Draft Guiding Principles for the Implementation of the United Nation s Protect, Respect, Remedy Framework Global Unions * Response

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1 I. Introduction Draft Guiding Principles for the Implementation of the United Nation s Protect, Respect, Remedy Framework Global Unions * Response Trade unions welcome the Protect, Respect, Remedy Framework as a significant step forward in more effective prevention and redress of business-related human rights abuses. The essential feature of this framework is the clear distinction it establishes between the responsibilities of states and business enterprises, while at the same time linking those responsibilities. It grounds them firmly in international human rights instruments, including labour standards. The Framework is a fresh approach that is quite different from the usual Corporate Social Responsibility (CSR) practices. Its emphasis on due diligence with respect to established standards of human rights offers a more satisfactory basis for addressing the responsibility of business for its impacts on society. Workers and their trade unions are concerned with the full range of human rights. But we feel that we can most effectively contribute to the Guiding Principles by focusing on those issues with which we are most familiar because they are related to the human rights of workers. The issues covered are ones that we have raised in the civil society consultations, in the on-line consultation process, and in the consultation held between trade unions and Professor Ruggie in October 2010 that are discussed under the relevant Pillars. This submission also draws attention to highly problematic aspects of CSR that have been incorporated into the Guiding Principles. These elements, in our view, may unwittingly promote contemporary CSR practices, whereas the strength of the Framework, and potentially of the Guiding Principles, is precisely in overcoming the deficiencies of such practices. II. The State Duty to Protect Human Rights 1. Guiding Principles 1 and 5: Role of the State The description of the role of the state could be less ambiguous and more forcefully stated. There should be an explicit reference to the rule of law and to the state obligation to foster a culture of compliance with law. The commentary of this principle can address the importance of conducting activity within an appropriate legal framework where the rights of the parties can be protected and all parties have effective access to justice. * Global Unions" is a term describing international trade union organisations representing national trade unions by trade/ sector or national centres. The Council of Global Unions brings those two trade union structures together and facilitates co-operation. 1

2 2. Guiding Principle 4: Maintaining Domestic Policy Space States often sacrifice their necessary domestic policy space through pressure exerted by other states, particularly during treaty negotiations. The Guiding Principles address the responsibility of States to assist other States to achieve policy coherence. The commentary suggests that this is only relevant when entering into agreements. Because the full range of potential human rights risks of these agreements cannot be completely anticipated, the need to make adjustments to agreements must be recognised. Failure to take this into account would establish a de facto treaty hierarchy of business over human rights law. 3. Guiding Principle 5: Addressing the governance gap in labour protection For trade unions, a key governance gap that the State Duty to Protect should address is the impact on human rights resulting from the failure of the law or its application to provide protection for workers. Paragraph 1 of the description preceding the Guiding Principles emphasizes the challenges to conventional understanding and policy designs engendered by the rapid evolution of new forms of business enterprise and activity. A key feature of this development has been the changing relationships under which work is performed which pose distinct challenges for business and human rights. Work relationships are becoming increasingly precarious because they are more temporary or casual or because they put the worker in triangular relationships where rights cannot be fully realized or defended. Indirect employment relationships can directly result in abuses because indirect employment tends to diffuse responsibility and can undermine the State Duty to Protect. Recent decisions by the ILO Committee on Freedom of Association and the ILO Committee of Experts on the Application of Conventions and Recommendation have clearly highlighted the deliberate use of indirect employment systems in particular cases to prevent workers from effectively exercising their human rights to freedom of association and collective bargaining. In some countries, acceptance of the State role in protecting human rights is selective. It may not extend to other human rights; this is frequently the case with respect to the human rights of workers. Inadequate legislation or its ineffective application and obstacles for workers seeking remedy for the violation of their rights are, unfortunately, quite common. An important factor in this human rights omission is pressure from business. 4. Guiding Principle 8: Development Finance Institutions 2

3 Many States have development finance institutions (DFIs) that lend to the private sector in the developing world. The UK government s CDC group (formerly the Commonwealth Development Corporation), for example, lends indirectly to some 700 companies. Adding finance would broaden the application of Guiding Principle 8 in a way which is largely consistent with existing practice among DFIs: most, but not all, bilateral DFI s, for example, have adopted the IFC performance standards. 5. Guiding Principle 11: Bilateral Donors The scope of Guiding Principle 11 should be expanded to capture the activities of states when acting as bilateral donors. III. The Corporate Responsibility to Protect 1. Guiding Principle 12: International Standards At the time that the ILO Declaration of Principles of Fundamental Rights at Work was adopted by the International Labour Conference, many spoke of Conventions from which the Declaration Principles were derived as the human rights Conventions. They were fundamental in the sense that Member States could be assumed to support them based on the Constitution of the ILO, even if they had not been ratified. In addition, freedom of association and the rights to organise and collective bargaining have long been considered enabling rights that go to the very heart of human rights. They were already recognised as deserving of special attention when the ILO established the Committee on Freedom of Association in Ten years following the adoption of the Fundamental Rights Declaration, the ILO adopted its Declaration on Social Justice for a Fair Globalisation which identified principles of other Conventions as constituting human rights. Moreover other ILO instruments are elaborations of rights in the International Bill of Human Rights. They all belong to the universe of human rights. 2. Guiding Principle 12: Scope of the Corporate Responsibility to Respect The following paragraph in the commentary may be understood to assign to business itself the task of defining the scope of its responsibility, even if this is not the meaning intended: 3

4 A corporate group may consider itself to be a single business enterprise, in which case the responsibility to respect human rights attaches to the group as a whole and encompasses both the corporate parent and its subsidiaries and affiliates. Alternatively, entities in a corporate group may consider themselves distinct business enterprises, in which case the responsibility to respect attaches to them individually and extends to their relationships with other entities both within the group and beyond that are connected to their activities. However, if the responsibility to respect extends across a business enterprise s activities and relations, it cannot be the role of the enterprise to define the scope of its responsibility by what it considers to attach to itself or its subsidiaries and affiliates. The rapid evolution of business referred to in the introduction to the Principles includes continuously evolving commercial relationships which range from direct ownership of material assets to branding and other forms of intellectual property, licensing and franchising arrangements and indirect forms of investment, all of which may obscure mechanisms of ownership and control and call into question the meaning of own when applied to enterprises which embody a range of activities, income streams and relationships. As previously noted, new employment relationships have also emerged that can serve to obscure control and dilute responsibility. It may be safely anticipated that still new forms will continue to evolve, posing new challenges. Regardless of how a business considers its structure and relationships, the responsibility to respect must be based on the recognition that modern enterprises (and not only corporate groups in the formal sense) comprise a totality of activities and relationships. The principle states this clearly, if in a general fashion; the Commentary is less clear. 3. Guiding Principle 12: Avoiding Negative Impact on Human Rights The Commentary should explicitly address the responsibility of business to refrain from seeking laws or practices that would negatively impact on human rights or from opposing laws or practices that would bring a State in line with international human rights standards. A company that were to actively oppose proposed legislation to ban child slavery or torture, for example, would not breach the Guiding Principles in their current form. 4

5 4. Guiding Principle 15: The human rights of workers In addition to the recommendations made to address the rise of precarious work under the State Duty to Protect (Guiding Principle 5 and its commentary), this issue should also be tackled under the Corporate Responsibility to Respect. The relationships under which work is performed is implicit in assigning the corporate responsibility to respect across an enterprise s entire range of activities, but should be more explicit. 5. New Guiding Principle: Positive Action/Refrain from Undermining Rights Respect for many, perhaps most, rights requires business enterprises to abstain from conduct that results in negative impacts. However, there are some rights that cannot be respected without positive action on the part of the company. One such example is the right to collective bargaining, which cannot be exercised unilaterally, and hence cannot be respected, simply through non-interference. It is a right that, in order to be realized requires the recognition of a legitimate, representative trade union by the employer. National legislation often requires respect of the duty to bargain or provides that parties bargain in good faith. In the absence of positive action, the right to collective bargaining is empty and without meaning. Article 4 of ILO Convention 98, one of the international standards that should be respected even if the State fails to mandate it, provides for such positive action: Article 4 Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers' organisations and workers' organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements. 6. Guiding Principle 17: From Impact Assessment to Action Principle 17 is clear, but the Commentary does not provide sufficient support. It potentially assigns to the company the determination of appropriate action. Professor Ruggie has elsewhere shown, for example, that the capacity to exercise leverage cannot be defined a priori in quantitative terms, but is constituted in the course of attempting to bring about change in the supplier s practices. Clear indications are needed in the Commentary if the principle is to be upheld. 5

6 As with value chain, supplier may be interpreted in an overly restrictive sense. It applies to the full range of goods and services that make up the totality of the business IV. Access to Remedy 1. Guiding Principle 24: Barriers faced by Migrants The Commentary should explicitly refer to the legal barriers faced by migrants. 2. Guiding Principle 27: Collective Bargaining We welcome the recognition given in the last paragraph of the Commentary to Guiding Principle 27 that [O]perational-level grievance mechanisms should not be used to undermine the role of legitimate trade unions in addressing labor-related disputes. This is a key principle to protect workers with legitimate trade unions but, more importantly, to help to ensure that such procedures are not put in place in order to thwart efforts by workers seeking to exercise their human right to join and form trade unions. In addition, we recommend that the Commentary be further strengthened by underlining the positive role of collective bargaining in addressing labor-related human rights abuses. V. Use of CSR Concepts and Terms The UN Framework offers a significant and welcome opportunity to go beyond the now largely discredited approaches of CSR. However, trade unions are concerned that the Guiding Principles use terms drawn from the conventional wisdom of the CSR industry. 1. Guiding Principle 14: Endorsing codes of conduct Principle 14 on policy commitment reads as little more than an endorsement of the contemporary practice of large companies to promulgate CSR codes. Unfortunately, the practice is often used by companies to redefine or reinterpret already established standards or expectations of behavior including with respect to human rights. The principles should not provide a basis for such re-interpretation or be used to promote form over substance. 2. Guiding Principle 16: Use of the term stakeholder The term stakeholder is used throughout the text without precision and often without real purpose. For instance, the phrase in Principle 16 potentially affected groups and other relevant stakeholders is redundant or confusing. 6

7 The problem is that the use of this term in such an ambiguous way is part of a common abuse in the CSR practices of companies that is promoted by the CSR industry. All too often, enterprises engage stakeholders that they select as a means of redefining their responsibility and of conflating the sustainability of the business with sustainable development. If the term is to be used, its meaning must first be established. It is a relational term in that it only has meaning with reference to another party. Stakeholders have a stake in the activities of a particular enterprise because they are actually or potentially impacted by the activities of that enterprise. Consideration of human rights deserves more precision than this term is usually able to provide. It is better to avoid stakeholder by using more precise terms rights holders, experts, NGOs, customers, the community etc. - whatever term best conveys the concrete meaning which is intended. 3. Guiding Principles 18 and 19: Use of the term performance It is the impacts and not the performance on which the business enterprise should report. Plain language will lead to less misunderstanding and abuse. If current practices in sustainability reporting are a guide, then the use of the term performance will promote the use of objective measurements in reporting, which in the area of human rights are almost always misleading or useless. ( the number of complaints dropped since we instituted the reformed grievance mechanism. ). Similarly, the concept of continuous improvement a widely used management concept, is not always appropriate in the context of human rights. ( We engaged 50% fewer child slaves this year.) Principles 18 and 19 borrow too much jargon from sustainability reporting practices. 4. Guiding Principle 19: Use of the term assurance Principle 19 endorses third party assurance. This term is now understood in CSR reporting discourse to refer to the usually commercial practice of selling attestations with respect to the quality of specific social responsibility or sustainability reports. This is an unregulated industry whose practices are not credible and that should not appear to be endorsed by the Principles. Given the general nature of the Principles and of the limits to their length there is no need to make recommendations with respect to how the credibility of communications is enhanced. 7

8 Audits and other forms of third-party assurances can also weaken the content and credibility of human rights reporting, legitimating these reports by obscuring or ignoring risks and abuses. Encouraging the further proliferation of such schemes is not a valid approach to strengthening the method, content and scope of reporting. Conclusion The Protect, Respect, Remedy framework is conceptually strong and is a sensible and realistic way to address the human rights responsibilities of business in an interdependent global economy. The Guiding Principles need to fulfill that promise and not limit it. It is in that context that we urge that the Guiding Principles, and, in particular, the commentary associated with them, be strengthened along the lines we've indicated so that they are able to ensure respect for human rights in a world of continuously evolving business enterprise and continuous challenges to basic rights.. 8

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