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Responding department: Ministry of Employment and the Economy; Ministry for Foreign Affairs

Has your government taken any initiatives to reduce companies’ negative impacts on human rights that you consider particularly successful?

In November 2012 the Government published a CSR Action Plan ([link]), which defined CSR more preciously than before and clarified what was expected from companies. The action plan includes various activities related to export credit agencies, SMEs, the prevention of corruption and money laundering, CSR communication, responsible mining, public procurement, and state ownership steering. The Government also committed to prepare a national implementation plan on the UNGPs in the CSR action plan.

The national implementation of the UNGPs was launched in September 2014 based on a proposed action plan. The plan is available online here: [link].

Both of these plans were prepared with strong commitment from different Ministries and by including stakeholders in the process. Discussion with stakeholders continues especially in sector specific round tables, which seek to further increase dialogue between businesses and civil society, share information, and possible form new partnerships. Other key aspects of the UNGP implementation plan are the legislative report on certain aspects of Finnish legislation, responsible public procurement, training and communication, and state ownership policy and social responsibility.

What department or departments have significant responsibility for business and human rights within your government?

The Ministry of Employment and the Economy has the primary responsibility, but other ministries are closely involved: Ministry for Foreign Affairs, the Ministry of Justice, and the Prime Minister’s Office (State-ownership Unit) are close collaborators. All Finnish Ministries were involved in preparing the UNGP national implementation plan.

Responsibilities for individual projects are singled out in the UNGP implementation plan. Coherence is ensured through daily communication and active discussion. Since the UNGP implementation plan is approved by the Government, it’s the alignment all Ministries adhere to.

Other actions

Export credit agencies

The publication of the UN principles and the update of the OECD Guidelines for Multinational Enterprises in 2011 have had the effect in public export credits of increasing the amount of attention being paid to the impact on human rights in the projects guaranteed. Finland’s official export guarantee company, Finnvera, uses policies updated on 1 January 2013 for evaluating the environmental and social effects of projects (cf. [link]). When granting export credit guarantees and confirming export credit guarantee conditions, the environmental and social impacts of the project in question are taken into consideration as part of the project’s total risk assessment. The development of Finnvera’s environmental and social impact assessment is continuing in accordance with the OECD Common Approaches agreement. As with other public export credit companies, Finnvera also reports on its progress at the expert meetings related to the OECD agreement.

In autumn 2011, Finnfund, a Finnish development finance company, and twenty-four other providers of development funds signed the principles of good governance and guidelines on how the providers of development funds attempt to promote good governance in the companies funded and thereby support the sustainable economic development of developing countries. In addition, the activities of Finnfund itself and of the companies it funds should be both environmentally and socially sustainable. The same principles of responsibility apply to the activities of both Finnfund and Finnpartnership, The Finnish Business Partnership Programme, alike.

Finnvera’s project review examines the level of the project’s environmental and social impacts. The review also pays attention to the impacts of associated facilities.

In general, Finnvera’s project review encompasses the whole project even when export financing is granted only for a part of the project or for an individual delivery of equipment that is associated with a project. In justified cases, a rough review is conducted on all operations directly linked with the project (e.g. an old industrial plant) if the operations are deemed to involve significant environmental and/or social risks or consequent credit risks.

The project category given by Finnvera determines the level of the background studies required by the project:

A: The applicant shall provide Finnvera with an Environmental and Social Impact Assessment (ESIA) report as well as other information pertaining to the project, such as any action plans that may have been made. The ESIA report must address the issues mentioned in Annex II of the OECD Recommendation. Apart from assessing environmental and social impacts, the ESIA report includes the process for consulting the local population and other relevant bodies and the Environmental and Social Management Plan for the operations.

B: The project review is based on the ESIA or other reports compiled on the project, the answers to individual questions concerning environmental and social impacts and, if necessary, further studies conducted by outside experts.

C: No background studies are needed. However, in individual cases, for instance the validity of the environmental permit may be checked.

The owner of the project company and/or the main supplier for the project and/or the project sponsor and/or the exporter is responsible for ensuring that the background studies required by the project category are made or commissioned. The applicant for export financing is responsible for supplying the information to Finnvera. When collecting background information, Finnvera also checks any statements and reports that are available through the National Contact Point (NCP) of the OECD Guidelines for Multinational Enterprises.

The level of the project’s environmental and social impacts is benchmarked against the requirements laid down in local legislation and in the international standards in force. The benchmarking is primarily based on the World Bank Group’s technical environmental standards and ten Safeguard Policies that are relevant for the project. Alternatively, the benchmarking may be based on the eight Performance Standards of the IFC² when this is justified due to a large project size or due to that the transactions share characteristics with project finance, or when other participating financial institutions use them.

If the project is carried out using project finance, the benchmarking is made on the basis of the aspects that are essential for the project among the eight IFC Performance Standards. If a major multilateral financial institution³ participates in the financing of the project, the standards of the institution in question can be used for benchmarking the level of environmental and social impacts.

A more stringent standard than those listed above, such as European Union standards, can also be used for benchmarking the level of the project’s environmental and social impacts.

The project must meet the requirements of local legislation and the requirements of the international standards used in the assessment of the project if these are stricter than local legislation.

In the main, if a project is carried out within the EU in accordance with the requirements of EU legislation, Finnvera’s assessment of the project is more concise than normally. The same is done in individual cases if the project is carried out in the territory of some other country in accordance with that country’s legislation when this legislation is comparable to that of the EU. However, the assessments and reviews conducted and any environmental permits granted must be submitted to Finnvera, if necessary.

In relation to Finnvera’s policy, enterprises are required to report on environmental and social impacts.

Environmental impacts may be associated with factors such as: atmospheric emissions, including greenhouse gas emissions; waste water; solid waste; hazardous waste; noise and vibration; and significant use of natural resources.

Social impacts may be associated with factors such as: labour rights and working conditions; community health and safety and security; land acquisition and involuntary resettlement; the rights of indigenous peoples; cultural heritage; and project-specific human rights factors, such as forced labour, child labour and occupational health and safety situations posing a threat to human life.

Has your government adopted a National Action Plan on business and human rights as encouraged by the UN Human Rights Council and UN Working Group on business & human rights, or will it do so in the future?

Yes, the UNGP Action Plan is available online in English here: [link].

If your government has adopted a National Action Plan or is planning on adopting one, please highlight whether it makes reference to international human rights standards and whether it was developed in consultation with affected stakeholders.

The plan makes reference to international human rights standards and it was developed in consultation with affected stakeholders. Stakeholders were heard formally twice during the preparation of the plan, in January 2014 and in May 2014. In addition to open hearings organised at those times stakeholders were also invited to send written comments on both occasions.

Access to remedy: What steps have been taken to develop new judicial or administrative remedies or to reduce barriers to existing remedies for victims?

Based on the Finnish UNGP Action Plan the Ministry of Employment and the Economy, together with the Ministry of Justice and the Ministry for Foreign Affairs have commissioned a study to explain and evaluate the national legal framework in relation to the legal responsibilities of enterprises for human rights violations in transboundary situations. The study is due to be published in February 2015. The study is to be used as the basis for providing better information to enterprises and NGOs on the legal obligations and remedies available as well as to consider whether further legislative measures are needed.

Access to remedy: What steps have been taken to develop new non-judicial remedies, improve existing mechanisms, and reduce barriers for victims?

Finland supports the OECD Guidelines for Multinational Enterprises and is an active member of the OECD Investment Committee, which develops and coordinates the Guidelines. Finland has had a National Contact Point (NCP) since 2001. Since 2008 the Ministry of Employment and the Economy and the Committee on CSR act together as the NCP. The NCP is tasked with furthering the effectiveness of the Guidelines by undertaking promotional activities, handling inquiries, and providing a mediation and conciliation platform for resolving issues that arise from the alleged non-observance of the Guidelines. This built-in grievance mechanism is internationally unique, since the members of the CSR Committee represent public authorities, trade and industry, labour market and NGOs. The government is committed to further develop the functioning of the NCP.

Access to remedy: For companies headquartered in your country or their subsidiaries, has your government taken steps to enhance accountability for human rights impacts abroad?

Please see answer to question 3.2, example #3.

Furthermore, the Finnish National Contact Point has disseminated information about the OECD Guidelines and the UNGPs to the Finnish embassies abroad in order to inform the local Finnish enterprises on the Guidelines, and business and human rights.

Which factors impede your government’s ability to take action on business and human rights?

Not a factor:

  • Lack of resources for enforcement, monitoring and prosecution
  • Opposition or lack of consensus within government
  • Opposition by economic interest groups or business associations
  • Other opposition by influential proplr or groups outside government
  • Political limitations imposed by foreign governments or multilateral institutions
  • Concern about deterring foreign investment
  • Lack of understanding or awareness of business & human rights in government
  • Challenges of coordinating across government departments