Scope of application in the MNE Sample Clauses

Scope of application in the MNE. Whenever an MNE holds the controlling interest, GP 13 (a) states that it has the responsibility to avoid all adverse human rights impacts. This responsibility is reflected in most GFAs. However, ques- tions may arise whenever an MNE does not fully own a subsidiary or does not hold the controlling interest (GP 13 (b)). The UNGP define the term “business relationship” to explicitly include minority as well as majority shareholding positions in joint ventures (OHCHR, 2012, p. 5). The Office of the United Nations High Commissioner for Human Rights has clarified in a letter of interpretative guid- ance (OHCHR, 2013) that there is no indication that minority shareholdings outside the context of joint ventures would be excluded from the scope of GP 13 (b). It is stated that a company has the duty to seek to prevent or mitigate any adverse human rights impacts in all minority shareholdings. Moreo- ver, in a situation in which an MNE lacks the influence to change the behaviour of the entity con- cerned, it should consider ending the business relationship or selling its shares (ibid.). These responsibilities of MNEs under the UNGP have implications for clauses in GFAs con- cerning the scope of the agreement. At least the provisions in the agreement affirming the human rights responsibilities of the MNE should be applicable throughout the whole company group. This includes the rights of the ILO Declaration on Fundamental Principles and Rights at Work. A limita- tion to only wholly owned subsidiaries is not in line with the UNGP. Beyond that scope, in affiliates where the MNE is present but does not control operations, GFAs should include a clause that xxxxxx- xxxx the obligation of the MNE to exert its influence in these companies and to consider ending the relationship if the MNE lacks influence to mitigate adverse human rights impacts.