Civil society and corporate lawyers should work together on human rights due diligence
Lise Smit, Senior Research Fellow in Business and Human Rights, British Institute of International and Comparative Law (BIICL)
Current trends suggest the law could drive corporate action on human rights
In the current legal framework, direct corporate legal obligations for human rights are rare. As a result, claimants and their legal representatives have found creative ways to bring human rights claims through other avenues such as tort, consumer claims and statutory provisions.
However, we are seeing some examples of corporate legal obligations for human rights developing, centred around the standard of human rights due diligence (HRDD). Examples include the 2017 French Duty of Vigilance Law, and the Swiss counter-proposal for mandatory HRDD.
There have also been proposals for some form of mandatory HRDD in Finland, Germany and at EU level. In the UK, the UK Joint Committee on Human Rights suggested a 'failure to prevent' mechanism for corporate human rights abuses. It is fair to speculate that we are looking at a future landscape of mandatory HRDD, at least in the EU.
HRDD is an area where human rights experts and corporate legal advisers will need to join forces.
The concept of HRDD was first introduced by the UN Guiding Principles on Business and Human Rights (UNGPs), as part of the corporate responsibility to respect human rights. HRDD is fundamentally different from traditional due diligence as understood in the business context: it is not just a one-off tick-box exercise, but a far-reaching standard of care, a continuous and wide process.
It includes assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking the responses, and communicating on how impacts are addressed. HRDD should be ongoing, cover all human rights, and include the impacts of third party business partners such as suppliers.
And, perhaps most importantly, HRDD should focus on the risks to the rights-holders, and not just on the risks to the company. This is a significant mind-shift in terms of corporate risk management, which is traditionally focused on the risks to the company. In this way, it is absolutely essential for civil society to play a role: local civil society and human rights experts are the ones who know what the risks are to rights-holders.
One of the current questions that has not yet been answered to date is: What is effective HRDD? Many companies are using contractual clauses and codes of conduct, but monitoring and enforcement is limited. Often, the same companies which include human rights expectations in their contracts, would, through a different sourcing team, drive down prices so low that suppliers are unable to adhere to these standards.
This illustrates the need for cross-functional approaches within companies. In other words, people need to know about human rights in all the company’s teams. And, as a result, people need to know about human rights in all the law firm’s teams that are advising companies.
Another question is: What does an effective grievance mechanism look like? The UNGPs set out a few requirements: they have to be legitimate, accessible, predictable, equitable, transparent, rights-compatible, and a source of continuous learning, but there are various challenges in practice.
At the 2017 UN Forum on Business and Human Rights, which was focused on access to remedy, it was interesting that both the companies and the rights-holders agree that they want to avoid litigation in twenty years’ time.
All these questions require human rights experts and civil society to work with corporate lawyers and companies, rather than being at odds with each other.
However, the vigour with which some companies, which are perceived to be human rights 'leaders', oppose legal claims over alleged human rights abuses have raised serious concerns about the value of voluntary commitments. In order to be effective, HRDD needs to be required as a substantive legal standard.
Similarly, the burden of overseeing implementation of HRDD cannot simply be left to civil society. Accountability needs to take place through state-based and judicial mechanisms. The role that civil society is expected to play in HRDD should not to substitute the obligations of the state to ensure that laws are implemented.
Instead, civil society’s role should be to provide the information about human rights impacts that companies, regulators and courts require for the 'adequate' HRDD enquiry.
If current regulatory trends continue in a positive way, we may soon approach a point in history when, driven by the law, companies are finally asking us to help them prevent their negative human rights impacts.
How can we help them do that? It is not simple, and there are no clear answers.Yet, this is what lawyers do very well: not simply to be reactive when something goes wrong, but to assist companies in putting in place multi-component plans to protect both the company and human rights-holders.
Adapted from a presentation originally delivered as part of a panel on “Human Rights By Other Means” at the 2018 PILNet Annual Global Forum in Berlin
For more on BIICL’s research in this area visit biicl.org/bhr.