A/HRC/14/27 include a description of their CSR activities (including those of their subsidiaries) or state that they have none.21 In South Africa, companies listed on the Johannesburg Stock Exchange must disclose compliance with a national corporate governance code that recommends integrated financial and non-financial reporting.22 In France, a new bill will extend standardized sustainability reporting requirements beyond listed to non-listed companies (small- and medium-sized enterprises excepted). However, such steps are unusual and even among them, explicit human rights references remain rare; there is considerable variation in what and how companies should report and whether and how the provisions are enforced. 38. Worldwide, companies’ financial reporting is their most tightly regulated and legally consequential reporting requirement. Companies generally must disclose all information that is “material” or “significant” to their operations and financial condition, with penalties for non-disclosure or misrepresentation. Regulators tend to regard information as “material” if there is a substantial likelihood that a “reasonable investor” would consider it important in making an investment decision. Such information uniformly includes financial risks, but regulators increasingly also recognize the “materiality” of certain short- and long-term nonfinancial risks to a company’s performance. However, the Special Representative’s corporate law project documents that none of the 40-plus jurisdictions studied specifically identify human rights-related risks as a factor in determining “materiality”, therefore few companies report them.23 This is despite the growing number of lawsuits against companies on human rights grounds, coupled with emerging evidence of significant costs triggered by human rights-based grievances (see section III). Regulators should clarify that human rights impacts may be “material” and indicate when they should be disclosed under current financial reporting requirements. 39. A third policy tool is the specification of directors’ duties. Directors can set the right tone at the top and play vital oversight roles. The Special Representative’s corporate law project examined to what extent directors’ duties currently facilitate corporate respect for human rights. Two themes emerged. One is lack of clarity regarding not only what directors are required to do regarding human rights, but even what they are permitted to do. The other is the limited (to non-existent) coordination between corporate regulators and government agencies tasked with implementing human rights obligations. As a result, directors get little, if any, guidance on how best to oversee their company’s respect for human rights. Yet, in some instances, directors may already be at risk of legal non-compliance by not considering human rights impacts, as discussed in paragraphs 69–73. 40. Innovative practices with human rights implications are rare. The UK Companies Act requires directors, in promoting the company’s success, to “have regard” for the company’s “impact on the community and the environment”.24 The new company law of Indonesia requires natural resources companies to “put into practice environmental and social responsibility”,25 which may require directors’ oversight. The new South African Companies Act will permit non-shareholders to demand that a company itself institute legal 21 22 23 24 25 GE.10-12629 Bursa Malaysia listing requirements (appendix 9c, part A (291)). Available from http://www.klse.com.my/website/bm/regulation/rules/listing_requirements/downloads/ bm_mainchapter9.pdf. Section 8.63 (a) of the Johannesburg Stock Exchange limited listings requirements. See http://www.business-humanrights.org. Section 172, para. 1 (d), Companies Act 2006. Article 74, para. 1, of Law No. 40 of 2007 concerning Limited Liability Companies. 9