Guiding principles on business and human rights (the United Nations): economic frameworks of research

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Yaroslav Mudryi National Law University

Guiding principles on business and human rights (the United Nations): economic frameworks of research

О. Grytsenko Doctor of Sciences (Economics), Professor, Professor of the Economic Theory Department

O.S. Marchenko Doctor of Sciences (Economics), Professor, Professor of the Economic Theory Department

Ukraine, Kharkiv

The authors prove the necessity for applying an economic approach to researching business and human rights. The economic approach enables: a) ascertaining the essence of human rights requiring protection; b) analysing the interests of business enterprises aimed at human rights; c) outlining a range of actors being the focus of attention of business enterprises; d) disclosing conflicts between the interests of business enterprises and stakeholders; e) indicating the role of a government in mediating the interests of business enterprises and human rights.

Keywords: human rights, business enterprise, entrepreneurial activity principles, stakeholders, conflict of interest.

Е.А. ГРИЦЕНКО доктор экономических наук, профессор, профессор кафедры экономической теории Национального юридического университета имени Ярослава Мудрого, Украина, г. Харьков

О.С. МАРЧЕНКО доктор экономических наук, профессор, профессор кафедры экономической теории Национального юридического университета имени Ярослава Мудрого, Украина, г. Харьков

РУКОВОДЯЩИЕ ПРИНЦИПЫ ПРЕДПРИНИМАТЕЛЬСКОЙ ДЕЯТЕЛЬНОСТИ В АСПЕКТЕ ПРАВ ЧЕЛОВЕКА (ООН): ЭКОНОМИЧЕСКИЕ ОСНОВЫ ИССЛЕДОВАНИЯ

Доказывается необходимость экономического подхода в исследовании бизнеса и прав человека. Экономический подход позволяет: а) выявить содержание прав человека, которые нуждаются в защите; б) проанализировать интересы бизнеса, направленные на права человека; в) определить круг субъектов, попадающих в сферу интересов бизнеса; г) раскрыть конфликты между интересами бизнеса и стейкхолдеров; д) понять роль государства в опосредовании интересов бизнеса и прав человека.

Ключевые слова: права человека, бизнес, принципы предпринимательской деятельности, стейкхолдеры, конфликты интересов.

Анотація

О.А. ГРИЦЕНКО докторка економічних наук, професорка, професорка кафедри економічної теорії Національного юридичного університету імені Ярослава Мудрого, Україна, м. Харків

О.С. МАРЧЕНКО докторка економічних наук, професорка, професорка кафедри економічної теорії Національного юридичного університету імені Ярослава Мудрого, Україна, м. Харків

КЕРІВНІ ПРИНЦИПИ ПІДПРИЄМНИЦЬКОЇ ДІЯЛЬНОСТІ В АСПЕКТІ ПРАВ ЛЮДИНИ (ООН): ЕКОНОМІЧНІ ОСНОВИ ДОСЛІДЖЕННЯ

Problem setting. In 2011, the United Nations Organization developed and approved Guiding Principles on Business and Human Rights UN (“Guiding Principles on Business and Human Rights”, 2011).

These principles initially determined a general standard oriented towards preventing and avoiding threats of adverse impacts of business structures' activities on human rights. The acceptance of these principles has become a reaction of numerous countries to changes of nature and reference points of social development, the role and place of a human in the process of labour relations. The UN contemplates that each country will develop national plans of actions regarding implementing the main principles in own legal practice. Nevertheless, there are well-established peculiarities of the business interests and own perception of the interrelation between business enterprises and a human in each country. Having confirmed participation in fulfilling these Guiding Principles, Ukraine should keep up contemporary requirements and develop own national program of action. Obviously, lawyers will form the main content. However, this does not mean that economists will not be engaged in this process. The participation of economists is considerably important since developing the national program of action should be grounded in analysing the real economic conditions of the country and models describing the interrelation of business and human rights.

Recent research and publications analysis. The authors observe a paradoxical situation - there is a large amount of materials concerned with the researched issue. However, all the materials contain applied discussions focused on legal aspects. Scientists hold forums (Business and Human Rights: Protect your rights and provide remedies, 2014; Business and Human Rights: Ukraine's Implementation of UN Guidelines, 2013; Human rights must be a priority in business, 2013). Working groups prepare numerous reports related to certain matters set up by this international document (Reports and other documents of the Working Group). The Office of the High Commissioner for Human Rights issues a wide range of publications on concretizing various aspects, for instance human rights and developing the Constitution, fulfilling human rights at the expense of a state budget, land and human rights, transitional justice and economic, social, and cultural rights, economic, social, and cultural rights of migrants under a non-regulated situation, etc. (Thematic Publications). Information presented in such publications is of great interest to governments, national human rights institutions, the civil society, the general public, and media. These publications enable enhancing knowledge and awareness of human rights and civil liberties, as well as ways for encouraging and protecting human rights and civil liberties throughout the world. These documents conduce to the broad discussion of issues concerned with human rights and opportunities for protecting them on the part of business enterprises, as well as state governments.

All these measures create the essential database for the more thorough theoretical and methodological research. Researches concerning social and corporate responsibility of business enterprises have been the first step in that direction (Belyayeva, 2008). However, the Guide Principles specially highlight that there are significant distinctions in approaches to analysing human rights protection and social responsibility of business enterprises. The Guide Principles anticipate that all companies will compulsory (rather than voluntary) follow principles of protecting human rights. This is a fundamental distinction between directions of research. From the standpoint of traditional perception, corporate social responsibility implies voluntary participation and efforts of business enterprises for addressing social and ecological problems of societies and accomplishing charitable goals in development of a society at different levels (local, regional, and global) in compliance with objectives and priorities of a certain business enterprise. Nevertheless, these actions do not compensate the non-adherence to human rights within their activities. Certainly, efforts of a business enterprise may coincide with undertaking the Guide Principles on Business and Human Rights but may not conform to their conceptual backgrounds. Over the past few years, government officials of the European Union change approaches to understanding corporate social responsibility of companies, emphasizing the compulsory prevention of adverse impacts on human rights and the maximum increase of their advantages. Such definition brings together conceptual and operative essences of both conceptual approaches. The authors may conclude that applying the Guide Principles in realities of Ukraine requires social theoretical and methodological approaches of economics.

Paper objective. The Guide Principles leave solving many problems up to governments of each country, namely what human rights have to be protected in business, how the interests of business enterprises are related to human rights, the interests of which actors fall into the sphere of business interests, what role a government should play within the business-human rights algorithm. Thus, the article objective is to respond these issues.

Paper main body

Methodological tools of economics contemplate forming theoretical frameworks based on logics of development of relations between business enterprises and human. Firstly, it is necessary to determine a notion of labour rights. The Guide Principles defines labour rights as rights of employees enshrined in the International Labour Standards developed by the International Labour Organization (ILO). Such approach disrupts the formal and logical structure of the notion since it accentuates concrete forms of a right (namely freedom of association, the right to collective bargaining, prohibition of all forms of forced labour, elimination of the worst forms of child labour, and non-discrimination in employment) rather than determine the essence. These rights are enshrined in eight fundamental international conventions. None contradicts the importance of these labour rights. However, is that enough for comprehensive analysis of the interrelation between business and human rights? The authors claim that it is not. Hence, there is a need to determine a notion of labour rights.

Any rights (as a social institution) fundamentally stipulate a way for combining the interests of human and interests of a society. Socially divided relations in a society are the methodological basis for this approach. On the one hand, any member of a society has a right to freely dispose own body and skills, and to independently determine ways for meeting own needs. On the other hand, his or her opportunities are stipulated by dependence on a society. Within this dependence, all the members are equal Economic backgrounds for emergence of rights are more thoroughly considered in the article (Grytsenko, 2015).. This basis underlies a motto - equal rights for all people. Rights becomes a social institution, which determines the extent of the most adequate and effective algorithm for combining liberties and rights of a human. On the one hand, labour rights are aimed at ensuring liberties of revealing labour skills of a human, which foster his or her development. On the other hand, they adjust opportunities and desires of a human to needs of a business enterprise. Searching for this extent is always a long-term process while disrupting this extent (on the part of either a human or a society) leads to escalating social contradictions, which manifest themselves in the form of various economic and social phenomena (conflicts in a business environment, deviant behaviour, etc.). In each society, searching for this extent is based on peculiarities of historical development, specific regularities of economic development, mentality religion, etc. At the end, each member of a society perceives the very extent as social justice determining a right of a human to a decent life. For instance, in the USA, a 100-hours workweek of a young professional at a law firm is perceived as a normal condition for providing a decent life (Grishem, 2011). This means that the society put more emphasis on freedom of a human. Simultaneously, according to French writer Annie Ernaux, the yellow vests movement in France shows that French people express seeking to social equality more intensively than other European nations (What are the “yellow vests” really fighting for?). Since business enterprises can influence practically the whole range of human rights, the authors recommends assigning responsibility for fulfilling all the possible human rights to business enterprises. Such measure should be applied to at least rights enshrined in the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, and the ILO Declaration on Fundamental Principles and Rights at Work. Depending on the context, including cases when entrepreneurial activity creates risks for persons from among particular groups of population (children, disable persons, and migrants) requiring special attention, firms may be forced to apply additional international standards in the sphere of human rights.

Obviously, labour rights underpin interrelations between a business enterprise and human. These rights, to a greater extent, should be oriented towards ensuring a decent life, i.e. they have to conform to the essence and purpose of a human, and his or her internal values (formed in an institutional environment of society). A decent life emerges in a society in compliance with a real stage of economic development and people's mentality. European countries implement the following labour rights to ensure a decent life for a person: the right to work, right to just and favourable conditions of work , right to safe and healthy work environment, right to just remuneration, right to professional education, right to form trade unions, right to collective bargaining, right to join trade unions, right to protect children and women at work, right of persons with disabilities to work, right of migrants to work, and right to protection against discrimination. The authors point out that those rights may be referred to as urgent because they suffer from more risks while the most intensive infringement of these rights destroys a decent life of a human. The Guide Principles emphasize that business enterprises should concentrate on the most urgent rights.

The nature of techno-economic paradigm underlies the degree of exercising theses rights. This paradigm changes the role of a human in a manufacturing process and fosters the emergence of human capital, as well as social capital. Under such conditions, development of business enterprises considerably depends on the very human, his or her education, knowledge, professional competencies, and the state of health. As a result, the increase of capital more and more depends on opportunities of a human. Hence, business enterprises are interested in the development of a human and protection of his or her rights. At the same time, social capital forms new social relations, rules, and institutions, which operate as factors for the increase of capital, as well as ensure control over its social mission.

Nowadays, the interrelation between business enterprises and a human in Ukraine is mainly functional, i.e. it discloses methods of influence of business enterprises on human rights. Such influence may be both positive (e.g. innovations conduce to the growth of the level of education and enhance life opportunities of a human) and negative (using various methods of exploitation, e.g. an employer requires an employee to register as an entrepreneur instead of concluding a labour contract).

Human rights are only one of components of methodological frameworks underpinning economics whereas the description of entrepreneurial activity implies another one component of research. The very description assumes responsibility for fulfilling human rights. Business implies the internal essence of entrepreneurial activity. A notion of business is a very comprehensive. According to the objective approach to defining its essence, the business is subject to entrepreneurial activity. An entrepreneur performs that activity in order to gain profit. An enterprise, firm, or company present a functional form of business.

The main features of business as an economic entity encompass:

- performing economic activity (manufacturing goods, providing services, and carrying out works) oriented towards meeting public or individual needs;

- entrepreneurship as a special resource, which combines and initiates the use of all other resources, creating an innovative methods for functioning of these resources;

- separateness of capital, as well as economic, financial, organizational, and legal separateness;

- independence of making decisions within current legislation alongside assuming risks of entrepreneurial activity and responsibility for its results;

- system nature since an enterprise is an open socio-economic manufacturing system interacting with an external environment and is characterized by the well- ordered internal structure.

To understand how business enterprises can influence human rights, it is necessary to analyse the essence of the interest of an entrepreneur or business being the main motive and incentive for actions regarding gaining economic benefit. The interest is the first term for forming business rights. Jointly distributed relations create the economic interest and business rights, as well as human rights. The entrepreneur's interest expresses his or her freedom, independence of making decisions and dependence on a society. The latter state is enshrined in the legal form. economic business human right

In a broad sense, the entrepreneur's interest is a conscious need of an entrepreneur in efficient fulfilment of right to entrepreneurial activity, which induces him or her to certain actions aimed at accomplishing goals of business enterprises determined in compliance with the business enterprises' interest. In a narrow sense, the business enterprises' interest is a set of the business interests of an entrepreneur being factors for encouraging particular actions leading to the adherence to requirements of a society regarding human rights, as well as the infringement of these rights.

The Guide Principles specially pay attention to business relations consisting of relations, which ensure creating the added value (partners and suppliers) or participate in distribution of this value (government and non-government bodies, consumers).

The business's interests may be divided into internally oriented (business- oriented), i.e. those concerned with achieving, preserving, and multiplying entrepreneur's benefit (the egoistic interests of a business enterprise). This is a conscious need of an entrepreneur for ensuring better conditions for access to tangible and intangible goods, and the better position in implementing agreements. Since goods are scarce, these interests stipulate the competitive orientation of entrepreneur's actions towards accomplishing goals and the ability to make an economic choice. The main goals of entrepreneur embodying his or her egoistic business interests are preserving and accumulating property, competitiveness, and economic benefit (profit, a market share, scale of business, etc.).

Any business enterprise is primarily grounded on ownership relations since it cannot function without the use of any property. Thus, the main interest of a business enterprise is to preserve the stable financial position. Nevertheless, the simple preservation of property is insufficient measure for the normal development of a business enterprise: an amount of assets should continuously increase. This stipulates the pursuit to increase an amount of own property.

Secondly, competitiveness is an ability of business enterprises to accomplish own goals in a market where other entrepreneurs with analogical goals already operate. Preserving competitive advantages contemplates supporting quality of products, the level of services, a price policy, an expense policy, the image, and other factors in leading positions in the field. Success of business enterprises directly depends on strengthening own merits rather than supporting them. Competitiveness of business enterprises is achieved at the expense of permanent researches of market's demands, a policy of competitors, cutting-edge scientific developments, and investing financial resources in implementing results of these researches in the reality. Functioning of business enterprises provides preserving and multiplying property in a short-term period whereas strategic development is impossible without usual strengthening its competitiveness.

Thirdly, the very difference between revenues and expanses is the main economic outcome of entrepreneur's activity. The very egoistic business interest stipulates contemporary business enterprises. In other words, a need for economic benefit is the main goal of any entrepreneurial activity since profit implies a single source of own funds for the existence and development of business. Outstanding manager of the 20^th century Alfred Pritchard Sloan Jr. has usually emphasized that a strategic purpose of a business enterprise consists in receiving profit owing to investing in capital. This mission ensures externally oriented (socially oriented) business interests of a business enterprise - conscious needs of economic entities for performing activity in favour of a society (social interests of a business enterprise). The increase of profit leads to creating conditions for the growth of wealth of a nation in general. Such interests are not introduced by business entities from an external environment. They are formed in the process of the very business activity and function as conscious needs to take into account regularities of the development of a society as a whole, namely to obey rules, norms, and traditions of development of business relations formed by a society.

The creative interests consisting in enhancing own competitiveness play the important role within the structure of social interests of a business enterprise because business entities are interested in development of creative components of own activity. This is an internal component of a business enterprise because its activity is aimed at creating goods not existing in nature. The highest level of creativity is inherent to the innovative business.

A right of an entrepreneur to guaranteed long-term functioning and ensuring the security is the next element of the interest. Impediment of fulfilling these rights creates a threat to economic security, which can turn into insecurity (bankruptcy, crises, and conflicts). None of business entities can ensure own security on their own because each of them requires an effective system of public (local, state, and international) security. This is a reason for forming dependence of business enterprises on a society and a state in general. This dependence induces business enterprises to pay taxes on results of own business activity to finance activities of a society and government. In Ukraine, the public interest of business enterprises in security is presented in government guarantees of a right to entrepreneurial activity. “The state shall guarantee to all entrepreneurs irrespective of their organizational forms of entrepreneurial activity, equal rights and opportunities for attraction and use of material and technical, financial, labour, informational, natural and other resources. The state shall guarantee the inviolability of property and ensure protection of property rights of the entrepreneur” (“The Commercial Code of Ukraine”. Law of Ukraine dated January 16, 2003).

The interests of business enterprises are closely interrelated but may be contradictory. Business entities are engaged into business relations, following not only own egoistic interests but also public needs for different goods. Consequently, they are engaged into these relations, obeying current public interests. Thus, alongside goals of business caused by egoistic interests, the authors indicate the others stipulated by public interests:

- a desire of business entities to achieve a maximum effect in meeting demands of a final consumer of goods. Taking into consideration demands of consumers is an important goal for a business enterprise in the context of providing the personal benefit, as well as supporting a progress of a society;

- a desire of business entities to maintain stable partner relationships. Preserving and strengthening partner relationships is an essential element of business efficiency since forming a network of permanent partners enables business enterprises to accurately prognosticate their actions, use discount systems, guarantee satisfactory terms and conditions of agreements, etc.;

- a desire of business entities to create and reproduce the attractive public image of own activity. The business image is the public perception of a business enterprise formed in the process of its functioning. The image is a result of functioning of an entrepreneur and those entities an entrepreneur has to interact with. The positive image exerts considerable influence on financial results of a business enterprise. Over the past few years, economic actors form a contingent of ethical consumption. These customers are willing to collaborate only with those entrepreneurs, who respect the ecology, perform charitable activities, and actively foster the process of science and technologies. Entrepreneurs will involve such customers only if they build the positive image.

A particular business entity, which is induced by own needs and seeks to enhance own welfare, does whatever a society desires in general.

Therefore, the egoistic and public business interests of business entities manifest themselves as two opposite tendencies for forming business relations, namely:

- a tendency for competition or rivalry;

- a tendency for integrating activities of different economic entities into a single flow of publicly useful activities.

Although these tendencies are controversial, they always supplement and stipulate each other. The egoistic and public business interests of enterprises do not correspond to each other as primary and secondary because they are equal and manifest themselves in activities of entrepreneurs simultaneously.

All these facts show that, by following own interests, a business enterprise will conduce to the development of a human, who is able to protect own rights.

The Guide Principles determine the conception of a sphere of company's influence for indicating the scope of its social responsibility. This conception enables a company to ascertain ways of participation in encouraging human rights or supporting other social goals. However, the Guide Principles does not consider the sphere of influence as a prerequisite for assigning responsibility to a company for restraining human rights. Conversely, responsibility is determined by the influence of its activity on human rights: the question arises as to whether a company adversely influences or facilitates it, or its activity, products, and services are directly concerned with an unfavourable action stipulated by business relations. The Guide Principles do not accurately identify a sphere of business relations and a circle of persons, rights of which should be protected by a business enterprise. This option is handed off to developers of national plans of actions. Thus, it is very important to determine whose rights a business enterprise is able to protect.

The main actors may be divided into those having internal relations (employees, shareholders) and those having mediated (external) relations with them (partners, customers, consumers, government agencies, investors, creditors).

Those actors, which are engaged in the business, are interested in its outcomes, have rights and shares, establish requirements, have leverages of influence and interests in the business, and are called stakeholders.

According to the AA1000 Stakeholder Engagement Standard, stakeholders are those individuals, groups of individuals or organisations that affect and/or could be affected by an organisation's activities, products, or services and associated performance. The Standard notes that this does not include all those who may have knowledge of or views about the organisation (AA1000SES Stakeholder Engagement Standard). Stakeholders are interested or have certain requirements to activities of business organizations and, therefore, can facilitate or impede decisions made by its managers. Stakeholder is a market actor interested in company's activities or certain directions of company's activities, which does not seek to gain net income (Arefieva, & Komaretska, 2008, p. 80).

Since the interests of different groups go in different directions, which should be taken into account to avoid conflicts, it is necessary to determine groups of stakeholders and to examine their interests (Smachylo, Kolmakova, & Kolomiiets, 2017).

Contemporary scientific and educational literature contains a wide range of classifications of stakeholders in compliance with different criteria:

1. The place of pressure groups within a business environment: stakeholders may be classified as internal and external, which, in turn, influence efficiency of various factors. The internal stakeholders encompass staff (employees and managers) and shareholders. The external ones consist of all other, including customers, vendors, a government, trade unions, the general public (a local community and broader range of participants) (Ammari, 2012).

2. A form (tools) used by certain groups for impacting the business: pressure groups financing business enterprises (e.g. shareholders and investors); managers governing business enterprises; employees (those of them interested in accomplishing organization's goals); economic partners, which comprise buyers and suppliers, as well as other economic actors (“Strategic management”).

3. Opportunities for influencing business enterprises: primary and secondary stakeholders. The primary ones include those being able to exert direct economic influence on an enterprise. This group contains owners, rivals, consumers, employees, and suppliers. Relations between these stakeholders and a business organization have legal foundation. The secondary stakeholders are persons or groups having shares owing to enterprises' activities. This group includes a government, the general public, local communities, financial institutions, mass media, etc. The authors cannot describe interrelations of business enterprises with these groups, using only the legislative basis. Hence, principles of social justice, morality, and ethics may be applied as regulators of such relations.

4. Depending on the interests and powers of pressure groups, the authors indicate two types: powers of stakeholders stipulate their ability to affect an organization; the interests of stakeholders stipulate their ability to affect an organization.

5. The authors indicate stakeholders, depending on the combination of interests of an enterprise and pressure group, as well as an opportunity to influence each other.

6. A sphere of influence: a social sphere, public sphere, economic sphere, industrial and scientific spheres. The social sphere includes enterprise's staff, consumers of goods and services, population, and rivals. The public sphere encompasses local communities, publicly owned organizations, non-government organizations, the ecological state of a territory impacted by entrepreneurial activities, and mass media. The economic sphere of influence consists of investors, a business environment, shareholders, particularly minority shareholders, subsidiaries and affiliated companies, vendors and business partners, insurance and leasing. From the standpoint of developing the national program of actions regarding implementing the Guide Principles, it is necessary to clearly determine rights of stakeholders to be protected. Their interests stipulate these rights.

Typical interests of the main internal and external stakeholders of a business enterprise

Therefore, the thorough analysis of the interests of all the business's stakeholders, determining the most influential and important from among them, and establishing priorities regarding different groups of stakeholders will enable forming an effective mechanism for protecting the interests by business enterprises.

According to the principles of the corporate responsibility to respect human rights, business enterprises have to: a) avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur; and b) seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.

The Guide Principles especially pay attention to preventing human rights risks. Human rights risks are understood to be any adverse uncertainties in the form of business enterprise's potential adverse human rights impacts. These risks are consequences of emerging conflicts. Revealing possible conflicts becomes a link of a methodological approach to analysing the Guide Principles.

A conflict of interest is the confrontation and inconsistency of the interests of persons related by the certain interests - economic, social, political, etc. It is the confrontation of opposite goals, positions, views, and opinions of interacting actors.

A conflict of interest of business enterprises and humans manifests itself in the following forms:

a) a conflict of the egoistic business and public interest in cases when the business enterprise's interest consists in undertaking particular actions aimed at achieving economic benefit through a method threatening the public interests;

b) a conflict of interest between business enterprises and entities being external stakeholders - consumers, vendors, government agencies, non-government organizations, investors, creditors, etc.;

c) a conflict of interest between business enterprises and entities being internal stakeholders - employees, management staff, and shareholders;

d) a conflict of interest between business enterprise's external stakeholders;

e) a conflict of interest between business enterprise's external stakeholders and internal stakeholders.

An object of a conflict of interest primarily implies: corporate rights, which ensures possessing corporation's shares (an ownership right, right to participate in governing, right to receive dividends, right to a share of corporation's assets) and labour rights of employees and managers (workplace, job, salary, wage, working conditions, improvement of professional skills, career, employment benefits, and the social status). The absence of balance of the interests between these key entities of corporate relations is a reason for conflicts being able to exert adverse influence on business enterprises. The main types of the corporate conflicts of interest between key stakeholders and business enterprises are as follows:

- conflicts of interest between owners of business enterprises and corporation's managers since shareholders are suspended from operational management of a business enterprise. A reason for this is unbundling of shares among the large number of minority shareholders being not eligible to control activities of corporation's managers. These conflicts of interest are concerned with actions of corporation's managers oriented towards accomplishing own goals, which contradict the interests of the very corporation (business enterprise). They lead to infringing rights of business enterprise's owners;

- conflicts of interest between owners of large (controlling) blocks of shares - majority and minority shareholders. Majority shareholders exert real power over business enterprises. Hence, their influence on business enterprises aimed at accomplishing own goals is crucial. Such situation encourages a corporate conflict of interest;

- conflicts of interest between business enterprises and employees, management and employees, shareholders and enterprise's employees.

Conflicts of interest become risks of infringing human rights. Some of these conflicts business enterprises tackle on their own through an interaction, dialogue, consultations with interested parties and potential affected parties, which enable a business enterprise to listen to, understand, and react to their interests and problems, particularly applying approaches based on collaboration. However, a business enterprise is not always able to solve problems related to protecting human rights. Thus, the Guide Principles contains a special chapter dedicated to the role of a state in solving problems of human rights abuses.

The Guide Principles disclose delineated but complementary roles of state and business enterprises with regard to human rights. That is to say, to fulfil human rights, not only do companies undertake measures but also governments should implement a corresponding policy and create a legislative environment, which will induce enterprises to fulfil human rights and to assume responsibility for adverse impacts. The Guide Principles establish corresponding frames for states, companies, and other interested parties, which allow understanding their different but complementary intentions and actions to be committed to efficiently avoid and eliminate adverse impacts related to entrepreneurial activity.

Establishing standards in the sphere of occupational hygiene and production safety is one of examples of accepting legislative and legal measures requiring companies to adhere to rules. Such standards protect employee from conditions, which may threaten their life or health. Governments may enact such legislation, e.g. through creating supervisory agencies such as labour inspections, which may track the adherence to the standards at enterprises and impose sanctions in cases when companies do not adhere to norms. Many countries also provide companies with complex recommendations on the adherence to standards. Governments may require companies to apply due diligence procedures in their business relations, e.g. with foreign vendors, particularly inquiring necessary information on ensuring the adherence to labour norms in their supply chain or applying a due diligence procedure because of terms of receiving certain types of government benefits such as export loans.

An economic analysis of the Guiding Principles enables creating an algorithm of the interaction between business enterprises and human rights, which will underlay the development of national, regional, and corporate programs of actions.

Conclusions of the research

The authors point out that applying the Guide Principles in activity of each firm is of great significance for implementing them. This contemplates the following steps:

1. Developing a strategic economic model, which will clearly determine a notion of human rights, reveal a relation between human and business rights, and indicate risks, obligations, and opportunities of business entities.

2. Creating an economic model for implementing the strategy at each corporation contemplates revealing obligations of senior executives in the sphere of protecting human rights and involving stakeholders.

3. Forming directions for enforcing the strategy: reviewing the strategy of enterprise's activity with regard to human rights; revealing directions of enterprise's activity, which have already been related to human rights; determining potential risks and opportunities for preventing them in the context of human rights.

4. Developing procedures for implementing entrepreneurial activity with regard to human rights: determining directions of business enterprises' activity on protecting human rights; evaluating risks in the sphere of fulfilling human rights at all the stages of implementing new projects or new directions of activities; including human rights principles in the operational process of management.

5. Determining the potential and opportunities of business enterprises with regard to human rights: including principles of protecting human rights in business culture of a company and interrelations with stakeholders; implementing essential educational programs; including human rights principles in internal and external reports of firms.

6. Forming criteria for control over effectiveness of implementing human rights principles: determining indicators for evaluating efficiency of such activities; developing and applying methodical tools for collecting quantitative and qualitative data.

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