On 30 November 2022, the Council of the European Union (the “Council”) adopted its negotiating position on the European Commission’s proposal for a corporate sustainability and due diligence directive (the “Draft Directive”). As discussed in our previous blog posts (which you can read here and here), the proposed Draft Directive set out an EU standard for human rights and environmental due diligence (“HREDD”) and required EU member states to introduce legislation making in-scope companies responsible for violations of HREDD standards across their entire value chain. This meant that companies would have to conduct HREDD on their suppliers and clients, and could be held liable for how their products and services are used and disposed of. Although the fundamental principles of the proposed Directive remain intact, the Council’s suggested amendments to the Draft Directive do include some important changes.Continue Reading Human Rights and the Environment – EU Council responds to the draft Corporate Sustainability Due Diligence Directive
On 21 November 2022, the World Benchmarking Alliance – a non-profit organisation that develops benchmarks to hold companies to account for their part in achieving the United Nations Sustainable Development Goals – published its 2022 Corporate Human Rights Benchmark Insights Report (the “2022 Report“).
Compared to previous iterations (which we have discussed in a previous blog post here), the 2022 Report devotes more attention to companies’ efforts to ensure that human rights are respected within their operations and supply chains, rather than simply focussing on the human rights-related commitments that companies have made. The 2022 Report also focusses on companies’ stakeholder engagement, their business models, strategies and risks, and whether they prohibit forms of forced labour.
In applying this revised methodology, the 2022 Report concludes that companies are better recognising their human rights-related responsibilities and have improved their human rights-related risk management strategies. However, the 2022 Report also highlights that the pace of this improvement has been very slow.Continue Reading Business and Human Rights: Corporate Human Rights Benchmark 2022 shows that corporate respect for human rights has gained momentum
The requirement for companies to conduct human rights diligence (“HRDD“) is increasingly being implemented by legislators across the globe. For example, the EU is expected to adopt its draft corporate sustainability and due diligence directive in 2023. Importantly, the Directive will apply to Japanese companies and their subsidiaries if they meet certain criteria (for further information on the applicability of the directive to Japanese companies, read our earlier blog post here). Japanese companies are, therefore, being required to strengthen their HRDD processes as a result of the legislation of foreign jurisdictions (including the EU).
On 13 September 2022, the Japanese Government published its Guidelines on Respecting Human Rights in Responsible Supply Chains (the “Guidelines“), which recommend that all enterprises engaging in business activities in Japan respect human rights in their supply chains and carry out HRDD.Continue Reading Business and Human Rights: Japan publish Guidelines on Respect for Human Rights in Responsible Supply Chains
Investors across the globe are increasingly putting pressure on legislators to mandate human rights and environmental due diligence (“HREDD“). The UK Government has not been immune from such pressure.
As highlighted in our earlier blog post, in early September 2022, a group of 47 companies, investors, business associations and initiatives operating in…
The expectation for businesses to conduct human rights and environmental due diligence (“HREDD“) is increasingly becoming mandated by legislators across the globe. As discussed in our earlier blog post, mandatory HREDD obligations are already in-place across Europe, including in France, Germany and Norway, whilst the EU is expected to adopt the draft Corporate Sustainability and Due Diligence Directive – which sets out a proposed mandatory HREDD standard – in 2023. Although the UK Government has announced its intention to introduce a new Modern Slavery Bill (see pages 83 to 84 of the Queen’s Speech briefing, published on 10 May 2022), the UK Government has not indicated that it intends to follow Europe’s lead in introducing a UK-level mandatory HREDD law.
As a result, in September 2022, 47 companies, investors, business associations and initiatives operating in the UK published a joint statement calling on the UK Government to “introduce a new legal requirement for companies and investors to carry out human rights and environmental due diligence“. This follows calls, in August 2022, from a group of 39 investors for the UK Government to bring forward a ‘Business, Human Rights and Environment Act’ to mandate all companies operating in the UK to conduct HREDD.Continue Reading Business and Human rights: Investors call on the UK Government to mandate human rights and environmental due diligence
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
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
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
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…
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