EU legislators are being pressed to ensure that, as they progress plans for mandatory human rights and environmental due diligence, they highlight the importance of companies identifying and mitigating corruption.
Global Witness and Transparency International EU published a report in April 2021 which highlights that, despite commitments from every EU country to tackle bribery and corruption, only three of 27 countries (France, Germany and Italy) have enacted legislation that requires companies to prevent and detect corruption. The report proposes that the EU’s proposed mandatory human rights due diligence legislation should make it clear that companies should address the negative risks and impacts of corruption as part of a broader human rights and environmental due diligence obligation.
The report argues that the integration of strong anti-corruption measures into due diligence processes will help to:
- Catalyze business action on corruption, as corruption can (i) cause adverse human rights or environmental impacts in so far as it may, for example, lead to laws or regulations being circumvented or unenforced, and (ii) undermine efforts to reinforce human rights and environmental protection;
- Harmonize the legislative approach to corruption across EU Member States, which will provide greater legal certainty to companies and, in turn, facilitate the adoption of group-wide policies that apply to all EU operations; and
- Remove distortions in competition in the EU’s internal market which create an uneven playing field for companies.
The Fight Against Corruption as a Human Rights Issue
The report refers inter alia to:
- A June 2020 report to the Human Rights Council by the UN Working Group on business and human rights noting that corruption “may undermine the availability, quality and accessibility of goods and services that States need to provide to meet their international human rights obligations. Moreover, corruption undermines the functioning and legitimacy of State institutions and weakens the rule of law. Groups and individuals who have been marginalised and discriminated against suffer disproportionately from corruption, and corruption involving business harms the human rights of workers and communities affected by it.”
- An April 2020 report of the United Nations High Commissioner for Human Rights asserting that the human rights due diligence obligation should encompass a duty to identify and mitigate anti-corruption risk: “Given the negative impact of corruption on the enjoyment of human rights, adopting anti-corruption measures can be seen to be part of human rights due diligence. Linking anti-corruption due diligence with human rights due diligence can improve the effectiveness of both methods.”
Human Rights Due Diligence: Lessons from Anti-corruption Compliance Programs
Legislative clarity on the importance of companies identifying and mitigating corruption as part of their human rights and environmental due diligence would certainly be welcomed. However, companies would be well advised in any event to reflect on corruption risk when undertaking their human rights and environmental due diligence having regard to the matters identified above. They should also exploit the similarities and synergies between human rights and environmental due diligence and anti-corruption compliance programs to combine the two programs, particularly where a company’s anti-corruption compliance program is well-established and more mature.
In particular, anti-corruption compliance programs can offer:
- A structured system for human rights risk management;
- An opportunity for leveraging senior management support for human rights;
- Policy alignment possibilities (e.g., supplier codes of conduct and contract clauses);
- Scope for integration of human rights into well established procedures (such as training, reporting and non-financial auditing);
- Risk assessment methodologies that can be adapted;
- Existing cross-functional collaboration; and
- Collective action opportunities.