This article was published in The Jakarta Post paper edition, July 2, 2021, written by Bahtiar Manurung and Ratih A. Putri
Ten years have passed since the unanimous endorsement of the United Nations Guiding Principles on Business and Human Rights (UNGPs) by the United Nations Human Rights Council on 16 June 2011. Although it has long been acknowledged that businesses contribute to the fulfillment of human rights through, among others, the creation of job opportunities that allow people to have an adequate standard of living, the delivery of health service and equipment, and development of technologies that improve the quality of life, business activities may also harm human rights. The UNGPs provide the authoritative framework for States and businesses to address this issue, preventing human rights harms by business activities and providing access to remedy to victims when such harms occurred.
In marking the 10th commemoration of the UNGPs, the UN Working Group on Business and Human Rights has released a stocktaking report on their uptake over the last decade. The report highlights achievements that include the adoption of human rights due diligence on global standards such as the OECD Guidelines for Multinational Enterprises, the ISO 26000 standard on social responsibility, and the ILO’s revised 2017 Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. The stocktaking report also underscored the wave of legislation on mandatory human rights due diligence in European countries that include France, the Netherlands, Germany and Norway, plus the current development of the European Union directive on mandatory human rights and environmental due diligence.
The report also shines a light on the development of national action plans on business and human rights in 25 countries, which has been one of the most visible signs of uptake of the UNGPs by States. Indonesia has announced its plan to develop such a national strategy on business and human rights for years but as yet has not completed and published such a strategy. Although a national strategy on business and human rights is not a panacea in itself, the strategy is fundamental for Indonesia as it will provide comprehensive national directions, detailed actions plans and targets with a clear timeline.
Another thing the report focuses on is the unparalleled power of the financial actors such as banks, insurance companies, pension funds, financing companies, institutional investors, and development finance institutions to influence companies and scale up progress on implementation of the UNGPs. Those financial actors have the leverage and the ability to prevent human rights harms in the companies that receive investment or loans from the financial actors.
Many global financial actors are increasingly recognizing their own responsibility to respect human rights and have considered human rights criteria in their financing and investing activities – a development accelerated by the increased of Environmental, Social and Governance (ESG) investing. These include the signatories of the Investor Alliance for Human Rights, with current membership of over 170 institutional investors that represent over US$4 trillion in assets under management, which have committed to increasing their capacity in addressing human rights risks and impacts. Another example is the establishment of Principles of Responsible Investor (PRI) which was backed by the United Nations. The signatories of PRI, more than 3,600 institutional investors in over 60 countries with more than US$103 trillion in assets under management, acknowledge the importance of respecting human rights. Recently, PRI has just published a multi-year agenda for its signatories to implement respect for human rights as defined in UNGPs.
Realizing the unparalleled role of the financial actors in influencing the uptake of respect for human rights, stock exchanges around the world have picked up the trend. Sixteen out of 56 stock exchanges surveyed by the Sustainable Stock Exchanges Initiative referred explicitly to the UNGPs in their ESG disclosure guidance. Indonesia needs to keep up with this trend. While Indonesia Financial Services Authority (OJK) Regulation No. 51/2017 on Sustainable Finance Implementation has required financial services institutions and publicly listed companies to develop sustainability reports, the regulation does not explicitly state the requirement to report on respect for human rights implementation with reference to UNGPs.
The absence of regulations that explicitly require financial actors to report on the implementation of respect for human rights is likely one of the reasons for the lack of uptake of the UNGPs by financial actors in Indonesia. FIHRRST’s study on the implementation of respect for human rights in large public companies in 2019 and study on sustainability report in 2020revealed that large financial service institutions that are included in the studies have not reported their commitment, processes and performance on human rights.
Indonesia needs to accelerate the uptake of respect for human rights by companies, particularly during a time when we are facing multiple challenges that includes the ongoing COVID-19 pandemic that put risk on workers’ health and safety and the uncertainties over the future of the modern workplace resulted by the pandemic.
As a first step, the government of Indonesia should expedite the completion of the national strategy on business and human rights. The strategy should mandate human rights due diligence implementation by public companies and financial services institutions. Meanwhile, OJK should issue or amend the existing regulations, requiring public companies and financial services institutions to report on their human rights practice and performances. Lastly, financial service institutions should start embedding human rights criteria into their financing and investment activities that will significantly influence the uptake of respect for human rights by companies in Indonesia.
Bahtiar Manurung is the Operations Director and Ratih A. Putri is Business and Human Rights Specialist at the Foundation for International Human Rights Reporting Standards (FIHRRST)