Three Takeaways from a “Business and Human Rights” Short Course

I recently attended the Short Course: Business and Human Rights at the British Institute of International and Comparative Law (BIICL). The course dove deep into the core concepts and principles of business and human rights, first established by the UN Guiding Principles on Business and Human Rights (UNGPs) and now enumerated in national and (most recently) EU regulation. The course was also an opportunity to exchange ideas and best practice with other professionals in this multi-disciplinary field. 

In this Passle I share three takeaways from the course. These also relate to our recent client briefing on “The rise of the S in ESG” and how companies can navigate this new landscape of management and disclosure of corporate social impacts.

1. What was previously soft law is now hard law. The UNGPs represent best practice in this field; they are the seminal guiding text on which further frameworks were based. The overarching principle embedded in the UNGPs is that businesses must respect (i.e., not harm) human rights. After further soft law (among others, the OECD Guidelines for Multinational Enterprises) and the implementation of relevant national laws (for example in Germany and France), we have now recently seen the most comprehensive hard law regulation on this topic – the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) with its requirement of mandatory human rights due diligence. 
2. More companies will be affected than those in scope. Key to bear in mind is that many (if not most) companies will be affected, directly or indirectly, by the new hard law on business and human rights. Though these regulations generally directly apply only to the largest companies, the higher standards of due diligence will be cascaded down through value chains, meaning smaller companies will also have to align to these standards. The cascading occurs because in-scope companies will need to engage with their suppliers and other business partners to demand higher standards of human rights due diligence from them, in order to be able to themselves comply.
3. There is a lot of work for companies to do. Aligning with these standards is going to take thought, investment and time and companies should be starting that work now, to future proof their businesses. An important first step for any company will be to determine how this body of principles / regulation relates to its business, including its business partners and value chain. Then, due diligence will need to be integrated into the business in a way that is strategic and proportionate, as well as dynamic and ongoing. As a result of the new regime, companies will need to re-think current practices, such as use of one-off compliance checks or shifting all risk and obligations onto suppliers, as these are no longer adequate. Similarly, under the regime a company would need to have a “responsible exit”: this means not immediately terminating a business relationship in light of adverse impacts but rather analysing if remedy is possible and/or whether there would be a worse outcome by its leaving rather than staying. 

Please get in touch with your Charles Russell Speechlys contact for advice on how the CSDDD will affect your business and the steps you should be taking now.