LSE - Laboratory for Advanced Research on the Global Economy - Investment & Human Rights Project

• About human rights
• Human rights, business enterprises and investment
• Why are human rights on the map with investment?
• Focus areas in human rights

The foundational idea underlying human rights is that all people have the right to live with dignity whatever their nationality, place of residence, sex, colour, religion, language, national or ethnic origin, or any other status. Human rights therefore relate as much to accessing essential food, water and shelter for life as they do to accessing education, healthy working conditions and freedom from torture and slavery.

While the origins and history of human rights can be described in many ways, today international human rights are a firmly established part of international law, and include economic, social, cultural, civil and political rights. The rights of workers are also protected in specific agreements under international law agreements. The catalogue of human rights that States have recognised in international agreements provide a common global reference point for identifying human rights.

Under international human rights law, States have a legal obligation to protect, respect and fulfil the human rights enshrined in the treaties that they ratify. The State’s obligation to protect human rights means States must protect individuals and groups from infringements on their human rights by third parties, including business enterprises. This includes providing access to effective remedies when infringements are caused by third parties. States must also respect rights, meaning that they must refrain from interfering with or curtailing the enjoyment of human rights. Finally, States have an obligation to work towards fulfilling human rights, meaning they must proactively engage in activities to improve the enjoyment of rights. These obligations require States to use the full range of their administrative, regulatory and judicial powers, including passing and implementing appropriate laws as well as taking judicial and administrative steps, engaging in educational activities and using other appropriate means.

The implementation by States of their human rights duties results in a number of concrete measures within domestic policy, legal and regulatory frameworks. For example, States protect, respect and fulfil human rights through passing and implementing constitutional and legislative bills of rights, anti-discrimination laws, criminal codes, corporate regulation and public law. Such measures may not refer to human rights expressly, but instead operate to protect human rights, for example by ensuring freedom of speech, prohibiting discrimination in employment or enabling access to essential health services. These human rights measures may place obligations directly on a range of actors, including the government and other public authorities, businesses, civil society organisations and also individuals.

States can also address human rights at the international level with other States, for example by developing guidelines and rules, or even by agreeing to legislate certain conduct domestically. One example of a set of international guidelines is the 2011 revised Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises, which now contains a chapter addressing business behaviour as regards human rights. The updated Guidelines have been adopted by 44 governments worldwide.

Beyond States, other actors, including business enterprises themselves, have participated in or initiated a wide range of initiatives to develop good practices and avoid negative human rights impacts. These initiatives include multi-stakeholder efforts, unilateral or sector-wide codes of conduct and product certification schemes. Sometimes these initiatives ask business enterprises to go beyond local legal requirements, or even conflict with them. The earliest example of such an initiative is probably the 1977 Sullivan Principles. This was a code of conduct for companies operating in apartheid South Africa, which demanded – amongst other things – non-segregation in the workplace, equal treatment and pay for equal work, and the training of non-whites for management positions.

Thus, whereas human rights originate with agreements by States in international law, the implementation of human rights in practice takes place in international and domestic legal and non-legal contexts, and involves States as well as other actors, including business enterprises.

State-supported multilateral and other initiatives relevant to human rights and business activities in the investment context will be further explored in the Learning Hub’s ‘investment-related standards’ pages.

In 2011, the Human Rights Council formally recognised that ensuring the protection of and respect for human rights in the context of business activities involves both States and business enterprises. This recognition came in the form of its endorsement of the United Nations Guiding Principles on Business and Human Rights (“UNGPs”). The UNGPs themselves do not create new international law. However, they reflect existing international legal obligations of States, provide policy guidance to States and provide an articulation of the global standard of expected conduct for business enterprises regarding human rights.

The Principles are based on a tripartite framework: the State duty to protect human rights, the corporate responsibility to respect human rights and the need to ensure access to remedy.

The State duty to protect human rights means that “States must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises. This requires taking appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication.”

For business enterprises, the UNGPs outline the corporate responsibility to respect human rights, which applies to all companies operating in any context and requires that they act with due diligence to avoid infringing on the rights of others, and address harms that do occur. The responsibility to respect applies across all business activities, including investment-related activities and business relationships with third parties connected with those activities—such as with business partners, entities in its value chain and State agents.

Access to remedy, the third part of the framework, relates to both the State duty to protect and the corporate responsibility to respect. It reflects that States have an international legal obligation to use judicial, administrative, legislative or other appropriate means to ensure that when human rights infringements related to business activities occur, those affected have access to effective remedy. The UNGPs also call on business enterprises to address impacts that occur, including by participating in and creating effective grievance mechanisms beyond what States provide.

The UNGPs are key to any discussion of human rights and investment, offering a number of useful entry points for analysing specific investment-related contexts and dynamics. For example, whereas investment often involves a complex web of actors where the leverage of each actor may be limited or unclear, the UNGPs helpfully describe the scope and nature of the duties and responsibilities of States and companies even where relationships are complex.

In the case of States, the UNGPs direct States to integrate their human rights obligations into the work of national and subnational departments and agencies that are responsible for policies, laws, regulations and rules related to investment Guiding Principles for Business and Human Rights, Guiding Principle 8 and Commentary . For example, they pinpoint State-supported export credit agencies as one kind of relevant agency in relation to the integration of human rights. The UNGPs also indicate that States should maintain adequate domestic policy space Guiding Principles on Business and Human Right, Guiding Principle 9 and Commentary  – even within their investment agreements – so that they can pursue their international human rights obligations.

The UNGPs further direct companies to integrate human rights due diligence across all business activities, including most core business processes related to investment, where these pose potential or actual adverse human rights impacts. Indeed, along with the UNGPs, the former UN Special Representative of the Secretary General for Business and Human Rights, John Ruggie, issued a guide addressing how States and commercial investment negotiators should integrate human rights risk management into State-investor contract negotiations. For businesses, the UNGPs invite a range of investment-related questions about the adequacy of due diligence in the context of mergers and acquisitions, for example, and about how companies approach building and managing relationships within an investment project.

At the international level, the UNGPs address the proactive role that States should play when acting as members of multilateral institutions Guiding Principles on Business and Human Rights, Guiding Principle 10  that deal with business-related issues. This would include organisations that determine rules, guidelines and policies related to investment.

There are a number of ways to define ‘investment’. The Learning Hub uses ‘investment’ to frame its work, which explores (i) the complex set of relationships that underlies cross-border economic activity, and (ii) the legal and financial structures, rules and dynamics that facilitate, support and protect this activity. The Learning Hub’s work will therefore relate to foreign direct investment, foreign portfolio investment and even some forms of trade.

Investment can have positive and negative impacts on people’s lives. It can create jobs, foster the transfer of technology and know-how, and bring valuable products and services to people. However, investment has also been blamed for worsening economic conditions and causing severe negative impacts on people.

The Learning Hub poses these questions: How can investment be supported, facilitated, promoted and protected in a manner that protects and respects human rights? How can human rights help avoid negative impacts and improve the positive benefits that investment brings to people?

As a common global reference point, human rights provide an authoritative guide for identifying the conditions necessary for dignity and human well-being. Placing human rights at the centre of the map, therefore, invites government and commercial practitioners to consider how investment-related activities can connect to people’s lives and well-being. At the same time, the Learning Hub invites human rights experts, civil society and others to integrate consideration of investment-related rules, structures and activities into their work to improve enjoyment of human rights worldwide.

The UNGPs provide a very useful starting point for considering how States and commercial actors should carry out investment activities. They confirm that States should integrate their human right obligations into their full range of activities to promote, support, facilitate and protect investment. The UNGPs also recommend that all business enterprises incorporate human rights due diligence into all activities where they have potential or actual negative impacts on human rights, including into investment-related activities. But understanding what this all means in practice is not automatic. International investment is facilitated, supported, promoted and protected by a complex set of rules, structures, policies and practices that were developed largely in isolation from any consideration of international human rights.

What are the implications of human rights for how States regulate investment or how they approach the drafting and negotiation of international investment agreements? How should human rights shape how States and companies approach State-investor contracts? What do human rights obligations and responsibilities for States and companies imply for how lenders, insurers or export credit agencies do their jobs when supporting investment ventures? How should international human rights law bear on the resolution of investment disputes or company investment strategies?

The Learning Hub aims to foster thinking, research and learning to build understanding around these and other investment and human rights issues.

The Learning Hub’s work on ‘understanding human rights’ focuses on three key areas of human rights for understanding their relationship to investment:

1. international human rights law, as a firmly established part of international law;
2. investment-related standards to explore the range of human rights and investment-related initiatives, rules, standards and procedures that could be relevant to driving human rights improvements in investment; and
3. remedies for investment-related harms to explore what opportunities people have for an effective remedy when they suffer a human rights harm in the context of investment.

The mechanisms for remedy may include a number of forms including procedures of lending bodies, multilateral organisations, formal administrative or judicial processes domestically or abroad, processes created unilaterally by business enterprises or as part of a multistakeholder initiative or other.