National Action Plan on Business and Human rights: A Critique

[Vedangini Bisht is a third year student at National Law University Delhi]

In November 2018, at the Business and Human Rights Forum in Geneva, India formally announced that it would come up with a National Action Plan (NAP) on Business and Human Rights. This makes India one of 45 countries to have a NAP on business and human rights or those that are in the process of finalising a NAP. The aim is to make businesses accountable for the impact they have on communities and the environment. The aspiration is to make the actions of businesses sustainable and responsible. While the zero draft of the plan has been in the making for almost a year, it is now in the final stages of extensive consultations with stakeholders led by the Ministry of Corporate Affairs. 

India, along with other countries, has adopted the NAP in compliance with the United Nations Guiding Principles on Business and Human Rights, which were endorsed by the Human Rights Council in June 2011. These guiding principles consist of three pillars which the states are required to keep in mind while formulating the NAP: states’ duty to protect human rights, corporate responsibility to respect human rights, and access to effective remedies.

Further, the United National (UN) has prescribed four criteria to set a NAP in motion: first, the United Nations General Principles need to be satisfied. Second, the NAP needs to be specific to the actual and potential human rights violation by businesses in the country. Third, the process of formulation of a NAP should be transparent and inclusive. Fourth, the NAP ought to be updated and reviewed routinely.

The scope of the proposed framework has been kept broad and covers a multitude of arenas where human rights violations can occur, such as violations within public sector undertakings, informal sector, Indian subsidiaries of foreign companies, public private partnerships, Indian companies operating abroad, and the like.

Mere Guidelines

Despite these efforts, it is clear that putting mere guidelines in place with no compliance requirements will not elicit effective change. The question of their enforceability has largely been left open. It is a comprehensive document containing all the existing legislation that govern the companies and the market. But apart from what already is in place, it refrains from setting any legislative agenda.

The National Guidelines for Responsible Business Conduct (NGRBC) of 2018, quoted extensively in the NAP, is of a similar nature. It consists of nine principles, accompanied by required actions “essential for the operationalization of the Principle.” It also makes reference to a voluntary reporting framework to be used by businesses as an internal tool. Bear in mind that these are applicable only to businesses that wish to align themselves with the NGRBC. There is no legal obligation on businesses to implement the code of conduct, which makes it akin to a set of voluntary good practice guidelines.

Although the zero draft of NAP makes the requirement of compliance with human rights a pre-condition for the opening of businesses, and it does not depend on the acceptability of the NAP by businesses, the effectiveness of the NAP needs to be questioned. It refuses to adopt a regulatory approach. The language used is not strong enough for one to consider that human rights are non-negotiable. Rather, it suggests “creating awareness among businesses on the need to integrate human rights”. The second chapter, which deals with corporate responsibility, states at the outset: “Given below is an overview of the Government’s expectations of socially responsible conduct from businesses”.

There are currently ongoing negotiations at the UN to formulate a treaty that imposes mandatory requirements on governments to regulate the actions of the companies; however, anticipation of the same should not stall business and human rights developments within the countries.

No Mandatory Due Diligence

What follows from their nature of being mere guidelines is the fact that there is yet no mandatory due diligence mechanism in place. Ever since the UN Guidelines had been launched in 2011, a major focus of attention remained human rights due diligence that is required of businesses. Countries such as France and the Netherlands have already made it mandatory, and a number of countries such as Austria and Switzerland have committed to making it binding in the near future.

The UN guiding principles state that companies should formally report the measures they undertake to address human rights risks posed by their operations. But this constitutes just one element of due diligence. Companies only have to report the processes that exist. However, reporting requirements alone cannot make the companies suddenly take charge of addressing human rights violations. They have to be disincentivized legally from violations, for instance, in the form of mandatory human rights due diligence. The same is absent in the NAP, except as a guiding principle.

Flawed Remedy System

One of the most prominent limitations of the NAP is the absence of an efficient remedy system. While there have been extensive descriptions of the exiting redressal mechanisms, there is no clarity as to whether there would be a responsive remedy system in place to take up the grievances of those affected by the actions of corporations. There is also a conspicuous absence of the role of the National and State Human Rights Commissions beyond what already exists. In the absence of a remedial system in the internal ecosystem of the business, unless the National Human Rights Commission and the State Human Rights Commissions are mandated to take up the cases, there is no impetus to make the businesses comply with the NAP.

Further Omissions

There are certain other issues which have been blatantly ignored in the NAP. Land rights of the people displaced by businesses, which is just one narrow issue in the larger context of the rights of the marginalised and vulnerable, has not been dealt with appropriately. There needs to be a recognition of the role of local communities in the protection of environment, with whom businesses can collaborate. There are no specific affirmative guidelines for the women at the time when 53% of top 300 companies in India have a male to female ratio of 10:1 or worse. On the same lines, the issue of non-representation of the marginalised groups on corporate boards needs to be addressed. Further, the guidelines do not clarify how the jurisdictional issues of human rights violation by multinational and transnational companies in India will be resolved. Lastly, while the NAP has attempted to be wide in its ambit and create a ‘one size fit all’ plan, the differences in the formal-informal, large-medium-small enterprises and other variations have been overlooked. One hopes that the public consultations would bring these issues to the fore, and that they will be incorporated in the final draft.

Conclusion

There is no denying that these plans are a welcome directive. While India has some significant corporate social responsibility initiatives in places already, such as section 135 of the Companies Act, 2013,  the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business 2011 and directions by the Securities and Exchange Board of India to top 1,000 listed companies to prepare annual business responsibility report, such a NAP shall expand their scope and build on these strategies.

Vedangini Bisht

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