The State as an economic actor and human rights

Background

The UN Guiding Principles on Business and Human Rights clarify that all States are expected to ensure protection of and respect human rights in their role as economic actors. This aspect of the State duty to protect human rights—the “State-business nexus”—covers policy areas such as management of State-owned enterprises, export credit, official investment insurance, and public procurement.

The Guiding Principles emphasize that States should both integrate human rights due diligence in the activity of entities in charge of these areas, as well as incentivize due diligence by business with which the State conducts commercial transactions (Guiding Principles 4-6).

In addition, States are expected to ensure policy coherence between government departments and agencies that “shape business practice” and the States’ international human rights obligations (Guiding Principles 8-10).

These policy areas relate closely to a range of the Sustainable Development Goals (SDGs). Aligning SDG implementation with the Guiding Principles will be critical. As part of this, Governments should ensure policy coherence between commitments to the SDGs and their human rights obligations. This includes using their control and leverage as economic actors to promote respect for human rights.

Working Group focus areas

“Economic diplomacy” tools and investment/trade promotion

In 2018 the Working Group examined the leverage of States to promote corporate respect for human rights through its trade and investment promotion activities. As such, the Working Group sought to identify good practice models of integrating corporate respect for human rights in:

• the use of “economic and trade diplomacy tools” and incentives for business such as export credit, investment guarantees, export promotion, trade advocacy and participation in trade missions; and
• trade and investment promotion in the context of export processing zones.

In its report presented during the 38th session of the Human Rights Council,  the  Working Group developed practical recommendations for States and international and regional organizations relating to these policy areas. To gather information about good practice models and inform recommendations, the Working Group sought inputs from all relevant parties. Find the responses to the questionnaire that informed the report here.

The Working Group also convened a multi-stakeholder consultation in September 2017 and discussions during the 2017 Forum on Business and Human Rights (“part 2”). We also engaged directly with practitioners from relevant State institutions, such as export credit agencies in order to inform this report.

State-owned enterprises (SOEs)

In its report to the Human Rights Council in 2016, the Working Group called attention to and clarified what States are expected to do in their role as owners of enterprises and why. The starting point provided by the Guiding Principles is that States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State. The report highlights the persuasive reasons for additional action to be taken by States in this regard, including policy coherence, legal obligations, reputation and credibility.

• View report (UN document A/HRC/32/45, available in all UN languages)
• View executive summary

Other related issues addressed by the Working Group

• Promoting respect for human rights in the context of public procurement
• Safeguarding human rights in the context of the international investment regime