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Environmental

Recently celebrating the 10th anniversary of its entry into force, the Nagoya Protocol is a supplementary agreement to the Convention on Biological Diversity of 1992, which seeks to facilitate the protection of biodiversity globally. Parties to the Nagoya Protocol (Parties) have committed to so-called “Access and Benefit Sharing” (ABS) principles regarding the acquisition and utilization of genetic resources and associated traditional knowledge.

In a nutshell, access to those resources is conditioned upon obtaining the prior informed consent of authorities in the country of origin. Resources should then be used according to “Mutually Agreed Terms”, which shall include benefit sharing mechanisms with the country of origin.

This structure places concrete obligations on any company dealing with nature-based products and, notably, a need to obtain appropriate administrative authorizations and set up contractual arrangements toward benefit sharing. Beyond that, the key driver for compliance is to avoid the reputational costs associated with possible allegations of bio-piracy. Given the complexity of the global supply chains involved, global compliance is a challenge.

In this Blog Post, we discuss the practical implications of the Protocol on international businesses and their supply chains.Continue Reading The Nagoya Protocol & Access and Benefit Sharing: Organizing the Supply Chain Toward Protection of Biodiversity Globally

Brazil - Brasilia - Congress

On March 4, 2021, Brazil ratified the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (“Nagoya Protocol” or “Protocol”). Starting on June, 2, 2021, the country becomes a party to the Protocol and will be able to actively take part in discussions and decision-making, including by participating in the next Conference of the Parties serving as the meeting of the Parties to the Nagoya Protocol (COP-MOP 4) scheduled for October 2021.

Brazil is the most biodiverse country in the world, and the ratification comes 10 years after the signing of the Protocol on February 2, 2011. In the meantime, the country passed its own regulations on biodiversity, notably Law 13,123 of May 20, 2015 (Brazilian Biodiversity Law), which provides for access to genetic resources and traditional knowledge, as well as benefit-sharing mechanisms. The Brazilian Biodiversity Law is the national legislation for implementing the Nagoya Protocol and one of the key access and benefit-sharing (ABS) legislations, which places benefit-sharing obligations on manufacturers of finished products developed from Brazilian genetic resources (regardless of who previously accessed the resources).Continue Reading Brazil Ratifies the Nagoya Protocol: One Step Further to Unlock the Potential of Brazilian Biodiversity

Asset Management

The “Find It, Fix It, Prevent It” initiative, which extends to some 56 large investors including M & G, Fidelity International, Schroeder’s and Edentree, seeks to increase the effectiveness of corporate action against modern slavery.

Initially, the “Find It, Fix It, Prevent It” initiative was focused on the hospitality sector, with investors seeking to engage with the largest UK-listed hospitality firms to encourage companies to develop better policies, processes and procedures for tackling modern slavery–and better disclosure. This year, “Find It, Fix It, Prevent It” will look to broaden its engagement with companies to include the construction and materials sector, with plans to commence engagement with targeted companies from the third quarter: the initiative’s activities and future focus are set out in its first annual report. The CCLA estimates that “the construction industry is estimated to contain 18% of the world’s victims of forced labor”. The term “modern slavery” extends to slavery, servitude, human trafficking and forced or compulsory labor (read more on the key indicators of modern slavery here).Continue Reading Business and Human Rights: Investors Call Out “Modern Slavery” and Focus on Hospitality, Construction and Materials Sectors

This month, the American Bar Association (the “ABA“) published a Report on its suggested Model Contract Clauses to Protect Workers in International Supply Chains (the “MCCs“).

While the MCCs are not put forward as a binding standard, they do provide food for thought for companies who are seeking to align their supply chain contracts with the UN Guiding Principles on Business and Human Rights (the “UNGPs“), and the increasing tide of mandatory human rights due diligence legislation (see more on this impending legislation here).

Key takeaways:

  1. The aim of the MCCs is to align drafting in international supply chain contracts with existing human rights due diligence standards and obligations, with a view to providing “operational guidance for mapping, identifying and addressing human rights risks at every tier of the supply chain” and seeking to help companies “implement healthy corporate policies in their supply chains in a way that is both legally effective and operationally likely.”
  2. In aligning supply chain contracts with existing obligations and requiring reasonable due diligence by both contract parties, the MCCs seek to address what could be considered an imbalance in the typical negotiation of supply chain contracts where, traditionally, a buyer has tended to shift all responsibility for human rights issues to the supplier.
  3. The publication of the MCCs pose some interesting considerations for buyers negotiating supply chain contracts. For example, to what extent is it reasonable for the supply chain contract to reflect the stance that abuses of workers’ rights occurring in global supply chains is a shared responsibility of both buyers and suppliers? The cooperative approach submitted is very different to the traditional oppositional relationship between buyer and supplier, where buyers seek to ensure that any and all responsibility for adherence to prescribed human rights standards falls to suppliers by requiring representations and warranties from suppliers on a “strict liability” basis.

Continue Reading Human Rights Due Diligence in Supply Chain Contracts: A Shared Responsibility of Buyer and Supplier?

Governance

With the advancing wave of mandatory human rights laws (see our previous Blog Posts here and here) and the increasing focus from investors and other stakeholders on human rights (see our previous Blog Post), it is ever more incumbent on companies to take demonstrable steps to identify, assess and mitigate actual or potential human rights harms.  This includes taking steps to ensure that no forced labor takes place within an organization or, increasingly, its supply chain.

Indeed, the Sustainable Development Goals (SDGs) include specific targets relating to forced labor.  In particular, the SDGs call for (i) the elimination of all forms of violence against all women and girls in public and private spheres, including trafficking and sexual and other types of exploitation (SDG 5.2) and (ii) immediate and effective measures to eradicate inter alia forced labor (SDG 8.7).

But what indicators of forced labor should companies look out for?Continue Reading Business and Human Rights: What Are The Key Indicators of Forced Labor?

United Kingdom - London

On March 11, 2021, the UK Government launched an online modern slavery statement registry. The announcement follows a commitment from the UK Government to strengthen the reporting requirements under section 54 of the Modern Slavery Act 2015 following its Transparency in Supply Chains Consultation.

The registry is intended to enhance transparency and accessibility…

Risk Management

With the surge of climate and stakeholder litigation all over the globe–comprising climate, supply chain and human rights issues–not only should governments be concerned, but mainly the private sector. It is not new that, in addition to creating stakeholder engagement and pushing forward public policies, ESG concerns pose significant reputational and financial risks, particularly to corporations. This is not only true for those companies dedicated to carbon-intensive activities or exposed to supply chain liabilities, but also to financial institutions enabling the development and expansion of such activities.

This is a particularly relevant matter in Brazil, which already relies on a well-established legal and case law framework capable of supporting sanctions and prosecution against corporations and financial institutions deemed liable in connection with environmental degradation.

In this Blog Post, we discuss the existing legal framework in Brazil with respect to environmental degradation, and how that framework might apply to the broader range of ESG issues, from climate to supply chain and human rights liability.Continue Reading Climate and Stakeholder Litigation: Why Does It Matter to Companies Operating In Brazil?

Asset Management

How will EU Member States enforce the new EU mandatory human rights and environmental due diligence laws? What disclosure will be expected of companies and what steps will be deemed adequate?

Shift, the highly influential centre of expertise on the UN Guiding Principles on Business and Human Rights, has released a discussion draft seeking to inform the development and enforcement of these new laws. The draft provides valuable insight into the criteria that national regulators could use in assessing the quality of a company’s diligence practices by proposing six “signals of seriousness” for human rights due diligence:

  1. Governance of Human Rights;
  2. Meaningful engagement with affected stakeholders;
  3. Risk identification and prioritisation;
  4. Taking action on identified risks;
  5. Monitoring and evaluating progress in addressing risks; and
  6. Providing and enabling remedy.

How many companies can confidently assert that they currently exhibit these six signals? We highlight Shift’s helpful criteria in this Blog Post.Continue Reading Human Rights Due Diligence: Six Signals of Seriousness