Monitoring the National Action Plan for Business and Human Rights (NAP)

14.07.2020 - Article

Within the scope of a monitoring process being carried out between 2018 and 2020, the Federal Government is reviewing to what extent companies based in Germany are meeting their due diligence obligations enshrined in the National Action Plan for Business and Human Rights (NAP).

Following the publication in February of the Interim Report on the 2019 survey, preliminary information is now also available on the results of the 2020 survey.

The key elements of due diligence

The objective of monitoring the NAP is to ensure that at least half of all companies in Germany with more than 500 employees have adequately integrated the core elements of human rights due diligence into their business processes in a verifiable manner by 2020.

The Federal Government is supporting the companies in this task. The NAP Help Desk at the Agency for Business and Economic Development offers all companies confidential and personal advice regarding the NAP and monitoring.

You can find a short introductory film about the NAP and human rights due diligence here.

Final survey in 2020 – evaluation is ongoing, but initial trends have been identified

The final quantitative monitoring survey was conducted from 2 March to 29 May 2020. As planned, this was the second survey following on from the first large-scale survey which began in July 2019. Foreign Minister Maas had the following to say about this at the time:

Germany and the German economy are reaping the benefits of globalisation. That is why we have a particular responsibility to protect the rights of the people working in our global supply and value chains. Businesses in Germany are now being asked to report how they ensure human rights are respected in their processes – and what challenges they encounter on the way. Now the businesses in question need to use the opportunity and respond.

Preliminary information is now available, thus enabling the Federal Government to decide on possible follow-up measures during this legislative term. The main finding is that at the time the 2020 survey was conducted, significantly less than 50 percent of enterprises based in Germany with over 500 employees had incorporated the core elements of human rights due diligence described in the NAP into their business processes. Companies that plan to implement the NAP requirements by the end of 2020 do not have a large impact on this finding.

The detailed analysis of the companies’ responses is ongoing. In mid-August, the competent Interministerial Committee will receive and discuss the comprehensive report on the results of the survey. A discussion with stakeholders will also take place.

Of the just over 7400 businesses in the focus of NAP monitoring, some 2200 randomly selected businesses were invited to complete the survey in 2020. Due to the difficult situation for many companies in Germany and around the world, as well as the particular burden placed on their resources by the COVID-19 pandemic, the deadline for the survey was extended until the end of May 2020. The deadline for taking part was 29 May 2020. At least 365 completed questionnaires needed to be submitted to ensure representative results. As 455 completed surveys were returned, this quorum was met. The scientific survey was anonymised: the names of businesses contacted by Ernst & Young GmbH, the company commissioned to perform the survey, are not known to the Federal Government and will not be published. The FAQs that you can download at the end of this article provide detailed information on many different aspects of monitoring.

Results of the 2019 survey

The first quantitative survey was completed on 31 October 2019. Of the 3300 businesses contacted, some 460 submitted questionnaires, which means that the results are, within certain parameters, considered representative. The service provider EY assessed the data in line with the methodological requirements presented by the Federal Government and outlined in the first Interim Report published in July 2019. The key finding is that between 17 and 19 percent of businesses were able to document that they are adequately meeting the NAP requirements on human rights due diligence (“compliers”). EY identified a further 9 to 11 percent that are not yet meeting the requirements but are, all in all, working to high standards with good practices (“companies on the right track”). The second Interim Report published in February 2020 explains the results and methodological aspects in detail. It was discussed with companies, business associations, social partners and civil society within the framework of the Business and Human Rights Working Group.

Foreign Minister Maas issued the following statement after the results were presented in December 2019:

In the age of globalisation, companies bear an increasing responsibility for human rights protection all across the world. For this reason, Germany has implemented the National Action Plan for Business and Human Rights continuously since 2016. The initial evaluation shows, however, that the aims have not yet been achieved. If the initial results of the monitoring are confirmed, we should look at the possibility of statutory regulations. This is a way of creating incentives for businesses to commit to respect for human rights. At the same time it will provide a framework for naming and shaming if they do not.

After the 2019 survey, the Federal Government established that the “evaluation methodology is appropriate as a whole”. Changes made for the 2020 survey included altering the sample size and the way in which the businesses were contacted. Furthermore, in the light of the experience gained during the 2019 survey and as regards its results, the questionnaire and the requirements framework were examined and adapted slightly to prevent potential misunderstandings regarding the requirements of the NAP.

The early monitoring phase in 2018: finding the right method

The first qualitative interviews with 30 businesses were held in autumn 2018 (exploratory phase). The aim here was not to obtain statistically representative results. In addition, talks were held with nine representatives of stakeholder groups, that is social partners, business associations and NGOs. The Inception Report of September 2018 provided the basis for this phase. The interviews provided valuable findings that fed into the comprehensive surveys subsequently carried out in 2019 and 2020.

Transparency and expertise

Apprentice using a metal-boring tool
Taking a closer look at business processes© Liesa Johannssen/photothek.net

The Federal Government is keen to make the monitoring process transparent and to base it on methodologically sound scientific standards. A nuanced evaluation system ensures that the requirements to be examined regarding the content and implementation of the core elements by the businesses are reasonable. The assessments are anonymised and comply with applicable data-processing legislation.

The requirements with regard to human rights due diligence anchored in the NAP are considered to be implemented if a company has introduced all five core elements of human rights due diligence to an adequate extent. The monitoring also takes into account the possibility that a company may be able to provide reasonable grounds for not being affected by individual risks or for not (yet) being able to implement certain procedures or measures. The questionnaire provides for a comply-or-explain mechanism in all questions.

In the questionnaire, companies can submit their implementation planning for individual NAP requirements by the end of 2020. This planning must be sufficiently concrete, credible and appropriate for remedying an identified implementation shortfall by the end of 2020. In early 2021, it will be verified whether the companies have actually put these plans into practice. Until that time, such companies will not be regarded either as “compliers” or “non-compliers”. The final report, which will be presented in autumn 2020, will then be supplemented in the light of post-validation.

The information provided by the companies in the questionnaire will undergo a multi-stage plausibility review. For example, their answers will be compared with media reports; follow-up questions may be asked, and external stakeholders may be requested to provide information.

The question-and-answer options are based on Chapter III of the NAP. In unclear cases, the wording of the UN Guiding Principles on Business and Human Rights was used to define the requirements in more detail. The Interim Reports provide transparent information as to which parts of the NAP or UN Guiding Principles the questions and answers are based on (see annex 5 to the first Interim Report and annex 1 to the second Interim Report).

The reports on the results of the 2019 and 2020 surveys will be published and show what percentage of large companies in Germany meets the NAP criteria and what percentage does not. In order to acknowledge that companies have made a tangible effort to comply with human rights due diligence, the reports will also provide information on a group of companies that are “non-compliers” and have not yet planned full implementation by the end of 2020, but are already making good progress (“companies on the right track”, that is a maximum of three unsatisfactory responses, but no gaps in key elements of due diligence, and a recognisably good overall performance).

No conclusions can be drawn on compliance with the NAP requirements in the case of companies that fail to provide information (“non-responders”). Above all else, they cannot be included in the group of companies meeting NAP requirements. The reports will also state the number of non-responders. In addition, data will be collected and existing data evaluated to compare the companies that provided information and the non-responders in order to see whether there is any problematic bias in the results due to systematic differences in the response behaviour of individual groups of companies.

From 2020 onwards, the results of the monitoring process will form the basis for the Federal Government’s decision on further steps in the field of business and human rights. These steps can include legislative measures.

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