States’ Corporate Oversight Obligations Extend Beyond Borders, CESCR Concludes
In a recently released General Comment, the Committee on Economic, Social and Cultural Rights (CESCR) stated that States parties have an obligation to protect, respect, and fulfill rights implicated by the activities of businesses based in their territory, even when those businesses are operating abroad, to stay in compliance with the International Covenant on Economic, Social and Cultural Rights (ICESCR). See Committee on Economic, Social and Cultural Rights, General Comment No. 24 on State Obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities, UN Doc. E/C.12/GC/24, 23 June 2017. The General Comment, which was adopted by the Committee on June 23, 2017, includes guidance on States parties’ obligations to ensure that business activities do not violate the rights to food, housing, health, work, favorable conditions of work, form and join trade unions, and social security, both within State borders and extraterritorially, and finds that States parties may be held directly responsible for business activities that violate the Covenant in limited circumstances. See id. at paras. 2, 11. The Committee also concludes that States parties must address barriers to access remedies for violations committed by businesses, and must implement national action plans that specifically address the question of the role of business entities in the realization of ICESCR rights. See id. at paras. 38-59.
The General Comment contributes to a growing acknowledgement of the rights abuses that arise from business activities and the need to protect against those violations. The General Comment follows widespread attacks against human rights defenders working on issues arising from business activities, and the Panama Papers and the Bahamas Leaks that both revealed business practices potentially harmful to the realization of human rights. [OHCHR Press Release; ISHR] It also elaborates on earlier statements regarding States’ responsibility with regard to corporate entities and business activities, and on the Guiding Principles on Business and Human Rights. See General Comment No. 24 on State Obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities, 23 June 2017, at para. 2.
States Parties’ Obligations
The General Comment applies to all business activities, regardless of whether the business in question operates transnationally or nationally; whether it is privately or State-owned; and regardless of its size, sector, location, or structure. See id. at para. 3. Taking into account the growing impact of business activities on the enjoyment of rights like the rights to health, housing, food, and water protected under the ICESCR, the General Comment provides guidance on States parties’ obligation to respect, protect, and fulfill the right to non-discrimination as well as the other rights in the Covenant. See id. at paras. 7, 10.
Importantly, in addition to the States parties’ obligations to prevent non-State actors’ violations of rights and, to that end, to regulate business activities, the General Comment also lays out three scenarios in which States parties may be held directly liable for the action or inaction of business entities: when the business entity is following the State party’s instructions or is under its control or direction, such as when public contracts are at play; when domestic legislation empowers business entities to exercise government functions or, in the absence of official authorities, business entities exercise government functions; and when the State party acknowledges and adopts the business entity’s conduct as its own. See id. at para. 11.
At the outset, the General Comment clarifies that States parties’ obligations include eliminating formal and informal discriminatory practices by non-State actors—obligations of non-discrimination that are derived from articles 2 and 3 of the ICESCR. See id. at para. 7. In particular, the General Comment identifies women, children, and indigenous peoples as groups that are disproportionately affected by business activities aimed at developing and exploiting land and natural resources; persons with disabilities as a group that faces barriers to access accountability and remedies; and undocumented migrants and asylum seekers as groups whose status increases their vulnerability to exploitation, long working hours, unfair wages, and unhealthy working conditions. See id. at para. 8. Additionally, the General Comment identifies intersectional and multiple forms of discrimination resulting from investment-linked evictions and displacement. See id. The Committee calls on States parties to incorporate a gender perspective in measures regulating business activities to address intersectional forms of discrimination and to focus on improving women’s representation in the labor market. See id. at para. 9.
States Parties’ Obligations to Respect, Protect, and Fulfill
The General Comment focuses on States’ obligations to respect, protect, and fulfill economic, social, and cultural rights. See id. at para. 10. These obligations extend extraterritorially when business entities are domiciled in a State’s territory, are subject to its jurisdiction, or have a principal place of business in its territory. See id. at para. 26. Under the ICSECR, States parties are responsible for taking steps to prevent human rights violations abroad under these circumstances, so long as they do not infringe on the sovereignty of the host State. See id. at para. 26. Broadly, the obligations to respect, protect, and fulfill will apply extraterritorially when a State party can influence situations outside of its territory. See id. at para. 28.
The obligation to respect is violated when States parties give preference to business interests over the rights in the ICESCR or when they enact policies that affect those rights without adequate justification. See id. at para. 12. A State’s extraterritorial obligation to respect requires that it refrain from interfering with the enjoyment of rights under the ICESCR by persons outside of its territory, and that it not obstruct another State from complying with its obligations. See id. at para. 29. This is particularly relevant, the Committee notes, to treaty negotiations, investment agreements, and judicial cooperation. See id. at para. 29.
The obligation to protect requires a State party to prevent infringements of economic, social, and cultural rights in the context of business activities. See id. at para. 14. This includes a positive obligation to adopt appropriate measures ensuring that ICESCR rights are protected from business activities and providing victims with access to effective remedies. See id. Extraterritorially, the obligation to protect requires that States parties take steps to prevent infringements that occur outside of their territories because of the business activities of entities that they exercise control over. See id. at para. 30. This obligation is particularly important in cases where the violation of rights occurs in a State in which remedies are unavailable or ineffective. See id. at para. 30.
The General Comment notes that the duty to protect entails a positive obligation to adopt a legal framework that requires business entities to act with due diligence to respect ICESCR rights. See id. at para. 16. This includes adopting measures imposing due diligence requirements that take into account a business entity’s supply chain and subsidiaries, and measures to put monitoring and accountability methods in place that may influence business entities’ respect for ICESCR rights, such as the duty to report policies and procedures and the imposition of criminal and administrative sanctions for failure to act with due diligence. See id. at paras. 15, 16, 33. A violation of the right to protect may occur if a State party fails to prevent or counter business conduct that leads to ICESCR violations or that has the foreseeable effect of leading to human rights abuses, such as failing to regulate real estate and financial actors so that affordable and adequate housing is accessible to all. See id. at para. 18.
Additionally, State enacted measures should, the Committee states, take into account the privatization of goods and services that are essential to the enjoyment of ICESCR rights. See id. at paras. 21-22. The General Comment notes in particular the privatization of healthcare, education, and provision of water or electricity. See id. at paras. 21-22. Although the General Comment clarifies that privatization of services is not a per se violation of the ICESCR, States parties must ensure that private actors are effectively regulated so that their services are adequate and accessible to all. See id. at para. 22.
Finally, the obligation to fulfill requires States parties to use the maximum of their available resources to ensure the enjoyment of ICESCR rights for all and to direct business entities towards the fulfillment of these rights. See id. at paras. 23-24. The extraterritorial obligation to fulfill requires that States parties take a collective approach to help fulfill economic, social, and cultural rights outside of their territories. See id. at para. 36. The General Comment emphasizes that States parties should take legislative and policy actions to promote this environment and should encourage business entities, when possible, to not undermine State efforts aimed at achieving the realization of rights under the ICESCR. See id. at para. 37.
In addition to laying out States parties’ obligations to respect, protect, and fulfill the rights in the ICESCR, the General Comment explains States’ duties to provide regulatory and policy frameworks that ensure corporate responsibility and that ensure that individuals have access to effective remedies. See id. at paras. 38-39. Preferably, remedies should take the form of judicial remedies overseen by independent and impartial judicial bodies. See id. at para. 39. The General Comment clarifies that States parties have an obligation to address challenges to access effective remedies for corporate abuses, such as lack of territorial or subject matter jurisdiction and lack of legal aid and funding to make claims financially viable. See id. at paras. 38-48. Further, it lists judicial and non-judicial remedies that could be made available to ensure that victims have access to effective remedies, including in transnational settings. See id. at paras. 34-35, 49-57.
The CESCR is responsible with preparing general comments interpreting ICESCR’s articles. Each general comment focuses on one specific article of the ICESCR and is published on CESCR’s website. General comments provide guidance to States parties to the ICESCR and follow consultations with States, academic and research institutions, civil society organizations, and international organizations, such as the International Labour Organization and the Council of Europe. [OHCHR Press Release]
The CESCR is made up of 18 independent human rights experts from around the world, serving four-year terms with the opportunity to be reelected once if they are re-nominated by States parties to the ICESCR. See IJRC, Committee on Economic, Social and Cultural Rights. In addition to preparing general comments, the CESCR holds sessions, receives State reports on their implementation of the ICESCR, receives individual complaints and inter-State complaints alleging violations of rights under the ICESCR, conducts inquiry procedures pursuant to the Optional Protocol, adopts statements clarifying its position with respect to ICESCR obligations following new developments, and conducts thematic discussions during its general sessions. See IJRC, Committee on Economic, Social and Cultural Rights.
The CESCR is one of ten committees of experts established to assess States’ implementation of specific UN human rights treaties. To learn more about the CESCR and the other human rights treaty bodies, visit IJRC’s Online Resource Hub.