37/39 Database of all business enterprises involved in the activities detailed in paragraph 96 of the report of the independent international fact-finding mission to investigate the implications of the Israeli settlements on the civil, political, economic, social and cultural rights of the Palestinian people throughout the Occupied Palestinian Territory, including East Jerusalem - Report of the United Nations High Commissioner for Human Rights

GE.18-01474(E)



Human Rights Council Thirty-seventh session

26 February – 23 March 2018

Agenda items 2 and 7

Annual report of the United Nations High Commissioner

for Human Rights and reports of the Office of the

High Commissioner and the Secretary-General

Human rights situation in Palestine and other

occupied Arab territories

Database of all business enterprises involved in the activities detailed in paragraph 96 of the report of the independent international fact-finding mission to investigate the implications of the Israeli settlements on the civil, political, economic, social and cultural rights of the Palestinian people throughout the Occupied Palestinian Territory, including East Jerusalem

Report of the United Nations High Commissioner for Human Rights

Summary

The Office of the United Nations High Commissioner for Human Rights (OHCHR)

has prepared the present report, pursuant to Human Rights Council resolution 31/36 on

Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem, and in

the occupied Syrian Golan, on producing a database of all business enterprises involved in

the activities detailed in paragraph 96 of the report of the independent international fact-

finding mission to investigate the implications of the Israeli settlements on the civil,

political, economic, social and cultural rights of the Palestinian people throughout the

Occupied Palestinian Territory, including East Jerusalem (A/HRC/22/63) (“listed

activities”). It describes the state of progress made towards the consolidation of the

database, including the methodology adopted by OHCHR, recalls the normative framework

used, and makes a preliminary analysis of the most common explanations given by

companies for their involvement in the listed activities, and makes recommendations.

I. Introduction

A. Background

1. The present report of the United Nations High Commissioner for Human Rights is

submitted to the Human Rights Council pursuant to resolution 31/36, on Israeli settlements

in the Occupied Palestinian Territory, including East Jerusalem, and in the occupied Syrian

Golan, adopted by the Council on 24 March 2016. In paragraph 17 of resolution 31/36, the

Council requested the United Nations High Commissioner for Human Rights to produce a

database of all business enterprises engaged in certain specified activities related to the

Israeli settlements in the Occupied Palestinian Territory, in consultation with the Working

Group on the issue of human rights and transnational corporations and other business

enterprises, and to transmit the data therein in the form of a report to the Council at its

thirty-fourth session. The Council also requested that the database be updated annually.

2. On 13 February 2017, the Human Rights Council, pursuant to the recommendation

of the High Commissioner, decided to defer consideration of the report to allow for

additional time to consider the inputs received in the context of an open call for

submissions, and to ensure a fair process for concerned stakeholders (see A/HRC/34/77).

B. Mandate

3. Human Rights Council resolution 31/36 establishing the database follows up the

report of the independent international fact-finding mission to investigate the implications

of the Israeli settlements on the civil, political, economic, social and cultural rights of the

Palestinian people throughout the Occupied Palestinian Territory, including East Jerusalem

(A/HRC/22/63). In its report, the fact-finding mission found that business enterprises had

directly and indirectly enabled, facilitated and profited from the construction and growth of

the settlements; in paragraph 96 of the report, it provided a list of activities that raised

particular human rights violations concerns (“listed activities”). In resolution 31/36, the

Council defined the parameters of activities to be reflected in the database by reference to

the list compiled by the mission in its report, which comprised:

(a) The supply of equipment and materials facilitating the construction and the

expansion of settlements and the wall, and associated infrastructures;

(b) The supply of surveillance and identification equipment for settlements, the

wall and checkpoints directly linked with settlements;

(c) The supply of equipment for the demolition of housing and property, the

destruction of agricultural farms, greenhouses, olive groves and crops;

(d) The supply of security services, equipment and materials to enterprises

operating in settlements;

(e) The provision of services and utilities supporting the maintenance and

existence of settlements, including transport;

(f) Banking and financial operations helping to develop, expand or maintain

settlements and their activities, including loans for housing and the development of

businesses;

(g) The use of natural resources, in particular water and land, for business

purposes;

(h) Pollution, and the dumping of waste in or its transfer to Palestinian villages;

(i) Use of benefits and reinvestments of enterprises owned totally or partially by

settlers for developing, expanding and maintaining the settlements;

(j) Captivity of the Palestinian financial and economic markets, as well as

practices that disadvantage Palestinian enterprises, including through restrictions on

movement, administrative and legal constraints.

4. OHCHR notes that six of the 10 listed activities – (a), (b), (d), (e), (f) and (i) – refer

to activities that are explicitly linked to the settlements, while the remaining four – (c), (g),

(h) and (j) – refer to activities that may not be geographically connected to settlements, but

form part of the processes that “enable and support the establishment, expansion and

maintenance of Israeli residential communities beyond the Green Line”. 1 For example,

OHCHR notes that a company that is operating a quarry on Israeli-confiscated land in the

West Bank will be considered to fall under category (g) regardless of whether it is located

in or connected to a defined settlement community. Its presence in the Occupied Palestinian

Territory and the use of its natural resources for business purposes is sufficient to fall

within the scope of the database, as required by resolution 31/36.

5. The parameters of the database encompass local and international companies,

whether domiciled in Israel, the Occupied Palestinian Territory or abroad, carrying out

listed activities in relation to the Occupied Palestinian Territory. Companies engaged in

activities related to the occupied Syrian Golan do not fall within the mandate.2

6. The mandate for producing the database established by resolution 31/36 is strictly

confined to the 10 activities listed in paragraph 3 above. The database does not cover all

corporate activity related to settlements, nor does it extend to all corporate activity in the

Occupied Palestinian Territory that may raise human rights concerns.3 In addition, while

there may be other types of entities engaged in significant corporate activity related to the

settlements, only those entities established as business enterprises are considered; non-

governmental organizations, charities, sports associations or federations, and other entities

are therefore excluded from consideration.

C. Methods of work

7. As with all other mandates, in performing the present mandate assigned to it by the

Human Rights Council in resolution 31/36, OHCHR was guided by the principles of

independence, impartiality, objectivity, credibility and professionalism. OHCHR

formulated its methodology in accordance with these principles, based on best practices, the

advice and guidance of the Working Group on the issue of human rights and transnational

corporations and other business enterprises, and consultations with stakeholders (see paras.

23-25 below).

8. The work conducted by OHCHR in producing the database is in full compliance

with resolution 31/36 and does not purport to constitute a judicial process of any kind.

OHCHR is mandated to make factual determinations of whether businesses enterprises are

engaged in the listed activities.

9. It is the view of OHCHR that the work performed in consolidating and also in

communicating the information in the database to the Human Rights Council can assist

both Member States and business enterprises in complying with their respective legal

obligations and responsibilities under international law, including through constructive

engagement and dialogue and by serving as a source of information to promote

transparency.

1 The fact-finding mission defined Israeli settlements as encompassing “all physical and non-physical

structures and processes that constitute, enable and support the establishment, expansion and

maintenance of Israeli residential communities beyond the Green Line of 1949 in the Occupied

Palestinian Territory” (see A/HRC/22/63, para. 4).

2 While resolution 31/36 refers to the occupied Syrian Golan, paragraph 17 establishing the mandate to

produce a database and the report of the fact-finding mission to which it refers pertain to the

Occupied Palestinian Territory only.

3 For instance, the mandate for the database does not extend to companies involved in supplying the

Israel Defense Forces with weapons or other equipment used during military operations, nor does it

encompass companies involved in controlling access to and from Gaza.

1. Standard of proof

10. OHCHR has determined that where there are reasonable grounds to believe based on

the totality of the information reviewed by it that a business enterprise is engaged in one or

more of the listed activities, such business enterprise will be included in the database. This

standard is consistent with the practice of United Nations fact-finding bodies and is lower

than a criminal standard. There are “reasonable grounds to believe” that a business

enterprise is engaged in one or more of the listed activities where OHCHR has reviewed a

reliable body of information, consistent with other material, based on which a reasonable

and ordinarily prudent person would have reason to believe that the business enterprise is

involved in such activities.

11. The same standard will be used to make determinations as to whether business

enterprises are no longer engaged in one or more of the listed activities; thus, if

subsequently, based on the totality of information reviewed by OHCHR, there are

reasonable grounds to believe that a business enterprise is no longer engaged in the listed

activities, the business enterprise will be removed from the database.

2. Information-gathering process

(a) Initial steps taken to collect information

12. OHCHR examined information relevant to the mandate that was available to it,

initially gathered through the following methods:

 A desk review of publicly-available information, including reports by the United

Nations, civil society organizations (Israeli, Palestinian and international), media

reports, academic writings

 Information received in response to notes verbales sent on 11 October 2016 to all

Member States inviting them to provide inputs relevant to the implementation of

resolution 31/36

 Information received in response to an open invitation to all interested persons,

entities and organizations to submit relevant information and documentation

(b) Screening exercise

13. OHCHR reviewed information pertaining to 307 companies that were named in the

notes verbales or in the responses received through the open call for submissions. OHCHR

excluded those that met the following criteria:

(a) Business enterprises that were not, on the face of the submissions, covered by

the mandate; these included companies that were alleged to have engaged in human rights

abuses or supported the occupation through their corporate activity, but were not alleged to

have engaged in any of the listed activities;

(b) Business enterprises about which there were insufficient facts in the

submissions or in the public domain to support allegations of involvement in the listed

activities;

(c) Business enterprises that were no longer engaged in the alleged activities

because of corporate restructuring (for example, if a part of the business had been sold),

dissolution or other corporate action;

(d) Business enterprises with a minimal or remote connection to the listed

activities.

14. Of the 307 companies reviewed, 115 companies were excluded on the basis of the

criteria set out in paragraph 13 above. The 192 remaining companies formed the initial

group of “screened” companies that were subject to further research and consideration. The

majority of these 192 companies are domiciled in Israel or the settlements, followed by the

United States of America, Germany, the Netherlands and France.

(c) Further communications

15. OHCHR sent notes verbales on 11 July 2017 to the 21 Member States in which the

initial 192 screened companies were domiciled, identifying companies domiciled in that

Member State. The purpose was to inform those Member States that information had been

received alleging that business enterprises domiciled in their territories and/or under their

jurisdiction were engaged in one or more listed activities, and to invite any comments or

observations concerning measures taken to ensure implementation of resolution 31/36.

Fifteen of the 21 Member States responded by the deadline of 1 September 2017. Five of

these Member States expressed a position in the notes verbales or in confidential meetings

that supported OHCHR being in direct contact with companies. Six of the 15 Member

States did not comment on this point, while four Member States expressed a position in the

notes verbales or in confidential meetings that did not support direct contact between

OHCHR and companies.4

16. In reviewing past practices, consulting with the Working Group on the issue of

human rights and transnational corporations and other business enterprises, after having

duly considered the responses and positions of Member States, considering the complexity

of business relationships involved in each situation concerning listed activities, which often

encompassed business enterprises domiciled in multiple States, and to offer a procedural

safeguard designed to provide fairness, consistency, reasonableness and absence of

arbitrariness of potential decisions that may affect the interests of business enterprises,

OHCHR decided to communicate with the initial list of all 192 screened companies – not

just those domiciled in the States that indicated they were in favour of such an approach –

to provide them with an opportunity to respond to the information presented.

17. Of the 192 screened companies, OHCHR first contacted the companies concerning

which the strongest allegations of a clear connection to listed activities had been received.

To supplement information received in notes verbales from Member States and through the

open call for submissions from interested stakeholders, OHCHR conducted further research

into this subset of companies. This stage of the research included analysing public annual

financial reports, official websites from companies in English and Hebrew, financial

websites and media in English and Hebrew, the Israeli and other stock exchange markets,

the websites of Israeli government offices5 and websites of settlement industrial zones and

settlement councils.

18. When contacting companies, OHCHR included in the communications, wherever

possible, all relevant entities with respect to that particular situation of concern, including

parent companies and their subsidiaries, franchisors and franchisees, local distributors of

international companies, partners and other entities in relevant business relationships. In

some of these cases, further research by OHCHR revealed relevant business entities, such

as parent companies or subsidiaries, that were not initially named in the submissions

received in notes verbales from Member States or through the open call for submissions

from interested stakeholders. This necessitated adding 14 companies to the initial list of 192

screened companies, resulting in a total of 206 companies reviewed at the time of writing

(see table below paragraph 22).

19. OHCHR was given limited resources to carry out the mandate within the anticipated

time frame, which required it to calibrate its research and engagement with companies

accordingly. Not all companies about which OHCHR had received information could be

contacted by the time of submission of the present report. At the time of writing, OHCHR

4 Notably, one Member State acknowledged awareness of the alleged activity of a company domiciled

in its territory, and informed OHCHR that the Government had decided in August 2017 to conduct a

baseline study to assess the degree of implementation of the Guiding Principles on Business and

Human Rights in domestic legislation. OHCHR looks forward to the results of that study.

5 These included the Israeli Companies Registrar (http://havarot.justice.gov.il), the Bank of Israel

(www.boi.org.il/heb/Pages/HomePage.aspx), the Knesset Research and Information Centre

(www.knesset.gov.il/mmm/heb/index.asp), the Ministry of Environmental Protection

(www.sviva.gov.il) and the Ministry of National Infrastructures, Energy and Water Resources

(http://energy.gov.il/).

had contacted 64 of the 206 companies involved in 33 different situations concerning the

listed activities.6

20. In the letters addressed to the companies concerned, OHCHR informed them of the

listed activities that they appeared to be engaged in (based on the totality of information

reviewed by OHCHR), and set out the basic facts of the companies’ involvement in the

listed activity or activities. Companies were requested to respond in writing within 60 days

for an initial response, providing any clarification or update of the information. Companies

were informed that they could request that the substance of their written responses be kept

confidential; a number of companies made such a request.

21. OHCHR was also contacted by a number of companies that had not received letters

from the Office, but had either seen news of the database in the media or had been informed

by their governmental authorities of their inclusion in the notes verbales addressed to

Member States on 11 July 2017.

22. Responses from companies included those that (a) objected to the mandate of

OHCHR and declined to provide a substantive response to the information presented; (b)

rejected the information presented and objected to being included in the database; (c)

confirmed the information presented concerning their involvement in one or more of the

listed activities, and provided explanations; (d) provided updated information that indicated

they were no longer engaged in one or more of the listed activities; and (e) provided

additional information and clarifications that will require further discussion and analysis

before a determination can be made. OHCHR is considering the responses received to date,

and offers preliminary observations to the most common explanations put forth by

companies for their involvement in the listed activities (see paras. 50-60 below). Where

companies declined to provide a substantive response or failed to respond entirely, this will

not prevent a determination as to their involvement in listed activities from being made.

6 Not all parent companies or other ownership structures were contacted. For instance, if a company

was acquired by a hedge fund or private investment firm, these were not included for reasons of

practicality, given the lack of publicly available information concerning their portfolios.

Summary of screening exercise and communication with companies at the time of

submissiona

Screening exercise Communication with companies

State concerned Total

number of

companies reviewed

Number of

companies screened

from initial list

Number of

companies excluded

Number of

additional

companies screened

Total number

of screened

companiesb

Number of

companies

contacted to date

Number of

companies

not yet contacted

Israel or Israeli

settlements 186 131 43 12 143 45 98

United States of America 54 20 32 2 22 7 15

Germany 21 7 14 -- 7 1 6

Netherlands 7 5 2 -- 5 3 2

France 8 4 4 -- 4 2 2

Republic of Korea 3 3 0 -- 3 1 2

Italy 3 3 0 -- 3 0 3

United Kingdom of Great

Britain and Northern

Ireland 6 3 3 -- 3 1 2

Canada 2 2 0 -- 2 0 2

Japan 3 2 1 -- 2 1 1

Switzerland 12 2 10 -- 2 0 2

Ireland 2 1 1 -- 1 0 1

Mexico 1 1 0 -- 1 1 0

Denmark 1 1 0 -- 1 0 1

Russian Federation 1 1 0 -- 1 0 1

Singapore 1 1 0 -- 1 0 1

Turkey 1 1 0 -- 1 0 1

Sweden 2 1 1 -- 1 1 0

Spain 2 1 1 -- 1 0 1

Belgium 1 1 0 -- 1 1 0

South Africa 1 1 0 -- 1 0 1

Others 3 0 3 -- 0 0 0

Total 321 192 115 14 206 64 142

(d) Consultations

23. Throughout the process, as mandated by Human Rights Council resolution 31/36

and in preparation for the report, OHCHR carried out five in-person consultations with the

Working Group on the issue of human rights and transnational corporations and other

business enterprises and exchanged additional written correspondence. The feedback,

guidance and advice from the Working Group were critical to the development of the

methodology used to implement the mandate.

24. In addition, OHCHR held extensive discussions with Member States and was in

regular contact with Israeli, Palestinian and international civil society, think tanks,

academics, employer organizations, and other interested parties.

a Does not include companies that contacted OHCHR proactively (see para. 21 above).

b Reflects the number of companies screened from the initial list plus the number of additional

companies screened after further research (see para. 18 above).

25. A number of Member States, civil society organizations and other entities have

repeatedly voiced strong opposition, both publicly and privately, against Council resolution

31/36 mandating the High Commissioner to produce a database. Other Member States have

expressed support, along with Israeli, Palestinian and international civil society, academics

and think tanks. This includes a petition signed by over 400 members of Israeli civil

society, including a former attorney general and former members of the Knesset, retired

diplomats, and other prominent individuals;7 a joint statement by 56 non-governmental

organizations;8 and a letter signed by almost 60 Member States addressed to the High

Commissioner.9

(e) Next steps

26. More resources are required for OHCHR to continue its dialogue with and issue

communications to relevant business enterprises, adding information to the database and

updating existing information in the database as required by resolution 31/36. Once

OHCHR has been in contact with all 206 companies, and subject to determinations of their

responses and non-responses, OHCHR expects to provide the names of the companies

engaged in listed activities in a future update. Before the determinations on the companies

are made public, OHCHR will notify the companies concerned.

II. Normative framework

A. The obligations of Israel as the occupying Power

27. As stated above, the creation of the database is not a judicial process. In this respect,

the work of OHCHR is guided by Council resolution 31/36, in which paragraph 17 sets out

the tasks given to OHCHR. The preamble to resolution 31/36 reflects the normative

framework with regard to Israel as the occupying Power.10

28. Since the adoption by the Human Rights Council of resolution 31/36, the Security

Council, on 23 December 2016, in its resolution 2334 (2016), reaffirmed its position that

the establishment by Israel of settlements in the Occupied Palestinian Territory, including

East Jerusalem, had no legal validity, and constituted a flagrant violation under

international law. As recognized in numerous reports of the High Commissioner and the

Secretary-General, continued expansion of settlements not only undermines the possibility

of a two-State solution, but is also at the core of many human rights violations in the West

Bank (see for example A/HRC/28/80, A/HRC/31/42, A/HRC/31/43 and A/HRC/34/39).

Human rights situation

29. The extensive human rights impact of settlements on the human rights of

Palestinians has been well documented in successive reports of the High Commissioner, the

7 See “Hundreds of Israelis urge publication of UN settlement database”, Middle East Monitor, 4

December 2017.

8 “Joint NGO Statement in Support of the UN Human Rights Database on Business Activities related to

Settlements in the Occupied Palestinian Territory”, Worldwide Movement for Human Rights, 30

November 2017.

9 On file with OHCHR.

10 In the preamble to resolution 31/36, the Human Rights Council recalls, inter alia, relevant reports of

the Secretary-General, OHCHR and the fact-finding mission; relevant resolutions of the Commission

on Human Rights, the General Assembly, the Human Rights Council and the Security Council

reaffirming, inter alia, the illegality of the Israeli settlements in the occupied territories, including in

East Jerusalem; the advisory opinion on the legal consequences of the construction of a wall in the

Occupied Palestinian Territory rendered on 9 July 2004 by the International Court of Justice, which

concluded that the Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem,

had been established in breach of international law; the treaty bodies monitoring compliance with the

human rights treaties to which Israel is a party; relevant provisions of the Fourth Geneva Convention

and customary law; and the Guiding Principles on Business and Human Rights.

Secretary-General and the fact-finding mission (see for example A/HRC/22/63,

A/HRC/25/38, A/HRC/28/44, A/HRC/31/42 and A/HRC/34/39). The reports detailed how

the settlements are extensively altering the demographic composition of the Occupied

Palestinian Territory and fundamentally threatening the Palestinians’ right to self-

determination. The violations of human rights associated with the settlements are pervasive

and devastating, reaching every facet of Palestinian life. Owing to settlement development

and infrastructure, Palestinians suffer from restrictions on freedom of religion, movement

and education; their rights to land and water; access to livelihoods and their right to an

adequate standard of living; their rights to family life; and many other fundamental human

rights.

B. Obligations of States for business and human rights in the Occupied

Palestinian Territory

30. The Guiding Principles on Business and Human Rights (A/HRC/17/31), which were

unanimously endorsed by all States Members of the Human Rights Council in its resolution

17/4, set out the international human rights law obligations of States concerning business

enterprises. They do not create new legal obligations, but rather clarify the implications of

relevant existing international human rights standards, and provide practical guidance on

how they can be operationalized.11 These include the State duty to protect against human

rights abuses by third parties, which includes business enterprises. States may be held

responsible for abuse by business enterprises where the conduct can be attributed to them

(for example, in the case of a State-owned enterprise) or where States fail to take

appropriate steps to prevent, investigate, punish and redress abuse.12

31. The Guiding Principles specifically address the issue of business operations in

conflict-affected areas, which includes situations of occupation. In conflict-affected areas,

the Guiding Principles recognize that the “host State”13 may not be able to adequately

protect human rights because of a lack of effective control or involvement in abuses itself.14

In these situations, the Working Group on the issue of human rights and transnational

corporations and other business enterprises acknowledges that “home States”15 of

transnational corporations have a crucial role to play. In the context of the Israeli

settlements, Israel as the occupying Power is considered to have obligations equivalent to

those of a “host State”.16 Given the direct involvement of Israel in establishing, maintaining

and expanding the settlements, OHCHR considers that the role of homes States of

transnational corporations is essential in assisting both corporations and Israel to ensure that

businesses are not involved in human rights abuses.17

32. States’ obligations specifically concerning business operations connected to Israeli

settlements have been the subject of a number of United Nations reports and resolutions

(for example, A/HRC/22/63, para. 117 and A/HRC/34/39, paras. 34-39, and Human Rights

Council resolutions 28/26 and 34/31, para. 13 (b)). In its resolution 2334 (2016), the

Security Council called upon all States to distinguish between the territory of Israel and the

11 See Frequently Asked Questions about the Guiding Principles on Business and Human Rights

(OHCHR, New York and Geneva, 2014), p. 8.

12 Guiding Principle 1.

13 A “host State” is defined as the country in which a business operates. See Frequently Asked Questions

about the Guiding Principles (see footnote 11), p. 23.

14 See Working Group on the issue of human rights and transnational corporations and other business

enterprises, statement on the implications of the Guiding Principles on Business and Human Rights in

the context of Israeli settlements in the Occupied Palestinian Territory, 6 June 2014, p. 3.

15 A “home State” is defined as a State where a company is incorporated or has its headquarters or

primary seat. See Frequently Asked Questions about the Guiding Principles (see footnote 11), p. 23.

16 The Working Group recognized that the term “host State” is ambiguous in situations of occupation,

and that it would be more accurate to refer to the State that exercises effective control over an

occupied territory as having obligations equivalent to those of a “host State”. See statement of the

Working Group (see footnote 14), pp. 6-8.

17 In accordance with the statement of the Working Group, ibid., pp. 3-4 and 7.

territories occupied since 1967. With regard to the role of home States, the fact-finding

mission called upon all Member States to take appropriate measures to ensure that business

enterprises domiciled in their territory and/or under their jurisdiction, including those

owned or controlled by them, that conduct activities in or related to the settlements respect

human rights throughout their operations (A/HRC/22/63, para. 117).

33. Some States have taken steps towards fulfilling their obligations towards businesses

operating in settlements. In November 2015, the European Union issued guidelines on the

labelling of products made in Israeli settlements.18 As at December 2017, 18 States

members of the European Union had issued advisories warning businesses of the financial,

legal and reputational risks incurred by becoming involved in settlement activities.19

34. Some States have argued that they do not have an obligation to regulate

extraterritorial activities of businesses domiciled in their territory and/or jurisdiction. While

States are not generally required under international human rights law to do so, according to

the Guiding Principles on Business and Human Rights, there are “strong policy reasons” for

homes States to clearly set out expectations that businesses respect human rights abroad.

States also have additional obligations as economic actors in their own right when it comes

to State-owned enterprises. In its report submitted to the Council at its thirty-second

session, the Working Group on the issue of human rights and transnational corporations and

other business enterprises stated that there were compelling reasons for “greater action on

the part of States with regard to State-owned enterprises” so that they lead by example

(A/HRC/32/45).

C. Responsibilities of businesses

35. While States remain the primary duty bearers for the protection and promotion of

human rights, international law has increasingly evolved to recognize that non-State actors

– including business enterprises – also have responsibilities. The Guiding Principles on

Business and Human Rights set out a “protect, respect and remedy” framework for business

and human rights, which recognizes that while States have a duty to protect the rights of all

against violations by third parties, there is an independent and complementary corporate

responsibility to respect all internationally recognized human rights standards. In addition

to human rights, humanitarian law standards also apply to business enterprises in situations

of armed conflict.20

36. Under the Guiding Principles, all companies, regardless of size, industry, location,

ownership or legal structure, have a responsibility to conduct due diligence to identify,

prevent, mitigate and account for how they address their adverse human rights impacts

(principle 14). In its statement on the implications of the Guiding Principles in the context

of Israeli settlements in the Occupied Palestinian Territory of 6 June 2014, the Working

Group declared that businesses have a responsibility:

(a) To avoid causing or contributing to adverse human rights impacts through

their own activities, and address such impacts when they occur;

(b) To 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.

37. The Guiding Principles recognize that businesses operating in conflict-affected areas

– which include areas under occupation – face heightened risks of involvement in human

rights abuses, including gross human rights abuses committed by other actors (Principle 7).

18 European Commission, Interpretative Notice on indication of origin of goods from the territories

occupied by Israel since June 1967 (11 November 2015).

19 For excerpts of each State’s advisory, see

www.ecfr.eu/article/eu_member_state_business_advisories_on_israel_settlements.

20 International Committee of the Red Cross, Business and International Humanitarian Law: an

Introduction to the Rights and Obligations of Business Enterprises under International Humanitarian

Law, ICRC, Geneva, 2006).

In such situations, the Working Group clarified in the above-mentioned statement that

where businesses have an increased risk, “enhanced” due diligence (namely, the

“heightened care” with which due diligence processes should be executed) is required. The

Working Group also highlighted a number of actions that enhanced due diligence may

require, including formally integrating human rights principles into relevant contracts;

exercising extreme caution in all business activities and relationships involving the

acquisition of assets in conflict zones; and seeking advice from international organizations

and mechanisms.

38. As part of the due diligence process, particularly in relation to a complex operating

environment like the Occupied Palestinian Territory, businesses enterprises may need to

consider whether it is possible to engage in such an environment in a manner that respects

human rights. To do so, businesses would have to be able to show that they (in the words of

the Working Group in its statement) do not “support the continuation of an international

illegality nor are complicit in human rights abuses”, and that they can effectively prevent or

mitigate the risks to the human rights of Palestinians. This includes ensuring that businesses

are not acquiring resources and property without the “freely given consent of the owner”.21

39. In its report, the fact-finding mission emphasized that companies must assess the

human rights impact of their activities and take all necessary steps – including by

terminating their business interests in the settlements – to ensure that they do not have an

adverse impact on the human rights of the Palestinian people, in conformity with

international law and the Guiding Principles (A/HRC/22/63, para. 117).22

40. The scale, scope and immitigability of the human rights impacts caused by

settlements must be taken into consideration as part of businesses’ enhanced due diligence

exercises.23 The Guiding Principles do not explicitly require companies to terminate

operations where they are involved in human rights abuses; they do stipulate, however, that

such companies should be prepared to “accept any consequences – reputational, financial or

legal – of the continuing connection.”24

41. OHCHR notes that, considering the weight of the international legal consensus

concerning the illegal nature of the settlements themselves, and the systemic and pervasive

nature of the negative human rights impact caused by them, it is difficult to imagine a

scenario in which a company could engage in listed activities in a way that is consistent

with the Guiding Principles and international law. This view was reinforced in Human

Rights Council resolution 34/31 on the Israeli settlements, in which the Council referred to

the immitigable nature of the adverse impact of businesses’ activities on human rights.

III. Involvement of business in settlements

A. Overview

42. Businesses play a central role in furthering the establishment, maintenance and

expansion of Israeli settlements. They are involved in constructing and financing settlement

homes and supporting infrastructure, providing services to the settlements, and operating

out of them. In doing so, they are contributing to Israel’s confiscation of land, facilitate the

transfer of its population into the Occupied Palestinian Territory, and are involved in the

exploitation of Palestine’s natural resources (see A/HRC/34/39, para. 11).

21 Ibid., p. 22.

22 See also the statement of the Working Group (see footnote 14) and Guiding Principles 17 to 19.

23 The commentary to Guiding Principle 14 provides that the severity of impact is judged by its scale,

scope and irremediable character. See also Guiding Principle 17 on human rights due diligence.

24 Commentary to Guiding Principle 19.

B. How Israeli authorities encourage settlement businesses

43. The Government of Israel actively encourages economic development of and for the

settlements through the Israeli and international private sector by creating an attractive

financial business market, by providing key financial incentives to companies to operate in

the settlements. Ninety settlements have been designated as “national priority areas”, which

allows businesses operating within them to benefit from reductions in the price of land,

grants for the development of infrastructure, and preferential tax treatment (A/HRC/34/39,

para. 24). Businesses in settlements can also take advantage of functional immunity from

labour law with respect to the treatment of Palestinian workers.25 According to the fact-

finding mission, business owners are able to cut their costs by paying lower rates to

Palestinian workers than their Israeli counterparts, with substandard work conditions. This

is largely due to a lack of supervision or regulation of employers in the settlements by

Israeli officials (A/HRC/22/63, paras. 94-95).

44. Furthermore, Israeli authorities use their permit and licensing regime to encourage

international and Israeli business engagement with the settlements. Permits and licenses are

readily provided to businesses operating in or servicing settlements, but are rarely granted

to companies engaged in providing similar services to Palestinians.26 Israeli and

international companies are regularly given quarrying licenses in Israeli-controlled territory

in the West Bank, whereas, according to the Palestinian Union of Stone and Marble, no

new permits have been issued to Palestinian businesses to open quarries in Area C27 since

1994.28

45. Domestic laws and regulations in Israel also play a role in inducing businesses to

serve individuals in the settlements. The Consumer Protection Law (1981) was amended in

2017 in response to alleged discrimination against consumers living in settlements. The

revised law makes it mandatory for businesses to state clearly before any transaction is

finalized whether they are not willing or able to provide services to settlements. The

Prohibition of Discrimination in Products, Services and Entry into Places of Entertainment

and Public Places Law (2000), was amended at the same time to include customers’ “place

of residence” to the list of prohibited grounds for discrimination. It applies to any business

that provides public services, even if it is privately owned, such as transportation services,

communications services, entertainment, tourism or financial services intended for public

use.29 While these laws do not compel businesses to provide services to individuals in the

settlements, they make it more difficult not to do so.

C. How businesses contribute to and benefit from the establishment,

maintenance and growth of settlements

46. OHCHR notes that businesses play a key role in facilitating the overall settlement

enterprise, contributing to Israel’s confiscation of land and the transfer of its population

through commercial development. Some are directly involved in the confiscation of land by

carrying out demolitions that make way for settlement residential communities or

associated infrastructure, or by financing or executing settlement construction itself. Others

provide services that ensure the sustainability of residential settlement communities, such

25 Human Rights Watch, “Occupation, Inc.: How Settlement Businesses Contribute to Israel’s

Violations of Palestinian Rights”, 19 January 2016.

26 Ibid.

27 Under the Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip (Oslo II) of

1995, the West Bank, excluding East Jerusalem, was divided into three temporary administrative

zones, referred to as Areas A, B and C. Israel retains almost exclusive control over Area C, including

control over law enforcement, building and planning (see www.ochaopt.org/location/area-c).

28 World Bank, “West Bank and Gaza: Area C and the Future of the Palestinian Economy”,

Washington, D.C., 2013, para. 30.

29 According to articles 1 to 3 of the Prohibition of Discrimination in Products, Services and Entry into

Places of Entertainment and Public Places Law (2000), “financial services” include banking services

and the provision of credit and insurance.

as transport services that connect the settlements to Israel proper, tourism activities that

contribute to the profitability of the settlements, and telecommunication services. Those

that are located in the settlements help to perpetuate their existence through the payment of

taxes to settlement regional councils and Israeli authorities and the provision of jobs to

settlers, and by occupying confiscated land.

47. The involvement of businesses in the settlements extends across all main industries

and sectors, including:

• The banking industry, which helps to finance construction and infrastructure projects

in settlements, provide loans and financial services to settlement councils, and

provide mortgage loans to home buyers30

• The tourism industry, including tour companies, online accommodation and travel

booking sites, and rental car companies, all of which help to make the settlements

profitable and sustainable31

• The private security industry, which includes companies involved in providing

security for companies or residences in settlements, as well as those involved in the

checkpoints throughout the West Bank, including East Jerusalem32

• The technology industry, which provides surveillance and identification equipment

for use in the settlements, the wall and checkpoints

• The construction and demolition industries, including heavy machinery suppliers,

which help to facilitate and entrench Israel’s confiscation of Palestinian land for

settlements and associated infrastructure33

• The real estate industry, including companies involved in marketing, renting and

selling properties in settlements, which helps settlements to function as viable

housing markets, enabling the transfer of Israel’s population34

• The extractive industry, including mining and quarrying, which contribute

financially to the sustainability of settlements through the payment of fees to

settlement municipalities and the Israeli Civil Administration35

• The telecommunications industry, which includes mobile networks and Internet

providers servicing settlements

• The agricultural industry, which includes companies involved in crop and livestock

production, the wine industry and export companies

• The transportation industry

• The manufacturing industry, which includes companies that use raw materials from

occupied territory

• Others

30 See Who Profits, “Financing Land Grab: The Direct Involvement of Israeli Banks in the Israeli

Settlement Enterprise”, February 2017, and A/HRC/22/63, para. 97. Owing to the involvement of the

banking industry in servicing and supporting the settlements, a number of pension funds in different

countries have reportedly withdrawn their investments in Israeli banks; see for example PGGM,

“Statement regarding exclusion of Israeli banks”, 8 January 2014; Linda Bloom, “Israeli banks on

ineligible list for pension agency”, United Methodist Church, 13 January 2016; and Middle East

Monitor, “Danish pension fund excludes four companies for role in Israeli occupation”, 11 October

2017.

31 Who Profits, “Touring Israeli settlements: business and pleasure for the economy of occupation”,

flash report, September 2017.

32 Who Profits, Private Security Companies and the Israeli Occupation, Tel Aviv, January 2016.

33 Who Profits, Facts on the Ground: Heavy Engineering Machinery and the Israeli Occupation, Tel

Aviv, July 2014.

34 Human Rights Watch, “Occupation, Inc.” (see footnote 27).

35 Ibid.

48. In addition to the financial benefits provided by the Israeli authorities for operating

in the settlements, businesses engaged in certain sectors are able to take advantage of

captive Palestinian markets for Israeli goods. According to the United Nations Conference

on Trade and Development (UNCTAD), the Occupied Palestinian Territory operates as a

captive market for Israeli exports due to the imbalanced customs arrangements enshrined in

the Paris Protocol on Economic Relations and restrictions on movement and other obstacles

to trade.36 With regard to the economic consequences of situations of occupation,

UNCTAD had noted that they always involved the exploitation, impoverishment,

marginalization, displacement and appropriation of resources of the occupied indigenous

people. Such acts often deprived the people under colonial rule of the internationally

recognized human right to development by confiscating their national resources, preventing

them from accessing and utilizing those resources, depriving them of the ability to produce

and thus forcing them to consume products produced by the occupier.37

49. An example of how Israeli companies are benefiting from a captive Palestinian

market can be seen, for example, in the telecommunications industry. Palestinian mobile

and landline companies are prevented from operating fully and effectively in the West

Bank, including East Jerusalem, owing to restrictions on the import of necessary

equipment, which is often identified by Israeli authorities as “dual use”; restrictions on the

movement of goods and people; the inability to have independent access to international

networks; restrictions on the building of the necessary infrastructure in Area C following

the rejection of permit requests; and the provision of limited frequencies by the Israeli

authorities.38 Palestinian mobile providers are reportedly prohibited from operating inside

Israel and annexed areas, including East Jerusalem, which forces users to rely on Israeli

mobile providers.39 Israeli telecommunications operators are authorized under the Oslo

Agreement to provide services to settlements and settlement roads, but their infrastructure

now covers large areas of the West Bank. According to World Bank estimates, between 10

and 20 per cent of the mobile market share in the West Bank has been captured by

unauthorized Israeli operators, largely due to the fact that Palestinian companies do not

have access to more than 60 per cent of Area C. In 2014, the Office of the Quartet

Representative estimated that the quota captured by Israeli operators was even higher,

between 20 and 40 per cent of total market share.40

IV. Preliminary observations of responses of business enterprises

50. In communicating with companies and reviewing publicly available information,

OHCHR encountered a number of companies that acknowledged some connection to the

settlements and provided explanations of their involvement on a number of grounds. A

summary of the most common explanations are set out below. OHCHR offers the following

observations in response in the interest of continuing the dialogue with companies.

51. A major argument used by companies to explain their involvement in listed

activities is that they provide jobs to Palestinian families and help to support the Palestinian

economy.

52. OHCHR observes that this argument does not recognize that the presence of the

settlements in the Occupied Palestinian Territory, which is unlawful, serves to depress the

36 Report on UNCTAD assistance to the Palestinian people: Developments in the economy of the

Occupied Palestinian Territory (UNCTAD/APP/2016/1), para. 20.

37 Official Records of the General Assembly, Seventieth Session, Supplement No. 35 (A/70/35), annex,

para. 6.

38 World Bank Group, The Telecommunication Sector in the Palestinian Territories: A Missed

Opportunity for Economic Development (World Bank, Washington, D.C., 2016); see also World

Bank, West Bank and Gaza: Area C and the Future of the Palestinian Economy, Washington, D.C.,

2014, paras. 52-62.

39 “Israeli mobile companies banned from PA cities”, Ma’an News Agency, 1 April 2010.

40 Office of the Quartet Representative, Initiative for the Palestinian Economy: Summary Overview,

March 2014 (available at www.quartetrep.org/files/image/initiative.pdf).

Palestinian economy and to reduce opportunities for Palestinian businesses to thrive. As

pointed out by the fact-finding mission, the agricultural sector, which lies at the heart of the

Palestinian economy, has been in a continuous decline since 1967 owing to the

dispossession of land and the denial of access of Palestinian farmers to agricultural areas,

water resources and trade markets (A/HRC/22/63, para. 89). According to the Office for the

Coordination of Humanitarian Affairs, 70 per cent of Area C is “off limits for Palestinian

use and development”, as it falls within the boundaries of regional settlement councils.

Palestinian construction is heavily restricted in 29 per cent of Area C, and only the

remaining 1 per cent has been planned for Palestinian development.41 The World Bank has

acknowledged that the land allocated for settlement activity in Area C has “significantly

reduced land available for use by the Palestinian private sector”.42 In East Jerusalem the

situation is similar, as 35 per cent of land has been allocated to settlements and only 13 per

cent is zoned for Palestinian construction.43

53. The depressed Palestinian economy has had a direct effect on the job market in the

Occupied Palestinian Territory. According to UNCTAD, Israel’s full control over Area C,

which accounts for over 60 per cent of the area of the West Bank, has contributed to a

“permanent unemployment crisis” in the Occupied Palestinian Territory that forces

thousands of unemployed Palestinians to seek employment in Israel and in settlements in

low-skill, low-wage manual activities (TD/B/63/3, para. 6). In 2017, the International

Labour Organization reported that the “stagnating labour market in the West Bank pushes

Palestinians to take up work wherever it is to be found.”44

54. OHCHR notes that the employment of Palestinians, even on favourable terms, does

not exempt businesses of their responsibilities under the Guiding Principles concerning

their overall engagement in or with the settlements. The Guiding Principles make clear that,

while business enterprises may undertake certain commitments or activities to support and

promote human rights, these “do not offset a failure to respect human rights throughout

their operations.”45

55. Another argument used by some business enterprises to explain their involvement in

listed activities was that they did not take a political position in the conflict between Israel

and the Occupied Palestinian Territory, nor did they actively support Israel’s occupation of

Palestine. OHCHR recalls, however, that the political position of business enterprises is not

a relevant consideration in determining whether their actions are consistent with the

Guiding Principles or whether their business activities fall within the ambit of Human

Rights Council resolution 31/36.

56. Some companies that acknowledged operating in or with the settlements highlighted

the fact that they were acting in compliance with Israeli national laws and in accordance

with all required permits and authorizations.

57. According to the commentary to Guiding Principle 11, the corporate responsibility

to respect human rights “exists over and above compliance with national laws and

regulations protecting human rights”.46 Compliance with the national laws and regulations

of a State does not necessarily equate to compliance with the Guiding Principles or

international law. In the case of Israel, its national laws and regulations that allow for the

establishment, maintenance and existence of the settlements are in direct conflict with

41 Office for the Coordination of Humanitarian Affairs, Area C of the West Bank: Key Humanitarian

Concerns, update August 2014.

42 World Bank Group, Prospects for Growth and Jobs in the Palestinian Economy: A General

Equilibrium Analysis, November 2017.

43 Office for the Coordination of Humanitarian Affairs, East Jerusalem: Key Humanitarian Concerns,

update August 2014.

44 International Labour Office, The situation of workers of the occupied Arab territories, report of the

Director-General, International Labour Conference, 106th session, 2017, para. 21.

45 Commentary to Guiding Principle 11.

46 See also Working Group on the issue of human rights and transnational corporations and other

business enterprises, statement (see footnote 14), pp. 11-12.

international law, as settlements are widely recognized by the United Nations and the

international community as being illegal.

58. Some companies indicated that they had no knowledge or control over the actions of

other entities with which they had business relationships, such as distributors, partners or

other entities in their value chains, and therefore they should not be held responsible for any

harm caused by those entities.

59. According to the Guiding Principles, the responsibility of businesses to respect

human rights extends to their business relationships. Guiding Principle 13 states that

businesses are responsible for preventing or mitigating adverse human rights impacts

directly linked to their operations, products or services through their business relationships,

even if they have not contributed to them; this includes impacts caused by both actions and

omissions.47 The responsibility to conduct due diligence – and in the occupied territory this

involves enhanced due diligence (see para. 37 above) – entails taking active steps to

identify and assess any actual or potential adverse human rights impacts made as a result of

business relationships.

60. Furthermore, in its report, the fact-finding mission stated that business enterprises

conduct their activities in the settlements with “the full knowledge of the current situation

and the related liability risks” and “contribute to their maintenance, development and

consolidation” (A/HRC/22/63, para. 97).

V. Recommendations

61. The United Nations High Commissioner for Human Rights urges all businesses

with which OHCHR has been or may be in contact in carrying out its mandate under

Human Rights Council resolution 31/36 to cooperate with OHCHR with a view to

engaging in constructive dialogue.

62. The High Commissioner acknowledges with appreciation the extension granted

by the Human Rights Council for OHCHR to implement the mandate under

resolution 31/36. Recognizing that this was the first time OHCHR has been tasked

with such a mandate, the High Commissioner is satisfied that significant progress has

been made. However, while the dialogue with concerned business enterprises is

continuing, the work remains ongoing. For the High Commissioner to update the

database as required by resolution 31/36, more resources are required.

47 Commentary to Guiding Principle 13.