Litigation, business and human rights: if you’re not at the table, you’re on the menu

Last month, new commentary and recommendations were issued by UN experts on a nation state’s obligations in relation to business activities. Published by the UN’s top advisory body for Economic, Social and Cultural Rights, they define the scope of rights set out in international legal conventions – which in this case includes the right to work, to fair wages and to freedom of association amongst other labour rights.  

New advanced training course: Human rights due diligence

The latest UN recommendations on business and human rights say that countries should adopt measures that include imposing due diligence requirements to prevent abuses of human rights in a business’s supply chain. And that this covers the business's subcontractors, suppliers, franchisees or other business partners, wherever they may be located.

As such, this appears to be a direct request to governments to implement the UN Guiding Principles on Business and Human Rights (UNGP’s).

UNGPs and business responsibilities

The UNGPs establish business responsibility with respect to human rights. They require businesses to seek to prevent or mitigate adverse human rights impacts that are linked to their operations, products, services or business relationships. That includes situations where they have not directly contributed to those impacts.

However, the new recommendations go further than requiring mandatory due diligence. They set out that a country should:

• Consider imposing criminal or administrative sanctions and penalties where business activities result in abuses or where a failure to act with due diligence to mitigate risks allows such infringements to occur;
• Enable civil suits and other effective means of claiming reparations by victims of violations against corporate perpetrators; revoke business licenses from offenders…
• The extraterritorial obligation to protect requires States to prevent and redress infringements of rights that occur outside their territories due to the activities of business entities over which they can exercise control.
• The responsibility of the State can be engaged in such circumstances even if other causes have also contributed to the occurrence of the violation.
• States should also require corporations to deploy their best efforts to ensure that entities whose conduct these corporations may influence, such as subsidiaries or business partners (including suppliers, franchisees or sub-contractors), respect human rights.
• Appropriate monitoring and accountability procedures must be put in place to ensure effective prevention and enforcement.

The language deployed is direct and there is a strong emphasis on facilitating access to remedy.

Cross-sectoral implications

The recommendations apply across international supply chains and cover manufacturing, logistical, retail and other related activities and processes.

This shouldn’t come as a surprise. It is in response to the significant increase of activities of transnational corporations, growing investment and trade flows between countries and the emergence of global supply chains.

The commentary is also clear that the extraterritorial obligations of states to ensure respect for human rights follows from the fact that the obligations are expressed without any restriction linked to territory or jurisdiction.

Not only that, the UN recommends that if companies are unable or unwilling to address human rights, then governments should be prepared to facilitate claims by victims based outside their jurisdiction. Or even act themselves to impose sanctions or penalties on the companies concerned.

Taking legal action can be a long, stressful, expensive and often painful process for victims. ETI views legal action generally as a last resort, to be taken when mediation and other attempts at facilitating resolution of complaints have failed or are simply unfeasible.

But it should remain a genuine option should victims want to pursue a claim. And at present, this isn’t the case for many workers in global supply chains. It is generally either prohibitively expensive, or the domestic legal system is inaccessible or corrupt.

Current legislation

In April of this year, the UK Parliamentary Joint Committee on Human Rights suggested that the UK government consider creating a new corporate offence of failing to prevent human rights abuses. It will be very interesting to see if the proposal is taken up. The UK Government has already taken steps to enforce mandatory human rights due diligence and reporting. ETI members (and others) will already be familiar with the Modern Slavery Act.

The EU too is now catching up.

Last week, new Guidance was issued by the European Commission on non-financial reporting. This stems from an EU Directive that applies to large public-interest entities with more than 500 employees (so likely to apply to big MNCs, banks and insurance companies etc). The directive is part of a wider drive to increase corporate accountability and transparency and aims to standardise non-financial reporting across Europe.

The reporting requirements set out in the EU Directive cover corporate due diligence processes on all human rights issues, not just trafficking or forced labour. So, in that sense, they go much further than the Modern Slavery Act, even though fewer companies are required to comply.

Direction of travel

The new UN commentary, the EU Directive and the report by the UK Parliamentary Joint Committee on Human Rights all provide evidence of the direction of travel: mandatory action and reporting on addressing negative human rights impacts; and ensuring access to remedy.

Although these laws and directives differ in nature and scope, they all represent an attempt to interpret and implement the UNGPs.

We are urging our corporate members and other companies to stay ahead of the curve and to take the necessary steps now to put proper systems in place – systems that identify and mitigate risk – and provide redress for any harm done.

As the saying goes: “If you’re not at the table, you’re on the menu!”

For information on implementing the UNGP’s and conducting Human Rights Due Diligence, see ETI’s Human Rights Due Diligence Framework which serves as a guide for companies to help manage and mitigate labour rights risks, and understand why engagement, negotiation and collaboration are the best way to succeed.