Human Rights Principles and Responsibilities for Transnational Corporations and Other Business Enterprises, Introduction, U.N. Doc. E/CN.4/Sub.2/2002/XX/Add.1, E/CN.4/Sub.2/2002/WG.2/WP.1/Add.1 (February 2002 for discussion in July/August 2002).



 

United Nations Economic and Social Council

E/CN.4/Sub.2/2002/X/Add.1

E/CN.4/Sub.2/2002/WG.2/WP.1/Add.1

 

Original: ENGLISH

COMMISSION ON HUMAN RIGHTS
Sub-Commission on the Promotion and Protection of Human Rights
Fifty-fourth session
Item 4 of the provisional agenda
and
Sessional working group on the working methods and activities of transnational corporations

ECONOMIC, SOCIAL AND CULTURAL RIGHTS

Human Rights Principles and Responsibilities for Transnational Corporations and Other Business Enterprises



Introduction



1. At its first session in August 1999 the Working Group on the Working Methods and Activities of Transnational Corporations of the Sub-Commission decided to consider developing a code of conduct for business enterprises based on human rights standards. Such a code would attempt to involve in a constructive manner the relevant business communities, States, and NGOs. Mr. Weissbrodt was asked to prepare a draft of such a standard. The Working Group considered a draft of the human rights principles for business enterprises at its August 2000 session and a further revised draft at its August 2001 session. In addition to the human rights principles for businesses, the Working Group in 2001 considered a paper by Mr. Guissé on the impact of TNC's activities on the enjoyment of economic, social and cultural rights, and a paper by Mr. Eide on the responsibilities of and procedures for implementation and compliance of human rights guidelines. Pursuant to the discussion and recommendations for changes at the August 2001 session, Mr. Eide and Mr. Weissbrodt were asked in Sub-Commission resolution 2001/3 to present new drafts to the Working Group and to the Sub-Commission at their next sessions in August 2002, taking into account the comments received from experts, other sources, and particularly specialized agencies of the U.N. system.

 

2. At their informal meeting of 3-5 February 2002 the five members of the Working Group on the Working Methods and Activities of Transnational Corporations (Chairperson El-Hadji Guissé, Miguel Alfonso-Martínez, Vladimir Khartashkin, Soo-Gil Park, and David Weissbrodt) substantially revised and decided by consensus to adopt the draft "Human Rights Principles and Responsibilities for Transnational Corporations and Other Business Enterprises" for consideration at its session to be convened during the fifty-fourth session of the Sub-Commission. The Human Rights Principles consist of 18 fundamental human rights principles with regard to business activities of transnational corporations and other business enterprises and include a section on definitions.

 

3. At its February 2002 meeting the Working Group lacked sufficient time to review comprehensively a commentary on the Human Rights Principles, but agreed that individual member(s) should present the commentary, so that it will be available at the fifty-fourth session of the Sub-Commission to explicate the Princples. Accordingly, the Human Rights Principles with Commentary reflect the views of Vladimir Khartashkin, Soo-Gil Park, and David Weissbrodt. The comments of other members of the Working Group and the Sub-Commission as well as other participants at the fifty-fourth session of the Sub-Commission are, of course, welcome.



I. GLOBAL TRENDS HIGHLIGHTING THE NEED FOR HUMAN RIGHTS PRINCIPLES FOR TRANSNATIONAL CORPORATIONS AND OTHER BUSINESS ENTERPRISES



4. Several trends make human rights concerns an important issue for transnational corporations and other business enterprises. These trends include: the emergence of the increasingly integrated global economy; the prominence of international trade and investment; the growth of information and communications technology facilitating rapid transmission of information; increasing privatization; concerns about the impact of globalization and trade on human rights; an increase in consumer awareness about labour, environmental, and health conditions involved in the production of goods available for purchase; shareholder and other stakeholder demands for greater openness and public accountability; greater attention by more nongovernmental organizations to the conduct of transnational corporations and other business enterprises; and increased reliance upon voluntary compliance with international standards applicable to businesses. (1)

 

5. Transnational corporations (TNCs) are active in some of the most dynamic sectors of national economies, such as energy, telecommunications, information technology, electronic consumer goods, footwear and apparel, transport, banking and finance, insurance, securities trading, etc. (2) They bring new jobs, capital, and technology. Some corporations make real efforts to achieve international standards by improving working conditions and raising local standards of living conditions. They also encourage their employees to do voluntary work for human rights and development. They certainly have the capacity to assert a positive influence in fostering development. Some transnational corporations, however, do not respect international minimum human rights standards and can thus be implicated in abuses such as employing child labourers, discriminating against certain groups of employees, failing to provide safe and healthy working conditions as well as just and favourable conditions of work, attempting to repress independent trade unions, discouraging the right to bargain collectively, limiting the broad dissemination of appropriate technology and intellectual property, dumping toxic wastes, etc. Some of these abuses disproportionately affect developing countries, children, minorities, and women who work in unsafe and poorly paid production jobs as well as indigenous peoples and communities and other vulnerable groups. Extraction industries particularly tend to be associated with serious human rights problems, mainly because they may not be able to select their locality and may feel compelled to work closely with repressive host States. There is also a growing body of evidence linking extraction industry activities to environmental and human health impacts. Export processing zones are also associated with some of the worst abuses of human rights, as some workers do not enjoy healthy and safe working environments.



6. Transnational corporations and other businesses are becoming aware of the interplay between their businesses and their impact on individuals, communities, and the environment. There is reason to believe that greater respect for human rights by companies leads to better business performance. (3) For example, observance of human rights aids businesses by protecting and maintaining their corporate reputation and creating a stable and peaceful society in which businesses can prosper and attract the best and brightest employees. (4) Consumers have also demonstrated they are willing to pay attention to business standards and practices regarding human rights and may even boycott products that are produced in violation of human rights standards. (5)

 

7. All-in-all, business enterprises have increased their power in the world. With power comes responsibility. Hence, there is a need to consider what human rights duties should be expected of business enterprises. Businesses already are responsible for following certain human rights standards, and the creation of a uniform set of human rights principles would help all involved by making clear which human rights standards must be followed by all businesses.

 

II. DEVELOPMENTS IN REGARD TO INTERNATIONAL STANDARDS APPLICABLE TO TRANSNATIONAL CORPORATIONS AND OTHER BUSINESS ENTERPRISES



8. The U.N. Commission on Transnational Corporations prepared the draft United Nations Code of Conduct for Transnational Corporations that was never fully adopted by the UN body. (6) In 1976, the Organisation for Economic Co-operation and Development (OECD) established its first Guidelines for Multinational Enterprises to promote responsible business conduct consistent with applicable laws. (7) In June 2000, the OECD substantially updated its first set of Guidelines and adopted a revised set of Guidelines and enhanced implementation procedures. (8) The International Labour Organization (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises was adopted in 1977. (9) The Tripartite Declaration incorporates relevant ILO conventions and recommendations and has been amended in 1987, 1995, and 2000 to incorporate new conventions and recommendations adopted after its original passage. (10) For example, in March 2000 the ILO Governing Body incorporated into the Tripartite Declaration the 1998 Declaration on Fundamental Principles and Rights at Work and its Follow-Up, which had been adopted to modernize, strengthen, and ensure implementation of its system of labour standards. (11) In addition, the ILO also assists voluntary initiatives to establish and implement their own codes of conduct. (12)

 

9. The Sullivan Principles, developed by Reverend Leon H. Sullivan, originated in 1977 as a set of guidelines for companies doing business in South Africa during the period of Apartheid. The Sullivan Principles specifically targeted racial discrimination and called for companies to divest business activities with any entity that was engaging in discriminatory practices. The effect of corporations following the Sullivan Principles influenced the South African Government and ultimately had a role in bringing about the end of Apartheid in South Africa. Many years after the abolition of Apartheid in South Africa, Reverend Sullivan announced in 1999 the new Global Sullivan Principles, which are guidelines for ethical business practices in developing countries.

 

10. In January 1999, United Nations Secretary-General, Kofi Annan, proposed a Global Compact of shared values and principles at the Davos Conference. (13) As further explained in connection with the Davos Conference in 2000, the Global Compact has nine core principles that are divided into categories dealing with general human rights obligations, standards of labour, and standards of environmental protection. (14) Businesses are asked to support and adopt those principles, the first two of which are to support and respect the protection of internationally proclaimed rights within their sphere of influence and make sure they are not complicit in human rights abuses. "A clear demonstration that basic and broadly popular social values, are being advanced as part and parcel of the globalization process will help ensure that markets remain open, and will truly bring the people of the world closer together." (15) Since its launch, introductory events have occurred in over 20 countries, including Brazil, China, India, and Russia. (16)

 

11. In a January 2002 speech, Mary Robinson, the High Commissioner for Human Rights, recognized that even though the U.N. is engaged in the Global Compact - this is not enough. She stated that there is still a need for ". . . a legal regime [to] help to underpin the values of ethical globalization." She then called for the "next phase" to be "less aspirational, less theoretical and abstract, and more about keeping solemn promises made." (17)

 

12. States and regional organizations have also begun to address issues with regard to corporate social responsibility. In 1998, the European Parliament (EP) passed a resolution calling on the European Union (EU) to draft a Code of Conduct for European Multinationals. (18) The EP resolution calls for the creation of a legally binding code on European Multinationals and the establishment of a monitoring mechanism to ensure implementation of the Code provisions. Additionally, the Parliament of the Commonwealth of Australia is considering the "Corporate Code of Conduct 2000" which "impose[s] environmental, employment, health and safety and human rights standards on the conduct of Australian corporations overseas." (19) It also creates reporting requirements on corporations which employ more than 100 persons in a foreign country and provides for enforcement of the standards through fines. Further, France now requires that all French firms listed on the stock exchange must include information regarding the social and environmental impact of their activities. (20)

 

13. In December 2000, United Kingdom and United States Governments, along with many of the leading extractive and energy companies, released the "Voluntary Principles on Security and Human Rights." (21) The heightened awareness of human rights abuses by security forces hired by large corporations in the extractive and energy sectors led to the drafting of these UK-US Voluntary Principles. The UK-US Voluntary Principles attempt to address these abuses by setting forth standards extractive and energy companies should follow with regard to risk assessment, relations with public security, and relations with private security.

 

14. Transnational corporations and other business enterprises themselves have already begun to consider the human rights implications of their activities, for example, by (1) carefully assessing the context in which they are investing or doing business; (2) planning and implementing internal business policies; and (3) establishing workplace codes of conduct as to overseas offices, subsidiaries, suppliers, and contractors. Not only have many businesses developed their own ethical codes, (22) but also trade groups, NGOs and many others have written codes of conduct for businesses. (23)

15. Institutional and individual investors are also starting to recognize the importance of holding businesses accountable to human rights. The number of institutional and individual investors placing money in socially responsible funds is increasing rapidly. (24) There is evidence that professionally managed socially responsible funds provide a higher return than professionally managed assets which are not socially screened. (25) While socially responsible investing originally focused on excluding certain industries such as companies producing arms and tobacco, socially responsible investing today includes evaluating businesses with regard to their environmental and human rights records, and on their approaches to social issues and stakeholder relations. Stock markets have created indexes to aid in guiding socially responsible investors. The indexes provide benchmarks for measuring and marketing socially responsible funds, and include indexes such as the FTSE4Good series (26) and the Dow Jones Sustainability Indexes. (27) Further, States are enacting legislation requiring pension funds to take into account the social, ethical, and environmental issues before making pension fund investments. (28)

16. According to the United Nations High Commissioner for Human Rights, Business and Human Rights Progress Report, active business concern for human rights helps businesses: (1) ensure compliance with local and international laws; (2) satisfy consumer concerns; (3) promote stable legal environments; (4) build corporate community goodwill; (5) aid in the selection of ethical, well-managed, and reliable business partners; (6) aid in producing a predictable, stable, and productive business enterprise; (7) keep markets open; and (8) increase worker productivity and retention. (29) Further, if human rights principles for business enterprises become widely accepted, businesses will enjoy greater predictability and consistency with regards to their responsibilities for protecting human rights. An authoritative set of human rights principles for transnational corporations and other businesses would thus ensure that these responsibilities are clear, accessible, and unambiguous. A widely accepted set of human rights principles articulated by the international community will help establish a level playing field for business competition. Such predictability is a basic foundation for sustainable development and prosperity.

 

17. Although it may be beneficial for transnational corporations and other business enterprises to embrace human rights standards, it may still be questioned if it is appropriate to impose human rights obligations on these business associations. Certainly, States possess the principal responsibility to assure the implementation of human rights and businesses should not be asked to take over the primary role of States. Accordingly, it would be inappropriate to distract the United Nations and human rights advocates from their efforts to persuade States to adopt and enforce human rights law by focusing too much on the relatively new concerns of human rights abuses committed by corporations. One cannot, however, establish a requirement that States must fulfill all of their human rights obligations before it would be appropriate to consider the responsibilities of businesses, individuals, and others. Such a very high, if not impossible, threshold would lead to inordinate delay and misallocation of potential resources. The human rights community should continue to press States for improvement, but cannot meanwhile ignore abuses by business enterprises. While human rights are the principal obligation of States, one cannot ignore the corresponding responsibilities of individuals, business enterprises, and other organs of society. The growing power and transboundary reach of many large businesses have allowed at least some businesses to escape national regulation and thus require international attention.

18. Professor Milton Friedman in 1970 raised another issue when he contended that "there is only one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud." (30) It is interesting to note that even Friedman's view that businesses should not pursue socially desirable objectives excluded two social policies - fraud and competition. These exceptions may be explained by the need to maintain the quality of the free market that he strenuously advocated. It is doubtful, however, that even Friedman would argue that corporations could pursue profit by committing genocide or using slave labor. Indeed, Friedman would likely have agreed that corporations can only pursue profits in ways that are consistent with legal limitations. That position is consistent with the views of many businesses and business officials who wish to be informed of the law and would be willing to comply with the law.

 

19. Professor Ronald Coase developed an alternative paradigm to Friedman's understanding of how businesses should act, arguing that businesses are best understood by observing carefully their actual conduct rather than creating artificial models of how they ought to act. (31) The past ten years have demonstrated that major businesses are, in fact, becoming aware of the interplay between their businesses and their impact on individuals, communities, and the environment; realizing that respect for human rights leads to better business performance for the previously stated reasons; and finding it beneficial to issue their own codes of conduct that go far beyond a narrow profit motive. Hence, the creation of human rights standards that help attract the best and brightest employees, solicit investments from the one quarter of investors who place at least some socially responsible screen on their stock holdings, and obtain consumers who prefer to purchase goods made without child labor or unnecessarily soiling the environment are not contrary to the primary purpose of transnational corporations and other business enterprises. The creation of a uniform set of international human right standards would aid in this process by helping to make clear what human rights standards a company should follow and which business enterprises are meeting these standards.

 

20. Another general issue with regard to the Human Rights Principles is whether it is appropriate to pursue binding requirements upon the human rights conduct of transnational corporations and other business enterprises. Many believe that human rights codes of conduct are best implemented through the adoption and implementation of codes of conduct by transnational corporations and other business enterprises themselves. These types of voluntary initiatives require businesses to define and address their own policies towards human rights. The resulting codes developed by each transnational corporation or other business enterprise may therefore more adequately reflect a particular set of business values adopted by the company or more adequately address the particular area of risk in greater depth. The involvement of a business in the drafting and implementation of its code could lead to a greater level of internalization and therefore also effectiveness of the code.

 

21. The use of an entirely voluntary system of adoption and implementation of human rights codes of conduct, however, is not enough. Voluntary principles have no enforcement mechanisms, they may be adopted by transnational corporations and other businesses enterprises for public relations purposes and have no real impact on the business behavior, and they may reinforce corporate self-governance and hinder efforts to create outside checks and balances. Further, there is a need for outside verification that businesses are adequately incorporating and implementing the codes of conduct they adopt. Finally, there remains the issue of businesses which will not adopt a code of conduct on their own. Creating, adopting, and implementing a code of conduct takes time, money, and initiative on the part of the transnational corporation or other business enterprise, and many businesses may not be willing to put forward this type of effort.

 

22. Concerns have also been expressed about the adoption of Human Rights Principles for all transnational corporations and other business enterprises in so far as the Principles may not be able adequately to address each of the individual situations of particular countries and industries. Principle No. 1 deals with such concerns about the diversity of companies by providing considerable flexibility: "Within their respective spheres of activity and influence, transnational corporations and other business enterprises have the obligation to respect, ensure respect for, prevent abuses of, and promote human rights recognized in international as well as national law." (emphasis added.)

23. Similar concerns have been expressed that universal principles will only dilute already established more specific standards focused on particular issues facing an industry, a transnational corporation, or other business enterprise. For example, pharmaceutical and extractive industries deal with many issues that may be unique to their industries and could not adequately be handled without a lengthy and detailed document. Many of these issues are already covered by other instruments such as the WHO Ethical Criteria for Drug Promotion and the US/UK Human Rights and Security in the Extractive Sector. Also, many of these more particular situations may be more adequately handled by a certain industry or other individual businesses' codes. The Savings Clause, Principle No. 18, makes it clear, however, that nothing in the Human Rights Principles shall "be construed as diminishing, or adversely affecting more protective human rights norms." The Human Rights Principles are meant to establish a base line of conduct to which all transnational corporations and other business enterprises, regardless of size, location, or industry, must meet in a flexible fashion, that is, "[w]ithin their respective spheres of activity and influence." Further, the Human Rights Principles are envisioned as an evolving document, which is meant to grow and change with the standards as they develop over time. The Human Rights Principles cannot water-down existing standards as their only effect can be to raise standards which are below the requirements of the Principles and let those developing standards flourish which provide more protection to human rights.

24. The Human Rights Principles and the related Commentary represent an effort to establish standards for business conduct which will assist transnational corporations and other businesses enterprises to be good world, national, and local citizens. The Principles, as further explicated by the Commentary, reflect, interpret, and elaborate upon existing international legal norms as to human rights and related fields which do or should apply to the conduct of transnational corporations and other businesses enterprises. There is a need for this endeavour to clarify the existing human rights standards as they relate to transnational corporations and other business enterprises.

 

25. The Human Rights Principles rely primarily upon (1) legally binding treaties and other instruments, such as the Genocide Convention and the Race Convention; and (2) nonbinding guidelines adopted by international organizations, such as the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. In addition to relying upon legally binding treaties and nonbinding guidelines, the Human Rights Principles and the related Commentary are also supported by four other types of documents that reflect international practice in this domain: (1) industry or commodity group initiatives, such as the Clean Clothes Campaign, Code of Labour Practices for the Apparel Industry Including Sportswear; (2) framework agreements between multinationals' and workers' organization(s) such as the agreements between Danone and the International Union of Food and Agricultural Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF); (3) self-imposed company codes of conduct which may be non-binding and quite subject to change, such as the H & M Code of Conduct or the Tata Code of Conduct; and (4) NGO or union model guidelines, such as the Amnesty International Human Rights Guidelines for Companies and the ICFTU Basic Code of Labour Practice. (32) Both the Human Rights Principles and the Commentary reflect the binding norms, but also make use of the best and most commonly used provisions from the less binding documents. Neither endeavours to freeze standards to the extent that they draw upon past drafting efforts and present practices; they should be seen as an effort to reflect and encourage further evolution.

 

26. The Human Rights Principles and the Human Rights Principles with Commentary address a wide variety of topics including: the right to equal treatment; the right to security of persons including the responsibility to create appropriate security arrangements; the rights of workers including the right to a healthy and safe work environment, fair remuneration, freedom of association, and collective bargaining; respect for national sovereignty including avoidance of corruption; respect for economic, social, and cultural rights as well as civil and political rights; obligations regarding consumer and environmental protection; and general provisions for implementation.

 

27. The first principle is meant to state, as clearly as possible, that the Human Rights Principles are in no manner intended to reduce the obligations of States to respect, ensure respect for, and promote and protect human rights recognized in international as well as national law. The Human Rights Principles would be misused if they were employed by a State as a reason for failing fully to protect human rights or failing to respond effectively to human rights violations. The Savings Clause in Principle No. 18 reinforces the intent of these Human Rights Principles to avoid lowering any existing standards. All other existing or future standards which provide for greater protection of human rights would remain in force and would remain unaffected by the Human Rights Principles.

28. The Working Group and the Sub-Commission has considered and may also need to think more about what terminology to use for the attached draft. The Working Group initially requested the preparation of a "code of conduct" in 1999, but that title gave rise to considerable confusion. Some observers believed that a "code of conduct" would be appropriate for a document that might eventually be viewed as legally binding or as a first step towards the development of a legally binding instrument such as a treaty. Other observers pointed out that there are many company codes of conduct that are not legally binding and may be subject to change without notice by the company concerned. They argued that the Sub-Commission should not draft or adopt yet another code of conduct for business enterprises, (33) but should prepare a document that is interpretive of the human rights obligations of businesses, such as "human rights principles for businesses," or "standards," "rules," "guidelines," "guiding principles," "best practices," etc. Each of these words or phrases carries its own connotations and overtones from past usage. For example, the Sub-Commission might want to draw upon the generally positive experience with such documents as the Guiding Principles on Internal Displacement; Siracusa Principles on the Limitation and Derogation Provisions in the International Covenant on Civil and Political Rights; the Maastricht Guidelines on Violations of Economic, Social and Cultural Rights; the Limburg Principles on the Implementation of the International Covenant on Economic, Social and Cultural Rights; the Paris Minimum Standards of Human Rights Norms in a State of Emergency; and the Johannesburg Principles on National Security, Freedom of Expression and Access to Information.

 

29. During its review of the first draft of the Human Rights Principles, the members of the Working Group and most observers thought that the title "code of conduct" had been used too much by business enterprises for voluntary codes and might thus be misleading. Accordingly, the Working Group thought that the document should be known as guidelines or minimum guidelines. Participants at the March 2001 seminar on the Draft Principles suggested the name "Draft Universal Human Rights Guidelines for Companies" and the 2001 draft used that name. Other participants at the March 2001 seminar suggested "fundamental" instead of "universal." At the 2001 Working Group meeting, several individuals voiced their concern that the term "Guidelines" does not reflect the binding nature that the document should pursue in the future, that the term "companies" is not inclusive of all business forms, and that the term "fundamental" is more appropriate than "universal."

 

30. The Working Group at its February 2002 meeting in Geneva again discussed the title of the instrument they were drafting. The Working Group noted that the Sub-Commission in its resolution 2001/3 had asked the Working Group to "contribute to the drafting of binding norms." Accordingly, the Working Group decided to use the name "Human Rights Principles and Responsibilities . . .." The Working Group also noted that the Sub-Commission had in its resolution 2001/3 further requested the Working Group to "[c]ontribute to the drafting of relevant norms concerning human rights and transnational corporations and other economic units whose activities have an impact on human rights." Accordingly, the Working Group decided to make the instrument applicable to "transnational corporations and other business enterprises." Hence, the full title of the instrument became: Human Rights Principles and Responsibilities for Transnational Corporations and Other Business Enterprises. The adjectives "fundamental" and "universal," while applicable, were excluded because the title had already become quite lengthy. Additional discussion will no doubt be required before the Working Group and the Sub-Commission decide upon a title for this instrument.

31. Because the Working Group in 1999 requested that the first Draft Principles should focus on substantive provisions rather than implementation, the 2000 Draft did not address whether any such principles should be voluntary, legally binding, or how it should be enforced or implemented. Following the Working Group discussions in 2000, it became clear that the Working Group would need to consider not only substantive provisions, but also issues of implementation. Upon request by the Working Group, Mr. Eide prepared a preliminary paper on implementation of human rights principles with regard to companies for presentation to the Working Group in 2001.

 

32. The Draft Principles build not only upon existing international legal norms, but also the international legal practices that are reflected by the many efforts to encourage voluntary compliance with corporate social responsibility. Prominent among such efforts is the U.N. Global Compact, which is a set of nine voluntary principles. One way of perceiving the Draft Principles would be to view them as an authoritative explication of the nine relatively brief principles in the Global Compact. The Sub-Commission in 2001 has indicated its desire that the Human Rights Principles contribute to binding standards with regard to transnational corporations and other business enterprises. This preference is reflected in Sub-Commission resolution 2001/3 which asks the Working Group to:

The Human Rights Principles are therefore not only intended to contribute to the drafting of binding norms, but they begin to provide measures for implementation which will no doubt be amplified as the international community develops its capacity to respond to the challenge of assuring that transnational corporations and other businesses live up to their responsibilities as good corporate citizens. The Working Group recognized that adoption of the Human Rights Principles and Responsibilities for Transnational Corporations and Other Business Enterprises, as explicated by the Commentary, would only begin the process of implementing the Principles. The mandate of the Working Group is far more extensive and will require more attention to implementation. Nonetheless, adoption of the Principles will represent an important step towards achieving the objectives of the Working Group and the Sub-Commission.

 

33. For the foregoing reasons, the present section discusses how the Human Rights Principles can be implemented in a binding manner. In considering these issues and particularly implementation, it should be recognized that the quality and methods of implementation would vary considerably depending upon the size, resources, and capability of the transnational corporation or other business enterprise.

 

34. Once a human rights instrument is adopted by a U.N. body there remains the critical task of assuring that the provisions are brought into practice. Implementation may be pursued by (1) transnational corporations or other business enterprises, (2) business groups or trade associations, (3) unions, (4) NGOs, (5) intergovernmental organizations, (6) States, and (7) the United Nations. The first step towards implementation, however, would be broad adoption by these various categories of actors. The categories of potential actors do not necessarily suggest implementation by a single category. As indicated periodically in the following paragraphs, effective implementation may result from the coordinated efforts of groups in one or more of the categories.

35. The Human Rights Principles could call on States to require transnational corporations and other businesses enterprises themselves to adopt the substance of the Principles as the minimal standards for their own internal rules of operation consistent with these Principles. As indicated above, the Human Rights Principles will be most effective if internalized as a matter of company policy and practice. Transnational corporations and other business enterprises with pre-existing internal rules of operation could update their internal rules if necessary to conform to the international standards in the Human Rights Principles. Those businesses currently without internal rules of operation would have a clear model for the issues that should be addressed in their own internal rules consistent with these Principles.

 

36. Effective implementation of the Human Rights Principles at the level of the transnational corporation or other business enterprise asks businesses to consider and adopt mechanisms for creating accountability within the business. Depending on the resources and capabilities of the transnational corporation or other business enterprise, businesses should consider creating ethics committees and/or appointing ethics officers to provide oversight, counseling, and promotion of their own internal rules of operation consistent with the Principles. Employee incentives can also be used to create accountability within a company. For example, conduct consistent with the Human Rights Principles could be used as a basis for promotion or wage increases. Further, businesses should create adequate systems for addressing violations that include guarantees of non-retaliation and allow employees to remain anonymous when reporting violations. (35)

 

37. Once a transnational corporation or other business enterprise adopts the Human Rights Principles, they need to be disseminated. Transnational corporations and other business enterprises should make their own internal rules of operation consistent with these Principles available to employees and other stakeholders. Promulgation assures that those who are most affected by the business's actions know of the business's responsibility to promote and protect human rights. It also ensures the business's principles will be made known to the general public -- further legitimating and institutionalizing the existence of their principles.

 

38. Transnational corporations and other business enterprises adopting and disseminating their own internal rules of operation consistent with these Human Rights Principles should also work to improve their compliance with the Principles. One way of improving compliance would be periodic assessment and the preparation of impact statements. Any assessment of a business's performance under the Principles should be objective. For example, business management can conduct a self-assessment or they can retain outside consultants on a confidential basis with or without an assurance of confidentiality. Although self-assessment by a business's own management may be simpler and less expensive, such self-assessment may not yield results acceptable by outsiders. Confidential assessment by independent consultants may give company managers sufficient confidence to provide necessary information and would be more likely to be accepted by outsiders. Transnational corporations and other business enterprises with human rights concerns would be able to assess the situation and perhaps take steps to rectify any problems. Some outsiders may not, however, have confidence in the adequacy and certainly the transparency of confidential assessments. Both management self-assessments and assessments done by independent consultants could eventually be made public. Such dissemination would increase the transparency and legitimacy of the evaluation process, but the expectation of publicity may discourage adequate disclosure of information. If an evaluation is expected to be made public, it could also be undertaken by NGOs with expertise in the area, trade unions or labor associations, or States.

39. In addition to assessment of past actions, transnational corporations and other business enterprises should prepare impact statements to describe and analyze any proposed actions that may have a significant impact on human rights as enumerated in the Human Rights Principles. Impact statements can be used to examine ways to avoid or reduce adverse human rights consequences related to a proposed action. Impact statements include a description of the action, its need, anticipated benefits, an analysis of any human rights impact related to the action, an analysis of reasonable alternatives to the action, and identification of ways to reduce any negative human rights impacts. All impact statements should be made available to stakeholders for comment before any action is taken with regard to the proposed action. Impact statements, similar to assessments, may be created by the company itself, through the use of independent consultants, or in cooperation with NGOs having expertise in the area, trade unions or labor associations, or States.

 

40. The next step to effective implementation of a U.N. or similar standard would be the verification of the assessment. Verification can be accomplished through dissemination and by other means. A business can publish its assessment or a summary in its annual report or in a separate document. A business can also be asked to transmit its assessment to a State agency, an industry or trade association, some nongovernmental clearinghouse, or an international institution.

 

41. Another way of disseminating such assessments and making the assessments more comparable would be to establish a standardized numerical system for evaluating company performance under the Principles. One such standardized numerical system has been proposed by the Secretariat of the Caux Roundtable. (36)

 

42. Another means of verification would be through a corporate social audit similar to the current system used by public accountants for auditing company financial statements. The results of such an independent social audit could then be separately published or attached to the transnational corporation or other business enterprise's annual report.

43. Business groups, for example a trade association or an industry group, might adopt the Human Rights Principles as their own industry code of conduct for those businesses which are members. Such industry-wide acceptance will encourage compliance because competitors will be assured of equal responsibility. The Human Rights Principles could be used by a consortium of business enterprises as a prerequisite of membership. (37) The Human Rights Principles could also support the creation of a labeling system to identify products and services created under the specific standards so as to promote ethical purchasing patterns.

44. Unions may wish to use the Human Rights Principles as a basis for negotiating agreements with businesses and monitoring compliance of businesses with the Human Rights Principles.

45. Similarly, NGOs may also adopt the Principles as the basis for their expectations of business conduct and monitoring compliance of businesses with the Human Rights Principles. They could also be used as a standard for promoting ethical investment initiatives.

46. The Human Rights Principles can be used for the creation of standards on a region-by-region basis to address specific issues. (38) There exist a number of intergovernmental bodies that may find the Human Rights Principles useful in developing their own standards. For example, the ILO and OECD could take the Principles into account when making clarifications on their already existing standards for businesses. Similarly, the OECD could use the Human Rights Principles in the context of their National Contact Points. The World Bank and its constituent institutions have adopted standards for loans relating to their impact on indigenous peoples, the environment, transfer of populations, sustainable development, and gender equality. The Principles might be helpful in amplifying and interpreting those World Bank standards as well as encouraging further World Bank standards.

 

47. The World Trade Organization Agreement, which generally prohibits States from creating trade limitations, contains several exceptions allowing States to restrict trade when certain conditions are met. (39) For example, in its Agreement on Sanitary and Phytosanitary Measures, the WTO prefers to follow international standards in determining if certain technical regulations which create trade limitations are necessary to protect human, animal or plant life, or health. (40) Similarly, the WTO's Agreement on Technical Barriers to Trade states that "[g]eneral terms for standardization and procedures for assessment of conformity shall normally have the meaning given to them by definitions adopted within the United Nations system and by international standardizing bodies . . .." (41) It is conceivable that the Draft Principles could be considered one such international standard. After the passage of the North American Free Trade Agreement (NAFTA), two mechanisms were created to oversee the implementation of NAFTA with regard to environmental and labor standards. Those two mechanisms -- the North American Agreement on Environmental Cooperation (42) and the Agreement on Labor Cooperation (43) -- do not rely upon existing international standards for their decisions; however, the Principles could be used as a basis for fact-finding or interpreting the NAFTA standards. The European Parliament has adopted a resolution referring to basic international standards applicable to multinationals and calling upon the European Union to create a legally binding code of conduct for all multinationals headquartered in the European Union (EU). (44) The European Parliament can hold hearings to assess compliance with its resolution and the EU might eventually be able to use the Human Rights Principles as a model for the EU's code of conduct.

48. States can use the Human Rights Principles as a model for legislation or administrative provisions with regard to the activities of each transnational corporation or other business enterprise having a statutory seat in that country, under whose law it was incorporated or formed, where it has its central administration, where it has its principal place of business, or where it is doing business. In those countries where legislation already applies to the activities of transnational corporations or other business enterprises, courts could use the Human Rights Principles to interpret legal standards. (45)

 

49. Self-assessments, assessments by consultants, independent social audits, etc. could be used by individual investors and socially responsible mutual funds in making their investment decisions. Banks and other lending institutions may use this information in deciding whether to extend credit. States could encourage or require businesses to file reports about their compliance with the Human Rights Principles in a central office or could make the filing of such annual reports a requirement of business registration, licensing, securities law, tax law, consumer protection law, etc. The Human Rights Principles should not replace, but should encourage existing State procedures for assuring compliance of business enterprises with human rights standards, for example, through the use of labour inspections. Courts might refer to annual reports and the Human Rights Principles in assessing whether a transnational corporation or other business enterprise has provided consumers or investors adequate information about their products and services. In some countries compliance with the Human Rights Principles might be relevant to determining liability for injuries caused by businesses and their officers.

50. Human rights treaty bodies could further use the Human Rights Principles in the creation of additional reporting requirements by States. The additional reporting requirements would request States to include reports about the compliance of business enterprises established within their respective treaties. A further mechanism would be to allow the four treaty bodies with individual communications procedures to receive communications regarding States that have failed to take effective action in response to businesses that have violated the respective treaties as elaborated by the Human Rights Principles and General Comments and Recommendations.

 

51. The Human Rights Principles could further be helpful to most of the human rights treaty bodies as the basis for their efforts to draft general comments and recommendations relevant to the activities of transnational corporations and other business enterprises. For example, the Committee on Economic, Social and Cultural Rights might use the Principles in drafting, adopting, and applying a General Comment on the obligations of transnational corporations and other businesses to protect rights set forth in the International Covenant on Economic, Social and Cultural Rights. Indeed, all the treaty bodies might use the Human Rights Principles in a cooperative effort to develop a joint General Comment/Recommendation dealing with the human rights implications of the activities of transnational corporations and other business enterprieses. The treaty bodies could also use such a General Comment/Recommendation and thus the Human Rights Principles in preparing their country comments and recommendations on States' compliance with already existing treaty provisions.

52. Special rapporteurs or thematic procedures of the U.N. Commission on Human Rights could use the Human Rights Principles and other relevant international standards for raising concerns about actions by transnational corporations and other business enterprises within their respective mandates. For example, the Commission's Special Rapporteur on Adequate Housing might express concerns about company actions that have resulted in forced evictions. (46) The Principles could also be used to create a new thematic procedure within the context of the Commission or the General Assembly. Unfortunately, however, there are so many thematic procedures within the context of the Commission that there are insufficient resources to staff such procedures and inadequate time within the agenda of the Commission to give appropriate attention to each of the thematic procedures. A thematic procedure on the human rights responsibilities of businesses would just add to the overload on the limited resources of the Office of the High Commissioner for Human Rights and the overburdened agenda of the Commission.

 

53. The Human Rights Principles may also be used in the development of procurement standards for the U.N. as well as specialised and other agencies. For example, the UNHCR already uses procurement standards which call for consideration of the vendor's environmental practices. UNICEF similarly uses procurement standards specifically regarding the suppliers' compliance with national child labour laws and involvement in the sale or manufacture of land mines. Using the Human Rights Principles, procurement standards could be created or enlarged so as to evaluate the overall human rights practices of a supplier before engaging in any business with the supplier.

54. Transnational corporations and other business enterprises as well as States and other institutions may be aided in their implementation of the Human Rights Principles by the creation of a resource center. The resource center could be used by transnational corporations or other business enterprises, States, unions, other NGOs, individuals, or other groups to assist with: the dissemination of internal rules of operation consistent with the Principles throughout the company including all the places where the company does business and/or has affiliated entities; mechanisms for training company personnel and suppliers about the Principles; and gathering information about implementation of the Principles by other businesses.

 

55. Another mechanism for implementation would be the establishment of an interactive website which would post international human rights standards in regard to transnational corporations and other business enterprises, including the Principles being prepared by the Sub-Commission, company codes of conduct, and other norm-setting documents. The website would also receive information from individuals and organizations about the conduct of businesses in compliance with the Principles, other relevant standards, and codes of conduct. Transnational corporations and other business enterprises would be given an opportunity to respond to the information received.

56. The Sub-Commission's Working Group on the Working Methods and Activities of Transnational Corporations or a successor pre-sessional body could also monitor compliance with the Human Rights Principles by receiving information from NGOs or interested individuals and then by allowing businesses an opportunity to respond. The Working Group may also consider serving as the body to receive and respond to company requests for advisory opinions on proposed investments, decisions, and other company changes. If the Working Group is able to pursue such a role, it would require that the Group become an inter-sessional group so that it would have some more time and resources to handle the additional responsibilities. Nonetheless, there is a question about the adequacy of the resources available for such a major task, as discussed above in regard to thematic procedures.

 

57. If the Human Rights Principles eventually become the basis for a treaty, the treaty will need an implementation procedure analogous to the six existing human rights treaty bodies but taking into account the particular concerns and attributes of transnational corporations and other business enterprises.

58. The Working Group and eventually the Sub-Commission should consider these implementation options that may be both alternatives and, at least to some extent, complementary approaches.

59. The Human Rights Principles and Responsibilities for Transnational Corporations and Other Business Enterprises, as well as the related Commentary, are the result of much effort by the Working Group and considerable input from representatives of States, intergovernmental organizations, transnational corporations, other businesses, unions, nongovernmental organizations and others. Such representatives contributed most visibly in a March 2001 seminar at Palais Wilson. Further, the International Council on Human Rights Policy held a very useful meeting in February 2000 at which, inter alia, an earlier version of the Draft Human Rights Principles was discussed and the contribution of the participants of those two meetings must be acknowledged. Further, this effort has been aided considerably by the International Council on Human Rights and Nicholas Howen in preparing Business wrongs and rights: human rights and the developing international legal obligations of companies -- an extensive report on different implementation mechanisms available for an international human rights standard. (47)

 

60. Very useful comments and communications have been received from the following intergovernmental organizations: International Labour Organization, Office of the High Commissioner for Human Rights, United Nations Environmental Programme, World Health Organization, and World Intellectual Property Organization. Further, gratitude must be expressed for the suggestions of the following organizations: Amnesty International, Anti-Slavery International, Association of American Jurists (AAJ), Calvert Group, Caux Round Table, Center for Ethical Business Cultures, Center for Human Rights and the Environment, Centre on Housing Rights and Evictions, Consumers International, Europe-Third World Center (CETIM), Friends of the Earth, Human Rights Advocates, Human Rights Watch, International Committee of the Red Cross, Indian Law Resource Center, Institute for Agriculture and Trade Policy, International Chamber of Commerce, International Confederation of Free Trade Unions (ICFTU), International Organization of Employers, International Women's Rights Action Watch, Lawyers Committee for Human Rights, Minnesota Advocates for Human Rights, Lutheran World Federation, National Heritage Institute, Norwegian Institute of Human Rights, Novartis Foundation for Sustainable Development, Oxfam, Pax Romana, Save the Children - U.K., the World Organisation Against Torture (OMCT), and others. Extremely helpful comments were also received from a number of businesses and organizations of businesses: BP Amoco; Business for Social Responsibility; Calvert Asset Management Company; Corporate Social Responsibility Forum; Freeport-McMoRan Copper & Gold; Friends, Ivory & Sime; FTSE4Good Advisory Committee; International Chamber of Commerce; International Organization of Employers; PriceWaterhouseCoopers; Nokia; Novartis; Novo Nordisk; Reebok International; South African Breweries; and U.S. Council for International Business.

61. The following persons must be thanked for their active participation and contributions at the March 2001 seminar in Geneva and for their other comments: Andrea Aeby, Christopher Avery, Martin Brooks, Theo Boutruche, Doug Cahn, Geoffrey Chandler, Andrew Clapham, Aron Cramer, Sumithra Dhanarajan, Janelle Diller, Asbjorn Eide, Teresa Fabian, Arvid Ganesan, Pia Rudolfson Goyer, Stephanie Grant, Frances House, Nicholas Howen, Scott Jerbi, Dwight Justice, Menno Kamminga, Vladimir Kartashkin, Alya Kayal, Muria Kruger, Klaus M. Leisinger, Peter Maurer, Thomas McCarthy, Justine Nolan, Helena Nygren-Krug, Gerald Pacoud, Soo-Gil Park, Penny Parker, Miguel Pellerano, David Petrasek, Peter Prove, Usha Ramanatham, Mabel Rantla, David Rice, Manual Rodriguez-Cuadros, Karin Schmitt, Fackson Shamenda, Sune Skadegaard Thorsen, Wilder Tayler, Bret Thiele, Brent Wilton, Cornis Van der Lugt, and Jong-Gil Woo. The seminar was organized by the University of Minnesota in cooperation with the Office of the High Commissioner for Human Rights, with additional financial support from the Ford Foundation and the Swiss Federal Department of Foreign Affairs as well as practical assistance from the Lutheran World Federation.

 

62. In addition to those persons and organizations mentioned above, gratitude must also be expressed for the assistance and advice received from the following individuals who made comments on the drafts: Nicole Ankeny, Stephen Befort, Norman Bowie, Robert T. Coulter, Gemma Crijns, Connie de la Vega, Nikki Daruwala, Kristin Dawkins, Charles Denny, Lisa Dercks, Caroline Dommen, Mike Dottridge, Alexandra Faite, Anna Fielder, Marsha Freeman, Barbara Frey, Shinobu Garrigues, Daniel Garry, Mayra Gomez, Maria Green, Monica Halas, Gavin Hayman, Adonis Hoffman, David Isaacs, Chris Jochnick, Richard Jones, Sarah Joseph, Michael Kane, George Kent, Steve Kong, Sharon Ladin, Michelle Leighton, Michael Levy, Morris Levy, John Matheson, Gabrielle K. McDonald, Brett McDonnell, David McGowan, Selig Merber, Nathalie Mivelaz, Justine Nolan, Joanne O'Donnell, Joseph Oloka-Onyango, Andrew Orkin, Carolina Ortega Barrales, David Ould, Gerald Pachoud, Jelena Pejic, Joe W. (Chip) Pitts, Ravi P. Rajkumar, Anita Ramasastry, Steven Suppan, Sophie Thomas, Samantha Towle, Deepika Udagama, Winston Wallin, David Waskow, John Welty, Morton Winston, Jennifer Woodward, Stephen B. Young, Saman Zia-Zarifi, and others. Furthermore, the preparation of the Human Rights Principles was much assisted by the research of Muria Kruger at the Harvard University Human Rights Program and the University of Minnesota Human Rights Center as well as by the secretarial work of Mary Thacker at the University of Minnesota.

 

63. The Working Group's efforts to establish Human Rights Principles and Responsibilities for Transnational Corporations and Other Business Enterprises represent an important initial step in fulfilling the tasks which Sub-Commission resolution 2001/3 envisioned for the Working Group. Upon completion of these Principles, however, the Working Group should continue with the many other tasks foreseen by Sub-Commission resolution 2001/3, including further measures of implementation and monitoring.

 

1. See United Nations High Commissioner for Human Rights, Business and Human Rights, <http://www.unhchr.ch/global.htm> (last visited Dec. 18, 2001); United Nations Conference on Trade and Development, The Social Responsibility of Transnational Corporations, U.N. Doc. UNCTAD/ITE/IIT/Misc.21 at 6 (1999).

2. See The Realization of Economic, Social and Cultural Rights: The relationship between the enjoyment of human rights, in particular, international labour and trade union rights, and the working methods and activities of transnational corporations, U.N. Doc. E/CN.4/Sub.2/1995/11, para. 22 (1995).

3. See Roger Cowe, ABI Research Reports, Investing in Social Responsibility: Risks and Opportunities (2001) (supporting the proposition that corporate social responsibility has a positive impact on businesses by increasing their potential for competitive advantage and increasing shareholder value through promotion of risk management).

4. See Christopher L. Avery/Amnesty International United Kingdom, Business and Human Rights in a Time of Change ch. 1 (2000). See also Business and Human Rights, supra note 1.

5. For example, consumer discontent that soccer/footballs were made by child labour led to a consumer boycott forcing the manufacturers to stop using child labour. See Robert J. Liubicic, Corporate Codes of Conduct and Product Labeling Schemes: The Limits and Possibilities of Promoting International Labor Rights Standards Through Private Initiatives, 30 Law and Pol'y Int'l Bus 111 (1998).

6. Development and International Economic Cooperation: Transnational Corporations, U.N. Doc. E/1990/94 (1990); see also United Nations Draft International Code of Conduct on Transnational Corporations, 23 I.L.M. 626 (1984). In 1972 the Economic and Social Council requested the Secretary-General to appoint a group of eminent persons to study the impact of multinational corporations on the world economy. In 1977 the United Nations Commission on Transnational Corporations began formulating a Code of Conduct for Transnational Corporations; the most recent draft was completed in 1990, but the Code of Conduct was never concluded. See Paul Lansing & Alex Rosaria, An Analysis of the United Nations Proposed Code of Conduct for Transnational Corporations, 14 World Competition 35, 37 (1991); John Christopher Anderson, Respecting Human Rights: Multinational Corporations Strike Out, 2 U. Pa J. Lab. & Emp. L. 463, 474-75 (2000).

7. Organization for Economic Cooperation and Development, Guidelines for Multinational Enterprises, 15 I.L.M. 967 (1976). The OECD has established National Contact Points for handling inquiries and contributing to the solution of problems that may arise in connection with the OECD Guidelines. The OECD has also established the Committee on International Investment and Multinational Enterprises (CIME) that periodically or at the request of a Member country can hold an exchange of views on matters related to the Guidelines. <http://www.oecd.org/daf/investment/guidelines/faq.htm> (last visited Dec. 18, 2001). Over 30 cases have been submitted to the CIME - principally involving employment and industrial relations.

8. OECD Guidelines for Multinational Enterprises, Revision 2000, <http://www.oecd.org/daf/investment/guidelines/index.htm> (last visited Dec. 18, 2001).

9. International Labour Organization, Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (1977), 17 I.L.M. 422, para. 6 (1978). <http://www.ilo.org/public/english/employment/multi/tridecl/index.htm> (last visited Dec. 18, 2001).

10. See International Labour Organization, Updating of references annexed to the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, ILO Doc. GB.277/MNE/3 (2000).

11. ILO Declaration on Fundamental Principles and Rights at Work and its Follow-Up, adopted by the International Labour Conference at its eighty-sixth session, Geneva, June 18, 1998. The ILO Declaration is monitored through a quadrennial survey and through interpretations rendered by the Subcommittee on Multinational Enterprises. As of November 15, 1999, the Subcommittee had received over 23 requests for interpretations with very few passing the test of receivability so that an interpretation has been issued. Follow-up and Promotion March 2000 by Subcommittee on Multinational Enterprises, ILO Doc. GB.277/MNE/1 (2000).

< http://www.ilo.org/public/english/standards/relm/gb/docs/gb277/pdf/mne-3.pdf> (last visited May 14, 2001). See also, International Labour Organization, Your Voice at Work, Global Report under the Follow-up to the ILO Declaration on Fundamental Principles and Rights at Work (2000).

12. See International Labour Organization, The International Labour Organization and Private Voluntary Initiatives (2000).

13. Secretary-General Kofi Annan, Address at the World Economic Forum in Davos, Switzerland (Jan. 31, 1999), U.N. Doc SG/SM/6448 (1999).

14. The principles are that businesses should: (1) support and respect the protection of internationally proclaimed human rights within their sphere of influence; (2) make sure they are not complicit in human right abuses; (3) uphold the freedom of association and the effective recognition of the right to collective bargaining; (4) eliminate all forms of forced and compulsory labour; (5) abolish child labor; (6) eliminate discrimination in respect of employment and occupation; (7) support a precautionary approach to environmental challenges; (8) undertake initiatives to promote greater environmental responsibility; and (9) encourage the development and diffusion of environmentally friendly technologies. The Global Compact, available at < http://www.unhchr.ch/global.htm> (last visited on Dec. 18, 2001).

15. The Global Compact, supra note 14.

16. See The Global Compact Website, Global Compact Newsletter, Dec. 2001, available at <http://www.unglobalcompact.org/un/gc/unweb.nst/content/newsletter.htm> (last visited Dec. 18, 2001).

17. Mary Robinson, address, Second Global Ethic Lecture, University of Tübingen, Germany, January 21, 2002, reprinted in, Globalization has to take human rights into account, Irish Times, Jan. 22, 2002.

18. European Parliament (EP), Resolution A4-0508/98 of 1998; Resolution on EU standards for European Enterprises operating in developing countries: towards a European Code of Conduct. In November 2000, the Development Committee of the EP held parliamentary hearings on the Resolution. Additionally, the Commission of European Communities submitted the Green Paper Promoting a European Framework for Corporate Social Responsibility. COM(2001)366.

19. Corporate Code of Conduct Bill 2000; A Bill for an Act to impose standards on the conduct of Australian corporations which undertake business activities in other countries, and for related purposes.

20. See Transparence sociale et environnementale au menu des sociétés françaises, Le Monde, Feb. 22, 2002.

21. Human Rights and Security in the Extractive Sector <http://hrpd.fco.gov.uk/Combi-Vol_Prin_Sec_Hum_Rights_13Dec.pdf> (last visited, Dec. 18, 2001).

22. Examples of corporations which have adopted voluntary codes of conduct are 3M, Body Shop, BP Amoco, British Telecom, Cargill, C&A, Carlson Companies, Gap, H & M, ING Group, Levi Strauss, Medtronic, Nokia, Novo Nordisk, Numico, PepsiCo, PetroCanada, Reebok International, RioTinto, Sara Lee Corporation, Royal Dutch/Shell Group of Companies, Starbucks, Statoil, Tata Iron and Steel Co.,Volkswagen, and Xerox.

23. See generally Ibid. Examples of codes of conduct written by States, trade groups, NGOs, and others include: Amnesty International Human Rights Guidelines for Companies; Australian Code of Conduct Bill 2000, Business Charter for Sustainable Development; Caux Principles for Business; Clean Clothes Campaign, Code of Labour Practices for the Apparel Industry Including Sportswear; Clinton Coalition Code of Conduct; Coalition for Environmentally Responsible Economies; Code of Labour Practice for Production of Goods Licensed by the Federation Internationale de Football Association; Confederation of Norwegian Business and Industry's Human Rights from the Perspective of Business and Industry--a checklist; Council on Economic Priorities Accreditation Authority (CEPAA); Declaration of Principles Concerning Human Resource Management for Korean Enterprises Operating Overseas; Ethical Trading Action Group (ETAG), Canadian Base Code of Labour Practice; Ethical Trading Initiative, Code of Conduct; European Parliament, Code of Conduct for European Enterprises Operating in Developing Countries; Fair Labor Association Charter Document; Global Sullivan Principles; Interfaith Center for Corporate Responsibility, Principles for Global Corporate Responsibility: Bench Marks for Measuring Business Performance; International Chamber of Commerce, International Code of Practice in Marketing; International Chamber of Commerce, Recommendations to Combat Extortion and Bribery in Business Transactions; International Code of Ethics for Canadian Businesses; International Confederation of Free Trade Unions (ICFTU), Basic Code of Labour Practice; International Federation of Building and Wood Workers (IFBWW) Model Code of Labour Conduct for the Construction Industry (draft); ISO 14001, A Guide for Environmental Managers & Product Designers; Japan Chemical Industries Association, Responsible Care Principles; Keidanren (Japan Federation of Economic Organizations) Charter for Good Corporate Behavior; MacBride Code; Maquiladora Standards of Conduct; Miller Principles; Mikkeiren Japan Federation of Employers' Association, Guidelines for Overseas Direct Investment; Pacific Basin Economic Council, Charter on Standards for Transactions Between Businesses and Government; Social Accountability 8000; South Asian Coalition on Child Servitude, Rugmark; Swedish Chemical Industry Progress Report, Responsible Care; United States/United Kingdom Discussion Group's Human Rights and Security in the Extractive Sector; and Zimbabwe Industrial Chemical Association, INCHEM Responsible Care Initiative.

24. The ethical market share in the United Kingdom has grown 15% from 1999 to 2000. See Deborah Doane, New Economics Foundation Taking Flight, The Rapid Growth of Ethical Consumerism (2001), available at <http:// www.neweconomics.org>(last visited Dec. 18, 2001). A recent study in the United States found that one out of every eight professionally managed investment dollars is used in social responsible investing. See Social Investment Forum, 2001 Report of Socially Responsible Investing Trends in the United States (SRI Report), available at <http://www.socialinvest.org/areas/research/trends/2001-Trends.htm> (last visited Dec. 18, 2001).

 

25. The U.S. Social investment Forum study socially screened assets grew at a rate 1.5 times faster than all professionally managed assets combined in the United States. See 2001 SRI Report, supra note 24. Cf. Michael S. Knoll, Ethical Screening in Modern Financial Markets: The Conflicting Claims Underlying Socially Responsible Investment, 57 Bus. Law. 681 (2002).

 

26. FTSE4Good tracks business performance in three key areas; environmental, relations with stock holders, and support and respect for the protection on international human rights. The FTSE4Good contains four benchmark indexes including; FTSE4Good UK, FTSE4Good Europe, and FTSE4Good Global Index, and 4 tradable indexes; FTSE4Good UK 50, FTSE4Good Europe 50, FTSE4Good USA 100, and FTSE4Good Global 100. See <http://www.ftse4good.com> (last visited, Dec. 18, 2001).

 

27. The Dow Jones STOXX Sustainability Indexes track the financial performance of leading companies in terms of economic, environmental and social criteria. The four indexes include Dow Jones STOXX Sustainability Index; the Dow Jones EURO STOXX Sustainability Index, the Dow Jones STOXX Sustainability Index ex Alcohol, Gambling, Tobacco, Armaments and Firearms; and the Dow Jones EURO STOXX Sustainability Index ex Alcohol, Gambling, Tobacco, Armaments and Firearms.

28. The 1995 U.K. Pension Act was amended in 2000 requiring pension fund trustees to state their policy on social, environmental and ethical issues. In the U.S., the state of California enacted legislation requiring the California Public Employee's Retirement System (Calpers) and California State Teachers' Retirement System (Calstrs) to divest themselves of tobacco and seek socially responsible investments. Calpers also plans to follow human rights, labor, and environmental standards in making investment decisions.

29. Business and Human Rights, supra note 1, at 8-9.

30. Milton Friedman, Capitalism & Freedom 133 (1962); see also Milton Friedman, The Social Responsibility of a Business is to Increase Profits, N.Y. Times, Sept. 13, 1970 (Magazine) at 32, 125.

31. See Ronald Harry Coase, The Firm, The Market and the Law (1988).

32. Cf. Overview of global developments and Office activities concerning codes of conduct, social labeling and other private sector initiatives addressing labour issues. Working Party on the Social Dimensions of the Liberalization of International Trade. International Labour Office, Geneva, November 1998, GB.273/WP/SDL/1 (breaking down the categories of standards into four categories).

33. UNCTAD has noted "incipient signs of 'code fatigue'." UNCTAD, supra note 1, at 12.

34. E/CN.4/Sub.2/RES/2001/3.

35. Lisa H. Dercks, Twelve Steps to an Effective Ethics and Compliance Program (2000).

36. The Caux Round Table, Caux Round Table Self-Assessment and Improvement Program.

37. For example, Caux Round Table Principles for Business (1986); Clean Clothes Campaign, Code of Labour Practices for the Apparel Industry Including Sportswear; International Chamber of Commerce, Guidelines for International Investment and Business Charter for Sustainable Development.

38. For example, the Sullivan Statement of Principles (4th Application, Nov. 8, 1984, 24 I.L.M. 1464 (1985); Irish National Caucus, the MacBride Principles (1984); Council of Economic Priorities Accreditation Authority, Macquiladora Standards of Conduct; Miller Principles; Partner's Agreement to Eliminate Child Labor in the Soccer Ball Industry in Pakistan.

39. Article XX of the 1947 General Agreement on Tariffs and Trade states ten exceptions in which a State may use trade-restrictive measures, including things such as the protection of public morals; the protection human, animal or plant life or health; and the preservation of exhaustible natural resources. See Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations (April 15, 1994) reprinted in The Results of the Uruguay Round of Multilateral Trade Negotiations - The Legal Texts (1994), and in 33 ILM 1140 (1994).

40. See ibid, at Agreement on Sanitary and Phytosanitary Measures, art.2.1.

41. Ibid. at Agreement on Technical Barriers to Trade, art. 1.1.

42. See North American Agreement on Environmental Cooperation, 32 I.L.M. 1480 (1993).

43. See North American Agreement on Labor Cooperation, 32 I.L.M. 1499 (1993).

44. See Resolution on EU standards for European Enterprises operating in developing countries: toward a European Code of Conduct, European Parliament, Resolution A4-0508/98 of 1998.

45. See, e.g., Wiwa v. Royal Dutch Petroleum Co., - F.Supp. 2d - (S.D.N.Y. 2002); Su-Ping Lu, Corporate Codes of Conduct and the FTC: Advancing Human Rights Through Deceptive Advertising Law, 38 Colum. J. Transnat'l L. 603 (2000) (discussing how company human rights codes of conduct may be used by courts to hold companies liable under deceptive advertising laws).

46. See Committee on Economic, Social and Cultural Rights, General Comment 7, The right to adequate housing (Art. 11 (1) of the Covenant): forced evictions, U.N. Doc. E/C.12/1997/4 (1997).

47. International Council on Human Rights Policy, Beyond Voluntarism: Human rights and the developing international legal obligations of companies (2001).

 

 

Home / Treaties / Search / Links