Human rights due diligence for business: elements and developments

This is a cross-post of a piece I wrote for the new Irish Centre for Human Rights blog. The Centre, which is based in the School of Law at the National University of Ireland, has just launched its blog with the aim of providing a platform for academic commentary and creative work on the broad subject of human rights, locally and globally, from staff, researchers and guest contributors. Be sure to follow!

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In the field of business and human rights, the exercise of human rights due diligence by companies is viewed as a core vehicle for ensuring that businesses respect human rights through the taking of preventive measures and addressing human rights impacts. The United Nations Guiding Principles on business and human rights describe the corporate responsibility to respect human rights as meaning that “business enterprises should act with due diligence to avoid infringing on the rights of others and to address adverse impacts with which they are involved”. Translating the Guiding Principles’ policy recommendation on human rights due diligence into practice remains an ongoing work in progress, with a number of efforts underway aimed at having States made it a legal requirement that at least certain companies engage in human rights due diligence. For example, the latest draft of the proposed international treaty on business and human rights envisages an obligation for future States parties to “adopt measures necessary to ensure that all persons conducting business activities, including those of transnational character … undertake human rights due diligence”.

In this post, I want to touch on some of the key elements of human rights due diligence for business enterprises, as well as outlining recent developments that point towards the further development of legislation at the national level on mandatory human rights due diligence. The Covid-19 crisis has highlighted both the necessity of such obligations for companies and the insufficiency of progress on this front to date. In their recent statement concerning the global pandemic, the UN Working Group on business and human rights has reiterated the centrality of human rights due diligence:

For businesses, effective human rights due diligence should be conducted to avoid or minimize harm to people in the current context. Prevention is always better than cure – and integration of human rights expertise in crisis management teams will help businesses being better positioned to identify and address risks to people that may not be front and centre among other business functions. It may also help business address future legal risks (because treating people with dignity is the right thing to do).

Attuned to the pressing need to go beyond voluntary measures, the European Union’s Commissioner for Justice, Didier Reynders, announced at the end of April that the Commission will introduce a legislative initiative for mandatory human rights due diligence for companies as part of the European Union’s Covid-19 recovery package. While the details of this legislative proposal are to be worked out, a broad outline of the concept of human rights due diligence for business already exists.

According to the United Nations Guiding Principles, human rights due diligence means that companies should have a process in place “to identify, prevent, mitigate and account for how they address their impacts on human rights”. This process should assess actual and potential impacts on human rights, which leads to business enterprises taking action based on their findings, tracking responses, and communicating how such impacts on human rights are then addressed. Guiding Principle 17 sets out that human rights due diligence:

(a) Should cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships;

(b) Will vary in complexity with the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations;

(c) Should be ongoing, recognizing that the human rights risks may change over time as the business enterprise’s operations and operating context evolve.

Further elaboration on human rights due diligence is contained in the Guiding Principles themselves, as well as in numerous subsequent reports and initiatives. A considerable challenge arises in taking these somewhat broad recommendations and developing legislation at the national level that is sufficiently specific as to enable its implementation by business and enforcement by State authorities.

A small number of countries have already adopted human rights due diligence laws, oftentimes with a focus on specific human rights harms, such as modern slavery or child labour, or with an application to a limited category of companies, usually the largest business enterprises. Such laws have mostly been aimed at increasing corporate transparency, by creating reporting obligations for relevant companies in relation to certain social issues, albeit with limited and at times weak sanctions for non-compliant businesses. France’s duty of vigilance law stands somewhat apart by creating civil liability for relevant companies for failing to meet their obligations. Last year, dozens of German businesses called for the introduction of mandatory human rights and environmental due diligence so that “no company is allowed to escape its responsibility without consequences or to make profits at the expense of people and nature”.

Against this backdrop, and in the context of a global pandemic entailing serious health, social and economic damage, the recent statement of the European Commissioner for Justice is significant. At a meeting of the EU Parliament’s Responsible Business Conduct Working Group, Commissioner Reynders signalled a move to adopting mandatory human rights due diligence next year. The announcement came in the aftermath of an extensive European Commission study on due diligence across Members States of the European Union which demonstrated the limitations of a voluntary approach to this issue. The Commissioner’s comments have been welcomed so far by the European Coalition for Corporate Justice, Global Witness, Amnesty International and Human Rights Watch.

A planned consultation for the proposed EU legislation provides an important opportunity to contribute to the working out of the scope of the proposed legislation – which companies will be covered, which human rights issues are to be addressed, and the extent of companies responsibilities extraterritorially and throughout the supply chain – as well as how such legislation will be implemented and enforced. Civil society organisations will likely seek a maximalist approach, as with the proposed international treaty, although States and businesses may favour legislation of limited scope. Member States can of course choose to go beyond what is eventually agreed, if it were considered overly narrow, for example, and to continue with existing or planned national legislation that may address specific sectors or particular concerns.

From a global perspective, the prospects of domestic human rights due diligence laws beyond European States are less promising at present. The proposed international business and human rights treaty, and its articulation of a human rights due diligence obligation, remains a long way off being agreed. Countries can of course adopt such legislation, as Australia has done with its Modern Slavery Act 2018, but absent an international obligation to do so, such as arose under international treaties relating to corruption, there may be insufficient pressure to act.

In the Irish context, the National Plan on Business and Human Rights 2017-2020 takes a soft approach to human rights due diligence by committing, for example, to “[e]ncourage and support awareness and effective human rights due diligence by State owned or controlled companies”. This falls short of calls, such as that by Irish Human Rights and Equality Commission for mandatory human rights due diligence, as well as the interpretation of the Committee on Economic, Social and Cultural Rights that States parties to the Covenant have a “a positive duty to adopt a legal framework requiring business entities to exercise human rights due diligence”. Business representative organisations in Ireland have not been supportive of mandatory human rights due diligence to date given the potential burden on Irish businesses. As it stands, Irish companies over a certain size are required to report on any human rights due diligence they may have undertaken pursuant to the 2017 Regulations implementing the EU’s Non-Financial Reporting Directive.

As the severe economic consequences of Covid-19 take hold, certain Irish companies stand accused of having failed their employees, such as by going into voluntary liquidation instead of availing of government supports to sustain jobs. Other human rights concerns involving the private sector include the privacy and data protection issues related to Covid-19 contact tracing apps. Domestic legislation on human rights due diligence in Ireland will not be a panacea for all potential human rights issues, but it should serve to embed human rights concerns with business decision-making. The prospects for such legislation have increased considerably with the recent statement from the European Commission.

 

 

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