Guest Post: Claire Methven O’Brien on Ireland’s Working Outline for a national plan on business and human rights

I am very pleased to post the views of Dr. Claire Methven O’Brien on Ireland’s ‘Working Outline’ for its national action plan on business on human rights. Claire works as a Senior Adviser with the Danish Institute for Human Rights, Denmark’s National Human Rights Institution. She has kindly shared the remarks that she delivered at the Department of Foreign Affairs and Trade consultation on the ‘Working Outline’ in Dublin on 22 January 2016, as well as some subsequent thoughts on the document. Follow Claire @claire_ob1

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Thank you to the DFAT for the invitation to join you here in Dublin today.

First of all, let me congratulate the DFAT and all the organisations who have contributed to the development of the Working Outline of the NAP.

In my assessment the draft Outline document is a commendable first move in the development of a progressive business and human rights policy, that promotes the uptake of key international standards, including the UN Guiding Principles on Business and Human Rights (UNGPs), while maintaining relevance to Ireland’s own national context, and the profile of risks to human rights linked to business activity here in Ireland as well as those linked to Irish businesses operating abroad.

It has benefited from a participatory process, where the voices of a broad range of stakeholders, from business and civil society – and across government – have been heard – the importance of which we emphasised in our DIHR-ICAR NAPs Toolkit, which is now in use by government, NHRIs and civil society organisations to support NAPs development in countries from Chile and Colombia, to Germany, Scotland, Tanzania and Kenya.

And in many respects the Outline compares favourably with the ten NAPs published by other countries to date. Amongst the positive aspects that I think deserve note, and which should be carried forward into the final NAP, are the following:

  1. It distinguishes Corporate Social Responsibility (CSR) from respect for human rights. It explicitly affirms the UNGPs, and calls on all Irish businesses to implement them through risk-based due diligence, which it prominently explains.
  2. It addresses the various topics covered by the UNGPs in a systematic way.
  3. It commits to providing practical support to Irish businesses, including through a toolkit for public and private enterprises.
  4. It specifies detailed arrangements for monitoring and follow-up on the NAP through a combination of dedicated structures, in the form of the Human Rights and Business Implementation Group, and existing mechanisms, with the aim of anchoring human rights and business issues in broader policy-making processes and debates.
  5. It commits to produce an NBA, and also a review of obstacles to access to justice for victims overseas.
  6. It attempts to achieve a balance– which has been lacking in some other NAPs – between issues affecting rights-holders in Ireland, and extraterritorial ones.
  7. It manages at least to highlight some key issues that until now have so far been neglected in NAPs, such as gender, human rights defenders, and links between business and human rights and the Sustainable Development Goals.

At the same time, there are a number of points where the Outline could, from my viewpoint, be strengthened.

  1. Public procurement: Public procurement accounts for 14% GDP on average across OECD countries, rising to 19% including procurement by public utilities. Given this scale of spending, and the global nature of production today, we can say with certainty that there is forced labour, child labour, and other serious human rights abuses in the supply chains of public bodies in Ireland.

In addition, the increasing use of contracting-out to deliver essential public services on behalf of the state puts the users of such services into contact with companies in situations which by their nature their human rights may be at risk – as was highlighted last week by IHREC in its submission to the UN Committee on the Rights of the Child.

From a legal standpoint, public buyers have harder obligations for supply chain risks than do companies. Failure to tackle this issue moreover undermines policy coherence – and dilutes the impact of the millions of Euros of taxpayers’ money spent on aid in developing countries. It is good that procurement is mentioned in the Outline. But the action points are weak. Additional steps that could be taken in this area would include:

  • Developing guidance for procurers on practical steps they can take to address risks in procurement of both goods and services, as part of the transposition of the new EU Procurement Directives
  • Establishing online tools on risks per product and country of origin, as the US, Dutch and Danish governments have done
  • Identifying collaborative approaches public authorities can use to pool resources and achieve economies of scale in the monitoring of compliance with contractual obligations to meet ILO Core Labour Standards
  • Capacity building activities for procurement personnel, in partnership with professional bodies and others. One good example here comes from Scotland, where meetings are held periodically that allow public authorities such as the police and healthcare providers to discuss specific upcoming tenders with the national human rights institution and others with relevant expertise to identify what human rights safeguards might be needed.
  1. Ireland’s National Contact Point under the OECD Guidelines for Multinational Enterprises: I understand that the NCP has acted in only 2 cases to date, which would suggest that, like most NCPs, its existence is a little known fact amongst those who might benefit from its services. Here, similarly, the Action Point should be strengthened, with a commitment, at least, to review the effectiveness of the current institutional model and its function in practice, against those of other OECD countries.
  1. On the national baseline assessment: While the commitment to perform an national baseline assessment is very positive, besides analysing the legal and regulatory framework, this should consider the operation and effectiveness of that framework in practice, paying particular attention to reported instances of abuse, high-risk sectors and vulnerable groups, such as children.
  1. On non-financial reporting (NFR): Beyond implementing the EU NFR Directive, the NAP could commit to soft measures to encourage companies covered by the new legislation to fulfil their human rights reporting responsibilities, for instance, through benchmarking reports produced by the biggest Irish companies, as the Dutch government does, or by awarding prizes for the best reports, as happens in Denmark. Targets might also be set for the number of eligible companies reporting after given period of time.
  1. On due diligence for State-owned enterprises: Similarly, the ambition level of the NAP could be raised by setting a target for the number of SOEs doing and reporting on HR due diligence by the end of the period of the NAP, in line with the approach taken in the 2011 European Commission Communication on CSR.
  1. EU conflict minerals legislation: There is widespread opinion that a voluntary approach in this area will not work, and that the seriousness of human rights abuses attaching to conflict minerals warrant a mandatory approach. The NAP should commit Ireland to work towards that goal.
  1. Finally, more emphasis could be put in the NAP on the business opportunities presented for companies in raising their game on sustainability issues, including human rights. This is a crucial message in persuading companies to get on board with human rights work, and should be expressed more visibly in the NAP as a key policy document.

Thank you.

Some further thoughts on human rights due diligence and non-financial reporting:

Tax as a tool

One topic which drew much attention, for obvious reasons, in discussion with participants was Ireland’s corporate tax regime. Since Shane, Christian Aid, Trocaire and others had already very ably put the arguments forward on that front, I didn’t jump into the discussion but it did give me an idea.

What if, given the Irish government’s high-profile use of fiscal incentives to encourage inward investment, Ireland could also be the country to show the rest of the world how to use corporate taxation to encourage businesses, especially SMEs, to respect human rights, through due diligence and non-financial reporting?

A modest proposal could be something along the following lines.

The costs of undertaking human rights due diligence for the first time would be tax deductible for SMEs. But the tax rebate would only activate when the SME publicly reported on its non-financial impacts – 50% on publication of the first non-financial report, and the remainder on the second. Both reports would need to be made within a fixed period, e.g. 2-6 years of the due diligence taking place. An upper threshold for recoverable due diligence costs could be set by reference to the size of the company.

For most SMEs, if there are significant costs associated with doing human rights due diligence, such as training, hiring a consultant, getting access to risk assessment tools, or setting up a reporting framework, these will be front-loaded onto the first year. Subsequent exercises are likely to be more in the nature of updating, and ought to be less expensive.

The above scheme could, therefore, get companies over the initial “hump” in the road, and on track to transition to respect for human rights, and greater social and environmental innovation and sustainability – goals on which companies bent on success, and the Irish government as their sponsor, ought to support.

Would there be holes or drawbacks to this scheme? Probably – so let’s hear them! No doubt the Revenue would have a few things to say about enforcement – how would the publication of non- financial reports be monitored, or their adequacy assessed? Perhaps that test would have to be foregone, for the sake of practicability. Would rights advocates be satisfied with that low level of accountability, given an already favourable corporate tax regime?

But maybe arrangements for an acceptable compromise can be identified. While legislative initiatives in Switzerland and France, which were the brightest lights on the horizon for mandatory due diligence, have for the moment sputtered, the conversation seems worthwhile.

Non-Financial Reporting

Regarding non-financial reporting, in conversations last Friday, it emerged that in the region of just 5 Irish companies will be covered by legislation enacted to comply with the new EU NFR Directive, if the government does the minimum needed to meet its terms. Obviously, such a measure would make no meaningful contribution to improving sustainability or respect for human rights in Ireland’s business sector as a whole.

Last year, Denmark confronted a similar situation. Only 50 Danish companies would have been included in the scope of Denmark’s transposing legislation if it had adopted the definition of eligible companies set by the Directive.

Instead, the Parliament adopted a framework for graduated commencement of the rules to a much larger class of businesses that will ultimately apply to 1100 Danish companies. While only the EU-defined class is initially covered, in 2016, the obligation is triggered for state-owned enterprises, and in 2018, for all companies meeting two of the following three criteria:

  • A net turnover of 286 million Danish Kroner (about EUR 38.3 million)
  • Total assets of 156 million Danish Kroner (about EUR 20.6 million)
  • More than 250 full time employees (on average).

Perhaps such a staggered schedule for implementation in Ireland could be connected to the tax incentives for due diligence and reporting suggested above.

 

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