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.


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

In a recent Blog Post on May 28, 2021, we discussed a landmark court ruling issued by the Hague District Court in May 2021[1], requiring Royal Dutch Shell (Shell) to reduce the CO₂ emissions of the Shell group by net 45% in 2030, compared to 2019 levels. In a statement on July 21, 2021, Shell confirmed that it will appeal against this decision. In the meantime – and pending any final determination – Shell remain bound by the earlier court ruling.

In this Blog Post, we highlight key aspects of the Hague District Court’s decision and Shell’s recent decision to appeal.


Continue Reading ESG Litigation: Shell to Appeal Court Ruling in Netherlands Climate Case

Section 54 of the UK Modern Slavery Act 2015 (MSA 2015) requires large businesses to produce a statement each year setting out the steps they have taken to ensure that their business and supply chains are slavery free, or a statement that they have taken no steps to do this. Legislative reform of some kind has been some time in the offing, particularly since the Government’s response in September last year to the 2019 “Transparency in supply chains consultation” (see our previous Legal Update).

Continue Reading UK Modern Slavery – a Bill to prohibit the “falsification” of slavery and human trafficking statements

The impact of climate change on human rights is considerable and complex.  Air pollution can contaminate the air we breathe; droughts can result in hunger and famine; floods can impact housing and access to potable water.  If it is indeed accepted that climate change has an impact on human rights, then by extension businesses will not be able to prevent adverse human rights impacts unless they integrate climate change into their human rights due diligence processes.

This imperative is being driven among other things by approaching mandatory human rights and environmental due diligence legislation (see our Blog posts here and here) and expanding reporting requirements on environmental and sustainability matters expand (see, for example, our Blog posts here, here and here).


Continue Reading Business and Human Rights: The Environmental Dimension – climate change

On June 11, 2021, the German parliament passed the “Law on corporate due diligence in supply chains” (“Supply Chain Law”) (“Lieferkettensorgfaltspflichtengesetz”). It requires companies to take steps to prevent human rights violations in their supply chains. This builds on the growing momentum for mandatory human rights due diligence (see our previous blog posts here and here).

Continue Reading Business and Human Rights – Germany passes Mandatory Human Rights Due Diligence Law

In May 2021, the International Federation for Human Rights (FIDH) published a report setting out a series of tools investors can use to identify and address human rights risks, including modern slavery risks, in their portfolio companies.  The report includes a sectoral analysis of modern slavery rights in four sectors – Tourism, Construction, Food and Beverage, and Textile and Footwear – and adds to the growing toolkit of ESG-related resources available to investors (see, for example, our briefing Asset Managers: Mastering Non-Financial Risk – The Evolution of Human Rights Due Diligence).

Continue Reading Business and Human Rights – Analysing modern slavery risks in portfolio companies: practical considerations for investors

On 29 April 2021, the German Federal Constitutional Court published its groundbreaking ruling following several constitutional complaints against provisions of the German Federal Climate Change Act of 2019. In its order, the First Senate of the Constitutional Court held that the provisions determining national climate targets and the annual emission amounts allowed until 2030 are incompatible with fundamental rights insofar as they lack sufficient specifications for further emission reductions from 2031 onwards. The German legislator is now obliged to enact provisions by 31 December 2022 that specify in greater detail how the reduction targets for greenhouse gas emissions are to be adjusted after 2030.

Continue Reading ESG litigation: German Federal Constitutional Court rules that the German Federal Climate Change Act is partially unconstitutional

There have been two recent developments in the UK which further highlight the litigation risk for  international companies in respect of the activities of  their foreign subsidiaries. The UK is certainly not the only regime where there has been a notable increase in human rights related litigation but a distinct pattern is emerging.

PGI Group (PGI), a group of companies that operate in the agribusiness and renewable energy spaces, and its Malawian subsidiary, Lujeri Tea Estates Ltd (Lujeri), are facing a legal action in the UK High Court in connection with alleged systemic sexual abuse, including rape, sexual assault and discrimination, in Malawi.  Lujeri is a supplier to a number of known UK tea brands, including Typhoo, Yorkshire Tea and Tetley.  It is also a major supplier of macadamia nuts, which are grown in its Malawi orchards.

In the meantime, British American Tobacco (BAT) and Imperial Brands sought last month to strike out claims made against them and their subsidiaries by Malawian tobacco farmers, which were filed in the UK High Court last December.

These cases add to the growing list of companies to have faced legal claims in the UK courts in respect of the actions of their foreign subsidiaries (see our previous commentary on Camellia plc, Royal Dutch Shell plc and Vedanta Resources plc).  The cases also highlight the increasing litigation risk dynamic amid the growing trend of human rights and environmental litigation and underline the importance of UK companies taking steps to identify, prevent and mitigated human rights-related risks both in their own operations and also in the operations of their subsidiaries.
Continue Reading Business and Human Rights in the UK – Litigation Risk

On 21 April 2021, the EU Commission announced its proposal to extend existing sustainability reporting in a new Corporate Sustainability Reporting Directive (CSRD).  The proposal, which revises the Non-Financial Reporting Directive (the “NFRD“), will extend the reach of sustainability reporting to more companies and will cover more sustainability topics.

This is part of a wider, concerted effort by the EU to legislate for greater E, S and G reporting and accountability standards, like the EU’s proposed mandatory human rights and environmental due diligence law.  It is also part of a larger global trend: for example, New Zealand recently introduced a new Climate Disclosure Law (see our Blog Post on this here). Companies are increasingly embracing voluntary sustainability reporting but there are increased demands for mandatory reporting – the Global Reporting Initiative (GRI) for instance called for mandatory reporting in December last year. However companies’ standards of  voluntary reporting are of variable quality and often do not address the impacts of companies’ business activities on people and the environment.

Key aspects of the proposed Sustainability Reporting Directive:

  1. More companies would be asked to report on sustainability, up from 11,000 previously to nearly 50,000.
  2. The “double materiality perspective” is further reinforced – that is companies have to report on the impact of their business activities on people and the planet across the full value chain, as well as the sustainability risks for the business itself, and to disclose the process for determining their material issues.
  3. Measurements of sustainability will be more consistent, reliable, and therefore comparable, for investors and other stakeholders.
  4. Timing is subject to change, but it is expected these measures would take effect in 2024, i.e. reporting on the financial year ending 2023.


Continue Reading EU Moves Toward Comprehensive Corporate Sustainability Reporting Directive

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.


Continue Reading Business and Human Rights: The Corruption Dimension