“Human Rights Due Diligence (HRDD) Can Help Shield Companies From Legal Liability”, 30 April 2025

Companies often avoid HRDD for fear that it will expose them to legal liability; case law and regulatory risk shows the opposite might be true.

Companies can protect themselves from legal risk by conducting human rights due diligence (HRDD) in line with the United Nations Guiding Principles on Business and Human Rights (UNGPs) – the global standard for corporate responsibilities to respecting human rights. By illustrating to would-be plaintiffs and courts that the company is proactively attempting to prevent and alleviate adverse human rights impacts, HRDD can insulate companies from legal liability, rather than exposes them to risk. … , every HRDD process should investigate and identify salient human rights risks, mitigate adverse impacts, and track and report on the HRDD process.

This post discusses two areas of legal risk and how robust HRDD practices can help shield companies from legal liability in the US, EU, and beyond. First, publicly reporting on actions companies have taken to mitigate any human rights risks in their own operations or supply chains can shield companies .. greenwashing and other claims targeting companies over human rights abuses. Second, strong HRDD will help companies prepare to respond to a shifting regulatory landscape.

Greenwashing Lawsuits

… emerging risks associated with greenwashing lawsuits, or complaints filed by consumers targeting businesses that mislead them about sustainability achievements or human rights performances. These are typically filed as fraudulent business practices, false advertising, and deceptive trade practice claims. Big name brands have been hauled into court over allegations that their claims of sustainable or ethical production practices were misleading, with no robust protection measures underpinning their claims. Not only are these suits on the rise in number and complexity among consumer groups, but local governments are also joining the fray.

Case law demonstrates that greenwashing claims can be defeated when companies can demonstrate that they publicly identified human rights risks, and are taking active steps to address those risks – even if those risks persist. In one case … The Company’s strong HRDD shielded them from liability. …

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Shifting Regulatory Landscape

The regulatory landscape increasingly requires companies to comply with HRDD regulations across various jurisdictions. This is a fast-changing space, marked with uncertainties from our current political and regulatory environment. …

… shifts in US policy should encourage astute companies to adopt HRDD. …

Companies doing business on a global scale … face the heightened requirements of the global regulatory landscape:

• The Corporate Sustainability Due Diligence Directive (CSDDD) …
• The Forced Labor Regulation (FLR),...
• HRDD legislation is also established among individual countries. …
• Proposed mHRDD legislation is also sprouting up across Asian jurisdictions …

Failure to proactively identify, prevent, mitigate and remedy human rights violations not only leaves businesses in violation of international soft law, but vulnerable to potential risk of legal liability. HRDD can help shield companies from that risk.