Since the introduction of the UN Guiding Principles on Human Rights in 2011, business and human rights have become increasingly intertwined. By articulating the corporate responsibility to respect human rights, the Guiding Principles acted as a catalyst for the concretisation of human rights principles into binding legal obligations around the world. From the UK’s Modern Slavery Act to the French Corporate Duty of Vigilance Law, several jurisdictions have now introduced legislation or regulation requiring companies to report on, and in some cases address, the human rights risks and impacts of their global supply chains. Similar legislation is on the horizon in many more jurisdictions, including at an EU level.

At the same time, national courts have seen a considerable increase in the number of high-profile human rights-related cases brought against multinational companies, often in respect of human rights violations connected with their overseas subsidiaries and supply chains. Even where these cases do not succeed, the financial and reputational costs to a company of being embroiled in such litigation can be high.

The trajectory is clear: human rights risks in global supply chains are increasingly translating into legal, reputational and financial risks for multinational companies.

To help companies navigate this ever-evolving legal landscape, the UN Global Compact and Freshfields Bruckhaus Deringer have partnered to produce Business and Human Rights: Navigating the legal landscape. The report provides a snapshot of the key developments in business and human rights, with a focus on human rights due diligence legislation and human rights cases involving multinational companies, across these jurisdictions: Australia, Canada, EU, France, Germany, Netherlands, Switzerland, UK and the US (see the report p. 10-23).

The report is not only for legal practitioners: anyone involved with (or interested in) embedding sustainability and human rights considerations in business strategy will benefit from the report’s summaries of the key risks and recommendations for multinational companies:

  • Legislative obligations and regulatory compliance risk: Companies are experiencing a global shift from self-regulation/voluntary reporting towards mandatory duties to report, and increasingly, to act. To adapt to this trend companies may wish to adopt a globally holistic approach to compliance and proactive management of value chain risks, for example by multi-stakeholder engagement (see the report p. 6).
  • Civil litigation risk: Developments in national courts suggest that multinationals are increasingly likely to face civil liability for adverse human rights impacts caused by or connected with their overseas operations. To limit exposure to litigation, companies should align their human rights policies and due diligence with international standards and engage in business relationships with suppliers who have equally robust policies and procedures in place. Companies may defend themselves against human rights claims by pointing courts to effective compliance programmes and existing internal controls aimed at preventing and detecting human rights violations (see the report p. 7).
  • Reputational and business disruption risk: Companies’ approaches to human rights issues are under increasing scrutiny by civil society, investors, shareholders and consumers. To avoid or alleviate negative repercussions companies may wish to put in place an ongoing human rights due diligence process and establish a crisis management plan that will help them to quickly address and remedy any adverse situations that arise. The UNGPs also require companies to have non-judicial grievance mechanisms in place to address complaints (see the report p. 8).

The report also sets out the ‘big picture’ of the business and human rights landscape, offering an entry point for people encountering these issues for the first time. An overview of relevant national actions plans, national contact points, other means of redress, UN special procedures and other investigatory powers fills in the detail (see the report as of p.24).

“This report aims to provide multinational companies with the tools they need to get to grips with human-rights-related risks and to consider whether adaptations to their business strategy are needed.” said Deba Das, the leading Partner of the project at Freshfields.

 “We are pleased to share this valuable report with the business community and all interested stakeholders,” said Mari-Lou Dupont, Senior Manager Decent Work & Social Sustainability at the United Nations Global Compact. “This topic is critical for anyone looking to align their strategy and operations with our ten principles on human rights, labour, the environment and anti-corruption.”

Developments in this area continue to evolve at pace. For example, since the publication of the report, Switzerland has decided to put the Responsible Business Initiative to a public vote, which will take place this Autumn. We will continue to monitor this and other developments on the blog.

Read and download the full report here.