Legislative initiatives regulating businesses' impacts on human rights: what do businesses need to know?
Governments are implementing legislative initiatives designed to govern businesses' management of their negative impacts on human rights.
These requirements increasingly form part of broader efforts to drive responsible business conduct, sustainable corporate governance, and to include business in tackling climate change.
We recently published a briefing with the Global Business Initiative on Human Rights, 'Business and Human Rights: Navigating a Changing Legal Landscape', in which we consider these developments. We provide an overview of key legislative developments on business and human rights related issues across the world. We also identify five key points that businesses need to know to navigate this changing legal landscape which are summarised below.
1. Piecemeal legislation is giving rise to fragmented legal obligations to report and/or carry out due diligence on human rights related issues, and in some instances environmental issues. Over the last ten years, a number of countries and the EU have put into place legislative and regulatory initiatives aimed at business concerning human rights issues. However, as domestic legislation proliferates, companies will find themselves under pressure to comply with an array of laws, with each differing in scope and application, placing different demands on businesses.
2. Civil litigation seeking accountability for human rights harms is likely to increase. Legislation providing for corporate action on human rights related issues includes (to varying degrees) consequences for non-compliance – such as the French Loi de Vigilance which permits parties to apply to the courts for injunctive relief. In addition, climate change litigation increasingly relies on or incorporates claims related to adverse human rights impacts or abuses.
3. The growing regulation of sustainability issues including on ESG and sustainable finance will drive attention towards the implementation of responsible business frameworks. Businesses are now increasingly required to address their environmental, as well as human rights impacts. In particular, governments are seeking to harness the influence of finance to achieve sustainable growth while addressing climate and social challenges. The legislative developments on the horizon are likely, to varying degrees, to incorporate due diligence obligations and the standards set for business are likely to refer to or be influenced by frameworks for the management of responsible business conduct, such as the UN Guiding Principles on Business and Human Rights (UNGP) and the OECD Guidelines for Multinational Enterprises.
4. Alongside human rights due diligence requirements, states are using a wider range of legal and policy approaches to strengthen businesses' respect for human rights and ensure other responsible business practices are followed. States now use a range of measures to place pressure on businesses to take action in relation to actual or potential adverse human rights impacts in their operations and supply chains. These include economic (so-called 'Magnitsky') sanctions, procurement-related requirements and trade-related restrictions.
5. Businesses need to remain focused on effective implementation of the corporate responsibility to respect under the UNGP to achieve meaningful outcomes for people. Businesses should continue to look to the UNGP as a standard for their policies and procedures and understand that implementation is more than a check-box due diligence exercise. It is a collaborative, continuous process. They should also consider putting into place grievance mechanisms designed to provide access to remedy for human rights-related harms that occur in their supply chains.
For more information on this topic, please see our briefing, 'Business and Human Rights: Navigating a Changing Legal Landscape'.