This year, the United Nations Forum on Business and Human Rights brought together businesses, governments and civil society to develop thinking and share best practice in this emerging area of law and practice. For businesses, a number of key themes continue to develop pushing respect for human rights and responsible business conduct further up the corporate agenda.
As one General Counsel of a global financial services institution remarked "Our reputation takes a long time to win, but only a short time to lose. Our attitude to respecting human rights is therefore critical."
Risks to people are risks to business
Identifying and managing involvement in adverse human rights impacts is a key component of managing legal, financial and reputational risks. Businesses commented that the prevention of human rights harm is therefore critical and is no longer voluntary or a "nice-to-have" not least because this reflects a growing regulatory trend across a number of jurisdictions introducing due diligence or transparency obligations to implement a responsibility to respect human rights.
Disputes and parent company liability
Across a number of jurisdictions there is an increase in reported cases against parent or holding companies for involvement in human rights impacts related to activities of entities within their corporate group. These developments could affect businesses across a range of sectors because same legal principles can be applied to those at the top of a supply chain, especially where a brand is associated with any business enterprises lower down the chain who, it may be argued, is involved in adverse human rights impacts. Businesses remarked that as legal boundaries continue to change it is prudent to take an approach above and beyond compliance with the law.
Regulatory and policy initiatives
There is a clear trend towards regulatory and policy initiatives in the business and human rights space, increasingly converging with the United Nations Guiding Principles on Business and Human Rights (UNGP), and which seek to implement a responsibility to respect human rights, usually through due diligence and reporting requirements. A number of these initiatives have extraterritorial application. Examples of new regulatory and policy initiatives exist, for instance the UK Modern Slavery Act, in France the law about the duty of due diligence of parent companies and main contractors or "Duty of Vigilance Law" (Loi relative au devoir de vigilance des sociétés mères et des entrprises donneuses d’ordre), and the implementation of the EU Non-Financial Reporting Directive that seeks to add and additional layer on top of existing reporting requirements across EU members states. The list of initiatives is growing with, for example, proposals for modern slavery legislation in Australia and (pending Senate approval) the "Child Labour Due Diligence Law" (Wet Zorgplicht Kinderarbeid) in the Netherlands.
Businesses also remarked that a number of hybrid or quasi-regulatory initiatives are also being developed in certain sectors that impact the transnational business activities, for example the "Dutch Banking Sector Agreement on international responsible business conduct regarding human rights" and the "Dutch Agreement on Sustainable Garments and Textile".
In considering these developing initiatives a number of businesses remarked that voluntary compliance with the UNGP has enabled them to be in a position of compliance with emerging regulation as it develops.
Responsible Business Conduct
There is a clear trend away from CSR and towards the concept of Responsible Business, whereby responsible business conduct is embedded throughout businesses' activities, supply chain and relationships and increasingly within the mandate of legal and risk teams within businesses. This is evidenced by a greater interaction between responsible business teams and boards, management and legal teams to set and monitor strategic responsible business objectives and implement policy commitments throughout the business. Businesses remarked that respect for human rights fits squarely within this agenda and is a key driver of creating long term value.
Human rights due diligence is increasingly an expected norm of responsible business conduct and risk management. Due diligence, both ongoing and in specific instances, must incorporate the identification and management of human rights impacts into risk management and corporate governance systems. Businesses need to understand where their human rights risks - as risks to people - are so that they can be properly addressed. This is also a key component in enabling more effective remediation.
Businesses remarked that they are moving away from policies and talking about contractual clauses to dealing with substantive human rights issues and to do this human right expertise is required. Businesses commented that it is the duty of in house lawyers and external counsel to protect the company, not the board or individual managers.
Stakeholder engagement and civil society
Engaging with local and transnational civil society organizations can help businesses in their due diligence and remediation of human rights risks.
Businesses also remarked that legal restrictions on civil society organizations and the space in which they operate across a number of jurisdictions undermines the rule of law, foster corruption, limit competition, critical thought and innovation and create risks for business. Well-functioning markets, stable financial systems and enabling business environments depend on the rule of law and on open, inclusive and tolerant societies.
Businesses understand that creating long term value, enabling responsible business conduct, creating inclusive economic growth, reducing inequality and discrimination and supporting sustainable development requires an open space underpinned by the rule of law. Restrictions on and retaliations against civil society organizations are a red flag for businesses seeking to enter a particular operating context.
The effectiveness of non-judicial forums to resolve human rights issues was highlighted for their effectiveness in providing more appropriate remediation of human rights harm than judicial forums. Alternative dispute resolution processes, for example, mediation, can also provide an important way for affected stakeholders to feel empowered by the remediation processes and contribute to a more effective resolution and provide significant benefits to businesses by reducing time, cost and uncertainty. State-based non judicial forums such as National Contact Points are also increasingly professionalised, creating greater impact and incentives for businesses to engage, despite the lack of "hard" sanction.
Businesses remarked that grievance mechanisms are an important part of remediation but they are not a complete answer and should operate alongside institutional processes remedy and access to justice. To be effective grievance mechanism should be created with buy in from independent human rights expertise and, where possible, potentially affected stakeholders. This is important to ensure legitimacy of the process and trust in the outcome. Transparency thought the design and implementation of grievance mechanisms is also essential.