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02 May 2013
In our capacity as members of the United Nations Working Group on Business and Human Rights we today end our 10-day mission to the United States. We are grateful to the Government for having invited us to explore practices, challenges and lessons relating to efforts on implementing the UN Guiding Principles (“GPs”) on business and human rights as part of our mandate from the United Nations Human Rights Council.
We sincerely thank all who contributed to our mission. We are especially grateful to the State Department for hosting us and convening meetings with federal agencies, also the business, civil society and UN organisations who helped arrange other meetings and site visits.
During our mission we met with the State Department and several federal agencies including the Departments of Labor and Justice; representatives of state and city governments; and businesses, trade unions, civil society organisations, multi-stakeholder initiatives and other experts. We met with staff of the Tom Lantos Human Rights Commission and of the Senate Foreign Relations Committee. We travelled from Washington DC to West Virginia, Florida, California, Arizona and New York. All whom we met with shared information, perspectives and their experiences. We have strived to ensure that we engaged with relevant stakeholders to get a comprehensive range of views on the issues we have explored.
The overall objectives of the mission were to raise awareness of, and advocate for, implementation of the GPs in the US; identify current initiatives, challenges, opportunities and good practices where they have been implemented; and to offer the GPs as a mechanism and tool for application in areas where they may have not yet been considered.
The US is a huge country with a multi-layered, multi-faceted legal and political system governing a business community with influence and operations locally and globally. Hence we planned the mission by selecting issues and situations of particular relevance the GPs.
We have structured our statement today based on what we have seen and heard under headings that consider the coherence of policy across different levels of government; the unique understanding of labour issues; the apparent primacy of business culture; the freedom of information and consent; and newer areas where the consideration of rights is presenting both opportunities and challenges, such as in Finance and ICT.
It should be stressed that this statement contains only preliminary observations gleaned during the mission. Many issues we encountered must be further explored and clarified. We appreciate the offers extended to us for follow-up. In the coming months we will draft a more comprehensive report which will be presented to the Human Rights Council in mid-2014.
The Working Group has welcomed the US Government’s political leadership in supporting and committing to the implementation of the GPs. Government agencies at both federal and state levels are making notable efforts to address specific business-related human rights challenges. Examples include promoting better business practices through stricter disclosure requirements; marshalling concerted efforts against human trafficking, forced and child labour; and raising awareness of the GPs with business, civil society, and within Government. However, significant gaps appear to remain in regulation, oversight and enforcement in areas where business activities may adversely impact human rights. In this respect the Working Group notes with concern the exclusion of agricultural workers from protections afforded to workers in other sectors through legislation such as the National Labor Relations Act.
There is negligible awareness of the GPs generally among US stakeholders and, it seems, little appreciation of human rights being material to the conduct of business in the US. The State Department has issued a description of the overall US Government approach to business and human rights, which we will review. We encourage the US to present information about lessons learned, challenges and good practice for exchange with other States that have begun implementation of the GPs, including through the development of National Action Plans.
The Working Group found that individual states within the Union have the power to encourage and require businesses to respect human rights, and to ensure access to remedy for affected stakeholders. In addition, key federal regulation in areas such as environmental and labour law is significantly mediated by, and relies heavily upon, state-level action. We observed wide variations in how individual states ensure that rights are protected in the context of business activities. We noticed this dynamic at work in West Virginia where both federal and state agencies are involved in coalmining licensing. The Working Group believes that it is in contexts such as these that political leadership would be most valued and could be highly effective.
In San Francisco, the Working Group was impressed by how a local government can lead by example in encouraging and requiring respect for human rights. Their initiatives included improving local labour conditions and establishing non-discrimination requirements for businesses domiciled within the city; stipulating human and labour rights provisions for city procurement contracts; and encouraging business to engage with local communities and support human rights initiatives in urban rejuvenation programmes. Yet we were also told of challenges such as the difficulty of enforcing human rights within a supply chain where the contract value was too small and losing the city’s business was of little consequence to the supplier. One strategy being attempted to overcome this is aggregated buying with neighbouring cities and states with similar procurement criteria to increase leverage. The Working Group would encourage other local governments in the US to consider such collective action in procurement and other initiatives to incentivise business respect for human rights.
The Legacy of Labour
Labour issues in the US have been integral to the human rights debate, arising from a history of domestic political conditions and systemic complexities compounded by immigration, culture and other seemingly unassailable factors.
Despite apparent resignation on some fronts, discussions with federal authorities, trade unions and civil society stakeholders, presented important recent initiatives to address forced labour, child labour and human trafficking, both within the US as well as in the supply chains of US companies. These exemplary initiatives are embedded in procurement policies of the federal authorities for goods and services.
During various meetings throughout the mission, we encountered allegations of unfair labour practices in the context of the exercise of freedom of association. These included denial of access to the workplace for union representatives; the use of permanent replacements for striking workers; and denying public workers and supervisors the right to form trade unions and bargain collectively. The Working Group was reminded that relevant Committees of the International Labour Organisation have on several occasions found that some elements of US labour law and practice do not conform with the core conventions of the ILO and the ILO Declaration on Fundamental Principles and Rights at Work that is the key reference point for the GPs in the area of labour rights. We encourage the United States Government, Congress, business associations and trade unions, to take concerted steps to implement the recommendations of the ILO.
Besides violation of the freedom of association, we heard allegations of labour practices in low-wage industries with migrant workers, particularly within the services sector, that would be illegal under both US laws and international standards. These included violations of minimum wage legislation, wage theft, and chronic disregard for minimum health and safety measures.
We were informed of new and innovative initiatives by Government, trade unions and employers to address some of these concerns, some undertaken jointly. Yet the overall sense was that current initiatives were insufficient, or too poorly resourced, to effectively address the widespread nature of violations. Further, that the legal and regulatory framework provided weak deterrents to illegal behaviour, too many loopholes to avoid compliance and little incentive for companies to behave responsibly with sub-contractors or in a supply chain.
The Working Group was impressed by how such governance gaps relating to labour issues were addressed by the Coalition of Immokalee Workers (CIW), a multi-stakeholder initiative to enhance the working conditions of the largely immigrant workforce in the Florida agricultural sector. The CIW innovatively addresses core worker concerns, relies on market incentives for participating growers, and has an independent and robust enforcement mechanism. To overcome abuses in their industry workers, tomato growers and corporate buyers developed the Fair Food Code of Conduct setting-out minimum standards for workers and pay. We met participants who spoke of the advantages enjoyed by their business operations and workers who related the improvements in working conditions as a consequence of the scheme.
The merits of such a multi-stakeholder scheme are clear and have not required a government role, but the Working Group notes that the ultimate responsibility to ensure that rights are protected remains with the government. Concerted action by stakeholders in the tomato sector in Florida arose from two decades of campaigning even though the government was aware of the risks faced by workers.
In discussions with the Fair Labour Association and the Global Network Initiative we recognised the value of multi-stakeholder initiatives in advancing understanding and application of the GPs in particular industry sectors.
The Culture of Business
US businesses are vibrant and innovative. They create jobs, provide energy, develop technology and are undoubtedly enablers for the enjoyment of human rights.
The GPs require that companies respect human rights by having policies and processes to ‘know and show’ that their activities do not cause adverse impacts. The GPs also require businesses to operate with respect for national law. However, where the regulatory framework is either absent, insufficient or not enforced, businesses cannot assume that legal compliance alone is commensurate with meeting their responsibility to respect human rights.
The Working Group was encouraged that some US companies are actively implementing the GPs. However, these were typically multi-national companies who were involved to some degree in the process of originally developing the GPs. Some companies expressed discomfort at continuing efforts to produce guidance on how to implement the GPs, particularly for specific industry sectors, and that may precursor regulation. In contrast, others called for more guidance from the Working Group or some other authoritative body on interpretation of the GPs to support their implementation efforts.
Generally, the business representatives we met had limited awareness or understanding of human rights or processes that would prevent or mitigate risks to the degree envisioned in the GPs. There was suspicion and even outright rejection of important elements of the human rights framework, particularly as it relates to labour rights, and the content of individual rights. This raises concerns about the likely extent of implementation of the corporate responsibility to respect all internationally recognised human rights, particularly in locales or industries where regulation and protection of rights is lacking.
Concerted action by companies, business associations and Government at all levels is crucial to implementation of the GPs. The Working Group recognises that businesses may be less familiar with human rights issues than government and civil society. Also, that they may face challenges of integrating and interpreting human rights within corporate systems and decision-making processes. We urge business associations and networks to demystify human rights by raising awareness among their members. Embedding human rights in curricula of business schools and professional training programs will scale uptake and understanding, as will partnering with civil society organisations and bodies such as the American Bar Association. These efforts must be reinforced in spirit and through incentives from authorities at the federal, state and local level.
The Context for Rights
The Working Group visits to West Virginia and the Navajo Nation considered the GPs when at the nexus of rights of individuals and communities, business activities and government regulation.
We travelled to West Virginia to engage with stakeholders (regulators, and representatives from industry and communities) related to the challenging and divisive issue of surface mining .
NB: The Working Group has no position on the issue of surface mining itself, but has interest only in how actual or potential adverse human rights impacts are identified, prevented, mitigated and addressed.
The Working Group appreciates that coalmining provides jobs, revenue and energy production. It is an activity supported by many mineworkers and trade unions. We note the efforts of the West Virginia Department of Environmental Protection to engage with and respond to community concerns related to surface mining, and acknowledge information received on industry efforts to address community concerns.
However, we heard allegations of significant adverse human rights impacts, most notably related to health and water. Other concerns raised include non-compliance with regulatory standards for access to and protection of cemeteries, and lack of consultation or effective remedy. We heard allegations of intimidation, threat and harassment of individuals and groups vocal in their opposition to surface mining. The Working Group urges that these allegations be investigated and addressed. In line with the GPs, we also urge companies engaged in surface mining to take steps to prevent, mitigate and address any adverse impacts arising from their operations.
In the Navajo Nation the Working Group heard allegations of impacts on the environment, land and water; and on sites of cultural and religious significance to Native Americans. Further, of discrimination in markets for goods and services, with unfair finance and loan practices targeting the vulnerable within their community. While several federal initiatives to protect the rights of indigenous peoples have been advanced in the United States, many stakeholders indicated that more effective implementation of these measures is required to protect indigenous peoples from predatory business activities. The Working Group suggests that the GPs and the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) offer concrete guidance to the Government and Congress on how to address remaining gaps.
We notice that in contexts involving Native Americans, the weakness of protection afforded by the state against human rights violations is often regrettably reciprocated by commensurately poor understanding of the intent of corporate responsibility in respecting human rights. This results in well-meaning human rights policies being ineffective in practice. In addition to the Government laying out a more effective regulatory framework for protection of rights, there should be more awareness and training of businesses on relevant national and international standards, and peer-exchange with companies that have experience in implementing the GPs and UNDRIP. The Working Group urges all stakeholders to consider refreshed opportunities for dialogue and solution-orientated engagement using the GPs delineation of clear roles and relationships for government, businesses and communities.
The Undiscovered Controversy
The Working Group explored how discussions on human rights were developing in the Finance and Information and Communications Technologies (ICT) sectors, both of which are key enablers of the US economy, and major actors in globalisation.
In New York the Working Group met with banks, investors, and civil society organisations to discuss the implementation of the GPs in the financial sector. We were informed of on-going efforts and initiatives, such as the Equator Principles, yet also reminded that any expectations of the ability of banks to universally apply the GPs should be managed. It was of some concern to note that the “realities” of national laws and cultural contexts generally prevail over human rights criteria when evaluating whether or not to do business in certain places.
The Government and other stakeholders informed us of regulation to reform the sector following the financial crisis, and highlighted challenges in heightening disclosures such as required by the Dodd-Frank Act. The Working Group recognises the innovative nature and design of Dodd-Frank and that it has been welcomed in some quarters, however we also noted other concerns that such disclosures may discourage US businesses from investing in particular region and sectors.
Our meetings with investor groups confirmed that some actively use the GPs in engagement with asset owners about human rights issues and this informs their investment decisions. Some investors mentioned that the existing narrow definition of fiduciary duty makes it difficult for asset managers to include human rights within an assessment of materiality. The Working Group encourages the investment community to evolve definitions of such duties, and push for their adoption by regulators, to enable better consideration of the opportunities and risks arising between business and human rights.
Some stakeholders pointed out that the activities of the financial sector leading up to and during the financial crisis impacted rights, in particular for adequate housing in the US, and on food security both within and outside the US. There was neither effective protection nor access to remedy for those impacted. The Working Group encourages that further study be made on applying the GPs in the financial sector.
In San Francisco the Working Group met with a group of multinational ICT companies to discuss the issue of human rights in their supply chains, and the rights to privacy and free expression as championed by the Global Network Initiative, a multi-stakeholder initiative. We noted that the scale of data and information being held by businesses has disrupted traditional models of societal knowledge, individual and collective identity, and security as presumed to be in the domain of the state. The Working Group believes the landscape of rights in this territory requires exploration as it defines new relationships between states and businesses and their respective duties and responsibilities to the rights of individuals.
In concluding this statement, the Working Group draws attention to the impact of US policies and companies globally.
Civil society organisations and other stakeholders consistently raised the matter of impacts on human rights by US-based companies operating abroad and the difficulties of victims to obtain effective remedy when abuses occur. The GPs remind states that they are not prohibited from acting to prevent and address the impacts of their companies abroad. Indeed, several UN mechanisms have called on countries to do just that. The Working Group has welcomed and referenced efforts to take such action.
The US Government expects that US companies operating abroad meet certain human rights standards including those prescribed in the OECD Guidelines on Multinational Enterprises that are explicitly aligned with the GPs. US legislation, regulations and executive orders exist to address specific issues as sourcing conflict minerals from the Great Lakes region of Africa; investment in Myanmar; and bribery of public officials abroad. Effective implementation is challenging, particularly to ensure access to remedy of victims of abuses.
The US Supreme Court judgment on the inapplicability of the Alien Tort Statute as a platform for remedy in the Kiobel case has spurred thinking on the implications for access to judicial remedy in US courts by victims of extraterritorial human rights abuse. Notwithstanding, Congress and the US administration can support appropriate and effective remedy of adverse impacts by US-based companies abroad using relevant laws and regulations. In some cases multi-stakeholder initiatives have emerged to address the specific challenge of remedy, for example in the ICT sector upholding international standards in the face of government actions that do not protect, and sometimes even abuse, rights to individual freedom of expression and privacy. Such initiatives that can plug gaps in governance where legislation is weak or non-existent are important, though they do not replace the State duty to protect.
This statement offers only preliminary observations. We have received a vast amount of highly relevant information over the past ten days, which we will consider in greater depth in the coming months. We aim to follow-up on some of these issues in making recommendations to stakeholders in the US, and for US businesses that may impact others elsewhere, on the implementation of the GPs.
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The Working Group will refer to the concept of “surface mining” as it is done by federal authorities, while noting that the community representatives it met with while in West Virginia refers to the activity as “Mountaintop Removal Mining”.