Einde inhoudsopgave
Corporate Social Responsibility (IVOR nr. 77) 2010/7.3.2.2
7.3.2.2 Capital markets due diligence - integrating human rights?
Mr. T.E. Lambooy, datum 17-11-2010
- Datum
17-11-2010
- Auteur
Mr. T.E. Lambooy
- JCDI
JCDI:ADS367054:1
- Vakgebied(en)
Ondernemingsrecht (V)
Voetnoten
Voetnoten
Friends of the Earth, Consultation Paper: CESR's Advice on Possible Level ll Implementing Measures for the Proposed Prospectus Directive (2003); EU Parliament (Committee on Employment and Social Affairs) Report on Corporate Social Responsibility: a new partnership' (2006/2133(INI)).
l.e. the Charter of Fundamental Rights of the European Union, 2000/C 364/01-22.
Information received from sustainability-rating agencies and institutional investors during interviews in the course of the Nyenrode International Research on Biodiversity and Capital Markets, 2009 - an ongoing project in which the author participates. Furthermore, please see: www.UNPRI.org, accessed on 12 August 2009, to find out which institutional investors are signatories to the Principles for Responsible Investment (PRI), and for information on socially responsible investment (SRI). PRI signatories have pledged that they will integrate environmental, social and governance factors (ESG) in their investment decisions. Human rights are specifically mentioned. The importance of SRI was also confirmed in the PRI Academic & Practitioners Conference 2010 ' Mainstreaming responsible investment' (May 2010, Copenhagen), in which the author participated. The growing importance of sustain-ability indices of stock exchanges such as the FTSE4 Good for raising the standards for best practices in corporate behaviour has been highlighted by Catharina (Rieneke) Slager, ' What gets measured gets managed? Responsible Investment indices and responsible corporate behavior', paper available at: http://www.unpri.org/academic10/Paper_15_Rieneke_%20Slager_What%20gets%20measured%20gets%20managed.pdf, accessed on 12 August 2010. Furthermore, see: e.g. D. Brooksbank, 'Norway's €1.9bn Nestlé stake under scrutiny', in Responsible Investor, 21 September 2009, at: http://www.responsible-investor.com/home/ print/norway_nestle_stake/, accessed on 12 August 2009. See also: E. Umlas, Human Rights and SRI in North America: An Overview, PhD; January 2009, at: http://www.reports-and-materials.org/Umlas-Human-Rights-and-SRI-Jan-2009.pdf, accessed on 12 August 2010 re due diligence in relation to SRI, and referring to the framework of Ruggie.
The EU Prospectus Directive does not specifically mention potential human rights impacts as a subject to report on in a prospectus. The European Parliament and Friends of the Earth had advocated this in the pre-stages of the Directive.1 It is interesting however, to note that the Prospectus Directive stipulates under (48) of the Recitals: "This Directive respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union." It thus refers to the European Charter of Fundamental Rights adopted in 2000.2 The Preamble to this Charter reads:
This Charter reaffirms, (...) the rights as they result, in particular, from (...) the European Convention for the Protection of Human Rights and Fundamental Freedoms, the Social Charters adopted by the Community and by the Council of Europe and the case-law of(. )of the European Court of Human Rights. Enjoyment of these rights entails responsibilities and duties with regard to other persons, to the human community and to future generations. The Union therefore recognises the rights, freedoms and principles set out hereafter.
The fundamental rights set out in the Charter encompass all internationally recognised human rights such as dignity, freedom, equality, solidarity, citizens' rights and justice. From the reference to the Charter in the Prospectus Directive, it could be inferred that the EU considers human rights important in the context of capital market transactions. Consequently, it would not be illogical if a prospectus were to contain information about the human rights aspects of the business activities of the issuer. This view also aligns with Ruggie's approach, i.e. to encourage businesses to exercise due diligence with regard to respecting human rights. In addition, one could say that, in practice, any risks related to (potential) human rights violations will be regarded as general risks that need to be disclosed because they can negatively influence the company's position, reputation and income-generating capacity.
Another factor that might incite the inclusion of human rights aspects in capital market due diligence investigations, is the fact that the market for sustainable investments is growing. Sustainability-rating agencies and institutional investors welcome more information on human rights aspects relating to companies' activities.3 This information can be provided in the prospectus, but it can also be communicated in other ways, e.g. through annual reports, sustainability reports, and websites.