KAIROS Statement on the Report of the UN Special Representative of the Secretary-General on business and human rights, Dr. John Ruggie
Source: KAIROS statement www.kairoscanada.org
June 12, 2008 - This month the Special Representative of the Secretary-General on business and human rights is tabling a report at the UN Human Rights Council, entitled, Protect, Respect and Remedy: a Framework for Business and Human Rights. KAIROS welcomes this report and the work of the Special Representative during his three-year mandate.
The Special Representative notes that economic globalization has brought with it a “governance gap” in the regulation of business activities, one that provides a “permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation.” This is largely why the post of Special Representative was created in July 2005 – to make progress within the United Nations institutions in closing this gap.
KAIROS and our partners in the global South are painfully aware of this governance vacuum and its detrimental impact on human rights. “Every day that passes without accountability means more lives lost or endangered, more habitat destroyed or put at risk, more water polluted,” said Thabo Madihlaba, an activist with the Environmental Justice Networking Forum in South Africa. “What’s needed is for governments to hold companies to account. Our experience is that in countries where voluntary frameworks are in place, they just don’t get results.”
A new conceptual framework
KAIROS welcomes the conceptual framework outlining the differentiated but complementary responsibilities regarding business and human rights:
- The State duty to protect against human rights abuses by third parties, including business;
- The corporate responsibility to respect human rights; and
- The need for more effective access to remedies.
Importantly, the report recognizes that business can affect virtually all internationally recognized rights. This is consistent with KAIROS’ view that human rights are universal and inalienable. In the words of Monsignor Roger Ebacher, Archbishop of Gatineau, Quebec, “Human rights are not optional anywhere in the world: they are mandatory.” Attempting to limit the scope of business’ responsibility to respect human rights by including some rights but not others is the wrong approach.
The report recommends that companies consider, at a minimum, the international bill of human rights and the core conventions of the International Labour Organization (ILO). We urge the Special Representative to include the Declaration on the Rights of Indigenous Peoples as another fundamental standard that companies must respect, particularly in instances where their operations affect indigenous peoples and their lands, territories and resources.
Binding legislation urgently needed
Home State legislation, which ensures that companies headquartered in a particular country (e.g. the home state) comply with internationally recognized human rights and environmental practices when operating overseas, is urgently needed if the existing governance gap is to be seriously addressed.
We regret that the Special Representative stops short of recommending that home States enact legislation to hold companies accountable for human rights abuses in their international operations. However, we welcome his finding that there is an emerging international consensus that States “are not prohibited from doing so where a recognized basis of jurisdiction exists.”
It is noteworthy that the Special Representative specifically cites a recommendation of one of the UN treaty bodies, the Committee on the Elimination of Racial Discrimination, which calls on the Government of Canada to “take appropriate legislative or administrative measures” to ensure that companies registered in Canada respect the rights of indigenous peoples in other countries. This recommendation supports the call for binding legislation.
KAIROS’ partners are only too aware of the damage some Canadian companies have done to indigenous communities and their lands. Dr. Constancio Claver, vice-president of the Cordillera Peoples Alliance in the Philippines, spoke last year about a mine in his country operated by Calgary-based TVI Pacific Inc.: “[The mine] has been in operation for six years and the indigenous people there, the Subanons, even came to Canada in 2004 to testify before a House of Commons committee about the pollution, population displacement and human rights abuses, such as people being prevented from getting access to their farmland and the bulldozing of houses.” The mine continues its operation and, the Government of Canada has yet to properly investigate the situation.
Access to justice is a recurring theme within the report. States are called to “address obstacles to access to justice, including for foreign plaintiffs – especially where alleged abuses reach the level of widespread and systemic human rights violations.” We urge Canada to act on the recommendation from the UN Committee on the Elimination of Racial Discrimination and enact legislation to hold Canadian companies accountable for human rights compliance, including the rights of indigenous peoples, in their overseas operations.
Canadian Roundtables on the Extractive Sector
The Special Representative’s Report provides the Government of Canada with numerous recommendations for action. . Many of the policy reforms mirror recommendations made during the National Roundtables on Corporate Social Responsibility (CSR) and the Canadian Extractive Sector in Developing Countries, convened by the Canadian federal government in 2006. Dr. Ruggie was invited to Montreal in November 2006 to address the fourth and final Roundtable session, and he spoke very highly of the CSR Roundtable Process and has done so subsequently.
KAIROS partners spoke passionately about the need for action by Canada in regulating corporate activity abroad. At the roundtable held in Calgary in October 2006, Lilia Rocio Castaneda of Sintraminercol, a Colombian mine workers’ union, explained the impact of foreign multinationals: “In Colombia, resource extraction companies have exacerbated the conflict and an already atrocious human rights situation. Regions rich in minerals and oil have been marked by violence, paramilitary control, and displacement. In fact, these resource-rich regions are the source of 87% of forced displacements, 82% of violations of human rights and international humanitarian law, and 83% of assassinations of trade union leaders in the country.”
In March 2007, the National Roundtables Advisory Group tabled a series of 27 policy recommendations to the federal government – an unprecedented consensus between representatives of industry, civil society, academia and the investment sector. These recommendations were the first step towards necessary binding legislation for Canadian companies. Over a year later, the federal government has failed to adopt or implement the recommendations emerging from the Roundtables.
The centrepiece of the National Roundtables Advisory Group recommendations is the creation of a Canadian CSR Framework that includes clear CSR standards for Canadian companies, public reporting requirements, an ombudsman to receive and investigate allegations of non-compliance, and sanctions in instances of serious non-compliance.
Such a framework would be applied by the federal government to condition its support to the private sector on CSR compliance. The Special Representative supports this principle of government support conditioned on CSR compliance, and provides an example in the case of companies operating in conflict zones:
“Home States could identify indicators to trigger alerts with respect to companies in conflict zones. They could then provide or facilitate access to information and advice – whether from home or their overseas embassies – to help business address the heightened human rights risks and ensure they act appropriately when engaging with local actors. There may be a point at which the home State would withdraw its support altogether.” -- Paragraph 49
The CSR Framework outlined in the Roundtables Report takes a similar remedial approach prior to withdrawing support, but would apply to all Canadian extractive sector companies operating internationally, thus making the obligation stronger.
In designing the Canadian extractive sector ombudsman office, it would be advisable for Canada to take heed of the Special Representative’s six minimum qualities of a credible, non-judicial grievance mechanism: legitimate, accessible, predictable, equitable, rights-compatible, and transparent. Moreover, any ombudsman office should have recourse to enact sanctions in instances of serious non-compliance. Without these qualities, an ombudsman office will be ineffective, since affected communities will not see it as a practical avenue for recourse and redress.
Such has been the experience of affected communities who have tried to lodge complaints with Canada’s National Contact Point (NCP) under the OECD Guidelines for Multinational Enterprises. The role of the NCP is so circumscribed in Canada that it lacks any real powers of investigation or fact-finding. In fact, it has led nowhere for those whose rights have been violated by Canadian companies.
The Special Representative correctly acknowledges, albeit diplomatically, the serious shortcomings of the NCPs and the OECD Guidelines themselves. Unfortunately, the report recommends only enhancing the NCPs and revising the Guidelines. Given the very real shortcomings, this would do nothing to fulfill the six “minimum qualities” outlined in the Report. For Canada, the proposed CSR Framework, which includes an independent ombudsman office and directly references the Universal Declaration on Human Rights, is the best way forward in devising a non-judicial grievance mechanism. Such an office could ultimately be given the necessary stronger, quasi-judicial powers once established and tested.
One of the clearest and most prescriptive recommendations by the Special Representative relates to the human rights obligations of export credit agencies (ECAs). He advises that ECAs “should require clients to perform adequate due diligence on their potential human rights impacts.” This echoes recommendations from the Canadian CSR Roundtables calling on Export Development Canada (EDC) to apply the proposed CSR Framework to its clients. Sadly, EDC recently released a statement on human rights that only pays lip service to its human rights obligations and fails to require client companies to perform human rights impact assessments. Export Development Canada must not extend support to projects that will have serious negative impacts on human rights or environmental protection. Government action is necessary to amend the legislation governing EDC to include human rights provisions, in order for the crown corporation to uphold its obligations in this area.
Policy reforms that promote a corporate climate of openness and accountability can facilitate the State’s duty to protect human rights. The Special Representative speaks highly of countries that have introduced mandatory reporting requirements on CSR matters, including human rights. In addition, some jurisdictions have clarified the definition of fiduciary duty for investors to include taking into account environmental, social and corporate governance factors. Once again, such regulatory changes were also recommended to the Government of Canada in the CSR Roundtables report.
A new mechanism that can be harnessed in the business and human rights effort is the universal periodic review process of the UN Human Rights Council. We strongly support the recommendation for States to “include information about business in their reports for the universal periodic review,” and urge Canada to include information on the extraterritorial impacts on human rights of Canadian-based companies. When Canada submits its report for the universal periodic review in 2009, we would expect to see information on corporate impacts on human rights, both in Canada and internationally. Particular attention should be paid to the right of indigenous peoples.
Bilateral Investment Treaties (BITs)
The Special Representative notes that markets work optimally when they are embedded with rules, customs, and institutions – something that runs counter to current economic globalization
Bilateral investment treaties (BITs) are part of a growing trend within globalization, with 2,500 signed worldwide and more appearing each day. As noted in the report, “these treaties… permit foreign investors to take host States to binding international arbitration, including for alleged damages resulting from the implementation of legislation to improve domestic social and environmental standards.”
Canadians have long documented how this model, under the North America Free Trade Agreement (NAFTA), has hindered the fulfillment of human rights. Moreover, NAFTA’s Chapter 11 has demonstrated how – at the very core – this type of protection for foreign investors has come at a cost to ordinary citizens and their rights. In effect, these types of investment rules grant rights to corporations over and above people’s human rights.
As international binding treaties, BITs can seriously inhibit the State Duty to Protect. Not only can corporations sue governments over legislation that protects human or environmental health, rulings are made by panels with no accountability and whose decisions are binding. The end result, more often than not, is that governments are obligated to pay public money to corporations for alleged damages, despite the fact that they were working in the best interests of their people. BITs can also create a “chill effect” wherein governments, fearing the threat of a lawsuit from foreign investors, refrain from considering or enacting new legislation that would ultimately benefit people and may be necessary to fulfill their international human rights obligations.
In certain respects, BITs have become “binding legislation” entrenching corporate rights at the expense of human rights.
BITs are part of a broader trend towards free trade that, upon closer examination, appears skewed towards facilitating corporate access and entrenching corporate rights rather than promoting sustainable development and poverty eradication or upholding human rights. While globalization has created a “governance gap,” it also provides us with an opportunity to think in new and innovative ways of how to ensure the primacy of human rights over and above any guarantees granted to foreign investors. KAIROS urges the Special Representative to further investigate how free trade impacts human rights and the role that business plays.
Government working at cross-purposes
One of the biggest barriers to progress on the business and human rights front is the fact that business interests continue to trump human rights in the minds of many government and business leaders and senior policy makers. In the words of the Special Representative, “[the business and human rights agenda] is often segregated within its own conceptual and (typically weak) institutional box – kept apart from, or heavily discounted in, other policy domains that shape business practices, including commercial policy, investment policy, securities regulation and corporate governance.” Canada provides a textbook case of this.
The Special Representative decries the resulting incoherence “where departments – such as trade, investment promotion, development, foreign affairs – work at cross purposes with the State’s human rights obligations and the agencies charged with implementing them.” Take, for example, the contrast between Canada’s promotion of mining investment internationally and its complete inaction to date on the CSR Roundtables recommendations. Over the past year, Prime Minister Stephen Harper and (then) International Trade Minister David Emerson have criss-crossed the globe to promote Canadian mining interests, from Chile, to Tanzania, to Mongolia. Meanwhile, the Harper government continues to delay the adoption of the CSR Framework.
As the Special Representative rightly points out, “[g]overnments should not assume they are helping business by failing to provide adequate guidance for, or regulation of, the human rights impacts of corporate activities. On the contrary, the less governments do, the more they increase reputational and other risks to business.”Canada urgently needs to adopt the Roundtable Recommendations.
A troubling misstep
We are deeply troubled by the Special Representative’s suggestion that States should more closely align the activities of their export credit agencies with overseas development agencies. The Report suggests that regions attracting a given country’s trade and foreign direct investment should also receive its overseas development assistance to help manage the “large physical and social footprint” of such investments. In other words, foreign aid could be inappropriately diverted to clean up the social and environmental messes created by private investment and trade.
Whether it takes the form of a community development project alongside a large foreign-owned mining project, or providing technical assistance in rewriting the country’s mining code, Northern overseas development agencies have had a poor track record in helping developing countries manage the negative effects of their own country’s companies. More often, such assistance is intended to deregulate relevant sectors of the economy or “win the heart and minds” of local communities who may oppose a particular private sector project on their territory.
Canada needs to ensure that its official development agency focuses on poverty eradication and human rights in the global South. This should be its primary goal. Under no circumstances should our country’s foreign aid be tied to the needs and priorities of Canadian exporters and foreign investors.
A job left to finish
KAIROS recognizes the important work of the Special Representative to date. At the same time, we feel that much more needs to be done in advancing the business and human rights agenda internationally. . We are disappointed that the report falls short of recommending specific legislative and policy changes; changes that are urgently needed if countries are to uphold their human rights obligations and companies given clear frameworks for their human rights responsibilities.
KAIROS strongly recommends that the Special Representative’s mandate be extended.
There is much to be done: further development of the framework to include specific legislative and policy mechanisms, review of case-studies of human rights abuses – broadly understood - that are linked to corporate activity, how to prevent such abuses and further investigation into the impact of free trade on human rights and the role that business plays. In order to do this with legitimacy, the Special Representative will need to seek input from communities around the world who have been negatively affected by corporate activities. This is best done by reviewing specific cases of human rights abuses linked to corporate activity to understand what mechanisms would be most effective in remedying abuses and prevent similar incidents.