Human Rights

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Companies have a substantial impact on human rights when carrying out their business activities. The United Nations Guiding Principles on Business and Human Rights set the expectation that companies conduct human rights and environmental due diligence (“HREDD“) with respect to their business activities, which includes assessing and responding to actual and potential human rights issues.

The expectation for companies to conduct HREDD is increasingly becoming mandated by legislators across the globe. For example, in Germany the Supply Chain Due Diligence Act will enter into force on 1 January 2023. It is arguably the most comprehensive law in this area to date, since in-scope companies will have to comprehensively analyse their global supply chains, assess the risks within their supply chains and act accordingly. Further, in the European Union an equivalent directive is upcoming. The European Commission’s draft corporate sustainability and due diligence directive (the “Draft Directive“) – which is anticipated to be adopted in 2023 – sets out a proposed HREDD standard, under which companies will be obliged to identify actual and potential adverse human rights and environmental issues arising from their operations or those of their subsidiaries and, where related to their value chains, from their “established business relationships” (for more information on the Draft Directive, read our earlier blog posts here and here). Involving and engaging stakeholders in a meaningful way will be critical for in-scope companies to successfully implement HREDD processes and ensure compliance with these obligations.

To help companies engage with stakeholders, the UN Global Compact Network Germany (“GCNG“) – an organisation created to assist companies in meeting their human rights-related responsibilities – has recently published its “What makes stakeholder engagement meaningful? 5 insights from practice” report (the “GCNG Report“). The GCNG Report highlights five “selected success factors” that companies can adopt to help ensure their engagement with stakeholders is effective and meaningful.…

Continue Reading Business and Human Rights: meaningful stakeholder engagement in due diligence

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On 28 July 2022, 161 States voted in favour of a United Nations General Assembly (“UNGA“) resolution declaring access to a clean, healthy and sustainable environment, a universal human right (“UNGA Resolution“). In a remarkable display of global solidarity, the resolution received zero ‘against’ votes, and eight ‘abstain’ votes. This vote follows the passing of a similar resolution in the United National Human Rights Council in October 2021. UN Special Rapporteur on human rights and the environment, David Boyd, hailed the UNGA Resolution as having the potential “to be a turning point for humanity”.…

Continue Reading Business and Human Rights: New Universal Human Right To Access A Clean, Healthy And Sustainable Environment

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Investors are increasingly focussed on how companies address modern slavery and wider human rights issues when making investment decisions.  Despite this, many UK companies are failing to adequately report on, and take sufficient steps to eradicate, modern slavery within their businesses and supply chains, according to the Financial Reporting Council’s (the “FRC“) recently published Modern Slavery Reporting Practices in the UK Report (the “Report”).

The Report, which analysed the reporting practices of 100 companies listed on the London Stock Exchange’s Main Market, highlighted that the majority of companies are failing to disclose sufficient information to enable stakeholders to make informed decisions about companies’ compliance with modern slavery legislation.  Such shortcomings in the quality of companies’ modern slavery reporting presents a number of compliance, reputational and financial risks to companies.…

Continue Reading Business and Human Rights: the Financial Reporting Council identifies failings in UK companies’ modern slavery reporting

United States - Washington DC

In December 2021, President Biden signed the Uyghur Forced Labor Prevention Act (“UFLPA”) into law. The UFLPA creates a rebuttable presumption that goods “mined, produced, or manufactured wholly or in part” in the Xinjiang Uyghur Autonomous Region (“XUAR”) of China, or by certain other entities in China, are made with forced…

Governance

In 2017, following multiple legislative proposals and lengthy negotiations, France became the first EU Member State to adopt a cross-sectoral law on Corporate Sustainability Due Diligence (the “French Law“). At the time the French Law was adopted, it was highly criticized, in part because France appeared to be going “out on a limb” and a broader international response was felt to be necessary.

This February, an important step towards an EU-wide Corporate Sustainability Due Diligence legal framework was taken with the Proposal of the EU Commission for a Directive on Corporate Sustainability Due Diligence (the “EU Proposal“). This follows legislative developments in individual EU Member States mandating human rights and environment due diligence in supply chains – see our previous blog posts on national HREDD movements in Germany and the Netherlands, for example.…

Continue Reading Corporate Sustainability Due Diligence: How the EU proposal Could Impact France’s Existing Due Diligence Law

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On 23 February 2022, the European Commission published its much-anticipated draft corporate sustainability and due diligence directive (the Draft Directive), after a number of delays (see our Previous Blog).  The Draft Directive sets out a proposed EU standard for human rights and environmental due diligence (HREDD). This includes an obligation for companies to take appropriate measures to identify actual and potential adverse human rights and environmental impacts arising from their own operations or those of their subsidiaries and, where related to their value chains, from their “established business relationships”.  The Draft Directive also provides a mechanism for sanctions to be imposed for non-compliance with the due diligence obligations and provides for director responsibility and accountability in relation to a company’s HREDD programme.

Whilst the Draft Directive remains subject to further legislative scrutiny and approval, it provides the most detailed insight yet as to the scope and form of the prospective EU HREDD obligations, and it provides a helpful template for corporates to continue developing their due diligence policies and procedures designed to identify, assess and mitigate adverse human rights and environmental impacts – both in their operations and in their supply chains.…

Continue Reading Human Rights and the Environment – EU publishes draft Corporate Sustainability Due Diligence Directive

United States - New York City

The fashion industry often faces scrutiny from stakeholders to improve due diligence in supply chains.  A landmark proposed bill in New York, drafted last October and presented for the first time to a legislative committee on January 5 2022, is seeking to drive accountability and transparency in the supply chains of fashion companies. The Fashion Sustainability and Social Accountability Act (the “Act“) historic in its scope and nature, would require fashion retail sellers and manufacturers to disclose their environmental and social impacts, and to set out targets to reduce those impacts.
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Continue Reading ESG: Fashion in Focus – The Fashion Sustainability and Social Accountability Act

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.…

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.…

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

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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.…

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