Saturday, September 10, 2011

An Analysis of the U.N. Protect, Respect and Remedy Framework Guiding Principles, Part VI--Section By Section Analysis, the Corporate Responsibility to Respect

On March 24, 2011 the United Nations released the "Guiding Principles for the Implementation of the UN Protect, Respect and Remedy Framework" (the "GP" or "Guiding Principles"), the culmination of the work of the UN Special Representative on business and human rights, John Ruggie, and his team.

(From Yar:  Piracy at the Seventh Circuit, Hard Consonant, July 29, 2011) 

The Guiding Principles were endorsed by the U.N. Human Rights Council in June, 2011.   “In an unprecedented step, the United Nations Human Rights Council has endorsed a new set of Guiding Principles for Business and Human Rights designed to provide -for the first time- a global standard for preventing and addressing the risk of adverse impacts on human rights linked to business activity.” United Nations Human Rights Council, News Release, New Guiding Principles on Business and human rights endorsed by the UN Human Rights Council, 16 June 2011.

The consideration of the Guiding Principles marks a great milestone in the development of frameworks of governance of economic actors outside of the framework of national law. This milestone can be understood as consisting of four great aspects. The Guiding Principles represents the first successful efforts to provide a governance framework that can be adopted into the national legal orders of adhering states. In this aspect it represents a critical effort in the harmonization of national law on the basis of global consensus. At the same time, the Guiding Principles also represents the first successful effort to provide a framework for the development of customary and conventional international law. In this aspect, the Guiding principles represent a critical effort in the harmonization of governance for an important transnational actor at the international level. Additionally, the Guiding Principles for the first time acknowledges the existence and importance of non-governmental sources of governance rules. The embrace of the importance of social norm systems of autonomous behavior rules for economic enterprises represents a critical acknowledgment of non-state actors as a source of norm making the authority of which is not dependent on states. Lastly, the Guidelines for the first time link remedial obligations to the state duty to remedy and the corporate responsibility to respect human rights in a way that both preserves the autonomy of human rights and their connection to both law and social norms systems.

The Guiding Principles will likely be significantly influential not just as a source of soft law principles at the international level, but as a basis for the evolution of common understanding of appropriate standards of corporate behavior for the development of social norms and eventually changes to the form of the domestic legal orders of states. It will be inevitable that as the Guidelines move toward approval and implementation after endorsement, all major stakeholders in the process will seek to mold the Guidelines to suit their interests. See, e.g., Stefan Marculewicz, U.N. Special Representative's Final Guiding Principles on Business and Human Rights: Policy Implications for Employers, Global Employment Law, March 29, 2011 ("We also believe these Guiding Principles, if not addressed proactively by companies, may create an opportunity for advocacy organizations (such as issue-specific non-governmental organizations and labor unions) to seek to define the parameters of the Guiding Principles on their own terms. "). These discussions will draw on the Guiding Principles themselves and their inevitable comparison with failed earlier efforts to provide a structure for the governance of business actions with human rights impacts. John Knox, The Human Rights Council Endorses “Guiding Principles” for Corporations ASIL Insights Aug. 1, 2011 ("In the wake of the debate over the Draft Norms, the appointment of John Ruggie was something of a gamble that he could bring consensus out of the controversy over the application of human rights principles to corporations. To a remarkable degree, he did so. The Human Rights Council’s endorsement of the Guiding Principles opens a new chapter in the continuing effort to bring human rights law to bear on corporations. It remains to be seen, however, how successful the Guiding Principles will eventually prove at curbing corporate abuses of human rights."). 

 In order to better understand the Guidelines, it may be useful to examine the context in which the Guiding Principles were developed and the development of the Guiding Principles from draft (in November 2010, the "DP" or "Draft Principles") to final form GP (March 2011) from a more neutral perspective.

For this purpose I have provided my own thoughts about that context and development that I will develop in a series of posting, divided along the conceptual lines within which the Guiding Principles were framed.

That analysis is divided into several parts:

 (From Citi, Corporate Citizenship, Ethics and Human Rights)

This posting continues a section by section consideration of the final version of the Guiding Principles, focusing on the GP provisions elaborating the corporate responsibility to respect human rights.  

The full analysis will be published as  
Backer, Larry Catá, From Institutional Misalignment to Socially Sustainable Governance: The Guiding Principles for the Implementation of the United Nation’s 'Protect, Respect and Remedy' and the Construction of Inter-Systemic Global Governance (September 5, 2011). Pacific McGeorge Global Business and Development Law Journal, 2011 
and can be accessed here.


The Corporate Responsibility to Respect Principles

I have suggested that a substantial amount of principled pragmatism stands between the “Protect, Respect, and Remedy” framework and the final version of the Guiding Principles.  The Guiding Principles, as finally endorsed, represents a substantial aggregation of compromises and choices made to avoid the fate of the Norms in 2005.  The Guiding Principles do not fully implement a broad reading of the “protect, Respect and Remedy” framework, but does it preserve the essence of that framework?  The answer emerges from a consideration of the movement from draft to final version of the GP; and what emerges is a qualified yes.  The GP preserves the essence of the “Protect, Respect, and Remedy” framework but at a price—shifting the center of gravity to the state duty to protect and recasting remedies as a consequential aspect of the state duty to protect.  In the process, both the corporate responsibility to respect and the remedial pillar become more peripheral aspects.  And thus the qualification: what remains preserves the structure of the “Protect, Respect and Remedy” framework.  It leaves an opening, smaller than that suggested by the framework, but clear enough, from out of which corporations and other non-state stakeholders might rework the GP to more closely mirror the framework.  This section considers the provisions of the General Principles in the form endorsed by the UN Human Rights Council in detail.  Subsection A examines the definitions created under the DP and abandoned in the GP along with the capstone principles that inform interpretation of the GP as a whole. Subpart B then considers the GP Principles elaborating the state duty to protect human rights.  Subpart C analyzes the GP touching on the corporate responsibility to respect human rights and subpart D considers the GP touching on the remedial obligations of states and business entities.      

C. The Devil is in the Detail—Section By Section Analysis: Corporate Responsibility to Respect Principles. 

1.  The Corporate Responsibility to Respect Human Rights: Foundational Principles.  If the first ten General Principles touching on the state duty to protect are grounded in the language of regulatory and political primacy and broadly sketched role in the domestication of collective, the General Principles take on an altogether different tone in the context of the responsibilities of business entities.  Rather than primacy within interlocking systems of state, international and private power that mark the GP for the state duty to protect, the principles here acknowledge a subordinated regulatory role for the corporation, but one in which the obligations of the corporation are much more specifically detailed.  The General Principles move here from the language of political discourse and governance, to the social norm discourse of surveillance, monitoring, disclosure and mediation, and all under the eye of the state.  The state duty is couched in the language of law and policy.  The corporate responsibility to respect is grounded in the language of due diligence.

Yet, over the course of several years’ reports, the SRAG developed the quite innovative insight that corporations also operate autonomously from states, that such operation is subject to a well developed governance system rooted in global social norms, and that such behavior norms are enforceable by the community of actors through which social norms are expressed.  The Corporate responsibility GPs, however, muffle that insight in the service of states and their legal orders.  Because the responsibility of corporations does not flow entirely from states, the legal arrangements enacted by states do not serve to shield corporations from their autonomous obligations, yet the extent of that obligation is bounded by the law through which the state duty to protect is itself framed.  The corporate responsibility to respect human rights suggests a potent innovation in governance, yet takes only a few steps toward an innovative institutionalization within the framework of international law. The GP retain, importantly, a nod to the significance of an autonomous basis for human rights enforcement, but are careful to retain the primacy of at least the formal ties of corporate entities to the state and its remedial mechanics. 

The foundational principles were originally organized in two principles, DP 12-13.  These were divided and broadened into five principles in the final version (GP 11-15).  GP 11 articulates the basic standard: “Business enterprises should respect human rights.”[1]  The standard is then defined: “This means that they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.”[2]  The definition of the “responsibility to respect” standard of GP Principle 12 is particularly important in a number of respects.  First, the standard is constructed in a way that emphasizes the autonomy of the rule standards for the corporate responsibility, especially from the law-based system of states.  The corporate responsibility consists of its own normative system, one that may interact and overlap with the law system of states (and the international system) but one that remains separate form them as to sources of rules, the community that makes up the governance regimes subject to this autonomous responsibility, and the implementation of those governance norms. This is expressed in a number of ways.  First, the Commentary stresses the autonomy of corporate social norm systems. “It exists independently of States’ abilities and/or willingness to fulfill their own human rights obligations, and does not diminish those obligations.”[3]  Second, the corporate responsibility grounded in these social norm principles is not measured by the forms of responses required under the domestic law of states.[4]  Third, the human rights social norm system which is the object of the GP are only a part of the social norm system applicable to entities, which the GP is not meant to constrain.[5]  Lastly, responsibility carries with it the corollary that social norms should not undermine law based human rights obligations of states, though the suggestion, by implication, is that corporations may undermine domestic governance that is not consonant with a state’s duty to respect human rights.[6] 

GP 12 (DP 12(a) substantially unchanged) provides a definition of the scope of the responsibility to respect human rights.  It is meant to refer to all human rights but at a minimum to the International Bill of Human Rights and the eight ILO core conventions.[7]  The specificity accorded to the definition of internationally recognized human rights, applicable to both states and corporation in the draft version, is now confined to corporations under the responsibility to respect principles. A justification is possible: states are bound only to those international human rights to which they have acceded or to the small group of additional standards that are accorded universal applicability.  Beyond that, states may have policy reasons for incorporating human rights standards, but no legal obligations, either applicable internally or enforceable by the community of nations.  The Commentary also suggests that its definition is merely a minimum default rule;[8] some circumstances may warrant expansion of the definition,[9] other circumstances may require corporations to “respect the human rights of individuals belonging to specific groups or populations that require particular attention, where they may have adverse human rights impacts on them.” [10]

GP 13 (DP 12(b) and 13, modified in part), further refines the nature of the responsibility to respect human rights by describing the relationship between the scope of the responsibility and the way in which business enterprises ought to behave in relation that that standard. GP Principle 13 specifies negative and action.  First, the corporation should “avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur.”[11]  Second, the corporation should “seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.”[12]  The Commentary makes clear that the intent of this principle gathers several concepts together and frames their relationships.  The primary objective is address the scope of business activities within the scope of the corporate responsibility to respect human rights.  The Principle suggests a broad scope, covering not merely the direct actions of the entity, but also the activities that produce adverse human rights impacts “as a result of their business relationships with other parties.”[13]  This both softens and changes the scope of the language in the draft, DP 12(b).[14]  Rather than focusing on either “supply chain” or “value chain” concepts,[15] the final version of Principle 13 focuses on the consequences of activities and its relationship with the corporation by focusing generally on activities,[16] and on the construction of a structure for determining mitigation obligations set forth in GP Principle 19.   

GP 14 (DP 12(c), 13, and 15, modified in part) introduces a principle of proportionality to the calculus of responsibility.[17]  A significant factor in addressing proportionality is the degree of connection between the entity and the effect.  That was the subject of GP Principle 13.  GP Principle 14 identifies two other factors.  First, proportionality is based partly on corporate capacity, which, in turn, is based on the usual indicators—size, management structures, resources and the like.[18]  But there are limits, balanced against capacity are considerations of the severity of the adverse human rights impact of corporate activity.  The “severity” constraints then bring the calculus back, in part, to the issue of connection.  Yet, GP Principle 14 adds a layer of understanding to the basic insight of GP Principle 13, embracing the notion that legal relationships will not affect the determination of either capacity or severity, applying to “all enterprises regardless of their size, sector, operational context, ownership and structure.”[19]

The Principle importantly, then, embraces a functionalist approach, eschewing any effort to adhere strictly to the law or legal consequences of corporate or enterprise organization at the heart of the domestic legal orders of states that have chartered these enterprises.  The corporate responsibility applies  “to all enterprises regardless of their size, sector, operational context, ownership and structure.”[20]  The state’s duty, of course, is limited by the requirements of its legal obligations,[21] though it has an obligation toward legal coherence in light of its legal obligations with respect to human rights.[22]  The provisions are thus in tension unless one understands that the responsibility to respect operate polycentrically.  To the extent of the relationship between corporation and state, the corporation is bound by and its responsibilities for human rights limited by the legal framework within which it operates in any territory.[23]  However, to the extent of the responsibility among corporations and non-state parties in their own governance communities, then the legal framework of states is no longer a constraint under the framework principles of GP Principle 11.  

The coherence notions explicit in the relationships between a state and its law obligations are suggested as well by this construct in the relationships between law systems and social norm systems.  There is an element of direct interaction between international norms and the identification of the social norm rules applicable to corporations.  This suggests an assumption in the General Principles of an implicit acceptance of international political consensus, reflected in international norms, accurately reflects the norm framework for corporate behavior. More importantly, it also assumes that international norms (whether or not considered “law” within or by states) stand at the head of a hierarchy of norm creation applicable to corporations.  While the community of corporate actors and their stakeholders may also develop social norms that control or affect their behavior, the articulation of those norms by public international actors tends to be presumed the most authoritative expression of those norms.  Thus while the normative rule universe of corporate responsibility is autonomous of state law systems, it is assumed to interact directly with international actors for the production (or at least the articulation) of the norms making up the responsibility to respect. And third, there is an explicit understanding hat the standards applicable to conduct under legal governance regimes may be different from those under the social norm regimes of the corporate responsibility.  This is particularly apparent in the context of complicity. Here norm rule autonomy is emphasized by a recognition that complicity may be triggered both under the legal standard developing under domestic and international law regimes and otherwise under notions of corporate social norm frameworks.[24]

GP Principle 15 rounds out the opening set of fundamental principles that define the corporate responsibility to respect human rights, moving the focus from the standard itself to its expression.  If states manifest their policies and behavioral expectations through law and regulation, businesses express theirs through rules, policies and contract.  GP Principle 15 addresses the enterprise’s human rights responsibilities in the elaboration of its governance system: “In order to meet their responsibility to respect human rights, business enterprises should have in place policies and processes appropriate to their size and circumstances.”[25] GP Principle 15 then specifies three areas of policy that require highlighting, an articulation of a policy commitment to human rights (presumably both in its legal and social norm aspects, though that is not clear from the principle itself),[26] the self-imposition of a human rights due diligence framework that is elaborated in some detail in GP Principles 16-24),[27] and the establishment of remediation processes.[28]

2.  The Corporate Responsibility to Respect Human Rights: Operational Principles, Policy Commitment.  The foundational Principles of the corporate responsibility to respect human rights commits business entities to the development of a regulatory framework that operationalizes the respect commitment.  GP Principle 16 (DP Principle 14 substantially unmodified) focuses on the specifics of implementation.  It specifies the so-called policy commitments of corporations, understood as built on the development of a policy statement with a fixed form and content.[29] It described the five key elements of a corporate policy the embodies the responsibility to respect human rights.[30]  These include policy approval at the most senior level of the business enterprise; consultation with relevant internal and external expertise; a clear expression of the enterprise’s expectations of personnel and business partners; effective communication of the policy internally and externally to all personnel, business partners and relevant stakeholders; and incorporation within appropriate operational policies and procedures to embed it throughout the business enterprise.[31] These are not unusual and reflect an emerging set of practices already well incorporated into the global operation of the largest enterprises.[32]  They are meant to embody, within the context of the corporate responsibility to protect, the principles of policy coherence[33] and disclosure[34] that also form part of the state duty to protect human rights.

Like legislation, policy pronouncements “should be publicly available. It should be communicated actively to entities with which the enterprise has contractual relationships; others directly linked to its operations, which may include State security forces; investors; and, in the case of operations with significant human rights risks, to the potentially affected stakeholders.”[35]  A proportionality principle is also suggested.[36]  Lastly, like states, the policy should reach from the lowest to the highest levels of operation.[37]

3.  The Corporate Responsibility to Respect Human Rights: Operational Principles, Human Rights Due Diligence.  The articulation of the governance framework provides the structure for the elaboration of the operational heart of the principles developing the corporate responsibility.  It is with GP Principles 17-21 that one reaches this operational heart. 

A corporation’s commitment to human rights grounded in the GP framework is evidenced by and measured against a set of requirements identified as human rights due diligence. These detail the obligations of corporate human rights due diligence as the central operational feature of the corporate responsibility to respect. Human rights due diligence has four broad objectives, to “identify, prevent, mitigate and account for how they address their adverse human rights impacts.[38] Human rights due diligence must be directed to four principles functions: “assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.”[39]  These objectives of human rights due diligence may be incorporated in other corporate monitoring and reporting systems, as long as they do not lose their distinctive character.[40]  The diligence aspects should be ongoing and oriented ex ante. [41]

The extent of human rights due diligence is grounded in the fundamental scope rules of the corporate responsibility as a whole.  These limitations touch on three issues.  The first is touches on issues of coverage.[42]  The second focuses on issues of complexity and context of operations.[43] The third considers issues of time horizons in human rights due diligence.[44]  It is in the context of coverage that the issue of supply and value chain liability resurfaces, mitigating liability where the connection between the corporation and the entity directly responsible are either too remote or where a control or influence relationship is unreasonable.[45]   It also serves to develop a principle of corporate complicity for the adverse human rights impacts of others—including states.[46]  The Commentary emphasizes the effects of polycentricity in the context of corporate liability.  With respect to complicity, corporations musty be aware of the distinct bases for complicity liability under legal regimes[47] and under social norm regimens.[48] There is irony here, since the complicity relationship appears to proceed only in one direction.[49] Moreover, the retention by states of control over the application of their legal obligations, including those relating to issues of complicity, can substantially affect the success of efforts to harmonize approaches, in the absence of which actors can act strategically to minimize the impact of these principles on their operations. The connection between legal and social norm governance produces a tension for the human rights due diligence project that is recognized but not resolved.[50]  This tension is common to supra-national soft law systems with a polycentric element in the absence of substantial harmonization between the legal regimes applied in a specific state and the global social norms applied under soft law regimes that draw on these.  This was recently illustrated in the context of both procedural[51] and substantive[52] rules under the OECD Guidelines for Multinational Corporations. [53] 

The specific contents of human rights due diligence are then elaborated in GP Principles 18-21.  These are meant to provide more concrete guidance to enterprises that wish to undertake human rights due diligence within the GP framework.  GP Principle 18 (DG 16 substantively unmodified in significant respect) specifies the outputs of human rights due diligence.  It elaborates issues of identification and assessment in human rights due diligence programs.[54] Following the guidance of GP Principle 17, GP Principle 18 specifies that assessment be undertaken in advance of action that might have a negative impact on human rights, should identify those potentially affected and the issues the proposed action raises, should identify the relevant substantive standards that might be applied, and undertake to understand the specific nature of the adverse human rights impact.[55]  The GP explains that such systems should utilize internal or external human rights experts and other resources, and seek to engage meaningfully with potentially affected groups and other relevant stakeholders, the later with an explicit proportionality principle .[56]  Assessment is required periodically and when there is a material change in operations,[57] a standard similar to those triggering disclosure under the U.S. federal securities laws.[58]  The stakeholder engagement provision is broadly written to permit the use of civil society actors as legitimate intermediaries where direct engagement is not possible. But the GP leave unresolved the issue of third party representative legitimacy or liability by civil society for misrepresenting either their authority to represent or their fidelity to the interests of those they represent.[59]

“The assessment of human rights impacts informs subsequent steps in the human rights due diligence process.”[60] GP Principle 19-21 then moves the process forward.  GP Principle 19 (DP Principle 17) shifts attention from outputs to action, identifying the two things a corporation must undertake in the face of an adverse human rights impact of its activities.[61] It must first assess the impact of the action,[62] and it must then take appropriate action on the basis of the assessment.[63] The object is to prevent and mitigate potential adverse human rights effects of corporate activity by creating a structure by which assessments can be given effect.[64] The Principle makes a distinction between impacts to which the company (or its supply chain) have directly contributed and those where the connection is more indirect.  Remediation (or prevention) is required for the former,[65] but a more nuanced approach is permitted in the latter case.[66]  The Commentary suggests that the corporation ought ot rely on outsiders where the factors to be balanced in its risk, impact and action assessments are complex.[67]  A hierarchy of responsive action in the face of assessment suggesting adverse human rights impacts of corporate activity proposed or undertaken.[68]

GP Principle 20 (DP Principle 18 modified in part) adds a verification requirement.[69]  The specified method of verification is tracking, which is required to exhibit two characteristics.  First, it ought to be “based on appropriate qualitative and quantitative indicators.”[70] Second it should draw “on feedback from both internal and external sources, including affected stakeholders.”[71]   The Principle dropped an additional requirement that appeared in the draft principles—that it “inform and support continuous improvement processes.”[72] The Principles understand verification as serving an important surveillance function—tracking and analysis.[73]  There is an expectation that data will be harvested from all phases of the human rights due diligence process and all contacts with affected stakeholders.[74]  The Commentary urges integration into relevant reporting processes with a cross-reference to the corporation’s remediation obligations.[75]

The surveillance obligations of human rights due diligence elaborated in CP Principle 20 lead to the disclosure and transparency requirements set forth in GP Principle 21 (modifying DG Principle 19).  This provision focuses on accountability through communication.[76]  That communication is initially directed toward external informal and episodic communication, when triggered by stakeholder concerns, but is also understood to include a formal reporting component for business enterprises “whose operations or operating contexts pose risks of severe human rights impacts.”[77] 

The final version dropped an earlier suggestion that reporting should be regular,[78] substituting a more flexible context based requirement.[79]   The frequency and form of disclose is a function of the severity of the human rights impacts.[80]  The object is not general transparency, but merely a “a measure of transparency and accountability to individuals or groups who may be impacted and to other relevant stakeholders, including investors.”[81]

4.  The Corporate Responsibility to Respect Human Rights: Operational Principles, Remediation. The single principle that comprises this section considers the situation where assessment, and ex ante action is insufficient.  GP Principle 21 (DP Principle 20 substantially unmodified) provides: “Where business enterprises identify that they have caused or contributed to adverse impacts, they should provide for or cooperate in their remediation through legitimate processes.”[82]

This Principle articulates a simple liability standard for failures to respect human rights.  The obligation to remediate is tied to the principal human rights due diligence obligation, though not limited by it. [83]  In the draft version of this provision, the liability standard was not grounded in the law of any state.  Nor was it dependent on the operation of a particular domestic legal order either to determine liability or to calculate the measure of damages.  As a functional part of the autonomous responsibility to respect, these obligations flow directly from the autonomous imposition of responsibility of the second pillar. Yet the processes of remediation are substantially meant to be tethered to the state apparatus, at least when injury is substantial.[84]   The reason was simple and directed stated—a fear that in the absence of “vouching” by the organs of the state the processes for remediation would be illegitimate.[85] 

In the final version, there appears to be less aggressively autonomous.  The final version standard described in the Commentary, “active engagement,” might be understood as something less than the “help ensure” standard in the draft Commentary.  The reference to resort to operational level grievances remains the same.[86] Yet “[w]here adverse impacts have occurred that the business enterprise has not caused or contributed to, but which are directly linked to its operations, products or services by a business relationship, the responsibility to respect human rights does not require that the enterprise itself provide for remediation, though it may take a role in doing so.”[87]  This values or supply chain remediation amelioration provision would have been hard to reconcile with the Draft Principles emphasis on supply chain responsibility.  But having moved supply and value chain responsibility into the operational provisions, and having strengthened and broadened the application of the proportionality rules, it is now more likely that a larger set of human rights impacts may not be subject to a remediation requirement in the ultimate parent corporation.

5.  The Corporate Responsibility to Respect Human Rights: Operational Principles, Issues of Context. The last two principles that make up the corporate responsibility to respect human rights target issues of context. GP Principle 23 (modifying DP 23) speaks to the legal obligations of the corporation within a polycentric context in which the governance norms applicable to it may not harmonize. It first recognizes the primacy of the state and domestic law over international law where a corporation is faced with conflicting issues of compliance.[88]  It then suggests that, having honored the primacy of domestic law, corporations have a responsibility to honor even if not comply with internationally recognized human rights.[89]  And lastly, treat all risk of gross human rights abuses, whether arising from legal or social norm standards as a legal issue throughout its operations.[90]  

The Commentary emphasizes several points.  First, all business enterprises have the same responsibility to respect human rights, though its application will vary widely in context.  All businesses have a first duty to comply with domestic law that is applicable.  That leaves open and unresolved the equally compelling obligation to comply with the extraterritorially applicable laws of home state regulators.  The Commentary is silent on conflicts between the two. In the case of conflict between domestic and international law, business enterprises must comply with domestic law and find a way to honor the principles international law, especially “the principles of internationally recognized human rights to the greatest extent possible in the circumstances, and to be able to demonstrate their efforts in this regard.”[91]  The Commentary supports the provision that business Enterprises treat human rights impacts as a legal issue  “given the expanding web of potential corporate legal liability arising from extraterritorial civil claims, and from the incorporation of the provisions of the Rome Statute of the International Criminal Court in jurisdictions that provide for corporate criminal responsibility.”[92] Yet this also complicates the simple hierarchy posed between domestic and international law set out in GP Principle 23(a), suggesting situations where compliance with domestic law might constitute a violation of international law that is subordinated to domestic law in the territory where it is enforced but where that hierarchy is reversed elsewhere.  In this case polycentricity presents a potential trap. Special considerations apply in conflict zones—where the corporation may be called on to exercise augmented obligations and thus face potentially augmented liability regimes.[93] Finally, the utility of reliance on experts, emphasized in other corporate responsibility principles, is extended to issues of legal compliance.[94]

In draft form, this principle spoke to issues of operationalization standards  for the human rights due diligence framework grounded in two action vectors—first the size of the enterprise and second the severity of human rights impacts.[95]  These identify baseline rules for the implementation of context specific action principles.  The baseline includes four factors.  The first touches on the heightened obligation to substitute for the host state with respect to the observation of internationally recognized human rights in weak states.[96]  This parallels the state duty to project government into weak states or conflict zones.[97]  The second obligates companies to “honor” human rights principles “where domestic legal compliance may undermine their responsibility to respect.” [98]  The third reminds entities that the responsibility applies in conflict zones.[99] And the fourth suggests that issues of human rights compliance are transformed into more conventional issues of legal compliance (under international law or the law of the relevant domestic legal order) where the conduct risks or causes or contributes to international crimes.[100]

Finally, GP Principle 24 (DP Principle 22) provides basic rules of prioritization.  Where priority is necessary, the “business enterprises should first seek to prevent and mitigate those that are most severe or where delayed response would make them irremediable.”[101]  The context for prioritization is simultaneity,[102] but it applies only where specific legal guidance is unavailable, or better perhaps, unavailing.[103] And context is privileged; the severity of human rights is not measured against absolute values.[104]  

[1] GP Principle 11.
[2] Id.
[3]  GP Principle 11 Commentary.  “And it exists over and above compliance with national laws and regulations protecting human rights.”  Id.
[4] “Addressing adverse human rights impacts requires taking adequate measures for their prevention, mitigation and, where appropriate, remediation.” GP Principle 11 Commentary.
[5] “Business enterprises may undertake other commitments or activities to support and promote human rights, which may contribute to the enjoyment of rights. But this does not offset a failure to respect human rights throughout their operations.” GP Principle 11 Commentary.
[6] “Business enterprises should not undermine States’ abilities to meet their own human rights obligations, including by actions that might weaken the integrity of judicial processes.” GP Principle 11 Commentary.
[7] GFP Principle 12.  The Commentary elaborates:
An authoritative list of the core internationally recognized human rights is contained in the International Bill of Human Rights (consisting of the Universal Declaration of Human Rights and the main instruments through which it has been codified: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights), coupled with the principles concerning fundamental rights in the eight ILO core conventions as set out in the Declaration on Fundamental Principles and Rights at Work.
[8] “Because business enterprises can have an impact on virtually the entire spectrum of internationally recognized human rights, their responsibility to respect applies to all such rights.” GP Principle 12 Commentary.
[9] “In practice, some human rights may be at greater risk than others in particular industries or contexts, and therefore will be the focus of heightened attention. However, situations may change, so all human rights should be the subject of periodic review.” Id.  Thsi is particularly true when corporations opérate in conflicto zones and may acquire some of the obligations of a public carácter.  “Moreover, in situations of armed conflict enterprises should respect the standards of international humanitarian law.” Id.
[10] Id.  “In this connection, United Nations instruments have elaborated further on the rights of indigenous peoples; women; national or ethnic, religious and linguistic minorities; children; persons with disabilities; and migrant workers and their families.”
[11] GP Principle 13(a).
[12] GP Principle 13(b).
[13] GP Principle 13 Commentary.
[14] DP 12 (b) provided that business responsibility to respect human rights: “applies across a business enterprise’s activities and through its relationships with third parties associated with those activities. ”  DP Principle 12(b).  The Commentary suggested the scope of the obligation was as broad as the corporate value chain.  Id. Commentary.
[15] These ideas, however, do make their appearance elsewhere in the Commentart.  See, e.g., GP Principle 17, discussed infra.  The relationship between these concepts is difficult to discern.
[16] “For the purpose of these Guiding Principles a business enterprise’s “activities” are understood to include both actions and omissions; and its “business relationships” are understood to include relationships with business partners, entities in its value chain, and any other non-State or State entity directly linked to its business operations, products or services.” GP Principle 13 Commentary.
[17] “The means through which a business enterprise meets its responsibility to respect human rights will be proportional to, among other factors, its size.” GPO Principle 14 Commentary.
[18] “Small and medium-sized enterprises may have less capacity as well as more informal processes and management structures than larger companies, so their respective policies and processes will take on different forms.” GP Principle 14 Commentary.
[19] GP Principle 14. These notions were originally in DP Principle 15 but moved here.
[20] GP Perinciple 14. 
[21] CP Principle 1.
[22] GP Principle 3(b).
[23] E.g. GP Principle 2.
[24] GP Principle 17 Commentary.  It explains: “Questions of complicity may arise when a business enterprise contributes to, or is seen as contributing to, adverse human rights impacts caused by other parties. Complicity has both non-legal and legal meanings. As a non-legal matter, business enterprises may be perceived as being “complicit” in the acts of another party where, for example, they are seen to benefit from an abuse committed by that party.” Id.
[25] GP Principle 15.
[26] “A policy commitment to meet their responsibility to respect human rights.” GP Principle 15(a).
[27] “A human rights due-diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights.” GP Principle 15(b).  The Commentary makes this clear: “Business enterprises need to know and show that they respect human rights. They cannot do so unless they have certain policies and processes in place. Principles 16 to 24 elaborate further on these.” GP Principle 15 Commentary.
[28] “Processes to enable the remediation of any adverse human rights impacts they cause or to which they contribute.” GP Principle 15(c).
[29] “As the basis for embedding their responsibility to respect human rights, business enterprises should express their commitment through a statement of policy” GP Principle 16.
[30] GP Principle 16(a)-(e).
[31] Id.
[32] For a discussion in the context of the operations of WalMart, see, Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Law Making:  Wal-Mart as Global Legislator,  39(4) University Of  Connecticut Law Review 1739 (2007).
[33] “Just as States should work towards policy coherence, so business enterprises need to strive for coherence between their responsibility to respect human rights and policies and procedures that govern their wider business activities and relationships.” GP Principle 16 Commentary.
[34] “The term ‘statement’ is used generically, to describe whatever means an enterprise employs to set out publicly its responsibilities, commitments, and expectations.” GP Principle 16 Commentary.
[35] GP Principle 16 Commentary.
[36] “The level of expertise required to ensure that the policy statement is adequately informed will vary according to the complexity of the business enterprise’s operations.” GP Principle 16 Commentary.
[37] This imports from the “Protect, Respect and Remedy” Framework the notion of embedding.  “Through these and any other appropriate means, the policy statement should be embedded from the top of the business enterprise through all its functions, which otherwise may act without awareness or regard for human rights.” GP Principle 16 Commentary.
[38] GP Principle 17.
[39] GP Principle 17.
[40] “Human rights due diligence can be included within broader enterprise risk-management systems, provided that it goes beyond simply identifying and managing material risks to the company itself, to include risks to rights-holders.” GP Princ iple 17 Commentary.
[41] Thus, the Commentary suggests that “should be initiated as early as possible in the development of a new activity or relationship, given that human rights risks can be increased or mitigated already at the stage of structuring contracts or other agreements, and may be inherited through mergers or acquisitions.” Id.
[42] Human Rights due diligence “Should cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships.” GP Principle 17(a).
[43] Human rights due diligence “Will vary in complexity with the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations.” GP Principle 17(b).
[44] “Should be ongoing, recognizing that the human rights risks may change over time as the business enterprise’s operations and operating context evolve.” GP Principle 17(c).
[45] “Where business enterprises have large numbers of entities in their value chains it may be unreasonably difficult to conduct due diligence for adverse human rights impacts across them all.” GP Principle 17 Commentary. In those cases, corporations are advised to dfocus on issues with greatest human rights impacts effects:  “business enterprises should identify general areas where the risk of adverse human rights impacts is most significant, whether due to certain suppliers’ or clients’ operating context, the particular operations, products or services involved, or other relevant considerations, and prioritize these for human rights due diligence.” Id.
[46] “Questions of complicity may arise when a business enterprise contributes to, or is seen as contributing to, adverse human rights impacts caused by other parties.” GP Principle 17 Commentary.
[47] “As a legal matter, most national jurisdictions prohibit complicity in the commission of a crime, and a number allow for criminal liability of business enterprises in such cases. Typically, civil actions can also be based on an enterprise's alleged contribution to a harm, although these may not be framed in human rights terms.” GP Principle 17.  The Commentary suggest a movement toward a consensus on “aider and abettor” standards for civil liability. Id.
[48] “As a non-legal matter, business enterprises may be perceived as being “complicit” in the acts of another party where, for example, they are seen to benefit from an abuse committed by that party.”  GP Principle 17 Commentary.
[49] See discussion above at GP Principle --.
[50] The Commentary explains
Conducting appropriate human rights due diligence should help business enterprises address the risk of legal claims against them by showing that they took every reasonable step to avoid involvement with an alleged human rights abuse. However, business enterprises conducting such due diligence should not assume that, by itself, this will automatically and fully absolve them from liability for causing or contributing to human rights abuses.
GP Principle 17 Commentary.
[51] See, Larry Catá Backer,  Part I: The OECD, Vedanta, and the Supreme Court of India—Polycentricity in Transnational Governance--The Issue of Standing, Law at the End of the Day, Nov. 1, 2009 available
[52] See, Larry Catá Backer, Part II: The OECD, Vedanta, & the Indian Supreme Court—Polycentricity, Transnational Corporate Governance and John Ruggie’s Protect/Respect Framework,  Law at the End of the Day, Nov. 3, 2009.  Available
[53] OECD, Guidelines for Multinaitonal Entyerprises (updated 2011), available
[54] “In order to gauge human rights risks, business enterprises should identify and assess any actual or potential adverse human rights impacts with which they may be involved either through their own activities or as a result of their business relationships.” GP Principle 18.
[55] GP Principle 18 Commentary. “In this process, business enterprises should pay special attention to any particular human rights impacts on individuals from groups or populations that may be at heightened risk of vulnerability or marginalization, and bear in mind the different risks that may be faced by women and men.” Id.
[56] GP Principle 18(a) and (b).
[57] The Commentary explains
Because human rights situations are dynamic, assessments of human rights impacts should be undertaken at regular intervals: prior to a new activity or relationship; prior to major decisions or changes in the operation (e.g. market entry, product launch, policy change, or wider changes to the business); in response to or anticipation of changes in the operating environment (e.g. rising social tensions); and periodically throughout the life of an activity or relationship.
GP Principle 18 Commentary.
[58] The differences are less formally drawn than but follow the same rationale as periodic reporting under the 1934 Act under which corporations report annually (Form 10K) and quarterly (Form 10Q) as well as a "current report" that is used to report the occurrence of any material events or corporate changes which are of importance to investors or security holders and previously have not been reported by the registrant. It provides more current information on certain specified events than would Forms 10-Q or 10-K.
[59] “In situations where such consultation is not possible, business enterprises should consider reasonable alternatives such as consulting credible, independent expert resources, including human rights defenders and others from civil society.” GP Principle 18 Commentary.
[60] GP Principle 18 Commentary.
[61] “In order to prevent and mitigate adverse human rights impacts, business enterprises should integrate the findings from their impact assessments across relevant internal functions and processes, and take appropriate action.” GP Principle 19.
[62] GP Principle 19(a).
[63] GP Principle 19(b).
[64] “The horizontal integration across the business enterprise of specific findings from assessing human rights impacts can only be effective if its human rights policy commitment has been embedded into all relevant business functions. This is required to ensure that the assessment findings are properly understood, given due weight, and acted upon.” GP Principle 19 Commentary.
[65] “Where a business enterprise contributes or may contribute to an adverse human rights impact, it should take the necessary steps to cease or prevent its contribution and use its leverage to mitigate any remaining impact to the greatest extent possible.”  GP Principle 19 Commentary.
[66] The Commentary suggests a more complex calculus, grounded in a factor balancing analysis. “Among the factors that will enter into the determination of the appropriate action in such situations are the enterprise’s leverage over the entity concerned, how crucial the relationship is to the enterprise, the severity of the abuse, and whether terminating the relationship with the entity itself would have adverse human rights consequences.”  GP Principle 19 Commentary.  The standard does not require legal precision precisely because no legal standard is invoked.  Thus concepts of “leverage” play onto the calculus here in ways that might not have been appropriate either under the first pillar state duty to protect or even with respect to the extent of the corporate responsibility beyond the corporation itself. GP Principle 19 Commentary (“Leverage is considered to exist where the enterprise has the ability to effect change in the wrongful practices of an entity that causes a harm.”).
[67] “Leverage is considered to exist where the enterprise has the ability to effect change in the wrongful practices of an entity that causes a harm.” GP Principle 19 Commentary.
[68] The Commentary speaks of these as involving the use of leverage—in an effort to contrast, perhaps, the law based discourse of ameliorative measured imposed on, by and through states.  It is a curious framework all the same.  Irrespective of its value as a framing device, the hierarchy consists of prevention first, then mitigation (which might be augmented by obligations to capacity building among stakeholders), followed by terminating the relationship or activity causing the adverse human rights impact, “taking into account credible assessments of potential adverse human rights impacts of doing so.” GP Principle 19 Commentary.  Relationships crucial to the enterprise are subject to a different set of factor balancing.  See id.
[69] “In order to verify whether adverse human rights impacts are being addressed, business enterprises should track the effectiveness of their response.” GP Principle 20.
[70] GP Principle 20(a).
[71] GP Principle 20(b).
[72] DP Principle 18(c).
[73] “Tracking is necessary in order for a business enterprise to know if its human rights policies are being implemented optimally, whether it has responded effectively to the identified human rights impacts, and to drive continuous improvement.” GP Principle 20 Commentary. The tracking element is particularly important with respect to groups most likely to suffer adverse human rights impacts form corporate activity.  “Business enterprises should make particular efforts to track the effectiveness of their responses to impacts on individuals from groups or populations that may be at heightened risk of vulnerability or marginalization.” Id.
[74] “Business enterprises might employ tools they already use to track their performance on other issues, including performance contracts, reviews, surveys and audits. Operational-level grievance mechanisms can also provide important feedback on the business enterprise’s human rights performance from those directly affected.” GP Principle 20 Commentary.
[75] “This could include performance contracts and reviews as well as surveys and audits, using gender- disaggregated data where relevant. Operational-level grievance mechanisms can also provide important feedback on the effectiveness of the business enterprise’s human rights due diligence from those directly affected (see Principle 29).” GP Principle 20 Commentary.  This suggestion, of course, must be read together with the earlier caution in the GP about subsuming human rights due diligence within the risk management protocols of a business entity. See, e.g., GP Principle 17 Commentary.
[76] “Communication can take a variety of forms, including in-person meetings, online dialogues, consultation with affected stakeholders, and formal public reports. Formal reporting is itself evolving, from traditional annual reports and corporate responsibility/sustainability reports, to include on-line updates and integrated financial and non-financial reports.” GP Principle 21 Commentary.
[77] GP Principle 21.
[78] “Periodic public reporting is expected of those business enterprises whose activities pose significant risks to human rights.”  DP Principle 19 Commentary.
[79] Reporting should “Be of a form and frequency that reflect an enterprise’s human rights impacts and that are accessible to its intended audiences.”  GP Principle 21(a).
[80] “Formal reporting by enterprises is expected where risks of severe human rights impacts exist, whether this is due to the nature of the business operations or operating contexts.”  GP Principle 21 Commentary. 
[81] GP Principle 21 Commentary.
[82] GP Principle 22. “Some situations, in particular where crimes are alleged, typically will require cooperation with judicial mechanisms.” GP Principle 22 Commentary.
[83] “Where a business enterprise identifies such a situation, whether through its human rights due diligence process or other means, its responsibility to respect human rights requires active engagement in remediation, by itself or in cooperation with other actors.” GP Principle 22 Commentary.
[84]Business enterprises should have procedures in place to respond to such situations directly, where appropriate, and where possible should address problems before they escalate” DP Principle 20 Commentary.
[85] That vouching is effected through the third pillar principles covering the remedial right to be treated below. “Operational-level grievance mechanisms for those potentially impacted by the business enterprise’s activities can be an effective means of providing for such procedures when they meet certain core criteria, as set out in Principle 29.” DP Principle 20 Commentary.
[86] “Operational-level grievance mechanisms for those potentially impacted by the business enterprise’s activities can be one effective means of enabling remediation when they meet certain core criteria, as set out in Principle 31.” GP Principle 22 Commentary.
[87] Id.
[88] Business entities should “Comply with all applicable laws and respect internationally recognized human rights, wherever they operate;” GP Principle 23(a).
[89] The language is curious; business enterprises should see “ways to honour the principles of internationally recognized human rights when faced with conflicting requirements.  Principle 23(b).”
[90] Biusiness enterprises should “Treat the risk of causing or contributing to gross human rights abuses as a legal compliance issue wherever they operate.”  GP Principle 23(c).
[91] GP Prtinciples 23 Commentary.
[92] Id.  “In addition, corporate directors, officers and employees may be subject to individual liability for acts that amount to gross human rights abuses.” Id.
[93] “Some operating environments, such as conflict-affected areas, may increase the risks of enterprises being complicit in gross human rights abuses committed by other actors (security forces, for example).” GP Principle 23 Commentary.
[94] “In assessing how best to respond, they will often be well advised to draw on not only expertise and cross-functional consultation within the enterprise, but also to consult externally with credible, independent experts, including from governments, civil society, national human rights institutions and relevant multi-stakeholder initiatives.” GP Principle 23 Commentary.
[95] DP Principle 21 speaks to “the scale and complexity of policies and processes for ensuring that business enterprises respect human rights will vary according to the enterprises’ size and the severity of their human rights impacts.”
[96] DP Principle 21(a) (“Observe internationally recognized human rights also where national law is weak, absent or not enforced”).
[97] See GP Principle  10 and discussion, supra, at text and notes ---.
[98] DP Principle 21(b). The Commentary notes: “Where legal compliance with domestic law puts the business enterprise in the position of potentially being involved in gross abuses such as international crimes, it should consider whether or how it can continue to operate with integrity in such circumstances.” DP Principle 21 Commentary.
[99] DP Principle 21( c). The Commentary hreminds entities of their potential exposure to action under international criminal law in such situations where they are not careful.
Some operating environments, such as conflict affected areas, may increase the risks of enterprises contributing to, or being complicit in, international crimes committed by other actors (for example, war crimes by security forces). Prudence suggests that companies should treat this risk as a legal compliance issue, given the expanding web of potential corporate legal liability arising from extraterritorial civil claims, and in the criminal sphere from the incorporation of the provisions of the Rome Statute of the International Criminal Court in jurisdictions that provide for corporate criminal responsibility.
DP Principle 21 Commentary.
[100] DP Principle 21(d).  The Commentary suggests consultation with experts, and defines them broadly to include civil society actors.  DP Principle 21 Commentary.
[101] GP Principle 24.
[102] “While business enterprises should address all their adverse human rights impacts, it may not always be possible to address them simultaneously.” GP Principle 24 Commentary.
[103] “In the absence of specific legal guidance, if prioritization is necessary, business enterprises should begin with those human rights impacts that would be most severe, recognizing that a delayed response may affect remediability.”  GP Principle 22 Commentary.  The Draft version included included impacts “where the risk of irremediable impact is high.” DP Principle 22 Commentary.
[104] “Severity is not an absolute concept in this context, but is relative to the other human rights impacts the business enterprise has identified.”  GP Principle 24 Commentary.


Erna Mae said...

Very informative post...My juristaff and I really want to share this to our friends and relatives...Cheer up and good work.

Joel said...

As always, Larry's posts are timely, interesting and fun to read.