A/HRC/35/32 C. Human rights responsibilities of small and medium-sized enterprises 15. According to Guiding Principle 14, “the responsibility of business enterprises to respect human rights applies to all enterprises regardless of their size, sector, operational context, ownership and structure. Nevertheless, the scale and complexity of the means through which enterprises meet that responsibility may vary according to these factors and with the severity of the enterprise’s adverse human rights impacts”. 16. This means that all business enterprises, from small and medium-sized enterprises to large multinational enterprises, are expected to exercise human rights due diligence (as described in Guiding Principles 17 to 21), to avoid causing or contributing to adverse human rights impacts, and to take steps to mitigate and address any such adverse impact that is directly linked to their operations, including by cooperating in their remediation. 17. Small and medium-sized enterprises may have less capacity and more informal processes but their impact upon human rights can be just as significant as transnational corporations. At the same time, the steps needed to prevent and address such human rights impacts could be less complex for a small company than a large transnational corporation. According to the Office of the United Nations High Commissioner for Human Rights (OHCHR), the approaches needed to embed respect for human rights in a smaller enterprise’s operations can often mirror the lesser complexity of its operations. However, size is never the only factor in determining the nature and scale of the processes necessary for an enterprise to manage its human rights risks. The severity of its actual and potential human rights impact will be the more significant factor. For instance, a small company of fewer than 10 staff that trades minerals or metals from an area characterized by conflict and human rights abuses linked to mining has a very high human rights risk profile. Its policies and processes for ensuring that it is not involved in such abuses will need to be proportionate to that risk.19 18. Simple steps can be taken by small and medium-sized enterprises to respect human rights, and the Guiding Principles set out the path to follow. First, business enterprises will be expected to identify and assess any actual or potential adverse human rights impacts with which they may be involved, either through their own activities or as a result of their business relationships. Such enterprises should utilize the Guiding Principles, in particular pillar 2 (Principles 16 to 22) to assess their human rights impacts. In doing so, they may need to consult directly with potentially affected stakeholders and draw on external human rights resources and expertise. On the basis of an assessment of risks, these enterprises should take action to prevent and mitigate any adverse human rights impacts (Principle 19), track the effectiveness of such action (Principle 20) and be prepared to communicate externally how they address their human rights impacts, or report formally on this, in cases where their operations pose risks of severe human rights impacts (Principle 21). Where small and medium-sized enterprises identify that they have caused or contributed to adverse impacts, they should provide for or cooperate in their remediation (Principle 22), including though internal, industry or multi-stakeholder grievance mechanisms (Principles 29 to 31), in alignment with the effectiveness criteria of the Guiding Principles for non-judicial grievance mechanisms.20 19. For a long time, small and medium-sized enterprises have been involved in debates, initiatives and activities concerning corporate social responsibility. For example, a 2002 report21 found that half of such enterprises in Europe had been involved in external socially responsible activities, including some related to compliance with human rights standards. 19 20 21 6 See OHCHR, The Corporate Responsibility to Respect Human Rights: An Interpretative Guide (New York and Geneva, 2012), p. 20. Available from www.ohchr.org/Documents/Publications/HR.PUB.12.2_En.pdf. According to Principle 31, for a grievance mechanism to be credible it has to be legitimate, accessible, predictable, equitable, transparent, rights-compatible, a source of continuous learning and based on engagement and dialogue. See European Commission, European SMEs and social and environmental responsibility (2002), p. 7. Available from http://bookshop.europa.eu/en/european-smes-and-social-and-environmentalresponsibility-pbNB1401004/.