Title page

Contents

Executive summary 9

1. Introduction 11

1.1. The need for and development of policies on business and human rights (BHR), and responsible business conduct (RBC) 13

1.2. The need for work by investment treaty policy makers 16

2. Overview of investment treaties 17

2.1. Purposes of investment treaties 17

2.2. Expansion of covered investor protection and controversy 19

2.3. The interface: Business responsibilities and investment treaties 21

3. The overall framework for business responsibilities 23

3.1. Development of the United Nations Guiding Principles on Business and Human Rights (UNGPs) 24

3.1.1. The human rights regime applicable to states 24

a. The main human rights instruments 24

b. Limited effectiveness of the application of the human rights regime to states 25

3.1.2. The human rights regime and business: early controversies and developments 25

3.1.3. John Ruggie and the development of a middle way on business and human rights 26

a. The problem: governance gaps 27

b. Rejection of the two opposing poles 27

c. The middle way: the Protect, Respect and Remedy Framework and the UNGPs 28

3.1.4. Approach and content of the Framework and the UNGPs 29

a. The State duty to protect against human rights abuses by third parties, including business, through appropriate policies, regulation, and adjudication 29

b. The independent corporate responsibility to respect human rights including due diligence and addressing adverse impacts 32

c. The need for greater access to remedy for victims of corporate-related human rights harm 33

3.2. Work on Business and Human Rights (BHR) at the United Nations since 2011 34

3.2.1. UN Office of the High Commissioner for Human Rights (OHCHR) 35

3.2.2. UN Working Group on Business and Human Rights, and the annual Forum on Business and Human Rights 36

3.2.3. Human rights treaty bodies, Special Rapporteurs and Independent Experts 36

3.2.4. UNCTAD 37

3.3. OECD work on Responsible Business Conduct (RBC) 38

3.3.1. The OECD Guidelines on Multinational Enterprises 38

3.3.2. The 2011 update of the OECD Guidelines: comprehensive coverage including alignment with the UNGPs and continued alignment with the ILO 39

a. Broad application of the Guidelines to corporate groups and to all types of enterprises 39

b. Responsible supply chain management 40

3.3.3. The OECD Guidelines grievance mechanism - National Contact Points (NCPs) 40

3.3.4. Other OECD and OECD hosted work relating to business responsibilities since 2011: Tax and anti-money laundering 42

3.4. OECD development of due diligence guidance 43

3.4.1. Notion of due diligence in the RBC context 43

3.4.2. Development of detailed sectoral and general due diligence guidance at the OECD 45

a. Extractive sector: Responsible supply chains and due diligence on meaningful engagement with stakeholders 45

b. Financial sector 46

c. General due diligence guidance 46

3.5. The International Labour Organization (ILO) 47

3.6. Other initiatives by international organisations addressing BHR/RBC 47

3.6.1. International Finance Corporation (IFC) 47

3.6.2. Asian Infrastructure Investment Bank (AIIB) 48

3.6.3. Council of Europe 48

4. Business and Human Rights/Responsible Business Conduct developments in national and regional law and policy 48

4.1. National and regional regulation and policies 49

4.1.1. Laws, regulations and regulatory proposals for general HR/RBC due diligence requirements 49

a. France: Law on the duty of vigilance of parent companies and commissioning enterprises (2017) 49

b. Switzerland: Current developments concerning a "Responsible Business Initiative" 51

c. Finland 54

d. Germany 54

e. European Union 54

4.1.2. Sectoral or geographically-focused due diligence requirements 55

a. United States: conflict minerals 55

b. EU: Conflict minerals 58

c. The Netherlands: Child labour 58

4.1.3. Criminal law and bribery: references to due diligence concepts in national law 58

4.1.4. Reporting obligations 59

a. European Union 59

b. UK: modern slavery 60

c. Australia: modern slavery 60

d. Canada: introduction of a private member's bill for reporting on modern slavery 60

e. Climate change disclosure 61

4.1.5. Conditioning access to government contracts, services and benefits (other than investment treaties) 61

a. Government procurement 61

b. Export credit 62

c. Trade support and trade diplomacy 63

4.2. Domestic cases in home states for MNEs and access to remedies 64

4.2.1. Corporate liability for breach of customary international law or for torts under domestic law inspired by customary international law 64

4.2.2. The rise and fall of the US Alien Tort Statute as a potential avenue for remedies 66

4.2.3. Parent company liability for actions relating to their subsidiaries 68

a. Except in ISDS, a company is generally seen as a separate entity with its own property and liabilities: neither its shareholders nor its tort victims can ignore the corporate entity 68

b. Developments in parent company liability 69

4.2.4. Corporate law and the scope of fiduciary duties 72

4.3. Interaction between national and regional legal regimes, as well as accepted international principles 73

5. Investor, business, trade union and civil society action 74

5.1. "Sustainable" or "environmental, social and governance" (ESG) investing 74

5.2. Rana Plaza and the Bangladesh Accord between international brands and trade unions 76

5.3. The Hague BHR Arbitration Rules 77

5.4. NGO monitoring 77

6. Binding Instrument on Business and Human Rights 78

6.1. Status of work 78

6.2. Selected issues 78

6.2.1. Scope 78

6.2.2. Prevention 79

6.2.3. Liability 79

6.2.4. Relation with other treaties 80

7. Policy coherence on business responsibilities and investment protection treaties 81

7.1. Increasing attention to policy coherence between BHR/RBC and government policies in the economic sphere 81

7.2. National action plans (NAPs) on business and human rights to enable policy coherence for responsible business conduct, including with regard to investment treaties 82

7.3. Academic and NGO work on policy coherence 83

7.4. Multiple interactions between investment treaties and BHR/RBC 84

7.5. As of 2014, except for clauses requiring domestic law legality, there was little express attention to RBC in stand-alone investment treaties 85

8. Treaty provisions buttressing domestic law regulation - the broader reach of trade agreements 86

8.1. The treatment of human rights and labour rights in trade agreements (and their accompanying agreements) (to 2010) 87

8.1.1. The example of labour provisions in trade agreements and their side agreements 87

a. The growth of coverage of labour issues 87

b. Enforcement 88

c. Cases and complaints 88

8.1.2. EU policy on human rights and trade agreements prior to the Lisbon Treaty 89

8.1.3. Preliminary comparison of the approaches 90

8.2. A degree of convergence and expanded use in trade and investment agreements post-2010 91

8.3. Rare use of provisions affirming government duties to regulate in stand-alone investment treaties 93

9. The impact of investment treaties on policy space for domestic law and regulation of business 94

9.1. Investment treaties and interference with the host state duty to protect - general considerations 94

10. Provisions in investment treaties applicable to business conduct 96

10.1. Recent government action that addresses concerns about investment treaty impact on the state duty to protect 96

10.2. Domestic law legality requirements 100

10.3. Express attention to RBC in recent investment treaties - Speaking to business beyond domestic law legality 102

10.3.1. Hortatory clauses encouraging RBC or corporate social responsibility 102

10.3.2. Clauses addressed to business extending beyond legality requirements and hortatory clauses 105

10.4. Potential additional considerations 107

11. Conclusion 109

Annex 1: Preliminary overview of status of governments' National Action Plans (NAPs) on Business and Human Rights (BHR) or Responsible Business Conduct (RBC), and their attention to policies... 110

Annex 2: OECD Working Papers on International Investment 124