State-owned enterprises (SOEs) are major economic players and may be entrusted by states with operating in strategic sectors. Their compliance with sustainability obligations in terms of human rights, the environment and climate change must therefore be questioned. Yet, few recent studies have tried to understand how the state and the enterprises it controls – whether directly or indirectly – understand the Business and Human Rights (BHR) agenda.Footnote 1 Indeed, it is somewhat paradoxical to seek to impose normative obligations on the private sector while largely ignoring the role of ‘public’ enterprises in business activities.
Such public enterprises are defined in the book led by Judith Schönsteiner and Markus Krajewski as those ‘that have at least a 10% of state ownership, be that at the federal, regional or local level, regardless of the legal form’ (p. 2). The study focuses on SOEs’ performance in protecting human rights, environment and climate change in various countries in Europe (Finland, France and Germany) and Latin America (Brazil, Chile, Ecuador and Mexico), as well as through the Chinese SOEs’ investment activities abroad.
This comparative project brings to light how the ‘European approach’, also shared by the US, Canada and Australia, differs significantly from that generally adopted in Latin American countries and by Chinese SOEs. Indeed, for Shönsteiner and Krajewski, ‘The country studies were chosen to reflect different conceptions of SOEs, sectors, ownership structures and regulation’. By doing so, their book shows, with great acuity, that while the ‘European approach’ distinguishes between protection (Pillar I of the UNGPs) and responsibility (Pillar II) depending on the nature of the enterprises’ activities, the Latin American countries adopt a more holistic approach based on protection, responsibility and remedy. In that sense, different models pursue similar objectives. Furthermore, while Latin American countries under study still have underdeveloped BHR legislation, the score of their largest enterprises assessed by the Corporate Human Rights Benchmark is on a par with that of European ones. This conclusion is significant at a time when the corporate sustainability agenda is under threat in both Europe and the US.
Chapter I by Cantu Rivera is about Mexico and national petroleum enterprise PEMEX. His study draws three main lessons: (1) human rights issues are embedded at the corporate policy level but not at the normative and legal ones; (2) while the processes used are highly sophisticated, their effectiveness can be questioned; and (3) the essential role of national courts and the Inter-American Court of Human Rights, in particular to protect the right to a healthy environment and the duty of care.
Chapter II deals with the Ecuadorian National Mining Company ENAMI EP. This SOE was at the centre of the major Los Cedros case,Footnote 2 and the author shows that although this company has adopted a sustainability policy, the due diligence process remains weak in relation to the State’s national and international commitments.
Chapter III is a case study about the Brazilian SOE Eletrobras, the most important one in the energy sector in Latin America. The authors demonstrate that, despite the existence of an ambitious due diligence process and a desire on the part of the Brazilian government to develop a tool for assessing companies in terms of due diligence and sustainability, significant progress remains to be made. They point out, for example, that Norges Bank, a Norwegian investment fund, has decided not to invest in the company because of a controversial project (‘Belo Monte hydroelectric dam in Pará’) and they believe also that ‘there is an urgent need for new metrics and realistic indicators that go beyond common sense and can, based on a complete materiality map, identify reversibility opportunities in production chains’ (p. 61).
Chapter IV is about Banco Estado in Chile. As in most other contributions, the authors emphasize that ‘the bank does not have an explicit human rights policy but includes a human rights framework in its sustainability policy’ (p. 71). They call for a more ‘systemic approach’ to the state and SOEs from a human rights perspective, in particular the rights to housing, health, education and social security. Although there have been some positive developments in the last decades as the Claude Reyes order of the Inter-American CourtFootnote 3 on access to information or the duty to inform the regulatory authority of the company’s policy on human rights, the environment and climate change, achievements are still rather low in light of international standards and norms.
Chapter V shows that while there has historically been a proactive social policy in Finland, as in most Nordic countries, it has not necessarily been translated into greater consideration of the BHR dimension within SOEs. For Mikko Rajavuori and Juho Saloranta, the main reasons are that ‘Finland’s developmental model, which initially centered on the entrepreneurial state, has evolved into that of a shareholder state’ (p. 86) but also a ‘complex, multi-tiered legal framework spanning from corporate to constitutional law and from EU to soft law’ (p. 87). This conclusion could easily be extended to most EU member States as the French and German case studies show (see Chapters VI and VII).
Chapter VI focusses on Germany. Markus Krajewski and Tina Brosi insist on the European and national legal framework for SOEs. In particular, they underline the specific role of the German Act on Corporate Due Diligence Obligations in Supply Chains, which came into effect on 1 January 2023, and the EU Non-Financial Reporting Directive (NFRD),Footnote 4 for major companies like the ones under study, GIZ (cooperation development) and KfW (public reconstruction). The authors conclude that ‘it is not enough for an institution to simply commit itself to respect human rights and to engage in projects which are generally perceived as sustainable’ (p. 126), regarding the specific case La Salonga National Park Project. That is why they advocate ensuring a high level of protection for human rights and the environment by making use of the fundamental rights enshrined in the German Fundamental Law and upheld by the German Constitutional Court.
In Chapter VII, Mihaela Maria Barnes analyses the due diligence policy adopted by the French SOEs EDF (electricity) and Air France-KLM (airline) in the context of the first-ever French Vigilance Law.Footnote 5 Once again, the legal framework raises questions because, for example, ‘the cross-references in the Vigilance Law section to other sections that deal with corporate social responsibility issues are also problematic, given that the Vigilance Law uses human rights language, rather than corporate social responsibility terminology’ (p. 146). It explains that if these two SOEs have a vigilance plan and take action to protect human rights and the environment and to fight against climate change, there are still many grey areas regarding whether they are committed to respecting all the human rights set out in international and European instruments, and what measures they intend to implement to guarantee the stakeholders’ interests.
The last chapter deals with Chinese SOEs and their investment policy in Latin America and Europe. They exemplify a completely different approach to the relationship between the state and the enterprises it controls, as well as the way in which human rights are conceived. Indeed, the study focuses both on the complete interdependence between the objectives pursued by China (particularly since the ‘New Era’) and those of its companies, and on a collective vision of rights and sustainable development rather than solely on the individual dignity of each person. Nevertheless, and this is one of the most interesting lessons, this theoretical conception, which is radically different from that shared by Europeans or the United States, is not so far from the one adopted by some Latin American countries, and does not prevent Chinese SOEs from being pragmatic when they invest abroad. It is clearly a risk-based approach, not only in terms of human rights, environment and climate change, but more broadly for the purpose of Chinese ambitions.
Finally, this ambitious research questioned the 2016 call of the UN Working Group on Business and Human Rights on states to use SOEs to ‘lead by example’. It appears that whatever the region concerned – except China, because of the complete interconnection between the public and private sectors under the ‘Marxist-Leninist anomalia’ (p. 148) – this call from the UN Working Group remains difficult for states to implement. It can even be argued that sometimes SOEs are less responsive to the BHR agenda than other private sector companies (p. 5). This is primarily due to confusion between the goals and interests of states and enterprises (see Mexico, p. 22; Finland, p. 86 and China, pp. 155 and 162). But this conclusion also raises two main issues. First, it’s often complex or even impossible to distinguish between the responsibility of the state and that of its owned enterprises, as the Inter-American Commission and Court of Human Rights proposed in the Muelle Flores vs. Peru case.Footnote 6 Second, SOEs sometimes lack any real due diligence strategy with regard to BHR standards. Although these standards have been to some extent ‘harmonized’, since most SOEs guidelines and state legislation now refer to the UN and OECD Guiding Principles, as well as to other international texts (UDHR, ILO conventions or the 2015 Paris agreement), their implementation differs widely from one region to another.
For this reason, some authors propose to go further on the basis of the constitutional protection of fundamental rights, as in Germany, Ecuador and Chile, to reach a higher standard of protection (p. 199). Cases such as Frankfurt airport (p. 108) or Los Cedros (pp. 41–2) demonstrate that the judges have a major role to play. In the same way, the Paris Court of Appeal (France) inaugurated two new chambers devoted to ‘emerging litigations’ concerning due diligence and climate change in early 2025.
To ‘lead by example’, the SOEs should therefore anticipate and not just be ‘followers’. This issue deserves further research, which can build on this excellent collective work, aimed both at scholars and practitioners interested in BHR issues.
