Taking a dynamic approach to human rights due diligence 

Fri 22 Sep 2023

Respecting human rights is not a passive responsibility. It requires actions by companies; actions that are bound by an overarching policy commitment and a clear due diligence process with remediation systems in place. To help establish policies and procedures, companies are turning to the UN Guiding Principles (UNGPs) to prevent, address and remedy human rights abuses. But is guidance understood and used effectively?  

For example, UNGP17 gives businesses the framework to understand where their human rights risks lie so that they can start putting policies and processes in place to mitigate those risks as they arise. Essentially, it improves a company’s ability to analyse, integrate and act on the findings of due diligence assessments. 

However, as companies, markets and industries evolve, so do the risks. This is an important point in terms of how companies move from a passive stance on human rights responsibilities to the ability to take a more dynamic approach that involves purposeful actions.   

Moving from guidance to law 

Another reason for companies to appreciate and improve their understanding of human rights due diligence is the transition from soft to hard law. We see the UNGPs and the Organisation for Economic Co-operation and Development’s (OECD) due diligence guidance being translated into sustainability law at both European member state level and pan-European level. As part of the EU Green Deal, the Corporate Sustainability Reporting Directive (CSRD) and the Task Force on Climate-related Financial Disclosures (TCFD) are already in play for large and listed companies. How companies successfully interpret and integrate new sustainability laws into their systems and processes will depend on the ability to take a more active approach to evolving human rights due diligence requirements. 

Convergence of environmental and social impacts 

There is a growing acknowledgement at policy level of the intersection between environmental and human rights due diligence. The German supply chain law, which is already in force for some companies, requires organisations to understand their environmental impacts from a social perspective and what responses are in place. This acknowledgement that the two are inextricably linked requires companies to broaden their human rights due diligence to consider both environmental and social impacts across the supply chain. 

Forced labour bans on the radar 

Increasingly, forced labour import bans are being implemented. In the US, there are currently over 50 ongoing investigations into imported goods. The burden of proof is on the importer to prove that forced labour wasn’t used in producing goods brought into the country. In Europe, more legislation on forced labour is on the way and other global jurisdictions are likely to follow. Having the correct human rights due diligence processes in place will ensure you don’t get blindsided. 

Standard setters and regulators  

Standard setters are increasingly talking to regulators to support an understanding of what companies should do regarding human rights due diligence. Topics such as what types of disclosures companies should make, whether they are robust and comparable across sectors and how disclosures should be measured are now on the agenda. 

If we take the UK’s Modern Slavery Act as an example, most companies have a focus on reporting rather than action. However, regulators now realise that asking companies to report alone is no longer sufficient. The introduction of the Corporate Sustainability Due Diligence Directive (CSDD) in the EU is a signifier of this, demonstrating a transition from a duty to report to a duty to act that companies will need to implement. 

There is no doubt that putting in place effective human rights due diligence procedures requires high levels of human and financial capital to implement, stress test and monitor the effectiveness of policies in place using appropriate key performance indicators (KPIs). However, this investment will deliver positive returns. Companies that can analyse, integrate and act on the findings of due diligence assessments will equally be in the best position to avoid falling foul of evolving human rights legislation.