State-owned enterprises must lead by example

State-owned enterprises must lead by example on business and human rights – New UN report

GENEVA (17 June 2016) – Governments seem to forget that they are economic actors in their own right, said a United Nations expert group today, while urging States “to lead by example on business and human rights, starting with those enterprises closest to them - State-owned enterprises.”

“Governments are currently sending an incoherent message to businesses,” said human rights expert Dante Pesce, who chairs the UN Working Group on Business and Human Rights, during the presentation of the group’s latest report* to the UN Human Rights Council.

“On the one hand, they ask private businesses to respect human rights, and increasingly set out such expectations in law and policy,” Mr. Pesce noted. “On the other hand – barring notable exceptions – they show no great desire to use the means at their disposal to ensure that those enterprises they own or control respect human rights.”

Many States the world over manage large portfolios on State-owned enterprises (SOEs), which have risen as significant actors in the global economy, active at home and abroad in diverse sectors such as energy, utilities, infrastructure, transports, telecommunications, and banking. The proportion of SOEs among Fortune Global 500 companies has grown from 9.8% in 2005 to 22.8% in 2014, with US$389.3 billion of profit and US$28.4 trillion in assets.

The performance of SOEs on issues of governance and human rights is mixed, with reported cases of corruption and lack of transparency, and harm caused to workers and communities throughout SOEs’ operations. “Yet these human rights impacts - and the duties of States to protect against them - remain largely ignored,” Mr. Pesce explained.

In its report, the Working Group clarifies how States should behave in their role as company owners and suggests measures that they should take to ensure SOEs fully respect human rights.

“It is high time for States to show concrete leadership, and require the enterprises they own or control to be role models on human rights,” the expert stressed. “Doing so is part of States’ international legal obligations, and it will only reinforce the legitimacy of States’ expectations towards private businesses.”

The Working Group will also lead discussions on SOEs at the annual UN Forum on Business and Human Rights, which takes place at the UN headquarters in Geneva (Palais des Nations) from 14 to 16 November 2016 (http://www.ohchr.org/EN/Issues/Business/Forum/Pages/2016ForumBHR.aspx).

(*) Check the Working Group’s report at: http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/32/45

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