Editor’s note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of European and International Human Rights Law at Leiden University in the Netherlands. Prior to commencing the LLM, she worked as a business and human rights solicitor in Australia where she specialised in promoting business respect for human rights through engagement with policy, law and practice.

The consumer goods industry is shaped by businesses’ desire to engage with the best-quality suppliers at the cheapest price in order to sell goods at a high-profit margin in the burgeoning consumer markets. Accordingly, they continue to build their value chains in order to provide goods to consumers. The resulting effect of this is that potential human rights risks and impacts are likely to arise in the supply chains of businesses that operate in the industry. Risks that often arise in this sector include forced labour, non-compliance with minimum wage laws and excessive work hours, land grabbing and discrimination. Accordingly, businesses such as Unilever face the challenge of preventing, mitigating and addressing adverse human rights impacts in their supply chains through conducting human rights due diligence (HRDD). As Paul Polman (former CEO of Unilever) has stated: ‘We cannot choose between [economic] growth and sustainability—we must have both.’

This fourth blog of a series of articles dedicated to HRDD is a case study looking at how HRDD has materialised in practice within Unilever’s operations and supply chains. It will be followed by another case study examining another that has also taken steps to operationalise the concept of HRDD. To wrap up the series, a final piece will reflect on the effectiveness of the turn to HRDD to strengthen respect of human rights by businesses.

Company Background[1]

Unilever PLC (Unilever) is a consumer goods company that is co-headquartered in the United Kingdom and the Netherlands. It is considered to be one of the world’s leading consumer goods company, making and selling around 400 brands (including Dove, Lipton and Magnum) in the personal care, foods, home care and refreshment categories in more than 190 countries. Unilever is also the second largest advertiser globally and creates content to market its products using digital channels. It employs more than 155,000 people globally and over two billion people use its products daily.[2]

Unilever has a complex global value chain, with its global manufacturing operations spanning across approximately 76,000 suppliers and 300 factories in 69 countries in order to produce products of almost 19 million tonnes. Its products are distributed through a network of more than 400 warehouses to 26 million retail stores, including large supermarkets to small convenience stores and e-commerce channels.[3] 

Unilever endorsed the UNGPs in 2011 and recognises that it has ‘the responsibility to respect human rights and the ability to contribute to positive human rights impacts.’[4] It states that it follows and supports the OECD Guidelines.[5] Unilever acknowledges that there is ‘both a business and a moral case for ensuring that human rights are upheld across [its] operations and [its] value chain.’ As a result, it seeks to identify human rights risks that it may be involved in through its activities or business relationships through conducting HRDD and integrating the responses into its policies and internal systems, acting on the findings, tracking its actions and communicating with its stakeholders.[6] Unilever was the first company to pilot the Shift and Mazars UN Guiding Principles Reporting Framework, which resulted in its Human Rights Report 2015 – Unilever’s disclosure to the Reporting Framework in 2015 is accessible here.

Unilever’s human rights work is overseen by the CEO and supported by the Leadership Executive, including the Chief Supply Chain Officer, which includes the Chief Supply Chain Officer, Chief Legal Officer, Chief Sustainability Officer and the Global Vice President for Social Impact.[7] Unilever’s Procurement Team leads its supply chain efforts. There is no publically available information on the size and resources of this team, its role or where team members are located.

Identification and Assessment of Risks

Unilever’s process for identifying its salient human rights risks started with a workshop facilitated by Shift. Unilever considered the range of potential human rights impacts resulting from its activities, and prioritised those likely to be the most severe were they to occur, based on how grave the impacts to the rights-holder could be, how widespread they are and how difficult it would be to remedy any resulting harm.[8] Unilever drew from previous conversations with external bodies, including the Work Economic Forum Human Rights Global Agenda Council, the Global Social Compliance Programme and the UN Global Compact.[9] It also drew from external data sources such as governments, international agencies and risk organisations that assist it to monitor changes in human rights situations in the countries in which it operates, as well as from understanding of the perspectives of affected stakeholders and verification with expert stakeholders of the salient issues identified.[10]

Following this initial risk assessment, Unilever conducts regular human rights impact assessments (HRIAs), 'which include on-site visits by third-party experts who engage and consult rights-holders and other stakeholders.’[11] For example, in 2016 it commissioned a human rights impact assessment of its own operations and value chain in Myanmar in order to identify impacts on 'local right-holders, including workers, their families and other community members'.[12] This assessment 'uncovered regular patterns of discriminatory practices within some suppliers in [its] extended supply chain'. In addition, during the assessment of the harvesting of palm sugar activity, 'children were found to be working alongside their parents as they prepared palm juice, whilst palm sugar tree climbers were using unsafe homemade ladders to pick the fruit'.[13]

Unilever considers that its suppliers play a critical role in helping it source responsibly and sustainably.[14] Accordingly, Unilever developed a Responsible Sourcing Policy, which sets out Unilever’s expectations with regards to the respect for the human rights, including labour rights, of the workers in its extended supply chain. It is based upon 12 fundamental principles that are derived from internationally recognised standards and include treating all workers equally with respect and dignity, paying workers fair wages and ensuring working hours of all workers are reasonable.

Clauses are included in supplier contracts in an effort to ensure that suppliers respect and comply with a set of Mandatory Requirements related to each of the fundamental principles set out in the Responsible Sourcing Policy.[15] For example, with respect to workers being paid fair wages, suppliers are required to ensure that all workers are provided total compensation packages that include wages, overtime pay, benefits and paid leave which either satisfies or exceeds the legal minimum standards or industry standards, whichever is the highest. Guidelines and tips are provided for the implementation of a comprehensive and robust process so suppliers can meet the Mandatory Requirements and move up the ‘continuous ladder of improvement’ and advance to good practice and then finally achieve and maintain best practice with respect to each of the fundamental principles.

Where there are breaches of the Responsible Sourcing Policy, they must be reported to Unilever who will investigate and discuss its findings with the relevant supplier. If remediation is required, the supplier is required to devise and inform Unilever of their Corrective Action Plans (CAPs) and implementation plans and timeline to resolve the breach.

Unilever’s Procurement Code Committee evaluates and makes recommendations where suppliers are not willing to comply or move up the continuous improvement ladder, and it reviews all key incidents raised. Continual non-conformances with no remediation plans result in an escalation to the Global Procurement Code Committee for a decision on terminating the business relationship.[16] No information is publicly available regarding Unilever’s Global Procurement Code Committee.

Engaging with new and existing suppliers[17]

Unilever’s audit approach to evaluating suppliers is depicted below.

Source: Unilever 2015 Human Rights Report, p 18

Unilever uses a risk-based approach to evaluate prospective and existing suppliers. Suppliers are required to complete a self-declaration regarding their compliance to the Mandatory Requirements of Unilever’s Responsible Sourcing Policy. Suppliers are then segmented based on a risk assessment using externally available indices of business and human rights risks from expert sources. Country risk is one element of the risk assessment (see below for the outcome of Unilever’s 2018 country risk assessment).

Source: Unilever’s Supply Chain, p 17.

Suppliers in the highest risk segment are required to undergo an independent third-party audit. Raw material or finished goods suppliers are required to undergo an on-site audit, while service suppliers need to undergo a remote desktop audit.

During the course of an on-site audit, all non-conformances are recorded to indicate where a supplier’s site does not align with the Responsible Sourcing Policy Mandatory Requirements. A supplier must provide a time-bound CAP to address and remediate non-conformances, and the auditor must confirm the remediation has effectively addressed the non-conformance in a follow-up audit within a 90-day period for the supplier to be Responsible Sourcing Policy compliant.

Audit frequency can be every 12, 24, or 36 months, and is determined by the number and type of non-conformances found in the previous audit. CAPs must be implemented to address all non-conformances and re verified in a follow-up audit to confirm and verify that the identified issues have been effectively remediated.[18] As at May 2018, of the 44,290 suppliers risk assessed to date, 11,287 were classified as high risk of which 1,667 were identified with issues in the previous three years of which 1,175 had verified CAPs.[19]

More serious non-conformances are classified as ‘Critical Incidents’, with the most severe of these termed ‘Key Incidents’. The presence of Critical Incidents automatically means that the supplier must have a new audit after 12 months. On top of the requirements for Critical Incidents, the auditor must raise a Key Incident to Unilever within a 24-hour period. Key Incidents are escalated to either Director or Vice President level within Unilever to ensure appropriate attention is given. Within seven days a CAP to remedy the issue must be provided by the supplier.

Stakeholder Engagement Channels 

Unilever engages with its stakeholders in conducting risk assessments. Stakeholder consultation, dialogue and action are considered to be a critical part of its risk assessment process and have been said to deliver ‘enormous value’, given the localised and culturally specific nature of the issues faced. Unilever has identified its stakeholders to include its employees, trade unions, customers, NGOs, communities, suppliers, workers, business partners, advisory boards (such as the Unilever Sustainable Living Plan Council), governments, intergovernmental organisations and civil society organisations.[20] Unilever’s Advocacy Team play a lead role in engaging with its external stakeholders, which is supported by its External Affairs Team.[21] Unilever also engages with various organisations including the World Business Council for Sustainable Development, Consumer Goods Forum, United Nations Global Compact and the World Economic Forum.

Unilever also captures and addresses complaints through its grievance mechanisms – it notes that ‘Grievance mechanisms play a critical role in opening channels for dialogue, problem solving, investigation and, when required, providing remedy.’[22] With respect to Unilever’s supply chain, one of the fundamental principles of the Responsible Sourcing Policy requires all workers to have access to fair procedures and remedies. Accordingly, suppliers are required to provide grievance mechanisms to their workers. Unilever monitors the number of complaints received from workers by suppliers each year in order to monitor its salient issues and address root causes so that similar grievances will not be raised in the future.[23] Additionally, Unilever also provides a hotline that anyone can access to report on responsible sourcing issues. It has also developed a grievance procedure for workers in its palm oil supply chain. A summary of the complaints raised under this procedure can be found here.

Identified risks 

Through its risk identification and assessment processes, Unilever has identified eight salient human rights issues within its business, which are depicted in the image below.

Source: Unilever Human Rights Report 2015, p 26.

During the course of 2017, Unilever identified the following non-conformances in relation to the salient issues:

Source: Human Rights 2018 Supplier Audit Update, p 10.

Integrating and Acting

Unilever recognises that it must take steps to identify and address any actual or potential adverse impacts with which it may be involved whether directly or indirectly through its own activities or its business relationships. It seeks to manage the risks identified in the processes discussed above by ‘integrating the responses … into [its] policies and internal systems, acting on the findings, tracking [its] actions, and communicating with [its] stakeholders about how [it] address impacts.’[24] Remediation is perceived as important as addressing human rights impacts.

With respect to each of the eight salient issues set out above, Unilever has taken specific actions and implemented initiatives to prevent and mitigate those issues from arising in its supply chains. For example, with respect to forced labour Unilever has, inter alia:[25]

• Developed best practice guidelines on the use of migrant labour focusing on the recruitment process, contractual terms and the payment of wages and benefits. These guidelines are not publicly available.
• Incorporated human trafficking explicitly into its Human Rights Policy Statement, Code of Business Principles and its Respect, Dignity and Fair Treatment Code Policy, and provided associated training to its employees globally.I
• Incorporated trafficking guidelines into its Responsible Sourcing Policy and Responsible Business Partner Policy.
• Published a UK Modern Slavery Statement in 2017, 2018 and 2019.
• Became a founding member of the Leadership Group for Responsible Recruitment, which promotes responsible recruitment practices by business.
• Provided training to suppliers in Turkey, Dubai, India, Bangkok and Malaysia on eradicating forced labour and the responsible management of migrant labour.

Tracking

Unilever recognises that ‘the ability to track and monitor issues is a vital part of measuring progress in remediation and addressing grievances’.[26] The Unilever Board is responsible for compliance, monitoring and reporting and day-to-day responsibility lies with senior management. Unilever’s Corporate Audit Team and external auditors undertake checks on this process. [27]

With respect to tracking its supply chain, Unilever has an ‘Integrated Social Sustainability Dashboard’ (Dashboard), which sets out the ‘number of non-conformances for each fundamental principle of the RSP’.[28] It uses the information available through the Dashboard to identify salient hotspot issues ‘allowing use to prioritise, build guidance produce webinars, and support regions where the need is greatest’.[29] Unilever’s Procurement Team also monitors supplier compliance levels and identifies when intervention is required. It works with suppliers to ensure effective remediation. Unilever also tracks and verifies that CAPs are implemented within the agreed timelines. When very serious Key Incidents occur, Unilever more directly and actively participates in developing CAPs and following up on their implementation.[30]

Communicating

Unilever claims that it engages in dialogue with its employees, workers and external stakeholders who are or could potentially be affected by its actions.[31] It particularly focuses on individuals or groups who ‘may be at greater risk of negative human rights impacts due to their vulnerability or marginalisation’.[32]

Unilever primarily uses its Human Rights Report 2015 and Human Rights Progress Reports to communicate its process of identifying and assessing human rights risks and impacts, including its salient human rights issues and the actions taken to prevent and mitigate those issues, as well as integrating, acting and tracking those issues. Unilever also utilises its annual Modern Slavery Statements to communicate with stakeholders. Aside from these reports and statements, Unilever has not clearly stated what other means it utilises to communicate its human rights impacts, policies and approaches. A review of its website contains a webpage detailing its engagement with stakeholders, but fails to recognise exactly how this engagement is carried out.

With respect to grievances raised through the Palm Oil grievance procedure, Unilever publishes a Grievance Tracker online setting out a summary of each grievance raised, the link to Unilever and the latest actions taken to address the allegations. It also publishes responses in relation to specific claims – see for example here and here.

The Gaps Between Theory and Practice

Unilever has acknowledged that the challenges faced by the business community with regard to its responsibility to respect human rights are ‘enormous’, particularly given the scale of their operations and supply chain. It states that ‘the risk of systemic human rights abuses exists across our value chain and the value chains … This is a reality we must confront and work together to resolve.’ As a result it has claimed to go beyond respecting human rights to actively promoting them. This approach has positioned it publicly as a leader and a model from which other businesses can draw inspiration.[33]

What is clear from a review of Unilever’ human rights approach is that it recognises its responsibility to respect human rights and has sought to take steps to fulfil this obligation along its entire value chain. While Unilever’s human rights efforts started to gain some momentum in 2010 when it launched its Sustainable Living Plan and began evaluating suppliers, it accelerated its efforts in 2014 by introducing a Human Rights Policy Statement, formalising its commitment to promoting human rights across its operations and supply chains, as well as through designing a five-year human rights strategy.[34] In 2015, it became the first company to produce a standalone human rights report.

Nonetheless, despite Unilever’s extensive human rights work over the past years, including the strengthening of its HRDD processes in its supply chains, it has drawn and continues to draw criticism in relation to the human rights abuses that still exist within its value chain. Key human rights issues that have been placed in the spotlight in various jurisdictions are discussed below. Information regarding alleged human rights violations committed by Unilever pre-dating the UNGPs has been included in the sub-sections below to the extent that such violations have been found to still be present following Unilever’s actions to increase its efforts to respect human rights in 2014.

Vietnam

In 2013, Oxfam (together with Unilever) published a report in which it assessed the labour standards in Unilever’s operations and supply chain in Vietnam and developed measures to guide Unilever (and other companies) to fulfil their social responsibilities. It found that despite Unilever’s commitment to human rights, its tools and processes for due diligence and remediation via grievance mechanisms needed to be strengthened. It stated that Unilever had ‘not been aware that some of its practices were associated with adverse impacts for workers, including wages that were legal but low, excessive working hours, and high levels of contract labour.‘[35] Recommendations were made by Oxfam to Unilever, including policy changes, strengthening its due diligence processes and better aligning business processes with its policies. Unilever made a range of commitments in response to the recommendations.

A progress report was published in 2016, which found that Unilever’s ‘overall commitment to respecting human and labour rights has been strengthened as a result of effective leadership across the business’. Nonetheless, it identified some ‘critical implementation challenges’ that need to be addressed in order to ‘[translate] the company’s policy commitments into practice and achieve positive outcomes for … workers’. Specific issues that were identified were:

1. There was an ‘unresolved tension’ between the commercial and labour standards imposed on suppliers. Some suppliers did not see the business case for their own businesses in improving their labour standards.
2. Despite Unilever’s efforts to ensure fair compensation for workers, there was a lack of evidence to show that worker wages had increased beyond the legal minimum level in Vietnam.

Additionally, Oxfam highlighted that multinational more generally need to address the root causes of adverse human rights impacts in their supply chains in order for ‘good labour standards to become universal operating conditions.’ Oxfam made further recommendations to improve the situation for workers in Vietnam.

India

In the 2011 SOMO & ICN Report, SOMO also reported on Indian tea plantations that supply to Unilever. Issues identified included wages being paid with too little benefits, workers being discriminated against in relation to promotions and benefits, the casualization of labour as well as violations of the freedom of association. In 2016, ICN released a follow up report on the situation in India. It found that there had been some improvements in the ‘payment of minimum wages, setting up procedures for safe handling of chemicals and the provision of basic medical care and educational facilities for all temporary and permanent workers’. However, there are still ‘many serious non-compliances’ relating to ‘unequal benefits for casual workers, overtime wages and working hours, advance payments, chemical handling practices and worker representation.’ Unilever responded by stating that it was in dialogue with its suppliers in relation to the issues raised in the follow up report.

Further, in 2015 a BBC investigation found ‘dangerous and degrading living and working conditions’ in tea estates that supply to some of Unilever’s brands (Lipton and PG Tips). Unilever stated that it regarded the issues raised in the investigation as ‘serious’ and had made progress to rectify these issues through ‘working with [its] suppliers to achieve responsible and sustainable practices’.

Turkey

In 2014, an external organisation engaged by Unilever carried out an independent assessment of its tea supply chain in Turkey. The assessment found, inter alia, that workers worked excessive hours during the harvest, various health and safety issues (e.g. lack of protective equipment) and migrant worker accommodation did not meet the required standards in some instances. As a result, Unilever decided to remediate the identified issues at the individual site level and also work with external multi-stakeholder groups to address more systemic challenges. It also started a capacity building initiatives in Turkey that focuses on human rights and held training in 2016 focusing on the key non-compliances found. 

Indonesia

In 2016, Amnesty International published a report in relation to labour exploitation on plantations in Indonesia that provide palm oil to Wilmar, which then supplied to Unilever.[36] It was found that serious human rights violations were occurring on the plantations of Wilmar and its suppliers, including ‘forced labour and child labour, gender discrimination, as well as exploitative and dangerous working practices that put the health of workers at risk’, which resulted from systematic business practices (e.g. low wages and the casualisation of labour). Unilever issued a detailed response to a letter from Amnesty International in relation to the report recognising that ‘more attention needs to be paid to social issues at palm oil plantations and that current processes and policies need to be improved to ensure they address issues effectively and create more transparency.’ It also noted that it was in contact with Wilmar regarding the issues raised and committed to continuing to engage to take steps to ‘close the gaps identified’. Unilever also issues a public statement once the report was released, committing to investigating the grievances raised in the report and addressing them. Unilever has continued to engage with Wilmar and Amnesty International on these issues – see for example here (2016), here (2017) and here (2018).

Conclusion 

What is clear from these examples of human rights violations in Unilever’s supply chains is that despite its extensive HRDD process that it seeks to roll out across its value chain, in practice there remain weaknesses and blind spots in this process. For example, Unilever does not have a third party grievance mechanism allowing workers to raise complaints directly to the company (except in relation to palm oil). Instead workers must raise their grievances through supplier provided mechanisms, which can discourage the communication of human rights issues. Also, Unilever assesses prospective suppliers through the use of a self-declaration, which is extremely problematic as it relies on potential culprits to assess their own compliance with the Mandatory Requirements for doing business with Unilever, in some cases without verification by Unilever or an independent third party. Weaknesses such as these make it evident that Unilever has far to go on its journey to respecting human rights within its supply chains, despite being a ‘leader’ in implementing HRDD globally. Unilever needs to look beyond remedying human rights abuses as they are alleged and reported. It must also examine the systemic failings in its HRDD process that result in these human rights risks not being identified and therefore prevented or mitigated.

[1] Unless otherwise statement, the information in this section has been obtained from the Unilever 2018 Annual Report and the Unilever Human Rights Report 2015.

[2] Unilever Modern Slavery & Human Trafficking Statement 2019, p 2.

[3] Unilever Annual Report 2018, p 9.

[4] Unilever Human Rights Policy Statement, p 4.

[5] Ibid, p 1; Unilever, Advancing Human Rights in our Own Operations; Unilever Human Rights Report 2015, p 1.

[6] Unilever Human Rights Policy Statement.

[7] Business and Human Rights Resource Centre Action Platform, Unilever.

[8] Unilever Human Rights Report 2015, p 26.

[9] Unilever Human Rights Progress Report 2017, p 15.

[10] Unilever Human Rights Report 2015, pp 26, 58.

[11] Unilever Human Rights Progress Report 2017, p 71.

[12] Ibid.

[13] Ibid, p 70.

[14] Unilever Human Rights Policy Statement, p 2.

[15] Unilever Modern Slavery & Human Trafficking Statement 2019, p 4.

[16] Unilever Human Rights Report 2015, p 51.

[17] Unilever Human Rights Progress Report 2017, pp 18-19.

[18] Unilever’s Supply Chain, p 17.

[19] Ibid.

[20] Unilever Human Rights Report 2015, pp 22-23; Unilever, Engaging with Stakeholders.

[21] Business and Human Rights Resource Centre Action Platform, Unilever.

[22] Ibid.

[23] Unilever Human Rights Report 2015, p 57.

[24] Unilever Human Rights Policy Statement, p 2.

[25] Unilever Human Rights Report 2015, p 32; Unilever, Sharing Best Practice in Fighting Forced Labour; The Consumer Goods Forum, Business Actions Against Forced Labour, p 36; Unilever Human Rights Progress Report 2017, p 32.

[26] Unilever Human Rights Progress Report 2017, p 72.

[27] Unilever Human Rights Report 2015, p 47.

[28] Unilever Human Rights Progress Report 2017, p 72.

[29] Ibid.

[30] Ibid.

[31] Unilever Human Rights Policy Statement, p 3.

[32] Ibid.

[33] See for example: Corporate Human Rights Benchmark 2017 and 2018; and Know the Chain 2018.

[34] Unilever Human Rights Report 2015, p 3.

[35] Oxfam, Business and Human Rights: An Oxfam Perspective on the UN Guiding Principles, p 7.

[36] While Unilever confirmed that the purchase palm oil from Wilmar, they did not provide details on the refineries they source from. Nonetheless, Amnesty International found it ‘highly likely’ that Unilever sources palm oil from one of the 12 Indonesian refineries it investigated (whether directly or indirectly).

Editor’s note: Maisie Biggs graduated with a MSc in Global Crime, Justice and Security from the University of Edinburgh and holds a LLB from University College London. She is currently working with the Asser Institute in The Hague.  She has worked for International Justice Mission in South Asia and the Centre for Research on Multinational Corporations (SOMO) in Amsterdam.

The Rome Statute is a central pillar of international criminal law (ICL), and so any discussion concerning the subjection of legal persons requires a revisit of the negotiations surrounding its drafting. However in the time since its implementation, there appears to have been a shift in ICL regarding corporate liability. Developing customary international law, treaty law and now most domestic legal systems have some established mechanisms for prosecuting legal persons for violations of ICL.

The Rome Statute

A lot has been written on the negotiations surrounding the drafting of the Rome Statute of the International Criminal Court (Rome Statute). This document established the International Criminal Court (ICC), its rules and jurisdiction, and codified the core crimes of ICL and surrounding general principles. Article 25(1) of the Rome Statute explicitly restricts the court’s jurisdiction to natural persons, meaning that corporate wrongdoing may only be approached by the ICC through individual criminal responsibility or superior responsibility for corporate actors.^[1] The Statute was a “major achievement”^[2] as the first international law instrument essentially summarising the general principles of criminal law across national legal systems.^[3] Concerns about ‘complementarity’ arose as the ICC would be expanding the reach of ICL far beyond the remit of ad hoc Tribunals like those used to try crimes in Rwanda and Former Yugoslavia. The new Court needed to complement, rather than undermine national courts and jurisdiction.^[4]

During negotiations, individual responsibility of legal persons, corporations or criminal organisations was described as “a major political issue on which political guidance from the Committee was needed.”^[5] France had submitted a compromise proposal in the International Criminal Court Draft Statute of 1998 concerning the inclusion of responsibility of legal persons. The French representatives surmised that resistance from other states to its inclusion was because there was no equivalent in some domestic legal systems, while others held the view that the concept would be misapplied in an international criminal court.^[6]

The French proposal linked the responsibility of the legal persons with the responsibility of criminal organisations at Nuremberg. Under this proposal, group responsibility would be linked with the previous commission of a crime by a natural person (thus in no way concealing individual responsibility), and adopting in parts Article 10 of the Charter of the Nuremberg International Military Tribunal,^[7] the Court would make binding determinations on the criminality of an organisation, which states would need to implement and then penalise by fines or proceeds of crime confiscation.^[8]

The proposed text was as follows:

“[Art 23(5)]: Without prejudice to any individual criminal responsibility of natural persons under this Statute, the Court may also have jurisdiction over a juridical person under this Statute. Charges may be filed by the Prosecutor against a juridical person, and the Court may render a judgement over a judicial person for the crime charged, if:

(a) The charges filed by the Prosecutor against the natural person and the juridical person allege the matters referred to in subparagraphs (b) and (c); and

(b) The natural person charged was in a position of control within the juridical person under the national law of the State where the juridical person was registered at the time the crime was committed; and 

(c) The crime was committed by the natural person acting on behalf of and with the explicit consent of that juridical person and in the course of its activities; and

(d) The natural person has been convicted of the crime charged.

For the purpose of this Statute, ‘juridical person’ means a corporation whose concrete, real or dominant objective is seeking private profit or benefit, and not a State or other public body in the exercise of State authority, a public international body or an organisation registered, and acting under the national law of a State as a non-profit organisation.”^[9]

This was a compromise solution from France between liberal and romantic conceptions,^[10] looking not only to convict ultimately the company or organisation, but rather still use it as a mechanism for attributing responsibility to individuals.^[11] Several countries supported the concept, however prevailing concerns of enforcement and complementarity remained, especially for countries with no basis of corporate criminal liability. The matter was referred to the Working Group following mixed reception from states, however once there, negotiations met stifling time pressures.^[12] Per Saland, the Chairman of the working group which negotiated issues surrounding Part 3 of the Rome Statute concerning these general principles of criminal law (including Article 25 on individual responsibility), has since revealed that time ran out for the Working Group when it came to discussion of some more difficult issues, including liability of legal persons.^[13] David Scheffer, who was also involved in the negotiations, has confirmed that the combination of time pressures and complementarity concerns prevented the proposal from succeeding, however he has added that another contributing factor was a more fundamental concern that the “novelty” of the proposed corporate criminal liability would have “imperilled” the entire treaty’s ratification by states.^[14]

No agreement was reached concerning subjecting legal persons. Article 25(3)(d) retained a reference to a ‘group of persons acting’,^[15] so the French idea of individual participation in a larger collective was incorporated to an extent, however all references to legal persons have been removed in the final article. Perhaps unintentionally, a similar door for corporate liability remained ajar in article 7(2)(a), through reference to organisational policy.^[16] In the ICC investigation into the Kenyan situation,^[17] the Court examined this issue:

“Clearly, the 'organization' is an entity different from a "State" if the legislator was to avoid redundancy. Thus, it is permissive to conclude that an 'organization' may be a private entity (a nonstate actor) which is not an organ of a State or acting on behalf of a State [para 45].”

The Court delineated various ‘state-like’ characteristics that a non-state actor would have to demonstrate in order to qualify as an organisation under this article,^[18] however none expressly excluded legal persons like companies from the article’s ambit. 

Andrew Clapham provides an in-depth history of the Rome Statute negotiations, and how controversial this question of legal persons became.^[19] This episode has been treated as a definitive rejection of ICL liability for legal persons,^[20] however the Rome Statute is just one (important) part of the larger ICL picture.

Post-Rome caselaw developments 

Since Rome, customary international law through Tribunals, treaty law, and domestic law have all developed. Most notably, for the first time legal persons have been subjected under ICL by an international criminal tribunal.^[21] In the Al Jadeed S.A.L. & Ms Khayat (New TV S.A.L.)^[22] case, an Appeals Panel for the Special Tribunal for Lebanon (STL) overturned a decision that the Tribunal lacked jurisdiction over legal persons on 2 October 2014, allowing the case to proceed against the corporate entity Al Jadeed S.A.L. and natural person Ms Khayat. This was then followed by another contempt case Akhbar Beirut S.A.L., similarly against a legal and natural person.^[23] In New TV S.A.L., Judge Baragwanath acknowledged the development of domestic corporate accountability, and so determined that international criminal law has likewise progressed:

“Corporate liability for serious harms is a feature of most of the world’s legal systems and therefore qualifies as a general principle of law. Where States still differ is whether such liability should be civil or criminal or both. However, the Appeals Panel considers that… corporate criminal liability is on the verge of attaining, at the very least, the status of a general principle of law applicable under international law.”^[24]

The decision has been met with a mixed reception. Filled with “historical references and normative ambition,”^[25] some commentators have characterised the decision as an encouraging progression from state practice and foundation stone for future ICL criminal liability.^[26] However the basis of Judge Baragwanath’s decision has been described by Dov Jacobs as a “molotov cocktail to kill the principle of legality” as the judge’s reasoning relied only on “the ‘spirit’ of the statute combined with inherent jurisdiction.” Others have found the later Akhbar Beirut S.A.L. opinion more convincing due to its more concrete basis in Lebanese law.

The Tribunal very consciously restricted their consideration and findings to the specific crime of contempt: looking to precedent, they examined only whether there had been previous findings on contempt with regards to legal persons in the various international criminal tribunals, and found there had “simply been no legal pronouncement on this specific issue.” ^[27] The Tribunal drew its power to prosecute for contempt from its inherent jurisdiction as a judicial institution.^[28] Like the ICTY and ICTR before it, the STL’s primary jurisdiction for ‘core’ international crimes is explicitly over only natural persons, however the separate framework in the general Rules of Procedure and Evidence allowed the Tribunal to consider the broader definition of ‘persons’ for contempt.  The importance of this distinction for the case does also support Andrew Clapham’s argument that “at this point, the exclusion of non-natural persons can be seen as the consequence of a ‘rule of procedure’ rather than the inevitable result of application of international criminal law.”^[29]

There is debate about the broader applicability of these decisions, because of the STL's ties to Lebanese law. The STL itself is a partially-domestic forum which reduces the ICL significance of an ‘international tribunal’ taking this step. The legal basis for the Tribunal’s decisions is at least partially grounded in Lebanese law -  Article 2 of the formative statute of the STL mandates the use of Lebanese law (under which corporate criminal liability is possible) - however it is debatable whether this case is purely an instance of domestic legal application of international criminal law. Article 2 concerns only the applicable criminal law, (i.e., the ‘core crimes’ discussed above) and not the procedural rules on which this decision was based, which are grounded in international law concerning international tribunals. It would then appear that the legal basis for this decision was purely international, and the Tribunal in New TV S.A.L. accordingly based their decision on  “current international standards,”^[30] however in the Akhbar Beirut S.A.L. case the Tribunal links back the foreseeability of this corporate prosecution to Lebanese law: “It would be an oddity for a Lebanese company to face criminal sanction in Lebanon for interfering with the administration of justice with respect to cases before Lebanese courts and at the same time enjoy impunity for similar acts before an internationalised Tribunal guided by Lebanese law in carrying out its judicial work.“^[31]

The highest profile media case last before an international tribunal also concerned the responsibility of legal persons. The International Criminal Tribunal for Rwanda (ICTR) had a special focus on the media’s role of incitement in the Rwandan genocide.^[32] As the Tribunal in the Akayesu case positively quoted: “it was impossible that hundreds of thousands of people should commit so many crimes unless they had been incited to do so.”^[33] The ICTR case of Prosecutor v. Nahimana et al.^[34] (also known as the Media Case) tried three natural persons for their roles in inciting the Rwandan genocide. Two of these were the controlling figures of media organisations: RTLM was a radio station and Kangura a publication. The court found a specific “specific causal connection” between RTLM broadcasts and the killings, which “engaged in ethnic stereotyping …[which] called explicitly for the extermination of the Tutsi ethnic group.”^[35] The articles published by Kangura similarly had the impact of “whipping the Hutu population into a killing frenzy.”^[36] What was distinctive about this case was that the court, before outlining the individual responsibility of the named accused, went into great detail about the culpability of the organisations in question. The court named the media organisations themselves as responsible for inciting genocide: “If the downing of the [President’s] plane was the trigger, then RTLM, Kangura and CDR were the bullets in the gun.”^[37] It was not possible under the ICTR’s jurisdictional mandate to subject legal persons and so the court in the Media case did not broach this issue, however the structure and substance of the court’s reasoning centred primarily on the responsibility of the organisations, and only after did the court then address the roles of the natural persons who were actually on trial.

What may merit further investigation is how media cases before international tribunals differ from the prosecution of other international crimes that corporate actors engage in, such as pillage or complicity. The media acts as the ‘fourth estate’, a fundamental and (ideally) independent pillar of a functioning system of democratic governance. Arguably then, media companies are not purely private, non-state actors but serve a partially civic function, and so are in some ways fundamentally different actors than other corporate entities.^[38] How the unique role of this specific ‘private’ actor impacts its liability under ICL warrants further investigation.

International instruments imposing some form of corporate liability

A growing number of recent international treaties and conventions are incorporating obligations to impose sanctions on legal persons.^[39] These include the Optional Protocol on the Convention on the Rights of the Child (Article 3(4)), Convention Against Transnational Organised Crime 2000 (Article 10(2)), and Convention Against Corruption 2003 (Article 26 (2)). As pointed out by Sabine Gless and Sarah Wood, these instruments remain vague about implementation.^[40] Nonetheless, for these crimes states are required in some form to impose sanctions on legal persons.^[41]

The Draft Articles on Crimes Against Humanity being prepared by the International Law Commission (ILC) may go the same way as the afore-mentioned draft of the Rome Statute, but for now Draft article 6, paragraph 8 contains explicit subjection of legal persons:

“Subject to the provisions of its national law, each State shall take measures, where appropriate, to establish the liability of legal persons for the offences referred to in this draft article. Subject to the legal principles of the State, such liability of legal persons may be criminal, civil or administrative.”

This final sentence allows for flexibility in domestic application, however the offences being contemplated are international crimes. This convention is being designed to be a development from the Rome Statute, the “next generation” of legal tools concerning crimes against humanity.^[42] The addendum to the ‘Fourth report on crimes against humanity’ drafted by Sean D. Murphy, Special Rapporteur of the ILC, links this article with the previously mentioned international law instruments which are subjecting legal persons.

Conclusion

The ICC is as yet not touched by these developments, however there are glimmerings of a shift in customary ICL. As will be explored in the next post in this series, most domestic legal systems now have established mechanisms for prosecuting legal persons for violations of ICL. The Rome Statute negotiations surrounding the subjection of legal persons were centralised on complementarity; if domestic law has fundamentally shifted in the interim period it makes sense that this issue be revisited in international caselaw and international instruments as well.

^[1] David Scheffer, ‘Corporate Liability under the Rome Statute’ (2016) 57 Harvard International Law Journal Online Symposium 35, 35.

^[2] Per Saland, ‘International Criminal Law Principles’ in Roy S Lee (ed) The International Criminal Court: The Making of the Rome Statute (Kluwer Law International NL, 1999) 190-191.

^[3] ibid.

^[4] Andrew Clapham, ‘The Question of Jurisdiction under International Criminal Law over Legal Persons: Lessons from the Rome Conference on an International Criminal Court’, in Menno Kamminga and S Zia-Zarifi (eds), Liability of Multinational Corporations Under International Law (Kluwer Law International, 2000) 139, 142.

^[5] ‘Summary records of the plenary meetings and of the meetings of the Committee of the Whole’ in Official Records of the United Nations Diplomatic Conference of Plenipotentiaries on the Establishment of an International Criminal Court, Rome, 15 June-17 July 1998, Vol. II, UN Doc. A/Conf.183/C.1./L.3, 132.

^[6] ibid 133.

^[7] Clapham (n 4) 147.

^[8] ‘Summary records of the plenary meetings and of the meetings of the Committee of the Whole’ (n 5) 133.

^[9] ‘Working paper on article 23, paragraphs 5 and 6, UN Doc. A/Conf.183/C.1/WGGP/L.5/Rev.2, 3 July 1998’ in Official Records of the United Nations Diplomatic Conference of Plenipotentiaries on the Establishment of an International Criminal Court, Rome, 15 June-17 July 1998, Vol. III, 252.

^[10] “A liberal conception of responsibility focuses on individual agency and abstracts individual wrong from collective action. The ‘romantic’ view admits that international crimes are typically by their very nature committed in collectivities, and thus closely connected to some degree of collective will. The two traditions have been in conflict since the naissance of international criminal law.” in Carsten Stahn, ‘Liberals vs. Romantics: Challenges of An Emerging Corporate International Criminal Law’ (2018) 50 Case W Res J Intl L 91, 99.

^[11] ibid, 100.

^[12] Saland (n 2) 194.

^[13] ibid.

^[14] Scheffer (n 1) 38.

^[15] See the Case Matrix Network commentary on Article 25(3)(d) for the relationship between this and the doctrine of Joint Criminal Enterprise (JCE).

^[16] “‘Attack directed against any civilian population’ means a course of conduct involving the multiple commission of acts referred to in paragraph 1 against any civilian population, pursuant to or in furtherance of a State or organizational policy to commit such attack” [emphasis added].

^[17] Decision Pursuant to Article 15 of the Rome Statute on the Authorization of an Investigation into the Situation in the Republic of Kenya: ICC-01/09-19-Corr 01-04-2010 110/163

^[18] “[para 68] As I have endeavoured to demonstrate above, certain criteria need to be satisfied to qualify a non-state actor as an 'organization' under the ambit of article 7(2)(a) of the Statute. This state-like 'organization' is the author of a policy "to commit such attack" against any civilian population which is implemented by its members using the means of the 'organization'. As in case of a State policy, it seems to me that the "organizational policy" must be established at the policymaking level of the ‘organization'."

^[19] Clapham (n 4) 142.

^[20] This negotiation process was used as a basis for the UK and Netherlands Amici Curiae brief in the Kiobel case, which argued that there was no corporate liability under international criminal law: “corporations have been deliberately excluded from the jurisdiction of the International Criminal Court.” Brief of the Governments of the United Kingdom of Great Britain and Northern Ireland and the Kingdom of the Netherlands as Amici Curiae in support of the Respondents (No. 10-1491) (filed 3 February 2012), 17.

In the Jesner v. Arab Bank, PLC decision, the negotiation process was cited by both Justice Kennedy in the lead decision [p 15] and Justice Sotomayor in her dissent [p 8], the former using it as evidence of ICL's rejection of corporate liability, and the latter characterising it as evidence merely of varying domestic practices and not a definitive rejection of corporate civil liability under the Alien Tort Statute (as was one of the issues in this case).

^[21] Nadia Bernaz, ‘Corporate Criminal Liability under International Law: The New TVS.A.L. and Akhbar Beirut S.A.L. Cases at the Special Tribunal for Lebanon’ (2015) 13 Journal of International Criminal Justice, 313, 313.

^[22] New TV S.A.L, Decision on Interlocutory Appeal Concerning Personal Jurisdiction in Contempt Proceedings, Al Jadeed S.A.L. & Ms Khayat (STL-14-05),, Special Tribunal for Lebanon Appeals Panel (2 October 2014).

^[23] Akhbar Beirut S.A.L., Decision on Interlocutory Appeal Concerning Personal Jurisdiction in Contempt Proceedings, Case No STL-14-06/PT/AP/AR126.1, 23 January 2015.

^[24] New TV S.A.L. (n 22) para 67.

^[25] Stahn (n 10) 98.

^[26] See Nadia Bernaz (n 21).

^[27] New TV S.A.L. (n 22) para 41.

^[28] As articulated in Rule 60 bis (A) [Contempt and Obstruction of Justice] of the Rules of Procedure and Evidence for the STL.

^[29] Andrew Clapham, ‘Extending International Criminal Law beyond the Individual to Corporations and Armed Opposition Groups��� (2008) 6 Journal of International Criminal Justice 899, 902.

^[30] New TV S.A.L. (n 22) para 60.

^[31] Akhbar Beirut S.A.L. (n 23) para 59.

^[32] “The power of the media to create and destroy fundamental human values comes with great responsibility. Those who control such media are accountable for its consequences.” Prosecutor v. Nahimana et al., ICTR–99–52, Judgment and Sentence (3 December 2003) para 945.

^[33] Akayesu (TC) ICTR-96-4 (2 September 1998) para 551.

^[34]Prosecutor v. Nahimana et al., ICTR–99–52, Judgment and Sentence (3 December 2003) para 953.

^[35] Ibid para 949.

^[36] Ibid para 951.

^[37] Ibid para 953.

^[38] This might be a controversial statement within the broader debate in Business Human Rights circles concerning the civil functions, and public duties and responsibilities, of all companies.

^[39] Bert Swart cites seventeen international instruments which have provisions on corporate criminal liability with discretion concerning state-level sanctions, “while before 1997 none existed at all": Bert Swart, ‘International Trends Towards Establishing Some Form of Punishment for Corporations’ (2008) 6 J International Grim Just 947, 949.

^[40] Sabine Gless and Sarah Wood, ‘General Report on Prosecuting Corporations for Violations of International Criminal Law: Jurisdictional Issues’ in S Gless and S Broniszewska (eds) Prosecuting Corporations for Violations of International Criminal Law: Jurisdictional Issues (International Colloquium Section 4, Basel, 21-23 June 2017) 16.

^[41] ibid.

^[42] See a summary of Professor Murphy’s 2015 Supranational Criminal Law Lecture at the T.M.C. Asser Instituut.

Editor’s note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of European and International Human Rights Law at Leiden University in the Netherlands. Prior to commencing the LLM, she worked as a business and human rights solicitor in Australia where she specialised in promoting business respect for human rights through engagement with policy, law and practice.

Human rights due diligence (HRDD) has emerged as a dominant paradigm for doing business with respect for human rights. It is a central concept to the UNGPs and describes what ‘steps a company must take to become aware of, prevent and address adverse human rights impacts’ in order to discharge the responsibility to respect.[1] The case studies examining Adidas’ and Unilever’s HRDD practices (the Case Studies) have demonstrated how businesses are working with the concept of HRDD and translating it into practice. They provide an opportunity to consider the adaptable nature of HRDD and whether it has the potential to transform business internal frameworks in order to generate greater corporate respect for human rights. This will be reflected on in this final blog of our series of articles dedicated to HRDD. It will also reflect on the role that hard law initiatives play in incentivising substantive human rights compliance by business (in addition to soft law initiatives such as the UNGPs).

The Adaptable Nature of HRDD

There is no ‘one-size-fits-all’ approach that can be taken by businesses when implementing HRDD. Although the elements and parameters of HRDD are defined in the UNGPs (discussed in detail in a previous blog in this series), it is, by its very nature, an open-ended concept that has been ‘articulated at a certain level of abstraction’. Indeed, this level of abstraction was arguably intentional given the use of the term ‘due’ in HRDD, which ‘implies variation of effort and resources necessary to address effectively adverse impacts in a particular context’.[2]

The flexibility built into the concept of HRDD acknowledges that there are more than ‘80,000 multinational corporations, ten times as many subsidiaries and countless national firms’ globally that differ in many respects.[3] Accordingly, the shape of HRDD within one business cannot be the same as that of another business – it should be ‘determined by the context in which a company is operating, its activities, and the relationships associated with those activities’.[4] As Ruggie acknowledged in 2010, his aim was to ‘provide companies with universally applicable guiding principles for … conducting due diligence’, rather than prescriptive guidance. Therefore, the ‘complexity of tools and the magnitude of processes’ employed by businesses will vary depending on the circumstances. As such, businesses can exercise a great deal of discretion as to how to translate HRDD into practice.

However, this adaptable nature of HRDD has been critiqued for lacking clarity, embodying a ‘high degree of fragility and flexibility’ and for containing an ‘inbuilt looseness’.[5] These complexities arise due to the absence of ‘sufficient specificity of expected action’.[6] Bijlmakers argues that the ‘ambiguity and openness’ of HRDD can ‘lead to uncertainty about what conduct is required from companies for the effective implementation of their responsibilities’.[7] This can result in a lack of compliance by businesses or differing levels of compliance, which ultimately means that HRDD ‘may or may not achieve the desired outcome – i.e. non-violation of human rights – in all cases’.[8] Indeed from the Case Studies it is clear that despite the extensive efforts made by Adidas and Unilever to put HRDD into practice, there are still gaps between the paper-based processes and practices of both businesses, e.g. there are human rights abuses present within their supply chains that are not being identified by their current HRDD practices and therefore not being addressed. Mares also argues that the looseness surrounding HRDD as a concept can also result in ineffective implementation, whereby businesses take action that is ‘largely symbolic, generates limited improvements, and fails to address underlying issues’.[9] As a result, businesses are not addressing the root causes of human rights issues within their business, but rather ‘applying bandaids to symptoms’. [10]

The flexibility of HRDD as a concept also allows businesses to employ various tools and processes in order to ‘create plausible deniability’, instead of discovering and understanding issues within their supply chains and how they should be managed.[11] Through conducting on the ground research at the local level, Bartley demonstrates that businesses appear to be using these tools and processes in order to ‘collect just enough information to produce assurances of due diligence’, allowing human rights issues and impacts to be kept out of sight.[12] Accordingly, their is a risk that businesses take advantage of the open-ended nature of HRDD by implementing HRDD processes as window-dressing to give the impression that they are engaging with the human rights risks and impacts in the context of their business, when in fact they are not.

However, despite these critiques the Case Studies demonstrate that the adaptable nature of HRDD has proven to be transformative on businesses. Embracing HRDD has led Adidas and Unilever to transform their operations to fit the different phases of the HRDD process. In doing so, they have avoided using a cookie-cutter approach that does not account for the differences between the businesses and they way they operate.

The use of customised HRDD approaches is of particular importance given that the salient human rights risks and impacts identified by a business will always differ in some respects to those of another business. With respect to Adidas and Unilever, despite having some overlapping identified risks (e.g. discrimination, working hours, freedom of association and fair wages), both businesses also focus on a number of specific salient risks, which are determined using various factors including the assessed risks of the countries in which they operate. On one hand, land rights are a particular focus for Unilever given the negative impacts it can have on individual’s and communities’ land tenure rights, particularly through its suppliers. On the other hand, child labour is more of a salient risk for Adidas given the pressure on brands in the apparel sector to produce garments at low costs in a quick time frame. In light of this, the HRDD processes followed by each business after identifying these risk areas are different such that the actions taken to integrate and address risks and impacts are directly responsive to those risks.

Is HRDD Effective to Foster Corporate Respect of Human Rights? 

The Case Studies also demonstrate that HRDD is not solely a paper tiger. Businesses that truly engage with the HRDD process can indeed transform internal processes, enhancing corporate attention on human rights. Both Adidas and Unilever have not sought to use HRDD as a buzzword with no institutional consequences. Instead they have introduced concrete mechanisms aimed at preventing human rights impacts from arising within their business context. 

So how has HRDD had a transformative impact on Adidas and Unilever? As I have shown in the Case Studies, it has provided a framework for embedding institutional and regulatory changes geared towards the prevention of adverse human rights impacts. On paper, they have translated the cycle of HRDD into a maze of internal procedures involving different stages of their activities as well as different corporate entities integrated in their supply chains. Moreover, they have built-up enforcement mechanisms in an attempt to trigger change if a potential human rights risk is identified. In short, the transformative impact of HRDD on the structure and operations of the two corporations is clear, whether this impact is effective to tackle human rights violations in their supply chains is another matter. The Case Studies conducted cannot evidence effectiveness, as it would require much more time-consuming and expensive on-field studies to observe whether the compliance of, for example, the working conditions of Adidas’ or Unilever’s suppliers with core labour rights improves thanks to these changes.    

It is certain that neither Adidas nor Unilever have a perfect HRDD process in place – gaps and blindspots will always exist which allow serious human rights issues to continue to emerge in their supply chains. Nonetheless, as evidenced above, it is also true that embracing HRDD had a transformative impact in the way these businesses operate. Whether these transformations are correlated with a decrease in human rights violations across their supply chains is a fundamental question that cannot be answered by my research, even though it will be at the centre of future assessments of the practical effects of HRDD on human rights throughout supply chains.    

The Catalyst Role of Hard Law Initiatives

Soft law HRDD initiatives such as the UNGPs and the OECD Guidelines have been primarily relied upon to date in order to regulate corporate human rights behaviour. Over the past years, however, several countries have either adopted or started to consider adopting legislation that embeds HRDD into their legal framework. For example:

• The UK and Australia have both adopted legislation requiring specific businesses to report on their HRDD processes and efforts in their operations and supply chains in relation to modern slavery.
• The Netherlands has adopted legislation that requires specific companies to undertake HRDD related to child labour in their supply chains.
• France has taken a broader approach, rather than focusing on thematic issues, and adopted legislation that requires certain businesses to undertake HRDD to identify and prevent serious violations of human rights and fundamental freedoms, health and safety as well as the environment.
• Further, the Human Rights Council’s Open-Ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises with Respect to Human Rights is in the process of developing a binding business and human rights treaty. The current draft of the treaty includes a HRDD article requiring state parties to ensure that their domestic legislation requires all businesses to which the treaty applies to undertake HRDD throughout their business activities.[13]

The rapid rise of such hard law initiatives imposing HRDD across the board means that transformation observed in the context of Unilever and Adidas will spread to many more businesses in the coming years. The turn to binding HRDD might be a response to the lack of willingness of businesses to embrace HRDD voluntarily. This is particularly the case in light of the dire landscape highlighted by benchmarking initiatives. For example, the results of the Corporate Human Rights Benchmark demonstrates that 40% of the companies ranked scored no points at all in relation to the systems they have in place to ensure that due diligence processes are implemented.

Hard law that complements the business and human rights soft law already in existence might create the ‘compliance pull’ that is needed to ensure that businesses undertake HRDD by legally mandating that they engage in the process. Further, it can clarify and create greater certainty as to the expectations on business with respect to HRDD, as well as incentivise meaningful HRDD by imposing the risk of civil liability onto businesses failing to conduct proper HRDD. The turn to binding HRDD will necessarily have transformative effects on the way affected businesses operate. It will trigger the emergence of a whole HRDD bureaucracy involving rules, processes and institutions. Yet, whether it will lead to greater respect for human rights remains to be seen in practice and depends on the way HRDD will be implemented as well as on the intensity of control exercised by national authorities.

Conclusion

This blog series has delved into the operationalisation of HRDD from theory to practice by business. Through the detailed examination of the HRDD practices of Adidas and Unilever in their supply chains, it has demonstrated that HRDD can profoundly change the internal operations of businesses embracing it.

Despite the fragility and flexibility of the concept that gives rise to uncertainty and ambiguity as to how it should be complied with, businesses that choose to fully engage with the process are transformed by it with a potential effect on their human rights footprint. Truly implementing HRDD throughout a business’ operations and supply chains has the potential to result in human rights risks and impacts being better embedded within the business’ corporate governance framework. This is because HRDD focuses on identifying and managing these risks and impacts and to use those findings to inform business decisions, such as whether to engage in business activities in a particular country or whether to enter into contractual relations with a particular supplier. The development and adoption of hard law imposing HRDD complementing existing soft law initiatives contributes to the diffusion of HRDD into a greater number of businesses.

This blog series paves the way for further research into whether the HRDD mechanisms implemented by Adidas, Unilever and other businesses are truly effective to protect human rights. On the ground research at a local level involving engagement with the relevant business being assessed and its stakeholders is crucial to determining the effectiveness of specific HRDD mechanisms in practice. A broader examination of a greater number of businesses’ HRDD practices will allow for conclusions to be drawn as to how businesses can effectively conduct HRDD and whether there are particular practices and mechanisms that are more effective.

[1] Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie: Protect, Respect and Remedy: a Framework for Business and Human Rights (7 April 2008), UN Doc. A/HRC/8/5, [56] [2008 Report].

[2] Radu Mares, “Respect” Human Rights: Concept and Convergence, in R Bird, D Cahoy and J Darin (eds) Law, Business and Human Rights: Bridging the Gap, Edward Elgar Publishing (2014), p 8.

[3] John Ruggie, The Corporate Responsibility to Respect Human Rights (2010).

[4] 2008 Report, supra note 1, [25].

[5] Justine Nolan, The Corporate Responsibility to Respect Human Rights: Soft Law of Not Law?, in S Deva and D Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (2013), p 140 [Nolan]; Radu Mares, Human Rights Due Diligence and the Root Causes of Harm in Business Operations: A Textual and Contextual Analysis of the Guiding Principles on Business and Human Rights, 10(1) Northeastern University Law Review 1 (2018), p 45 [Mares].

[6] Mares, ibid, p 6.

[7] Stephanie Bijlmakers, Corporate Social Responsibility, Human Rights, and the Law, London: Routledge (2018), p 120.

[8] Ibid; Surya Deva, Treating Human Rights Lightly: A Critique of the Consensus Rhetoric and the Language Employed by the Guiding Principles, in S Deva and D Bilchitz (eds) Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect?, Cambridge University Press (2013), p 101.

[9] Mares, supra note 5, p 45.

[10] Ibid, p 1.

[11] Tim Bartley, Rules without Rights: Land, Labor, and Private Authority in the Global Economy, Oxford University Press (2018), p 178.

[12] Ibid.

[13] The HRDD article of the treaty is discussed in further detail in a previous blog.

Editor’s note: Constance Kwant is an experienced international lawyer who has worked as in-house senior legal counsel for a top tier international financial institution in both Hong Kong and the Netherlands. She has a specific interest in sustainable business and human rights, including responsible finance.

Introduction

This post aims to outline, briefly analyse and to provide a critical comment in relation to striking a balance between confidentiality and transparency in the procedure followed by the Dutch National Contact Point (‘NCP’) in the Specific instance procedure filed in December 2015 by three former employees (‘Representatives’) on behalf of a group of 168 former employees of Heineken’s subsidiary Bralima SA (‘Bralima’) in Bakavu, located in the eastern part of the Democratic Republic of Congo (‘DRC’).

The case, finalised in August 2017, concerns alleged violations of labour and human rights by Bralima in the period 1999-2003, a period during which the DRC was a highly volatile and conflict-affected country, where the eastern part of the DRC was effectively under control of rebel movement DRC-Goma.The complaint also alleged that Bralima had cooperated with DRC-Goma in a number of ways throughout this period. On the basis of the alleged violations, the Representatives sought financial compensation by filing its notification with the NCP.

Since the allegations were brought forward to the NCP under the OECD Guidelines for Multinational Enterprises, this post will first provide short background information on the OECD Guidelines and the workings of the Dutch NCP, subsequently moving through the proceedings, its outcome, and a brief analysis with a critical note.

The OECD Guidelines for Multinational Enterprises

The Organisation for Economic Co-operation and Development (‘OECD’) finds its roots in the Organisation for European Economic Cooperation (‘OEEC)’, which was established in 1948 to run the US-financed Marshall Plan for the economic reconstruction of the European continent after World War II. Due to the recognition by governments of the interdependence of their economies and OEEC’s success, Canada and the US joined the 18 OEEC member countries by signing the new OECD Convention on 14 December 1960. The OECD was formally established on 30 September 1961, when the Convention entered into force. To date, the OECD has 35 member countries and a number of adhering non-member countries.[1]

The OECD Guidelines for Multinational Enterprises were originally adopted in 1976 as part of the Declaration on International Investment and Multinational Enterprises (‘Guidelines’). These Guidelines are recommendations addressed by governments to multinational enterprises operating in or from adhering countries and provide voluntary principles and standards for responsible business conduct. They are the only multilaterally endorsed and comprehensive code that governments are committed to promoting. Various reviews since then have taken place, in 1979,1982, 1984,1991, 2000 with the most recent update in 2011. The revision of the year 2000 Guidelines provided for further clarification of the roles and responsibilities of the National Contact Points (‘NCPs’) by the incorporation of a section relating to the Procedural Guidance on implementation procedures. [2] Since then, the Guidelines constitute the only international instrument regulating transnational corporations with a built-in grievance mechanism as it provides a mediation and conciliation platform for resolving issues that arise from alleged non-observance of the Guidelines through the NCPs. The most recent update in 2011 not only provides a reinforced procedural guidance to strengthen the role of the NCPs and improve their performance, it also contains an entirely new Chapter on Human Rights in line with the Ruggie Principles.[3]

The National Contact Point of The Netherlands

The Dutch National Contact Point was established in 2000 as an independent entity, responsible for its own procedures and decision making. Its functioning falls under the political responsibility of the Minister for Foreign Trade and Development Cooperation and its Secretariat is hosted by the Ministry of Foreign Affairs. Since its restructuring in 2007, the NCP consists of four independent members and four advisory members, the latter from the Ministries of respectively Social Affairs and Employment, of Economic Affairs, of Foreign Affairs and of Infrastructure and Environment.

The NCP has two core tasks: (i) raising awareness of the Guidelines with businesses, trade unions and non-governmental organisations (‘NGOs’); and (ii) contributing to the resolution of issues that arise from the alleged non-observance of the Guidelines in specific instances. It states “The NCP can assist the involved parties to find a solution in order to avoid further escalation or reputational damage”. This can be done in an informal process, or it may be through a formal notification of a specific instance. [4] Each specific instance procedure with the NCP follows a standard procedure including a confidentiality policy applicable to both the NCP and the parties involved.

The Bralima and Heineken case: specific instance procedure with the Dutch NCP

Background of the case

On 14 December 2015, the NCP received a notification of specific instance in relation to alleged violations of the 2000 Guidelines by Bralima SA (‘Bralima’), Bakavu, Democratic Republic of Congo and its ultimate parent company Heineken N.V. (‘Heineken’), based in Amsterdam, the Netherlands. The notification was filed by three former employees of Heineken’s subsidiary on behalf of a group of 168 former employees who had been made redundant in several rounds in the period 1999-2003.

In its Initial Assessment on the notification regarding the former employees of Bralima versus Bralima and Heineken of 28 June 2016, the NCP summarises the alleged violations under the Guidelines (version 2000) as follows:

• Violations of the human rights of their own workers in the Bralima company in Bakavu, RDC in the period 1999-2003
• Cooperation with the rebel movement of RCD-Goma from 2000-2003 in RDC and the consequences for the workers of Bralima at Bakavu, RDC and their families”
• Illegitimate dismissals of 168 employees of Bralima, Bakavu, RDC between 1999-2003
• Irregularities and deliberate omissions in the individual redundancy schemes of the dismissed worker 
• Serious errors concerning mass dismissals in the period 1999-2003 contrary to the Congolese law by Bralima
• Taking the above into account Bralima and Heineken should pay two hundred million (200.000.000) euros to the former employees and their families as a compensation for the damages

In relation to the alleged violations of the Guidelines, it is argued that in particular the following Chapters of the Guidelines were violated: Chapter I. (Concept and Principles), Chapter II. (General Policies, paragraphs 1, 2, 5, 6, 9, 10, 11), Chapter IV. (Employment and Industrial Relations, paragraph 6) and Chapter VI. (Combating Bribery, paragraph 6). [5]

The NCP Procedure from receipt of the notification until the Initial Assessment

The NCP acknowledged receipt of the notification on 18 December 2015 and informed Heineken. The following steps were subsequently taken:

1. 21 January 2016: the NCP spoke with the Representatives by phone, further communication (questions and answers) took place via email;
2. 10 February 2016: the NCP had a meeting with Heineken during which Heineken asked for and was granted two weeks to determine its position;
3. 10 February 2016: the NCP received an initial response from Heineken on the notification that its Code of Business Conduct and its underlying policies (including on Employees and Human Rights, Bribery and Improper Advantages and the Supplier Code) and other instruments apply to all companies within the Heineken Group, including Bralima, in more than 70 countries in which the companies of the Heineken Group operate; that Heineken indirectly holds 95% of the shares in Bralima; and Bralima stayed in the DRC because the business case continued to be valid.
4. End of February 2016: the NCP supported Heineken’s proposal to first have the Representatives hold a meeting with the management of Bralima without interference of the NCP;
5. 13 April 2016: the meeting was held in Bakavu, DRC. Both parties informed the NCP that the meeting had not divulged anything new;
6. 31 May 2016: draft version of NCP’s initial assessment was sent to the parties with the request to submit any comments within two weeks;
7. 28 June 2016: the NCP published its initial assessment on its website.

The Initial Assessment of the specific instance by the NCP

Since the DRC is not a member of the OECD, it has no National Contact Point. According to the NCP’s notification policy, in such case, a notice of specific instance can be submitted to the NCP where the multinational enterprise involved is seated.

The NCP, based on this, considered itself competent to offer its good offices and to initiate a dialogue since Heineken is based in Amsterdam. Both parties accepted NCP’s good offices and requested the appointment of a third-party mediator. Also, an expert in Congolese law was appointed. According to the Initial Assessment, Heineken stated that it “is of the opinion that there is no breach of the OECD Guidelines, […..] concerning the dismissals in the period 1999-2003 the existing procedures have been followed carefully,[…..] it has always been of the opinion that it was a case for Bralima, but it did follow the case, […..]  the specific instance procedure is a forward looking process in which the NCP may try to verify the facts and organise interaction between the parties aimed at addressing the issues raised”.[6] The NCP concluded that in accordance with the Guidelines (2000), and its own Specific Instance Procedure, the notification merited further examination. Thereafter, parties entered into agreements on confidentiality and transparency on mediation and further examination while in the process, in accordance with the NCP's procedure.[7]

In the course of the procedure after the publication of the NCP’s Initial Assessment of 28 June 2016, several meetings were held in the period up to 18 July 2017. In January 2017, the parties agreed to the framework surrounding the dialogue. To further facilitate the dialogue and mediation process, shortly thereafter, meetings were also held at the Dutch embassies in respectively Kampala, Uganda, and Paris, France. These meetings were monitored by the NCP. In Kampala, the meeting between parties took place with the mediator, in Paris, with the externally appointed expert in Congolese labour law.^[8]

To further facilitate the dialogue and mediation process, shortly thereafter, meetings were also held at the Dutch embassies in respectively Kampala, Uganda, and Paris, France. These meetings were monitored by the NCP. In Kampala, the meeting between parties took place with the mediator, in Paris, with the externally appointed expert in Congolese labour law.^[9]

The NCP’s Final Statement and the scope of application of the Guidelines

According to the NCP’s Final Statement on the notification in Former employees Bralima vs Bralima and Heineken of 18 August 2017, the Guidelines (2000) equally apply to Heineken, not just Bralima, on the basis of Chapter II. General Policies, paragraph 1 of the Guidelines (2000).[10]

In this context, the NCP noted: “the Guidelines (2000) do not mention enterprise groups”. Based on Chapter II. paragraph 1 however, it concluded that the Guidelines do apply because Heineken held (and still holds) indirectly 95% of the shares in Bralima, implying a very strong business relationship.

The NCP’s recommendations

In general terms, the NCP encourages Heineken to draw up a policy, including guidelines as to how Heineken is to conduct business and operate in volatile and conflict-affected areas. In addition, according to the NCP, the specific instance procedure highlights the need to ensure ongoing internal analysis of Heineken's existing policies and processes not only in the context of the Guidelines (2011) but also in relation to the UN Guiding Principles on Business and Human Rights (‘Ruggie Principles’).

The specific Recommendations adopted by the NCP relate to Chapter IV. (Employment and Industrial Relations), paragraph 3 of the Guidelines (2000) and state that Heineken is to “provide information to employees and their representatives which enables them to obtain a true and fair view of the performance of the entity or, where appropriate, the enterprise as a whole”. [11] Moreover, based on this and on Chapter IV. (Employment and Industrial Relations), paragraph 6 of the Guidelines (2000) the NCP recommends:

1. transparency and communication to employees be part of enterprises’ policies for dealing with conflict settings; and
2. the handling of complaints should be monitored and evaluated within company groups as part of applying corporate governance principles and practices throughout the group.[12]

Subsequently, the NCP concluded on the basis of its monitoring role that “all parties have participated in a proper and fair way”.[13] In addition, it stressed the useful support of an external third party mediator, the involvement of an external expert on Congolese law and the Dutch embassies in Kampala and Paris having facilitated meetings outside the DRC. [14] The parties accepted the offer from the NCP to conduct a dialogue on the implementation of its recommendations, scheduled for the summer of 2018.[15] However, the final statement indicates also that both parties wanted to keep confidentiality on the agreement/outcome and “the NCP regrets this”.^[16]

Comments: Transparency matters

The NCP has been transparent in publishing the procedural steps it has taken in both its Initial Assessment and its Final Statement. Nevertheless, we face a total lack of transparency on what was finally agreed upon between the former employees of Bralima and Heineken. This is in itself a missed opportunity to provide a learning curve for the Investment Committee of the OECD, governments, multinational enterprises and civil society. This lack of transparency regarding the actual outcome of the Bralima and Heineken procedure leads to uncertainty on what agreements have or have not been reached and seems to severely contradict the spirit and possibly even undermine the effectiveness of the OECD Guidelines.

In order to ensure that all NCPs operate in a comparable way, the Guidelines (2000) incorporated the concept of “functional equivalence” in the Procedural Guidance for NCPs, meaning that in order to achieve comparable functioning, the Guidelines provide for so-called Core Criteria for NCPs which relate to Visibility, Accessibility,Transparency and Accountability, based on which the NCP accordingly established its own Core Values.

However, as far as the Core criterion Transparency is concerned, the Guidelines state that “outcomes will be transparent unless preserving confidentiality is in the best interests of effective implementation of the Guidelines”.[17] It is remarkable that the NCP itself regretted that both parties wanted to keep confidentiality on the outcome of the mediation, while not motivating its decision to ‘allow’ for confidentiality in the outcome of this case. It seems that the actual settlement of the dispute prevailed over ‘Transparency’ as one of the key Core Values under the OECD Guidelines. Did the “effective implementation” of the Guidelines with regards to Heineken truly require this lack of transparency regarding the final settlement? Or, isn’t it rather otherwise, that the effective implementation of the Guidelines, viewed from a general point of view, requires transparency as a default solution, with limited and strict exceptions that need to be properly justified?

[1] See http://www.oecd.org/about/membersandpartners/. In addition, the Supplementary Protocol No.1 to the OECD Convention the signatories to the Convention agreed that the European Commission participates in the work of the OECD. The European Commission however does not have the right to vote and does not officially take part in the adoption of legal instruments, http://www.oecd.org/general/supplementaryprotocolno1totheconventionontheoecd.htm.

[2] See http://www.oecd.org/corporate/mne/1922428.pdf, at page 33-35.

[3] On 16 June 2011, the United Nations Human Rights Council unanimously endorsed the Guiding Principles for Business and Human Rights: ‘Implementing the United Nations “Protect, Respect and Remedy” Framework’, which seek to provide a global standard for all businesses in preventing and addressing the risk of adverse human rights impact linked to business activity.

[4] On specific instances, see https://www.oecdguidelines.nl/notifications/submitting-a-specific-instance.

[5] See the NCP’s Initial Assessment, 28 June 2016, at page 2-3.

[6] Ibid, at page 4.

[7] Ibid, at page 5.

[8] See NCP, Final Statement, 18 August 2017, at page 4.

[9] Ibid.

[10] This provision states: “…..[…..] Enterprises should…[…] ‘Encourage, where practicable, business partners, including suppliers and sub-contractors, to apply principles of corporate conduct compatible with the Guidelines’”.

[11] See the 2000 OECD Guidelines for Multinational Enterprises, at page 17.

[12] Heineken does have a Speak Up Policy as part of its Code of Business Framework, see https://secure.ethicspoint.com/domain/media/en/gui/25903/index.html.

[13] See NCP, Final Statement, 18 August 2017, at page 6, paragraph 10.

[14] Ibid, paragraphs 13-14.

[15] Ibid, at page 7.

[16] Ibid, at page 5, paragraph 5.

[17] Ibid, at page 57, paragraph 2.

Editor's Note: Alexandru Rares Tofan recently graduated with an LLM in Transnational Law from King’s College London where he focused on international human rights law, transnational litigation and international law. He is currently an intern with the Doing Business Right project at the Asser Institute in The Hague. He previously worked as a research assistant at the Transnational Law Institute in London on several projects pertaining to human rights, labour law and transnational corporate conduct.

Human rights require meaningful enforcement mechanisms. This idea stands at the foundation of the United Nations’ approach to handling corporate human rights abuses.[1] An individual that has suffered a human rights harm must freely enjoy access to justice in order to seek the reparation of that harm. The third pillar of the UN Guiding Principles on Business and Human Rights (UNGPs) focuses exclusively on this need to secure access to effective remedy for victims. The remedial process described therein comprises both the procedural aspects of obtaining a remedy for an adverse human rights impact and the substantive outcome of those procedures. This process demands the involvement of all actors including governments, corporations and civil society.

The commentary to Principle 27 of the UNGPs notes the particularly important role that national human rights institutions (NHRI) play in providing access to effective remedy. In his 2008 Report, the UN Special Representative on Business and Human Rights referred to them as the ‘lynchpins’ of his framework’s entire system of grievance mechanisms. The reasons justifying this optimistic outlook are not difficult to uncover. NHRIs are state-based but independent institutions that have a constitutional or legislative mandate to protect and promote human rights.[2] They are focal points of expertise on human rights and they enjoy a presumption of neutrality and objectivity. Their unique positioning at the crossroads between governments, corporations and civil society further enables them to behave as crucial links between these actors. In terms of providing access to remedy, the 2010 Edinburgh Declaration envisions the participation of NHRIs as either direct or indirect. Direct participation refers to the handling of complaints relating to business and human rights cases. An NHRI may for instance assume the role of an investigator, mediator or conciliator. Indirect participation on the other hand refers to promoting education, monitoring, capacity-building, advising and issuing recommendations inter alia. In this sense, the NHRI becomes a centre for expertise on human rights and a hub for the exchange of information. The question nevertheless remains if and to what degree NHRIs have in practice assumed this role in the context of business and human rights.

This five-part series looks at the extent to which the the Access to Remedy Pillar of the UNGPs has been fulfilled through the daily practice of the Dutch, South African, Romanian, Australian and Indian NHRIs. Ultimately, this series hopes to unravel whether the chosen NHRIs have assumed the role envisioned for them under the Principles and the differing ways in which they may have done so.

[1] Jonathan Drimmer and Lisa J Laplante, ‘The Third Pillar: Remedies, Reparations, and the Ruggie Principles’ in Jena Martin and Karen E Bravo (eds), The Business and Human Rights Landscape: Moving Forward, Looking Back (CUP 2016) 318 and op. cit. 12.

[2] UNDP and UN OHCHR, UNDP-OHCHR Toolkit for Collaboration with National Human Rights Institutions (2010) 2.