As UNGP 13 states, companies should avoid causing or contributing to adverse human rights impacts through their own activities, as well as “seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts”.
Commodity Trading and Human Rights Responsibilities
An enterprise ‘causes’ an adverse impact if its operations, products or services directly ‘remove or reduce’ a person’s (or group of persons’) ability to enjoy a human right.
- For example, a trading company can cause an adverse impact if it discriminates against women or racial minorities in its hiring practices, if it violates labour rights on vessels the company or a subsidiary owns or if communities are negatively affected by a storage or transforming facility the company or a subsidiary owns.
‘Contributing to’ an adverse impact involves an activity that causes, facilitates or incentivises another entity to cause an adverse impact.
- An example would be a trading company recommending to a storage facility provider to hire a private security company with a track record of known abuses of human rights which is found to commit violence against right holders protesting against the resettling plan to expand the terminal.
Human rights impacts 'directly linked’ to business operations are understood to cover adverse impacts associated with business relationships, for example in the enterprise’s supply chain.
- Examples include buying or selling commodities that involved adverse human rights impacts (e.g. child/forced labour) at the point of production or during transportation.
OECD Due Diligence Guidance for Responsible Business Conduct pp70-72
ICoCA Interpretative Guidance Developing and operating fair and accessible company grievance mechanisms that offer effective remedies p3
UNGP 19 Commentary
The Commentary to UNGP 19 notes that:
- “Where a business enterprise causes or may cause an adverse human rights impact, it should take the necessary steps to cease or prevent the impact”.
- Where it contributes, or may contribute to an adverse impact, “it should take the necessary steps to cease or prevent its contribution and use its leverage to mitigate any impact to greatest extent possible”.
- “Where a business enterprise has not contributed to an adverse human rights impact, but that impact is nevertheless directly linked to its operations, products or services by its business relationship with another entity, the situation is more complex. Among the factors that will enter into the determination of the appropriate action in such situations are the enterprise’s leverage over the entity concerned, how crucial the relationship is to the enterprise, the severity of the abuse, and whether terminating the relationship with the entity itself would have adverse human rights consequences”.
As the Commentary to UNGP 19 also points out, a business enterprise’s “appropriate action” with respect to a business relationship depends in part on “the extent of its leverage in addressing the adverse impact.” Leverage in the context of the UNGPs is defined as the ability of a company to “effect change in wrongful practices of an entity that causes harm.” In other words, leverage is the ability to influence the behaviour of others.
(See UNGPs section for more information.)
UNGP 13 (b) Principle
Companies should avoid causing or contributing to adverse human rights impacts through their own activities as well as “seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts."
Definition Business relatonships
Business relationships refer to those relationships a company has with business partners, entities in its value chain and any other non-State or State entity directly linked to its business operations, products or services. They include indirect business relationships in its value chain beyond the first tier, and minority as well as majority shareholding positions in joint ventures.
Definition Leverage
Leverage is an advantage that gives power to influence. In the context of the UN Guiding Principles on Business and Human Rights, it refers to the ability of a company to effect change in the wrongful practices of another party that is causing or contributing to a negative human rights impact.
