The focus of this year’s UN Forum on Business and Human Rights was “putting rights holders at the centre” of business’ human rights due diligence efforts. In this post, ahead of Human Rights Day, we distill the important takeaways for business, drawing on Forum discussions among a range of stakeholders, including corporate representatives, governments, NGOs and rights-holders themselves.
1. The business and human rights legal landscape continues to evolve at a rapid pace and this trajectory will continue.
Many governments worldwide are considering and implementing new human rights due diligence legislative initiatives. Aside from laws already passed and the EU sustainability due diligence initiative (see our earlier alert), there are similar proposals on the table in Spain, Belgium, Netherlands, Brazil, and other countries. Japan recently published non-binding guidance for business, intended to drive good practice. Other countries are developing “National Action Plans” (“NAPs) under the UN Guiding Principles on Business and Human Rights (“UNGPs”), which can be a pre-curser to binding regulations. While legislative initiatives to date have largely been found in the Global North, we are also seeing movement in other regions: The African Union recently convened the first African Forum on Business and Human Rights.
While at varying stages of development and implementation, the fundamental tenets of these due diligence laws generally are similar. Companies are required to implement due diligence programs to identify and mitigate adverse human rights (and often environmental) impacts in their own operations and global supply or value chains.
2. With this evolution of legal standards comes a range of emerging challenges for businesses.
While there was no one Forum session dedicated to the topic, some hurdles for businesses were clear sub-text to many of the discussions. Challenges include:
- Striking an appropriate balance between being transparent (encouraged in standards such as the UNGPs) and mitigating unclear, evolving legal enforcement and litigation risks. This tension is particularly stark when it comes to certain aspects of human rights due diligence programs, such as human rights impact assessments and public-facing human rights-related disclosures.
- Prioritisation of resources. Some emerging legal due diligence requirements are risk-based. However, even taking a risk based approach to global human rights due diligence can be a vast undertaking, particularly if—as in the case of the EU due diligence proposal—obligations extend to a company’s entire global value chain (covering both upstream supply chain risks and downstream end-user-type risks). Taking a “rights-based” approach to due diligence would require companies to engage key stakeholders, including rights-holders potentially impacted by business activities and decisions, in advance of business activity (for example, decisions about new projects or investments and in the design of grievance mechanisms). This approach can be a challenge to embed across a global business.
Adding to the complexity, while there are commonalities across human rights due diligence requirements–which mean there are benefits to taking a “global” approach to compliance–there is fragmentation even amongst laws already proposed or in force. In order for human rights due diligence to be manageable and meaningful, businesses need to strategically prioritise resource and risk mitigation efforts.
- Navigating conflict. Businesses seeking to align their activities with the UNGPs may be confronted with a variety of challenging conceptual tensions: for example, how to operate in a way that respects competing and potentially conflicting human rights; or how to operate where local laws or systemic practices are at odds with international human rights standards. Businesses should consider implementing policies and procedures that establish a framework for how to navigate these conflicts as and when they arise.
- Embedding a culture of respect for human rights while avoiding “tick-the-box” compliance. As the legal and enforcement landscape continues to evolve, business’ Legal and Compliance teams will be called on to play a more significant role in business’ human rights due diligence and risk management. To avoid human rights due diligence becoming a pro forma compliance exercise—a concern voiced by various speakers during the forum—both in-house and outside counsel and compliance experts should familiarise themselves with the UNGPs and draw on existing substantive expertise in this area by partnering with sustainability experts. Increasing awareness of key human rights risks and best practices among key internal stakeholders outside of traditional sustainability and social compliance functions, is an important step that businesses can take to encourage meaningful identification and mitigation of human rights impacts.
3. Businesses have a key role to play in facilitating access to remedy for victims of adverse human rights impacts.
Leading standards such as the UNGPs encourage businesses to implement “operational level grievance mechanisms” (“OGMs”), channels through which rights-holders can raise concerns about the impact a company has had on them. These mechanisms can be company-wide or implemented at a site or project level. OGMs are key to early detection of concerns about human rights impacts that a company either caused, contributed to, or is directly linked to, and to enabling effective access to remedy (which might be financial and/or non-financial in nature) for rights-holders. As with other aspects of human rights due diligence, there is no “one size fits all” approach to OGMs, which should be designed in line with the UNGP effectiveness criteria and in consultation with rights-holders for appropriate tailoring to the local context and rights at issue.
Forum participants also stated that investors have a critical role to play in facilitating access to remedy. On a panel focused on the role of investors in business and human rights, asset managers described experiences in which they were able to exercise their leverage through “active ownership” steps such as shareholder votes, engagement with investee companies, and even direct engagement with rights holders to enable access to remedy where adverse human rights impacts had occurred.
4. Building relationships with diverse stakeholders is key.
The scope and systemic nature of some human rights risks makes it challenging for a single business to tackle them alone. For example, where a harm has been caused by a supplier, a single business with limited buying power may not have sufficient leverage to drive risk mitigation and remediation. Building collaborative relationships with a range of stakeholders, including multi-stakeholder initiatives, industry peers (with appropriate safeguards in place to avoid violating competition laws), civil society and governments therefore continues to be essential.
Businesses also have an opportunity to engage with governments to encourage stronger action where systemic human rights issues prevail. While one discussion at the Forum focused on the risks of “corporate capture”, business has an interest in remaining engaged in policy discussions surrounding new regulatory frameworks for human rights and environmental due diligence with a view to enabling an environment for responsible business where due diligence can be risk-based, effective and achievable.
5. Business and human rights discourse is becoming increasingly multi-dimensional.
While much of the legislation and mainstream business and human rights discourse to date has focused on supply chain risks—in particular labour rights and environmental-related risks—other business-related human rights risks are increasingly in focus in discussions at the Forum. For example:
- The intersection between climate and other environmental responsibilities and human rights risks was a recurring theme. This follows the UN General Assembly’s formal recognition of the right to a clean, healthy and sustainable environment as a human right earlier this year. There is some concern that human rights concerns are not adequately weighted as businesses take steps to reduce their greenhouse gas emissions and purchase carbon credits to meet their net-zero targets. For example, carbon reduction and removal projects, especially those based on nature-based solutions such as forests and wetlands may implicate various human rights concerns. Robust due diligence will be important to properly identify, assess and mitigate these concerns.
- Potential downstream human rights impacts of products and services in sectors such as the technology sector are being brought into sharper focus. Digital rights have long been discussed in other forums. For example, the EU General Data Protection Regulation imposes data protection rules aimed at protecting the human rights of privacy. New legislation such as the EU Digital Services Act, AI Act proposal and Data Act proposal place an increasing focus on the rights of users and protection of fundamental rights (including, for example through requiring large online platforms to carry out risk assessments that take into account actual or foreseeable negative effects on fundamental rights). However, it is important for these digital rights issues not to be tackled in silo. Ensuring that relevant business functions are aligned and that these risks are considered through a human rights due diligence lens is key to ensure a holistic, comprehensive approach to global human rights due diligence across a global business.
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This year’s Forum again highlighted the importance that companies implement robust, global human rights due diligence frameworks. These should include effective, cross-functional governance and oversight, policies and procedures, processes to identify and mitigate human rights risk, and effective grievance mechanisms and remediation strategies.
Covington has deep experience assisting businesses in designing and implementing global human rights due diligence programmes.