Libby Reynolds

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Governance

On 6 December 2021, the Netherlands became the latest European government to announce plans to introduce mandatory human rights and environmental due diligence (HREDD) legislation at a national level, adding to a growing movement and proliferation of national HREDD laws. This puts the Netherlands in the company of the likes of France, Germany and Norway (which have enacted or adopted such laws) and Austria, Belgium and Switzerland, among others (which are progressing their own national HREDD laws).

This development comes despite further delay on the publication of HREDD legislation at an EU level (see our previous Blog Post). On 6 December 2021, the Dutch Foreign Trade and Development minister said that he was “very disappointed” at the European Commission’s further delay to introduce EU mandatory HREDD legislation and announced the Dutch Government’s plans to develop and introduce a national HREDD law instead.

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Continue Reading Business and Human Rights – The Netherlands to Introduce Mandatory Human Rights Due Diligence Legislation

Governance

The European Commission has indefinitely postponed its much-anticipated directive on human rights and environmental due diligence (HREDD) – more than 150 days after it was first expected to be published. While the reason for the delay is unclear, 47 civil society organisations have penned an open letter seeking “full transparency on the reasons for the delay and on the decision-making process going forwards.”

Despite this setback, national HREDD legislation continues afoot: laws have been adopted or are in force in France, Germany and Norway, while proposed national legislation is being progressed in a number of other European countries. Most recently, in December 2021, the Netherlands announced its intent to introduce its own national HREDD law in view of the further delay of the proposed EU law.

Legislative developments aside, investors, civil society and other stakeholders are scrutinising how companies identify and mitigate human rights impacts in their operations and supply chains more closely than ever.

And so the message is clear: companies still need to take steps to develop and reinforce their human rights due diligence programmes, both in anticipation of further mandatory HREDD laws and to respond to stakeholder expectations and demands.

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Continue Reading Business and Human Rights – EU’s Proposed Mandatory Human Rights and Environmental Due Diligence Law Faces Further Delay

Social

During the COP26 summit, a coalition of 190 countries and organisations committed to phase out coal energy by 2040 as part of their commitment to transition to a low-carbon economy.  The coalition also stated, in their ‘Global Coal To Clean Power Transition Statement’, that they would provide a framework to support affected workers, sectors and communities to make a “just transition” away from unabated coal power.  The coalition’s concern is that the transition to a low-carbon economy may leave many coal-dependent economies at risk of economic hardship and social unrest.

The ‘Just Transition Assessment‘ (the Assessment) recently published by the World Benchmarking Alliance (WBA) provides important insight into the metrics that NGOs may lobby for in order to achieve what they view as a “just transition” (for information on some of the WBA’s other initiatives, please see our Corporate Human Rights Benchmark publication).  In carrying out the Assessment, the WBA states that it has measured the actions that some of the world’s most influential companies have taken to support workers and communities whilst they transform to low-carbon business models.

The Assessment contends that there is a “systematic lack of action by  companies to identify, prepare for and mitigate the social impacts of their low-carbon strategies”.  The Assessment goes on to state that these purported inadequacies need to be addressed, as transition risks being adversely affected by social unrest among those whose livelihoods are threatened.

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Continue Reading Just Transition: The World Benchmarking Alliance Publishes Its ‘Just Transition Assessment’

Social

In September 2021, the Business & Human Rights Resource Centre (BHRRC) published a briefing entitled “Social Audit Liability: Hard law strategies to redress weak social assurances” (the “Briefing”).

The Briefing contends that the existing model of social auditing is inadequate and that social auditing is not a substitute for human rights due diligence (see our previous Blog Post).  Among other things, the Briefing reflects on the failure of social audits to detect human rights abuse in the past and on the potential flaws in certification schemes.  Ultimately, the Briefing argues that companies should not solely rely on social audits and certifications and should instead adopt a “transformative approach” to human rights due diligence which goes beyond social auditing.

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Continue Reading Business and Human Rights: The Case to Look Beyond Social Auditing

Governance

“… we renew our call on all governments to develop, implement, and enforce mandatory human rights and environmental due diligence requirements for businesses headquartered or operating within their own jurisdictions or, where appropriate, to further strengthen these regulatory regimes where they already exist.” – a statement from 94 investors representing over $6.3 trillion in AUM

On 7 October 2021, 94 investors representing over $6.3 trillion in assets under management and advisement, sent a statement to European Commissioners and the European Parliament, voicing their support for mandated human rights and environmental due diligence (mHREDD) (the “Statement“). The Statement was sent in light of the upcoming European Commission legislative proposal on Sustainable Corporate Governance. The proposal would require companies to consider their human rights and environmental impacts, allowing them to better manage sustainability related matters in their value chains and overall operations.

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Continue Reading 94 Investors Representing Over $6 Trillion of AUM Voice Support for Mandatory Human Rights and Environmental Due Diligence

Australia - Sydney

On 1 January 2019, the Modern Slavery Act 2018 (Cth) (MSA 2018) came into force in Australia. The MSA 2018 requires entities based or operating in Australia with an annual consolidated revenue of more than 100 million AUS dollars to report annually on the risks of modern slavery in their operations and supply chains, and the actions taken to address those risks. The requirements of the MSA 2018 reflect increasing and strengthening modern slavery obligations around the world (see, for example, our previous Blog Post and earlier Legal Update).

The Australian Council of Superannuation Investors (ACSI) has published a report (the Report) evaluating the quality and compliance of reporting by companies listed on the Australian Securities Exchange (ASX200) during the first reporting cycle under the MSA 2018.  The report sets out a number of recommendations, including how companies can improve their disclosures and how investors can exert their influence to encourage best practice in modern slavery reporting.  Although the recommendations are focused on the ASX200 and the MSA 2018, the Report’s findings are of broader relevance to best practice reporting beyond Australia – and will be of interest to all stakeholders concerned with modern slavery reporting and emerging mandatory human rights and environmental due diligence legislation.

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Continue Reading Business and Human Rights – Reinforcing Modern Slavery Reporting – Lessons from Australia

Asset Management

‘With the most significant change since the GRI Standards launched in 2016, the revised Universal Standards set a new global benchmark for corporate transparency. Fully addressing gaps between the available disclosure frameworks and intergovernmental expectations for responsible business, including human rights reporting, they will enable more effective and comprehensive reporting than ever before.’

– Judy Kuszewski, Chair of GRI’s Independent Global Sustainability Standard’s Board

The Global Reporting Initiative (GRI) have revised their Universal Standards to emphasize and require more transparency in reporting on human rights impacts and due diligence obligations. This is a significant update because all entities reporting in accordance with the GRI standards are required to report on the Universal Standards (now GRI 1, 2 and 3). Previously, human rights-related disclosures were addressed largely in the GRI 400 series on Social topics, on which an organization is required to report only if it determines those topics to be material. Under the revised Universal Standards, all companies reporting in accordance with the GRI Standards will need to be able to identify (and disclose) how they identify severe risks to the economy, environment and people—this now clearly includes impacts on human rights connected with their business, and what they are doing to address these risks.

This development is part of a multi-phase project to update the GRI’s human rights-related disclosures, and the emphasis on “double materiality” brings the GRI standards in line with the UN Guiding Principles on Business and Human Rights (UNGPs) and emerging mandatory human rights and environmental due diligence legislation (see our Previous Blogs here and here).  For companies that already adhere to the UNGPs, these revisions may not present a significant new challenge in practice; however, for companies that have not to date sought to explicitly adhere to the UNGPs, this will present a new challenge in terms of meeting the revised GRI standards.

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Continue Reading Business and Human Rights: Revised GRI Standards Integrate UN Guiding Principles on Business and Human Rights and Foreshadow Emerging Mandatory Human Rights and Environmental Due Diligence Legislation

Energy innovation light bulb graphic interface.

It was recently reported, on 8 September 2021, that investors managing USD 2.3 trillion in assets called for standardised climate and environmental disclosure from more than 1,000 privately held portfolio companies.  The investors, who joined a growing chorus advocating for improved disclosures around environmental issues, requested the private companies to provide such data through the non-profit disclosure platform, CDP, which provides a mechanism for climate disclosures that align with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).  The TCFD recommendations were published in June 2017, and have accelerated the focus on climate disclosures by providing the leading framework for disclosures relating to the financial impacts of climate-related risks.

But what are the TCFD recommendations, and how can companies prepare for reporting in compliance with them?

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Continue Reading TCFD Recommendations: An Update on Climate Disclosures

Social

There is an undisputed trend of increased and strengthened human rights and environmental due diligence laws (for example, see our previous Blogs here and here).  A related trend is the rise of import controls to supplement such measures.  For example, the United States’ Customs and Border Protection agency have in recent times increasingly issued Withhold Release Orders to detain shipments of products suspected to be produced, in whole or in part, using forced labour (for example, see our Legal Updates here and here).

The European Commission is now assessing the adoption of action and enforcement instruments to tackle forced labour. Its consideration of such mechanisms coincides with the forthcoming legislative proposals from the European Commission on Sustainable Corporate Governance (SCG), a key element of which includes an obligation for corporations to undertake human rights and environmental due diligence (HREDD).

A coalition of NGOs, including Anti-Slavery International and the European Coalition for Corporate Justice, have released an NGO position paper raising some key considerations in the development of potential import control measures in tandem with a mandatory corporate HREDD obligation.

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Continue Reading Business and Human Rights: NGOs Set Out Key Considerations for EU Import Controls to Tackle Forced Labour

Governance

The UN’s Intergovernmental Panel on Climate Change’s Sixth Assessment Report (“IPCC Report“), published on 9 August 2021, delivered the starkest warning to date that human activity is responsible for significant changes in the Earth’s climate.  The attention of the world’s scientific, political, and business communities, and of society at large, is increasingly focused…