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Business deserves clarity on human rights responsibilities

The delay in approving a new EU directive does a disservice to companies that need legal certainty

By Robert Mccorquodale

March 10, 2024

Credits @FFHR.CZ

 The writer is the chair of the UN working group on business and human rights and author of ‘Business and Human Rights’ EU governments are currently debating whether to approve the draft corporate sustainability due diligence directive. This would provide for mandatory human rights due diligence — a requirement to assess, track, mitigate and remediate potential and actual adverse human rights impacts — by large companies operating in the EU (whether incorporated in the EU or not), and with sanctions for non-compliance.

One of the main obstacles to approval seems to be its potential impact on small and medium-sized businesses, although financial and other support could be provided to them.

This delay is frustrating for those around the world who are adversely affected by business activities that abuse human rights, damage the environment and have an impact on climate change. These include child labour in the garment and technology sectors, trafficking of agricultural workers and pollution of rivers and land in the extractive sector, as well as other examples across all industry sectors. It is also disappointing for the many businesses that are calling for such a law.

They wish to have legal certainty, harmonisation across their operations and to be able to protect their reputation — as well as to enjoy support from the law when a product produced by a rival is cheaper in price through use of forced labour or after environmental destruction. Such laws also give businesses clarity in decision-making, such as how to approach operations in conflict-affected regions, where to place investments and how to manage a just transition to renewable energy.

A key part of the reason for this legislation is the growing awareness among governments, civil society and companies themselves that business does have responsibilities for human rights abuses. Until recently, it was thought that only governments had human rights responsibilities and that any person or community impacted by business activities could only bring human rights cases against the governments where the businesses were located.

However, since 2011, when the UN guiding principles on business and human rights were adopted, there has been acceptance globally that businesses — of all sizes and structures and in all sectors — do have the responsibility to respect human rights. More and more businesses now include some human rights policies in their strategies, even if too many do not put them into practice throughout their value chains.

Behaviour that falls short has led to decisions by courts, tribunals and other independent bodies finding that businesses — from oil companies to financial institutions — have failed to respect human rights. In addition, existing legislation and regulation already requires some businesses to disclose activities that have actual or potential adverse impacts on human rights.

Unlike the UK’s Modern Slavery Act, a few of these pieces of legislation have real sanctions against businesses for non-disclosure of abuses, and these have been shown to be more effective than legislation without enforcement. Indeed, EU legislation already provides for this in some areas, which makes the delay in approving the draft directive even more puzzling.

It is, therefore, imperative that business leaders become aware of the significant changes in responsibilities of their companies with regard to human rights — and the consequent expectations that governments, consumers, civil society, trade unions and others have of them. If business leaders fail to take action, the legal, operational, financial and reputational consequences for them and their companies could be considerable.



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