"...the inherent dignity and... the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world."
The opening words of the Universal Declaration of Human Rights resonate as clearly today as they did 71 years ago when the declaration was adopted by the international community.
The human effects of armed conflict, so much in the minds of those who framed the Declaration in the aftermath of the Second World War, remain. But the challenges of climate change and degradation of the natural environment, the scourge of human trafficking and other forms of modern slavery, and our vulnerability to new forms of intrusion into our private lives have brought fresh complexities to the concept of ‘human rights’ in a way the authors of the Declaration could not have foreseen.
In the past decade, a new term – ‘business and human rights’ – has entered the lexicon and adds another layer to the debate. The UN's Guiding Principles on Business and Human Rights (carried forward in initiatives such as the OECD Guidelines for Multinational Enterprises), encapsulate the duty of businesses to ‘respect’ human rights as a complement to states’ duty to ‘protect’.
Once the sole preserve of corporate social responsibility teams, this duty is now being ‘concretized’ into hard law. California, the UK and Australia have all implemented modern slavery legislation, while France has introduced its Duty of Vigilance Act. Human rights have become as much a question of legal compliance and risk management as a matter of corporate values and aspirations. If the practical outcome of this is to better safeguard the human rights of those who hold them – as well as the assets and corporate reputation of those who owe them – that is surely to be welcomed. But is this enough? And where does the focus on human rights go from here?
Two thoughts on this, today, the 71st anniversary of the UN declaration.
Paul Bowden, head of Freshfields’ global business and human rights group, says: 'a partnership of “protection and respect”, beyond states making, and business receiving, new laws, is probably the next move. As governments propose and consult on human rights frameworks under their various “National Action Plans”, so new forms of collaboration are emerging. Policy is developing and evidence-based research into the causes of, and responses to, human rights violations in supply chains, alongside the use of non-judicial mechanisms to deliver remedies, appear to be in prospect, which bring benefits to everyone. As Guy Ryder, the Director-General of the International Labour Organization, said at last month's UN Forum on Business and Human Rights, “Attention is focused very much on the business part of ‘business and human rights’, but we should not forget the important role of the state.”’
‘Human rights are at the center of a larger sustainability landscape,’ adds Tim Wilkins, Freshfields’ global partner for client sustainability. ‘We are at a transitional point for business, where the creation of general prosperity is only possible when there is a focus on the nurturing and advancing of the rights of all persons. Customers, employees, suppliers, investors and communities must be joint collaborators in building enterprises that serve to protect the well-being and dignity of each stakeholder for the long-term.’
Around the world, legal developments in the field of business and human rights are progressing at various speeds. Our Global Business and Human Rights team follow these developments closely and have summarised the most pressing issues in the UK, US, Continental Europe and beyond below.
The prevalence of human trafficking and other forms of modern slavery has never been higher in the UK’s public, commercial and political consciousness. As we approach the five-year anniversary of the groundbreaking Modern Slavery Act, proposals to impose more exacting positive disclosure requirements on businesses are gathering pace. The UK Government's intention to stay at the forefront of the fight against modern slavery is also reflected in its decision to establish a Policy and Evidence Centre on Modern Slavery and Human Rights under the auspices of UK Research and Innovation. At the same time, the courts of England and Wales remain a popular venue for those seeking to bring cross-border claims, including an increasing number of claims alleging parent company liability for human rights violations linked to operations and suppliers overseas. It is increasingly difficult for business with significant operations in the UK simply to ignore the potential human rights impacts linked to their domestic and global operations and supply chains.
In passing the Transparency in Supply Chains Act in 2010, the State of California led the way in ensuring that large retailers and manufacturers provide consumers with information about their efforts to eradicate slavery and human trafficking from their supply chains. The California legislation was a forerunner to similar statutes in the UK, France and Australia, but the United States has never passed a federal human rights law. However, over the past decade, a rich web of case law and other statutes have been used by plaintiffs to hold companies to ever-higher human rights standards. US corporates are evaluating human rights-related risks from a number of sources, including the intersection of human rights and the US economic sanctions regime; civil litigation claims arising under common law tort and federal statutes such as the Trafficking Victims Protection Reauthorization Act and the Alien Tort Statute (ATS); and the reputation-shaping court of public opinion.
Against this backdrop are potential changes to the US human rights legal landscape. For example, in July 2019, the US House of Representatives introduced a discussion draft of a bill that would ‘require issuers to disclose human rights risks and impacts’, while in September 2019, the House introduced a bill that would require issuers to make annual ESG (environmental, social, and governance) -related disclosures. On the litigation side, the US Supreme Court’s decision in Jesner v. Arab Bank, PLC foreclosed ATS claims against foreign (non-US) corporations but did not eliminate the risk of ATS liability for domestic corporate defendants. As claims brought under the ATS are litigated further, the precise parameters of ATS corporate liability, if any, will become clearer over time.
As Stephanie Brown Cripps, counsel, explains: ‘Because US corporates cannot rely on an overarching federal statute, they must embed human rights into their core functions to ensure they can comply with the evolving web of adjacent legal, regulatory and industry standards.’
A number of European countries have taken – or are taking – steps to introduce increasingly exacting legislative obligations on businesses regarding human rights.
- With its Duty of Vigilance law, France has set the pace. The most demanding human rights law introduced by any national government to date, it requires large French companies to create annual ‘vigilance plans’ detailing the steps they will take to detect and prevent environmental and human rights risks linked to their business.
- In the Netherlands, the Dutch Senate passed a new law in May 2019 that requires companies to carry out due diligence with regards to child labour in their supply chains. The Dutch law is the first to foresee the appointment of a specific regulator to oversee compliance.
- In Switzerland, a Responsible Business Initiative contemplates the introduction of mandatory human rights due diligence for Swiss companies, and potential civil liability for human rights-related issues. The initiative has gone through several iterations within the Swiss legislature (involving various softer counter-proposals), but if it is not able to agree the form of the law, a national referendum on it in its original, expansive form will be held in 2021 at the latest.
- In accordance with the German National Action Plan, the German federal government is assessing compliance of some 400 German businesses with their human rights responsibilities. Although lawmakers announced that the outcome of the monitoring exercise (results due in spring 2020) will determine whether legislative action should be initiated, it is becoming more apparent that the federal government is planning to introduce a legally binding framework on human rights due diligence regardless. In this regard, a draft bill imposing extensive CSR-obligations on businesses along their supply chains was leaked to the public earlier in 2019.
- At European Union level, discussions about EU-wide business and human rights legislation are ongoing. A representative from the German Foreign Ministry at this year’s UN Forum on Business and Human Rights revealed what she called, a ‘conspiracy’ between Germany, France and the Netherlands (among others) to push for EU-wide business and human rights legislation, with Germany assuming the EU Council Presidency in 2020, draft legislation may be on the horizon.
Rest of the world
Progress on business and human rights in Asia, Latin America and Africa remains patchy, but with more countries adopting National Action Plans, which include commitments to take action, more rapid change is certainly foreseeable.
‘Human rights are relevant to our clients now and will only grow in importance as their operations continue to touch every corner of the globe. At Freshfields we aim to advise our clients on their compliance, investment and risk mitigation strategies as they drive the transition to a more sustainable future for themselves and the communities in which the operate.’
Tim Wilkins, Freshfields’ global partner for client sustainability