As 2,500 international stakeholders from national governments, international organizations, businesses, trade unions, civil society, lawyers, local communities, and academia gathered at the 11th United Nations Forum on Business and Human Rights (UNBHR Forum) last year, one message was clear: Business and human rights expectations and obligations are on the rise. As 2023 kicks off, these ideals, based on the U.N. Guiding Principles on Business and Human Rights (UNGPs), are increasingly being integrated into nonbinding local business expectations as well as binding international, national, and regional laws.
The UNGPs are grounded in the recognition that businesses “as specialized organs of society performing specialized functions” have a responsibility to respect human rights. As is standard for international legal obligations, states have a responsibility to protect the human rights of those within their jurisdictions. As the UNGPs make clear, such responsibility includes taking steps to prevent, investigate, punish, and redress human rights abuses by businesses. In a departure from other international legal norms, which apply predominantly to states, the UNGPs extend the duty to respect human rights to businesses themselves.
Acknowledging the unique role of businesses in the promotion of human rights, the U.N. Human Rights Council set up the UNBHR Forum to provide a multistakeholder platform that involves participants from around the world, including businesses. This forum is the world’s largest yearly gathering on business and human rights, and its discussions provide insights into current issues at the intersection of these sectors as well as the trajectory of the progress being made in this issue area.
The impact and reach of the UNGPs has proliferated since their introduction in 2011, although there is still much to be done to implement the principles. Three areas in particular featured prominently in last year’s forum: (a) the accelerated implementation of the UNGPs through international, national, and regional actions; (b) the link between human rights and the environment; and (c) the importance of considered business decision-making in conflict situations. Each of these themes highlighted the importance of business involvement in the protection of human rights in distinct ways and provides insights into the key areas of focus for 2023.
Since their introduction, the UNGPs have taken root in a variety of ways. The U.N. Working Group on Business and Human Rights, which is mandated to implement the UNGPs, strongly encourages all states to develop, enact, and periodically update a national action plan on business and human rights (NAP). By some counts, as many as 30 countries have launched NAPs since 2013, which set forth voluntary steps to incorporate human rights into business practices. Another 19 are in development, while four countries that do not have business and human rights-specific plans have at least addressed the topic in their broader human rights plans.
Against this normative backdrop, the UNGPs are now starting to progress from the nonbinding “soft law” that the NAPs represent to binding “hard law” via legislation at the regional and national levels. The nature of the obligations such laws impose is also evolving. Earlier laws in California, Australia, and the United Kingdom focused on reporting about human rights or, as in the cases of India, Kenya, Japan, and Thailand, reporting on environmental, social, and governance (ESG) matters more generally. More recently, however, international, regional, and national laws have emphasized mandatory human rights due diligence requirements, underscoring the role of businesses in promoting and respecting human rights directly and via their supply chains.
At the international level, negotiations toward a binding international agreement to implement the UNGPs began in 2014 with the establishment of a U.N. intergovernmental working group for this purpose, with the latest round of negotiations taking place in October 2022. Negotiations continue to progress, but an agreement is unlikely to come to fruition in the short term with states expressing concern about not only the workability of the current agreement draft but also whether a binding treaty in this space is appropriate.
While the development of binding requirements at the international level is stalled, legislation on the regional and national fronts is likely to be more immediate. Notably, the EU is advancing legislation that would impose human rights obligations on businesses. In February 2022, the EU Commission proposed a directive on corporate sustainability due diligence, which would require companies to identify, prevent, mitigate, terminate, and account for negative human rights and environmental impacts in their own operations, among their subsidiaries, and throughout their full value chains. This proposed EU Directive exemplifies the EU’s implementation of the UNGPs and other international human rights norms. If the EU Directive is enacted, it will apply both to certain companies registered in the EU and to those that generate revenue in the EU.
For the EU Directive to become law it must be discussed and agreed by the European Parliament and the Council of the EU. The council finalized its negotiating position on the EU Directive in December 2022. The European Parliament is poised to vote on its final EU Directive position in May. The council has suggested amending the EU Commission’s original proposal to limit the EU Directive’s application to a company’s “chain of activities” as opposed to its “value chain.” This would omit from the scope of the EU Directive requirements for companies to consider how the use of their products or services could impact human rights and the environment.
In response to the development of the EU Directive, Lara Wolters, a member of the European Parliament who has spearheaded the effort, said that while the EU is grappling with questions such as how far down the value chain the due diligence requirements will apply and whether the directive will apply to small and medium-sized entities, she hopes that the EU will agree on the proposed legislation by the end of 2023 and implement it by 2025. Given that the EU legislation takes the form of a directive (an instrument setting out goals for EU member states to achieve through their own national legislation), it is up to each member state to devise its own laws to reach these goals.
Apart from the EU Directive, the development of binding legal requirements that implement aspects of the UNGPs has already gained momentum at the country level. France, Germany, Norway, and Switzerland have now adopted mandatory human rights reporting and due diligence requirements. Proposed legislation in the Netherlands, Belgium, Austria, and Mexico would do the same.
These existing and proposed reporting and due diligence requirements are based in part on the UNGPs, including UNGP 15, which provides that businesses should implement a human rights due diligence process to “identify, prevent, mitigate and account for how they address their impacts on human rights.” The Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Business Conduct further specifies the elements of such a process, serving as a resource for companies seeking to comply with these developing legal requirements.
For example, the pioneering French Duty of Vigilance Law requires certain companies to create and publish a “vigilance plan” to identify human rights and environmental risks and adopt measures to prevent or mitigate those risks. Companies must discuss the implementation of their vigilance plan in annual management reports. Likewise, the German Supply Chain Act requires certain companies to identify human rights and environmental risks in their activities and supply chains, prevent or mitigate harms, and establish a complaint mechanism. As of January, the act applies to companies headquartered in Germany that have at least 3,000 employees (in Germany or abroad). It will expand to companies with at least 1,000 employees in January 2024. Penalties for failing to comply with the German Supply Chain Act include potential debarment from public contracts and a fine of up to two percent of a company’s global revenue. Penalties for failing to comply with the French law are less clear. The law originally provided for fines of up to 10 million euros for noncompliant companies, but French courts have since invalidated these penalty provisions, and it remains to be seen how the French law will be enforced. The French law, and the proposed Austrian and Belgian laws, also provide for civil liability, including compensation for harm that due diligence could have avoided.
Taking a somewhat different approach, the United States has addressed supply chain due diligence through import-related requirements and has imposed certain human rights-related obligations on companies through issue-specific laws, such as the Trafficking Victims Protection Act and subsequent reauthorizing legislation. Most recently, the Uyghur Forced Labor Prevention Act, which came into effect in June 2022, broadly prohibits the importation of goods into the U.S. that contain content derived from China’s Xinjiang Uyghur Autonomous Region. There is a similar North Korea-related prohibition, as well as other company- and product-specific restrictions on imports of products that U.S. Customs and Border Protection has designated under Section 307 of the Tariff Act of 1930 as derived from forced labor. The EU is also looking to address supply chain due diligence through import-related requirements. In September 2022, the EU Commission published its proposed regulation that would ban products made with forced labor from the EU market. The proposal must now be discussed and agreed by the European Parliament and the Council of the EU before it can enter into force. Unlike directives, regulations are directly applicable in EU member states without national implementing legislation; the regulation is expected to apply across the EU two years after its entry into force.
As the foregoing examples demonstrate, while based on principles espoused in the UNGPs, the scope and application of existing and proposed laws at the national and regional levels differ. One trend, however, is clear: Government authorities are increasingly focusing on the role of companies in implementing the UNGPs and respecting human rights, as evidenced by the uptick in human rights-focused legal obligations and normative frameworks.
Human Rights and the Environment
The link between human rights and the environment was another theme at this year’s UNBHR Forum. This environmental focus followed significant international developments in this space, including the June 2022 passage of the U.N. General Assembly resolution that declared access to a “clean, healthy and sustainable environment” a human right. Discussion at the forum underscored how environmental protection is key to the enjoyment of human rights, and the exercise of human rights is important for effective environmental protection. The treatment of environmental rights as human rights means that the UNGPs and associated regional and national laws can provide a framework to hold businesses accountable for their environmental impacts. For example, the proposed EU Directive would require companies to identify, terminate, prevent, mitigate, and account for their negative environmental impacts alongside their human rights impacts as part of their due diligence processes.
The June 2022 General Assembly resolution followed various regional developments, including the April 2021 entry into force of the Regional Agreement on Access to Information, Public Participation and Justice in Environmental Matters in Latin America and the Caribbean (the Escazú Agreement), which aims to guarantee the right of access to environmental information and public participation in the environmental decision-making process. The Escazú Agreement requires signatories to recognize and protect people and organizations that promote environmental protection and to establish impartial entities to monitor, report on, and guarantee the right of access to corporate environmental information via domestic legislative, regulatory, and administrative measures. Redress under the Escazú Agreement includes restitution, compensation for harm, and measures to mitigate adverse environmental impacts, among other things. This combination of potential access to private-sector environmental information (such as permits) and the establishment of redress mechanisms may incentivize companies that contribute to environmental harm to change their behavior.
Further expanding international avenues of environmental redress, the U.N. appointed the first Special Rapporteur on environmental defenders under the U.N. Economic Commission for Europe (UNECE) Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention). This Special Rapporteur is tasked with the protection of environmental defenders who are experiencing or are at imminent threat of penalization, persecution, or harassment.
Referencing the rights identified in the General Assembly resolution, the Sharm el-Sheikh Implementation Plan for the 27th Conference of the Parties (COP27), which immediately preceded the UNBHR Forum, also acknowledged “the right to a clean, healthy and sustainable environment.” COP27 also included discussions on how the climate crisis impacts national and global security, causing increased competition over scarce resources such as food, water, and land and displacing millions of people. At the UNBHR Forum, UNECE Executive Secretary Olga Algayerova picked up on this security theme, discussing the need for international cooperation to address issues of water security, especially for countries that share freshwater sources. Transboundary cooperation related to water sources would allow countries to exchange data and share costs and benefits to promote food security and regional stability in support of the right to a clean, healthy, and sustainable environment.
Speakers at the UNBHR Forum also emphasized the need for international cooperation to address the unequal effects of climate change. For example, climate change has severely impacted Pakistan and Nepal, which have experienced inordinately heavy monsoon rains and flooding, despite their relatively minor contributions to global carbon emissions. Conversely, wealthier countries, which tend to be the largest greenhouse gas contributors, may be less vulnerable to the effects of climate change. Thus, broader international action is warranted to address these disproportionate impacts, such as the COP27 establishment of a “loss and damage” fund to assist developing countries that have barely contributed to the climate crisis but are the most vulnerable to its effects. A fund alone, however, will not tackle these complex global climate issues. As U.N. Secretary-General António Guterres noted at the 2023 World Economic Forum, the achievement of climate goals ultimately “need[s] the full engagement of the private sector.” As Guterres remarked, such “private sector resourcefulness and cooperation” will advance “our common objectives of peace, sustainable development and human rights.”
Human Rights and Conflict
International conflicts—including Russia’s illegal war on Ukraine, the coup and subsequent military dictatorship in Myanmar, serious human rights violations in Xinjiang, and crises in Syria, Afghanistan, and beyond—formed the backdrop of this year’s UNBHR Forum. While governments have responded to these conflicts with various instruments of foreign policy, such as the imposition of sanctions and provision of foreign assistance, businesses rely on different tools to promote their values and protect human rights in such challenging contexts while also complying with an increasingly complicated government regulatory landscape.
To steer businesses grappling with myriad human rights and other challenges in these conflict environments in the right direction, the U.N. Development Program (UNDP) issued a guide on Heightened Human Rights Due Diligence for Business in Conflict-Affected Contexts in June 2022. As the UNDP guide highlights, business activities in conflict-affected areas are not neutral, whether the decision is to engage in business or to leave the country. As such, advanced and continuous human rights-centered planning is key in such environments, as this chart from the guide explains:
The UNDP’s planning suggestions for businesses assessing their activities in conflict-affected areas to mitigate adverse human rights impacts. Source
As the UNDP guide indicates, businesses have an important role to play when they operate in (or decide to leave) places where there is widespread armed violence or armed conflict, a military occupation, gross violations of human rights, or warning signs of any of the above. Such contexts may amplify businesses’ actual or potential adverse human rights impacts—on local populations or the conflict more broadly. Therefore, it is important for businesses to plan for and critically assess decisions made in times of conflict, amplifying the need to assess actions to identify and prevent negative impacts via context-specific analysis and ongoing monitoring, diligence, and reassessment.
The focus on the important role of businesses in the promotion of human rights is here to stay. Whether via international climate change-related commitments, domestic legislation, or significant impacts in conflict situations, businesses are increasingly tasked with upholding and promoting the rights of the individuals and communities that they impact. Such responsibilities will only increase in 2023 and beyond, as more states implement human rights-related laws and regulations. Now is the time for companies to proactively address these issues while these laws and regulations evolve. Likewise, policymakers at the domestic, regional, and international levels should actively engage with businesses to develop mutually beneficial human rights-related initiatives and requirements that will promote and progress the objectives of the UNGPs in a way that is sustainable and attainable for businesses.
ESG, SDG, CER, GRI, FSC, LCA, WELL Read More
Rachel Alpert, Karam Jardeneh, Aleksandra Ryshina