OECD Council Draft Revised Recommendation on Officially Supported Export Credits And
OECD Council Draft Revised Recommendation on Officially Supported Export Credits and Environmental and Social Sustainability:
Submission of International Co-ordinating Committee of National Institutions for the Promotion and Protection of Human Rights (ICC)
December 2011
CONTENTS
Part I. Introduction: NHRIs, business and human rights, and ECAs
1. NHRIs and the ICC
1.1 National Human Rights Institutions (NHRIs)
1.2 The International Coordinating Committee (ICC) of NHRIs
1.3 NHRIs: Key actors in human rights implementation
2. Business and human rights: the NHRI role
2.1 UN Paris Principles
2.2 UN ‘protect, respect, remedy’ framework and UN Guiding Principles on Human Rights
2.3 Business and human rights: NHRI activities
3. Export Credit Agencies (ECAs): What are they and what do they do?
3.1 OECD Recommendation on Common Approaches on Environment and Officially Supported Export Credits
Part II. OECD Common Approaches: Improving human rights protection
4.1 State responsibility under international human rights law
4.2 OECD Common Approaches: NHRI mandate
4.3 Human rights and the Common Approaches: Recommendations
4.3.1 Preamble and General Principles
4.3.2 Definitions
4.3.3 Screening and classification
4.3.4 Environmental and social review
4.3.5 Evaluation, decision and monitoring
4.3.6 Exchange and disclosure of information
4.3.7 Reporting and monitoring of the recommendation
4.4 Conclusion
ANNEX I NHRIs in OECD member states and countries adhering to the OECD Guidelines for Multinational Enterprises
ANNEX II Human rights commitments of countries adhering to the OECD Guidelines for
Multinational Enterprises
ANNEX III Export Credit Agencies Considered in desk-top review
Part I. Introduction: NHRIs, business and human rights, and ECAs
1. NHRIS AND THE ICC
1.1 National Human Rights Institutions (NHRIs)
National human rights institutions (NHRIs) are independent public bodies established at national level with responsibility for promoting and protecting human rights. According to the United Nations Paris Principles,[1] the main functions of NHRIs include monitoring and advising home governments, promoting human rights through education and other activities, investigating human rights abuses and coordinating with international bodies on human rights issues. Over 100 countries worldwide have NHRIs, of which more than two-thirds are accredited to ‘A’ status, meaning they meet the highest standards of independence, objectivity and pluralism. Of the 29 OECD Members of the Working Party on Export Credits and Credit Guarantees, 24 have an NHRI.[2]
1.2 International Coordinating Committee (ICC) of NHRIs
In 1993, the International Coordinating Committee (ICC) was established to promote NHRI governance, mandate, recognition and activities. The ICC’s governing body is the ICC Bureau which draws its 16 members from the ICC’s four Regional Networks (Africa, Americas, Asia-Pacific and Europe). The ICC is incorporated under Swiss law.[3]
1.3 NHRIs: key actors in human rights implementation
Since the early 1990s, the essential role of NHRIs in securing effective implementation of international human rights standards at national level has been increasingly recognised. Within the UN, the Office of the High Commissioner for Human Rights (OHCHR) leads cooperation and capacity-building activities with NHRIs, in collaboration with other UN partners (e.g. UN Development Programme) and the UN Secretary-General reports regularly to the UN Human Rights Council on progress made.[4] NHRIs are also entitled to participate in UN Human Rights Council proceedings, such as the Universal Periodic Review, as well as in monitoring of states’ performance of their obligations under specific international human rights treaties.[5]
2. Business and human rights: the NHRI role
2.1 UN Paris Principles
According to the UN Paris Principles, NHRIs are required to have a broad mandate to protect and promote human rights. As the current UN High Commissioner for Human Rights, Navi Pillay, affirmed in March 2010, this mandate includes business and human rights as a core element.[6]
2.2 UN ‘protect, respect, remedy’ framework and Guiding Principles on Business and Human Rights
In June 2011, the UN Human Rights Council adopted the Guiding Principles on Business and Human Rights, developed by the Special Representative of the UN Secretary-General on human rights and transnational corporations and other business enterprises, Prof. John Ruggie.[7] The Guiding Principles recognise that NHRIs have a critical role to play in supporting operationalisation across all the three pillars of the protect, respect, remedy framework. Under Pillar I, the Guiding Principles recognise that NHRIs may support states in assessing the alignment of national legislation addressing business with the state’s obligations under human rights treaties, and can monitor whether regulations are being effectively enforced.[8] Further, NHRIs can assist states in the development of guidance for businesses and other non-state actors concerning human rights compliance. Under Pillar II, the Guiding Principles highlight that NHRIs are a source of credible, independent expertise on human rights, with whom businesses can consult, for example, in assessing how to meet their “corporate responsibility to respect” human rights in complex contexts.[9] Thirdly, many NHRIs are empowered by national law to undertake mediation and conciliation activities, and in some cases have quasi-judicial functions. Accordingly, NHRIs also contribute to the provision of effective remedies for victims of human rights abuses under Pillar III of the UN protect, respect, remedy framework.[10]
2.3 Business and human rights: NHRI activities
2.3.1 Business and human rights: actions by individual NHRIs
Pursuant to their UN Paris Principles mandates, most NHRIs undertake certain activities relating to business and human rights. These activities may, for example, include:
· Convening round-table stakeholder discussions (e.g. Kenya, Korea, Scotland, Morocco)
· Developing best practice guidance for businesses on human rights issues (e.g. Australia, Great Britain)
· Investigating and conciliating communications and complaints from individuals and communities (e.g. Cameroon, India, Malaysia)
· Developing benchmarks and tools to support implementation within companies (e.g. Denmark, Canada)
· Legislative review and recommendations (e.g. Uganda, France)
· Assessing impacts of commercial projects and activities on human rights of local communities (e.g. Malawi, Philippines)
· Providing training on business-related issues (e.g. Denmark, Malaysia).
The issues addressed through these activities range widely, from abuses of migrant workers’ and human trafficking, indigenous peoples’ rights, resettlement and land rights, child labour, discrimination and privacy, to ensuring respect for human rights in the determination of service standards in privatised utilities, and human rights impacts of land acquisition, environmental degradation and climate change.
2.3.2 Business and human rights: recent ICC actions
The ICC Working Group on Business and Human Rights was established in 2009 to coordinate NHRI actions and further develop NHRI capacities in the business and human rights area. Subsequently, the Working Group has supported NHRI engagement on business and human rights issues with the UN Human Rights Council, UN Special Procedures and UN Global Compact, as well as with the OECD Investment Committee in the context of the 2010-11 updating of the OECD Guidelines for Multinational Enterprises.[11]
In October 2010, over 80 NHRIs participated in the ICC’s 10th Biennial Conference, Business and Human Rights: The Role of NHRIs, held in Edinburgh, Scotland. In the Conference’s concluding Edinburgh Declaration, NHRIs strongly reaffirmed the need to engage with stakeholders, including government and business, to work towards full effectiveness of human rights in the corporate sphere, for example, through advice, education, promotion and awareness-raising activities.[12]
It was also decided to hold strategic planning workshops on business and human rights during 2011-12 in each of the four ICC Regions. In October 2011, the Network of African National Human Rights Institutions concluded its Regional Workshop on Business and Human Rights in Yaounde, Cameroon[13]; the Asia-Pacific Forum of National Human Rights Institutions Regional Conference on Business and Human Rights was held in Seoul in October 2011[14]; and the Red de Instituciones Nacionales Para la Promocion y Proteccion de los Derechos Humanos del Continente Americano took place in Antigua, Guatemala, 9-10 November 2011. The European Region of NHRIs will hold its event in early 2012.
3. Export Credit Agencies: What are they and what do they do?
Export Credit Agencies (ECAs) are public entities that provide corporations with government-backed loans, guarantees, credits and insurance to support exports and foreign investments. ECAs may be divided into three main categories:
· ECAs established as state agencies or departments
· Government-owned state corporations managed independently but with government oversight
· Consortia of private/public companies, though still controlled by the state (e.g. via funding or regulation).[15]
Overall, ECAs therefore remain closely linked to the state in legal terms.
ECA activity usually focuses on support for business activities in emerging economies and countries of the global south. ECAs are a significant source of official finance and insurance for the private sector. In 2005, the OECD reported that ECAs in OECD member states provided enterprises with US$125 billion in credits, insurance, guarantees and interest support.
Sectors receiving substantial ECA-backed funding include: manufacturing for industry (e.g. base metal industries, cement/lime/plaster), energy generation and supply (e.g. construction of power plants, including hydro-electric) and the extractive sector (oil and gas, minerals).[16] ECA-funded development projects in these industries have been linked to significant adverse human rights impacts, for example, forced displacement of local populations, resettlement without adequate compensation and restoration of livelihoods, security forces misconduct, environmental damage and destruction of cultural heritage.[17]
3.1 OECD Council Recommendation on Common Approaches on Officially Supported Export Credits and Environmental and Social Sustainability (the “Common Approaches”)
The OECD Council Recommendation on Common Approaches on Officially Supported Export Credits and Environmental and Social Sustainability (Common Approaches) was first adopted in 2003 and subsequently amended in 2007.[18] As an OECD Recommendation, the Common Approaches are legally non-binding; nevertheless, they express the common political commitment of OECD member governments to the standards they describe.
The objectives of the Common Approaches stated in the 2007 text include:
· Promoting coherence between policies of OECD Member states on officially supported export credits and policies (including relevant international agreements) for the protection of the environment
· Developing common procedures and processes relating to environmental review of projects that benefit from officially supported export credits
· Promoting good environmental practice in operations benefiting from officially supported export credits
· Promoting a level playing field for officially supported export credits and increasing awareness and understanding of the benefits of applying the Recommendation, including amongst non-member economies.
The current version of the Common Approaches provides guidance to OECD Members on standards and procedures to be applied in:
· Screening and classifying projects
· Environmental review, including environmental impact assessment
· Evaluating and determining applications for ECA support
· Monitoring ECA-supported activities
· Exchange and disclosure of information by Members, including disclosure of environmental policy statements and procedural guidance of Members’ ECAs
· Reporting on implementation and operation of the Common Approaches between Members and to the ECG, including on steps to ensure compliance with the Recommendation
· Exchange of information on implementation and operation of the Recommendation with civil society organisations and non-member economies
· Monitoring by the OECD Secretariat of implementation of the Recommendation.
Under the Common Approaches, a “project” is broadly defined: ECAs need to apply the Common Approaches to any application they receive for support for any export of capital goods or services to any commercial, industrial or infrastructure undertaking, including the primary project site, as well as any associated facilities.[19]
3.2 OECD Common Approaches: human rights deficit
The 2007 version of the Common Approaches focuses on potential environmental impacts of projects supported via instruments of OECD member states’ ECAs, and does not include any explicit reference to human rights.[20] While it can be acknowledged that ECA-supported projects have potential to contribute in important ways to realisation of human rights, in exporting and importing countries, for example through job creation, as well as via social benefits of supported projects,, ECA-supported business activities have been implicated in widespread human rights abuses.
For example, ECA-supported projects have been associated with increases in landlessness and rural poverty, displacement of indigenous populations and resettlement without due consultation or compensation, security forces misconduct, environmental damage, including impacts on water, corruption, lack of consultation with impacted communities in general and destruction of cultural heritage.[21]
Such impacts have been brought to the attention of the international community in various fora, including specific instances before National Contact Points under the OECD Guidelines on Multinational Enterprises,[22] UN human rights treaty monitoring bodies[23] and UN Special Procedures,[24] in addition to advocacy by civil society campaigns and affected communities. ECA conduct is also being scrutinised with reference to state human rights obligations in national law.[25]
Part II. OECD Common Approaches: Improving human rights protection
4.1 State responsibility under international human rights law
Under international human rights law, states have a duty to respect, protect, promote and fulfil human rights. The state duty to protect human rights includes an obligation to regulate organs of the state through appropriate legislation, policies and adjudication; state responsibility may also extend to actions of non-state entities, for instance, those which fall under the effective control of the state. States are therefore responsible for ensuring that ECAs do not violate international human rights which the state has undertaken to uphold. This principle applies whether ECAs are, in legal terms, public bodies, private companies or operate as public/private consortia. ECAs also have the responsibility to respect human rights.
Consequently, where ECAs are public bodies, they also have a legal duty to take adequate measures to regulate and monitor the activities of private companies they support so as to avoid human rights abuses resulting from state-supported projects. Where ECAs fail to take adequate measures, this could result in state complicity in any such abuses.
The link between the ‘state duty to protect’ against corporate human rights abuses and ECA human rights obligations is affirmed in the 2011 UN Guiding Principles on Business and Human Rights. For example, under Guiding Principle 4, it is provided that:
“…states should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the state or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence.”[26]