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Abuse by State-owned enterprises, that is to say, where the State controls
the enterprise or where the enterprise’s acts can otherwise be attributed
to the State, may constitute a violation of the State’s own international law
obligations.8 If States own or control business enterprises, they have the
greatest means within their powers to ensure that relevant policies, legislation
and regulations regarding respect for human rights are implemented. Senior
management typically reports to State agencies, and associated government
departments have greater scope for scrutiny and oversight, including
ensuring that effective human rights due diligence is implemented. The legal
obligations of the State to respect and protect human rights are additional
to the enterprise’s own responsibility to respect human rights and do not
diminish it in any regard.
For joint ventures with significant human rights risks, it is particularly important
to ensure that the legal and other agreements underpinning the ventures
provide the necessary basis to ensure that human rights are respected in their
operations.
Q 17. How is an enterprise’s structure relevant to its
responsibility to respect human rights?
Business enterprises can have various structures. For instance, some are
wholly separate—legally and functionally—from any other enterprise;
others follow a franchise model with greater or lesser degrees of contractual
constraint on franchisees; others are part of cooperatives or create a holding
company to link a group of enterprises. Some others operate as a parent
company and subsidiaries, with varying degrees of control exercised by the
parent company and correspondingly varied levels of devolved authority to
the subsidiaries.
The corporate group structure does not make any difference to whether entities
within the group have to respect human rights. It simply affects how they go
about ensuring that rights are respected in practice, for instance through
their contractual arrangements, internal management systems, governance or
accountability structures. If human rights abuses occur, it will be the national
law in the relevant jurisdiction that determines where liability rests.
See the State duty to protect human rights, in particular Guiding Principle 4, not
covered in this publication.
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