I have an entrepreneurial friend in Spain who owns a successful business, making children’s clothes and selling them online. She has hired two seamstresses in Spain, but isn’t happy with their work, so she is looking for replacements in Nepal.
How many times might my friend be violating human rights with her microbusiness? Does it make a difference whether these violations happened voluntarily or knowingly? From the origin of the fabric and threads that she uses in her products, to the needles and even her sewing machine, right through to the work of the seamstresses (hired in another country), they have all been made or carried out by people, which means that there could be human rights violations somewhere along the supply chain.
In looking to find a solution, another obvious question inevitably arises: How to avoid any human rights violations, regardless of the scope, capacities and capital of a business? The services sector is not exempt from these questions. Everyone who takes part in modern life as we know it – public administrations, businesses and consumers – is supporting human rights violations, knowingly or otherwise.
There is no doubt that the modern world took a significant step on 16 June 2011, when the United Nations Human Rights Council unanimously backed the Guiding Principles on Business and Human Rights (hereinafter, Guiding Principles) in its resolution 17/4 (A/HRC/17/31)1. The Guiding Principles were drawn up in a process of investigation and consultation over a six-year period, led by John Ruggie, the Special Representative of the United Nations Secretary-General. These Principles set out the obligations of States in matters concerning human rights and the responsibility of businesses in global supply chains.
As Frank-Walter Steinmeier, the current German Minister for Foreign Affairs, stated in November 2014: “Not only governments, but also companies must take responsibility for human rights in their global business activities. What is profitable for some should not harm everyone else! We intend to create a framework for this with the National Action Plan for Business and Human Rights”2.
The assessment procedure in Germany
Those working on the German plan have spent more than two years listening to and assessing the opinions of representatives from different areas of society, such as the business and political sectors, civil society, associations and scientists, on the possible content of a business and human rights plan3. Finally on 21 December 2016 the final proposal for the German Business and Human Rights Plan was published4.
With regard to corporate responsibility, the following question arises: how can the Federal Republic of Germany intervene in the free market so that businesses comply with their responsibility?
Which then leads to other, more obvious questions: what type of intervention currently exists for businesses, organisations or even professional associations? What type of intervention and support do businesses need?
At one of the events organised by the German Ministry of Foreign Affairs, a representative and speaker from the business sector stated that for small and medium-sized enterprises (SMEs), there would have to be an incentive for them to apply due diligence on human rights matters and as required by the Guiding Principles.
Very often, only original equipment manufacturers (OEMs) and companies with a “business to consumer” (B2C) focus can benefit from “fair” production. In this regard, incentives and the positive impact of applying due diligence in SMEs should be described clearly and transparently.
The Spanish proposal
Whereas the Germans are still interviewing representatives and professionals, Spain presented a proposal (in its second version) in June 20145, which was criticised by civil society6. The Council of Ministers received this proposal to be submitted for approval.
But an email from the Human Rights Office dated 19 January 2016 regarding the date for approving the National Plan for Businesses and Human Rights advised: “in the current situation and until a new Government is formed, it is hard to make forecasts for the Council of Ministers’ work schedule.”
According to critics, the plan lacks a mechanism for it to be binding, both for the government and for businesses, and as a result compliance cannot be enforced. In addition, critical voices cited as an example the conclusions of the hearing by the Permanent People’s Tribunal (PPT), held in Madrid in May 2010, with the title “The European Union and transnational corporations in Latin America: policies, instruments and actors complicit in violations of the peoples’ rights”7, in which 27 multinational companies were tried symbolically, with the emphasis on the consequences that volunteering activities by transnational companies can have on the majority of the population with regard to respecting human rights.
The second draft has also been criticised8. Some critics claim that this second edition lowers the demands for effective control of the practices of transnational companies, and that the demands made by organisations from civil society have not been incorporated, stating their disagreement with the dialogue process and drafting of the Plan.
To contrast information, it is a good idea to look outward – Spain should be reminded that nine other countries already have action plans. Great Britain9, the Netherlands10, Denmark11 and Italy12 were the first countries to have established and published their plans, followed by plans from Finland13, Lithuania14, Sweden15, Norway16 and Colombia17.
Liberals in Britain
Great Britain (England, Wales and Scotland) has a highly practical plan: it includes a summary of the rules in force, the measures already being implemented and the measures that will need to be implemented by the British government and businesses. The plan establishes that companies must “comply with all applicable laws and respect internationally recognised human rights, wherever they operate”. An interesting reflection is to treat the risk of causing or contributing to human rights violations as a matter of compliance, wherever the companies may operate.
Britain is funding an online hub18 – in six languages – to provide guidance and information on the Guiding Principles and where companies can share their successful results and publish their best practices.
Forgotten pioneers: the Danes
The Danish plan establishes that companies have to be able to know and demonstrate that they respect human rights. The Danish government is therefore committed to creating greater transparency with regard to efforts in corporate social responsibility (CSR) of private business and public authorities alike.
According to the government, only through greater transparency can CSR become a key parameter for consumer options. Danish legislation, therefore, requires large companies to provide information about their social responsibility in their annual reports, including which specific measures they have taken to respect human rights.
The number of companies reporting acts relating to human rights shot up in 2010. When assessing CSR reports, it was detected that 16% of companies reported information on actions taken to protect human rights in 2009, rising to 38% in 2010.
In turn, the Association of Certified Public Auditors19, publishes its choice of the company with the best CSR reporting for large companies and SMEs.
The Danish are also pioneers in providing online tools for companies. One example of this is the CSR Compass, a free online tool that helps companies to implement responsible supply chain management.
Another notable tool is the Global Compact Self-Assessment Tool20, which helps companies test their performance in the Ten Principles of the UN Global Compact, and how well these issues are being managed.
The Dutch insist on clarifying terms
The Dutch insist on a clarification of the due diligence required by the Guiding Principles. Dutch businesses feel that their government has not defined its expectations in terms of due diligence, but according to the government, one definition of the concept could be as follows:
- Identifying and assessing impacts on human rights: taking protective measures to reach an understanding of how existing and proposed activities can cause or contribute to impacts on human rights.
- Adopting measures and monitoring the effectiveness of the response.
- External communication on how the company has dealt with adverse effects: it is possible that these impacts are not the direct result of the actions taken by a company, but are caused at another point in the supply chain.
- Due diligence is not a single activity, but rather an ongoing process.
As with the Danish, and as a result of a subsidy from the Ministry of Foreign Trade and Co-operation for Development, the Netherlands has introduced a tool called the CSR Risk Check for companies looking to apply due diligence, based on the particular sector and country where the company operates. This online tool provides an indication of the possible social impacts.
The conclusion for the Spanish proposal
I am convinced that no Spanish entrepreneur likes to see thousands of people die or be injured in an accident caused by a building collapsing, as occurred in Savar (Bangladesh) in 2013 – and not only for what it meant in terms of image and reputation. It is also true that a company cannot save the world – that is not its purpose. However, it can be expected to obey the law and the regulations in place, and be aware of the problems that exist.
As we have seen, three countries in the European Union have shown that with the appropriate tools and by raising ongoing awareness, it is possible to motivate even SMEs to apply due diligence. The Spanish plan could begin to provide a definition of due diligence so we all know what it is that we have to do.
And maybe the Directorate-General for Self-Employment, Social Economics and CSR could use the CSR-reporting directive21 to require companies to publish the measures taken to respect human rights in their management reports.
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