“COVID-19 and contract non-performance: wise companies are guided by business and human rights thinking”, 4 April 2020

[There has been]…a flurry of legal advice on…contractual force majeure clauses, [and other] avenues…to justify the non-performance of contracts…[during] COVID-19. Some companies have deferred contractual payments, refused to take delivery of already-produced goods, and cancelled large orders. Workers throughout supply chains consequently lose work [or]... face cramped conditions in factory dormitories. Those who continue to work, [like migrant workers]…, may not have access to social security [and] there is a…dange[r] of…forced labour…

The UN Guiding Principles on Business and Human Rights remind us that a business can become involved with adverse human rights impacts. Here are five [recommendations]:

• Focus on limiting…company contribution to health and economic crisis: [Temper]…commercially-focused approaches…or [avoid] taking commercial advantage of the crisis. [E.g.]…[some] companies have…, [paid suppliers] early, or [paid] extra, even if legislation…would have allowed…non-performance

• Engage with suppliers and customers to identify…impact of continued performance or non-performance: [E.g.]…cancelling orders already in production or completed and waiting to be shipped…- understand[ing] the impacts…is the first step to making better decisions

• Mitigate any impact of continuing contractual performance: [E.g.]…companies can…ensure [supply workers’]…health and safety: lengthening delivery times so that fewer workers are on the job…, providing personal protective equipment…, ensur[ing] worker housing is appropriate for social distancing

• Mitigate any impacts of contractual non-performance: ...the impacts…should be considered in the context of cumulative and potentially devastating impacts on human lives. Mitigation efforts should match the human rights risks…

• Work collaboratively, build and use leverage to mitigate impacts: [L]ook to industry, sectoral, multi-stakeholder or other ad hoc collaborations. Companies can [also] reach out to governments and their suppliers. Never before has collaboration, empathy, mutual support and assisting suppliers – even those far down the supply chain – been more important…