The United Nations Guiding Principles on Business and Human Rights (UNGP), authored by Harvard Law School Professor John Ruggie, were unanimously endorsed by the United Nations Human Rights Council in June 2011. These principles rest on three pillars: (1) States have a duty to protect human rights; (2) businesses have a responsibility to respect human rights; and (3) those whose rights have been violated must have access to an effective remedy.
In 2012, the European Commission encouraged EU Member States to develop a National Action Plan (NAP) for the implementation of these Guiding Principles. However, progress to date has been slow with only five Member States publishing their NAPs (UK, the Netherlands, Italy, Spain, and Denmark). A report from the Commission on the implementation of UNGP was expected in 2012 but is yet to be published. Despite this, work undertaken in 2014 makes it clear that momentum in this area is growing.
In 2013, a commissioned report revealed a particular weakness with respect to States fulfilling their obligation to ensure access to effective judicial remedy to victims of business-related abuses of human rights outside their territory (third pillar). Consequently, a series of high-level conferences took place in Paris, London, Berlin and Brussels in 2014 to discuss this and a plan of recommended actions based on the discussions at these conferences is expected in 2015. The Law Society of England and Wales also held their Annual Human Rights Conference in December 2014 where this matter was discussed.
The UK, in particular, has been criticised on implementation of the third pillar as a result of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) which reduces the scope for victims of human rights violations committed overseas by multinational companies bringing cases. Legal fees for a successful claimant will now have to be paid out of the claimant’s compensation damages and cannot exceed twenty-five percent of the damages. Furthermore, legal costs should not generally exceed damages, which may not be the reality in these factually and forensically intensive cases from distant locations. Professor John Ruggie wrote to the UK Justice Minister to state his concerns that LASPO creates “an effective barrier to legitimate business related human rights claims being brought before [UK] courts in situations where alternative sources of remedy are unavailable”
At EU level, 2014 saw the adoption of Directive 2014/95/EU amending Directive 2013/34/EU requiring disclosure of non-financial and diversity information by certain large undertakings and groups (October 2014). This directive places a requirement on companies with 500+ employees to disclose information on policies, risks and outcomes as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues and diversity on boards of directors. Any company that does not have a specific policy for one or more of these areas will be required to explain its position. Member States have until 2016 to transpose the Directive.
Developments have also occurred at national level. In the UK, the principle of ethical supply chains (UNGP principles 17-21) has been debated within the context of the Modern Slavery Bill 2014. The Joint Committee report on the Bill in April 2014 recommended legislation, within the Modern Slavery Bill or as an amendment to the Companies Act 2006, to assist businesses in ensuring supply-chain transparency. It also recommended placing a requirement on companies to identify an individual with responsibility for this at board level. This issue was also debated at Committee stage in the House of Lords on 10 December 2014. The UK Coalition Government has questioned the necessity of this by stating that since 2013 there has been a legislative requirement on UK listed companies to report on human rights where this is “relevant for an understanding of the business”. They also state that under the requirements of Directive 2014/95/EU, UK companies will be required from 2016 onwards to disclose information on “business relationships”, which will include information on subcontracting and supply chains.
In France, a draft bill was presented to the French Parliament in November 2013 calling for the establishment of a duty of vigilance of parent and subcontracting companies with respect to their subsidiary companies, subcontractors, and suppliers. The aim of this bill is to raise multinational enterprises’ awareness of their responsibility to prevent environmental and human rights abuses, not only in France but also abroad. Furthermore, the adoption of the bill would provide victims with an effective judicial mechanism to obtain compensation for the damage suffered. The human rights due diligence, as formulated in the UN Guiding Principles, was particularly central, as a conceptual tool, to establish the link between controlling companies and their subsidiaries or subcontracting companies. Most importantly, the amendments would place the burden of proof on companies to prove that they acted to prevent any occurrence of harm. The bill was debated in the autumn of 2014 and, to the surprise of many commentators, has made it much further through the legislative process than was expected. This again suggests a sea-change in the view of the relationship between business and human rights in Europe and that this is likely to remain a key issue throughout 2015.
In both legislative and non-legislative terms, it is clear that pressure on business to adhere to international human rights requirements is mounting. With Member States working to implement the Directive’s provisions by 2016, this pressure is only set to increase in the near future as the corporate veil is gradually lifted.