Towards a binding international treaty on business and human rights

08-11-2018

With its extended value chains, economic globalisation has brought numerous opportunities while also creating specific challenges, including in the area of human rights protection. The recent history of transnational corporations contains numerous examples of human rights abuses occurring as a result of their operations. Such corporations are known to have taken advantage of loose regulatory frameworks in developing countries, corruption, and a lack of accountability resulting from legal rules shielding corporate interests. This situation has created a pressing need to establish international norms regulating business operations in relation to human rights. So far, the preferred approach has been 'soft', consisting of the adoption of voluntary guidelines for businesses. Several sets of such norms exist at international level, the most notable being the United Nations Guiding Principles on Business and Human Rights. Nevertheless, while such voluntary commitments are clearly useful, they cannot entirely stop gross human rights violations (such as child labour, labour rights violations and land grabbing) committed by transnational corporations, their subsidiaries or suppliers. To address the shortcomings of the soft approach, an intergovernmental working group was established within the United Nations framework in June 2014, with the task of drafting a binding treaty on human rights and business. After being reluctant at the outset, the EU has become involved in the negotiations, but has insisted that the future treaty's scope should include all businesses, not only transnational ones. The 'Zero Draft' published in July does not reflect the EU's position on this point. It has been welcomed by experts for its more precise focus on prevention, on effective remedies and access to justice for victims, and on companies' liability for their subsidiaries and suppliers in third countries. The European Parliament is a staunch supporter of this initiative and has encouraged the EU to take a positive and constructive approach. This is a further updated edition of a Briefing published in April 2018, PE 620.229.

With its extended value chains, economic globalisation has brought numerous opportunities while also creating specific challenges, including in the area of human rights protection. The recent history of transnational corporations contains numerous examples of human rights abuses occurring as a result of their operations. Such corporations are known to have taken advantage of loose regulatory frameworks in developing countries, corruption, and a lack of accountability resulting from legal rules shielding corporate interests. This situation has created a pressing need to establish international norms regulating business operations in relation to human rights. So far, the preferred approach has been 'soft', consisting of the adoption of voluntary guidelines for businesses. Several sets of such norms exist at international level, the most notable being the United Nations Guiding Principles on Business and Human Rights. Nevertheless, while such voluntary commitments are clearly useful, they cannot entirely stop gross human rights violations (such as child labour, labour rights violations and land grabbing) committed by transnational corporations, their subsidiaries or suppliers. To address the shortcomings of the soft approach, an intergovernmental working group was established within the United Nations framework in June 2014, with the task of drafting a binding treaty on human rights and business. After being reluctant at the outset, the EU has become involved in the negotiations, but has insisted that the future treaty's scope should include all businesses, not only transnational ones. The 'Zero Draft' published in July does not reflect the EU's position on this point. It has been welcomed by experts for its more precise focus on prevention, on effective remedies and access to justice for victims, and on companies' liability for their subsidiaries and suppliers in third countries. The European Parliament is a staunch supporter of this initiative and has encouraged the EU to take a positive and constructive approach. This is a further updated edition of a Briefing published in April 2018, PE 620.229.