CORE’s submission to the original consultation exercise called for an explicit human rights reporting requirement to be extended to cover large and medium-sized unlisted companies.

The regulations are now open for consultation until 15 November 2012. CORE will coordinate a joint response from organisations in our network.

Parliamentarians and NGOs have welcomed a report by a committee of MPs urging the Government to do more to address human rights abuses resulting from the overseas activities of UK businesses.

The Foreign Affairs Select Committee report released today sets out that a forthcoming Government strategy on Business and Human Rights must go beyond providing advice to companies and a reliance on voluntary initiatives to change business behaviour, and should set out the Governmental responsibilities necessary to fulfil its duty to protect human rights.

The report goes on to recommend that the Government consider an extension of extra-territorial jurisdiction to cover actions overseas by businesses based in the UK, or by firms operating under contract to the UK.

The Committee also criticises the UK Government’s position on extra-territoriality, set out in its intervention in Kiobel – v – Shell, a major human rights court case brought in the U.S. by a group of Nigerians, relating to allegations that Shell was responsible for the jailing and ultimate executions of nine Nigerian activists who were campaigning against the company’s operations in the Niger Delta.

Shell’s legal team have used the case to argue that corporations should be exempt from extra-territorial jurisdiction. The UK Government has supported this, stating that ‘US courts should not assert jurisdiction on claims brought by a foreign plaintiff against a foreign country which concern events in a third country.’

Shell’s position has attracted widespread criticism, including from Professor John Ruggie, the former UN Special Rapporteur for Business and Human Rights, who has described it as an attempt to ‘…destroy an entire juridical edifice for redressing gross violations of human rights.’

Commenting on the report, Lisa Nandy MP, Chair of the APPG on International Corporate Responsibility said ‘The Government’s intervention in Kiobel – v – Shell is apparently at odds with its commitment to implement the UN Guiding Principles on Business and Human Rights. All decisions taken by the Foreign Office and across government should be in line with their human rights policy commitments and I am concerned that in this case, as in many others, government has failed to do so.’

Marilyn Croser from CORE, a coalition of NGOs that work on corporate accountability said ‘The Government’s Business and Human Rights Strategy must include commitments to meaningful action to prevent corporate abuse overseas. If Government fails to act, the result will be business as usual. Extending extra-territorial jurisdiction to UK businesses would be a significant step towards improved corporate accountability.’

Peter Frankental, Economic Relations Programme Director at Amnesty International UK said ‘Amnesty International welcomes FAC’s recognition that the human rights impacts of UK businesses abroad should not be subservient to commercial and security interests.’

The world’s resources are under ever-increasing pressure, leading to environmental, economic and social impacts. At the same time, commodity prices have increased 150% since 2000, creating economic pressures on companies and individuals. Research has shown that there are substantial gains to be made by improving the use of resources by companies, but only a limited number of companies are focusing on this area. By introducing rules to make companies measure and reduce their overall use of resources, environmental and social impacts will be improved, and companies will lower their costs while boosting competitiveness. The European Commission is due to publish new draft legislation on Non Financial Reporting by companies by the end of 2012 – Friends of the Earth considers that this is an important opportunity to press companies to report their use of key resources (materials, water, land and carbon), thus helping to move to a resource efficient EU.

In this brief, Prof. Ruggie asks, regarding Shell’s position in the Kiobel lawsuit broadly opposing application of the ATS to abuses occurring outside the United States, whether a company’s corporate responsibility to respect human rights under the UN Guiding Principles on Business & Human Rights should be consistent with its litigation strategy and whether such a strategy should “aim to destroy an entire juridical edifice for redressing gross violations of human rights, particularly where other legal grounds exist to protect the company’s interests.”

The nosedive in Lonmin’s share value over the last week is proof that the environmental, social and human rights activities of companies are linked to their financial value.

By Lisa Nandy

Companies have traditionally been less willing or able to make a business case for their social obligations – to people, communities and wider society – than they have for their responsibility to the environment.

Moral commitments to the environment can often have tangible cost benefits; urging customers to switch off lights and appliances reduces gas and electricity bills for customers, while asking people to switch off taps or use the same towels for an entire hotel stay conserves water and lowers costs.

By contrast, exercising due diligence, conducting human rights impact assessments, consulting with and adjusting large scale projects to meet the needs of local communities and paying the living wage are all more difficult to sell to a board because the short-term advantages and profit-making potential are less obvious. What is obvious is that such measures can engender a significant cost in the short-term.

The solution – long-term cost benefit analysis – is discouraged by the nature of our financial markets but increasingly companies are beginning to discover that the benefits of long-term responsibility are no less tangible and significant when they arise: costs such as delays and disruptions of operations; problematic relations in local labour markets; insurance and security; reduced output; diverted staff time and, perhaps most significantly in this case, reputational damage.

This week’s events at Lonmin demonstrate that the markets understand this too.  There is an increasing recognition that environmental and social factors can have a material impact on returns and should be a greater priority for companies.  In the aftermath of the financial crisis, few would dispute the need for more forward-thinking and long-term planning from multinationals and for greater cognisance of the wider impact of business. The Gulf of Mexico oil spill, which forced BP to cancel its dividend for the first time since the Second World War and to report its first annual loss in nineteen years, demonstrated that environmental and social issues can be vital to company success.

Yet there remains doubt in the private sector, and particularly among investors, that Government is willing to offer the expertise, support and clarity to business about their social obligations and how to meet them. Companies who are leaders in social responsibility complain that the playing field is tilted against them, and want to see greater rewards from Government for good behaviour, and greater sanctions for rule breakers. Successive governments have failed to do this.

In May this year I tabled an amendment to the Financial Services Bill, which would have sent a clear signal to companies like Lonmin that such behaviour would not be accepted by the London Stock Exchange. In October, colleagues in the Lords will put forward similar amendments that will clarify the purpose of the stock exchange, allowing the new regulator, the Financial Conduct Authority, to take into account an applicant’s respect for human rights and sustainable development in protecting the integrity and respectability of the exchange.

Richard Lambert, former Director-General of the CBI, wrote in an opinion piece for the Financial Times in June 2011: ‘It never occurred to those of us who helped launch the FTSE 100 index 27 years ago that one day it would be providing a cloak of respectability and lots of passive investors for companies that challenge the canons of corporate governance, such as Vedanta, ENRC, Kazakhmys, Fresnillo. Perhaps it is time for those responsible for the index to rethink its purpose.’

The government has been handed an opportunity to correct the market failure that led to the death of 34 miners last week. It is widely accepted that a more sophisticated understanding of investment risk – one which takes longer-term sustainability issues into account – is urgently required.  If this Government is serious about its commitment to responsible capitalism and sustainable development, both companies and their investors must be engaged in the debate and the stock exchange is uniquely positioned to facilitate this process.

This piece was originally published in the New Statesman

The case hinges on a law called the Alien Tort Statute (ATS), which allows foreign citizens to bring lawsuits in U.S. courts for violations of international law. Shell says the ATS doesn’t apply to them — because they are a corporation. Only two years after the Supreme Court used corporate personhood to grant corporations unprecedented influence over U.S. elections, Shell is asking the same nine judges to give corporations immunity from human rights litigation under the ATS.

EarthRights International have launched TooBigToPunish.org to stop Shell’s attempt to enable corporations to get away with murder. You can pledge your support for the campaign here.