A/HRC/35/32 I. Introduction A. Background, aims and outline 1. In the present report, the Working Group on the issue of human rights and transnational business enterprises and other business enterprises examines the importance for small and medium-sized enterprises of implementing the Guiding Principles on Business and Human Rights, with a particular focus on the challenges and opportunities for such efforts. 2. The report is prepared as part of a wider effort of the Working Group to promote implementation of the Guiding Principles and to clarify and elaborate on practical implications. It is intended to represent an initial assessment of an important but complex subject, in the hope of prompting further discussions among stakeholders on more refined and nuanced ways of supporting and strengthening the ability that small and medium-sized enterprises have in meeting their responsibilities to implement the Guiding Principles. 3. Section I includes an assessment of contextual issues, including the definition of small and medium-sized enterprises, the global economic environment in which they operate and their human rights responsibilities. Section II includes an overview of existing tools and guidance, and the various capacity-building initiatives. It also includes a review of the roles of specific stakeholders, including business initiatives and associations, trade unions, international organizations and Governments, and examples of good practices. Section III includes conclusions and recommendations on how to strengthen the role of these enterprises in preventing and addressing adverse human rights impacts, in line with the Guiding Principles. B. Basic characteristics of small and medium-sized enterprises 4. The boundaries between small, medium and large enterprises are fluid and differ between nations. There are no consistent naming conventions: some countries differentiate between small and medium, or introduce the concept of a micro-enterprise, while others do not. However, some key variables — such as size, legal status, sector, resources, employment, turnover, capital investment and balance sheet totals — are considered in most definitions. Most commonly, small and medium-sized enterprises are defined as a business with fewer than 250 employees. 1 5. The differing visions concerning small and medium-sized enterprises reflect how difficult it is to engage in a coherent manner with such a diverse business community. Aside from certain definitions, there is more that divides these enterprises than unites them, including geography, sector, operating contexts, development levels and governance. It therefore makes little sense to identify a “typical” enterprise or a “typical” human rights footprint in order to determine how business and human rights interact. 6. Small and medium-sized enterprises are of paramount importance to a country’s economy, as they contribute to economic growth, foster innovation and economic diversification and create jobs, all of which have a positive impact on the livelihoods of individuals. 2 The International Labour Organization (ILO) has estimated that there are between 420 and 510 million such enterprises globally (excluding the many microenterprises that comprise fewer than 10 employees). Of those, an estimated 80-95 per cent are in low- and middle-income countries. In countries of the Organization for Economic Cooperation and Development (OECD), small and medium-sized enterprises are estimated 1 2 For examples of different definitions, see International Labour Organization, Small and medium-sized enterprises and decent and productive employment creation (Geneva, 2015). See also https://unstats.un.org/unsd/industry/meetings/eg2005/AC105-22.pdf and https://stats.oecd.org/glossary/detail.asp?ID=3123. See www.oecd.org/cfe/smes/2090740.pdf. 3