the website of the Institute for Human Rights and Business.

 

[1] For more information see: http://www.ohchr.org/EN/Issues/Business/Pages/NationalActionPlans.aspx

[2] The last two reporting periods comprise 06/2012-06/2013 and 06/2013-06/2014.

[3] See Final Statement following  agreement reached in complaint  from WWF International against  SOCO International plc, July 2014

[4] In a recent survey MNEs indicated that the NCP procedure has in a number of cases led to a meaningful stakeholder dialogue and a solution of the disagreement. See Second BIAC Survey of Member Companies’ Experiences in NCP Specific Instance Procedures Recommendations for Notifying Parties Discussion Paper for the 2013 Annual Meeting of NCPs, June 2013

[5] For information on relationship between NHRIs and the OECD Guidelines see Memorandum of Understanding between the OECD and the Association International Coordinating Committee of National Human Rights Institutions (ICC) and  Fact Sheet on National Human Rights Institutions  and the OECD Guidelines for  Multinational Enterprises

Speech by Prof. Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct, 8th ICGLR-OECD-UN GoE Forum on Responsible Mineral Supply Chains

Roel Nieuwenkamp opening remarks

8th ICGLR-OECD-UN GoE Forum on Responsible Mineral Supply Chains

3 November 2014

Son Excellence Monsieur le vice Premier Ministre de la RDC, Excellence Ministre de Mines de la RDC, Excellence Minister of Natural Resources from Rwanda, Excellence Executive Secretary of the ICGLR, Ambassador of Canada, Ambassadors, ladies and gentlemen, good morning.

The OECD is pleased to co-organise our 8th ICGLR-OECD Forum for the first time in the Democratic Republic of the Congo, which remains a key country in our fight to promote responsible business conduct in global mineral supply chains.  I would like to thank the Government of DRC for their support in making this Forum happen in country, but more importantly for continuing to be a partner with the OECD in our work to end conflict minerals and unleash broad based development.

This Forum provides the chance to showcase real concrete progress. In my hand I have the Fairphone, an excellent symbol of concrete progress. There is also a fair microprocessor. I would like to compliment the companies that stick out their necks to make this happen.

And I hope and expect to be able to present for example a FairPad, FairWatch and Fair wedding rings with Fair diamonds on top next year!

This Forum also provides the chance for us to focus on implementation of OECD Due Diligence Guidance for Responsible Mineral Supply Chains on the ground – and focus on implementation of the various systems and procedures that are part of the ICGLR Regional Certification Mechanism.

It has been over 3 years since the implementation programme was launched, and the focus up to now has been very much on getting things started. Judging by enormous amount of interest in this Forum, particularly from regional actors, but also from international industry, it seems we are on our way. But still, a lot of work remains to be done.

To date, this Forum has focused on encouraging uptake of responsible sourcing. And so one of the key elements of the OECD’s implementation programme is our outreach and awareness raising work. This last year we have made some significant progress in this respect:

  • I am pleased to inform you that just last week, the OECD signed a Memorandum of Understanding with the China Chamber of Commerce Metals, Minerals & Chemicals, Importers & Exporters. The Chamber which goes by the acronym CCCMC has over 6,000 member companies and metal associations in China. We will work with them over the coming months to help operationalise the OECD Guidance for Chinese companies, whom as you all know are key players at all levels of the 3T and gold supply chains. We are also in initial positive talks with the Shanghai Gold Exchange, and this we hope will lead to some positive outcomes in 2015.
  • We also launched a new partnership with Borsa Istanbul to enable the implementation of due diligence in Turkey. We held one workshop with them last year, and will hold another training event at the end of this month.
  • As many of you know, the OECD Due Diligence Guidance applies in fact to all minerals, from any conflict-affected or high-risk area in the world. It is not a just focused on minerals from the Great Lakes Region, although most of our efforts have been in this region. In this respect, we have also made progress to ensure uptake in other mineral producing countries across the globe:
    • This year we began our implementation programme in Colombia. The Colombian Government adhered to the Council Recommendation on the OECD Due Diligence Guidance in 2012, and has further demonstrated its commitment to ensure its industry implements the OECD Due Diligence Guidance. After a series of events with the OECD in February this year, we are now undertaking baseline assessments of the Colombian gold trade in order to produce practical recommendations that will help build a responsible and conflict-free gold production and trade in the country.
    • We are also pleased to have for the first time the participation of the Government of Cote d’Ivoire in this Forum. The UN Security Council has recently lifted the ban on diamond exports from the country, following the Kimberley Process recommendations. I look forward to hearing reports from the Ivorian Government later today and more importantly, to cooperating with them as they move forward with formalising their gold sector.
  • The OECD have also taken a pro-active approach to train government agents, industry and civil society leaders in the DRC this year, with Train the Trainer workshops in Bukavu in July and Kinshasa earlier this week.

This Forum over the last three years has focused on technical “nuts and bolts” of due diligence (e.g. traceability systems, mine sites qualifications, smelter audit programmes and certifications, in other words, what due diligence means, what are the steps and systems that need to be in place and how it can be implemented). Now it is time now to remind ourselves of the Human Rights element of the Guidance, and what it is we are trying to do. In a nutshell, to end the financial and commercial support of armed groups and militias and stop the most egregious human rights abuses associated with mining in high-risk and conflict-affected areas. Fundamentally, due diligence efforts are designed to ensure respect for human rights, so that mineral production and trade leads to positive impacts on the ground to improve the lives of affected communities in mining areas.

Doing no harm also means doing well. And from an investor point of view, there is a growing call for transparency in mineral supply chains, and accountability of state institutions governing the sector. Due diligence efforts of companies to source responsible minerals can not be sustained without broad-based improvements in mineral sector governance. For this reason, our last day of the Forum will examine how mining sector governance and investment climates can attract and sustain responsible investment and trade.

I would like to take the opportunity to thank all our donors, Canada, Switzerland and Sweden and notably the EU who is funding this conference and whose support this past year enables action and results.

Our work is far from over, and we need all of you to continue to stay engaged in this region and stay the course. Each actor has its role, whether it’s the local mineral traders that should be checking their suppliers and sourcing from conflict-free mines,  or the downstream industry that applies pressure, enables progressive improvements and creates a market for responsible minerals from conflict areas. The local government that should help formalise the artisanal mining sector and establish and enforce its own policies and laws on due diligence and associated reporting. And the civil society organisations as our eyes and ears on the ground, to keep us on our toes but also provide vital information and support for private sector due diligence and governance improvements.

Please, I urge you all to continue on and strengthen your work, to help us make the support of armed groups through mineral chains difficult for all those who are illegally benefiting from the vast natural resources of this region, and so that the mineral sector can truly become a source of prosperity, revenue and development.

Thank you