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30 Mar 2021

NOVA Centre for Business, Human Rights and the Environment

Legal brief unpacks current developments in human rights & environmental due diligence

"Legal Brief: Human Rights and Environmental Due Diligence", March 2021

10 years ago, in June 2011, the Human Rights Council unanimously endorsed the UN Guiding Principles on Business and Human Rights (UNGPs), which represented the first UN-level guidance to both States and companies in relation to business and human rights. The UNGPs are a soft law instrument which does not create legally binding obligations on either States nor companies, but merely provides guidelines. However, they have been extremely influential, and many States and companies have committed to their implementation. As such, they represent a globally recognized and authoritative framework on Business and Human Rights...

..., the UNGPs establish that companies may need to consider additional standards, and should also pay particular attention to the human rights of individuals from groups or populations that are particularly vulnerable (e.g. indigenous peoples; women, national or ethnic, religious and linguistic minorities; children; persons with disabilities; and migrant workers and their families) where they may have adverse human rights impacts on them. The UNGPs clarifies that in order to fulfil this responsibility to respect human rights, companies should have in place policies and processes appropriate to their size and circumstances, including:

(1) A policy commitment;

(2) A human rights due diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights;

(3) Processes to enable the remediation of any adverse human rights impacts they cause or to which they contribute...

...→ What does human rights due diligence refer to?

Human rights due diligence consists in a process - or a set of processes - that all companies should implement in order to identify, prevent, mitigate and account for how they address potential and actual adverse human rights impacts with which they may be involved...

...→ What does environmental due diligence refer to?

The concept of human rights due diligence has been incorporated to various international standards and instruments such as the OECD Guidelines for Multinational Enterprises and related materials, and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. In the OECD Guidelines, it was also expended to cover other areas such as the environment. As a result, companies are also expected to exercise environmental due diligence in order identify, prevent, mitigate and account for how they address their adverse impacts on the environment, which includes climate change. In addition, climate change and human rights are intrinsically interrelated as climate change threatens the effective enjoyment of a range of human rights including the right to life, water and sanitation, food, health, housing, self-determination, culture and development...

...→ Why is human rights and environmental due diligence important?

Human rights and environmental due diligence processes have been identified as a core practice of responsible business conduct, key to the fulfilment of the UN Sustainable Development Goals (SDGs). Human rights and environmental due diligence aims to protect the people and the planet by setting out the proactive steps that companies must take in order to avoid infringing on the human rights of others and on the environment, and addressing the adverse impacts with which they are involved. For companies, exercising human rights and environmental due diligence can help manage reputational risks as well as emerging legal risks and improve their relations with stakeholders, such as consumers and investors.

In a recent study for the European Commission which surveyed over 300 companies across Europe, nearly 70% of companies considered that the introduction of an EU-level legislation on mandatory human rights and environmental due diligence legislation would be beneficial for companies insofar as it would level the playing field, increase legal certainty by providing a single harmonised standard and facilitate leverage with business partners on human rights issues. In relation to the COVID-19 pandemic, preliminary studies have suggested that companies who had solid human rights due diligence processes had more resilient and human-rights compatible responses to the COVID-19 pandemic, and were more likely to cope better with the long term negative effects of the pandemic...