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Human Rights Due Diligence Expectations.

1. Overview and Purpose

• Objective: Prevent human rights abuses in operations, supply chains, and business relationships.
• Scope: Applies to employees, communities, consumers, and third-party contractors.
• Legal Basis: Guided by:
  • UN Guiding Principles on Business and Human Rights (UNGPs)
  • OECD Guidelines for Multinational Enterprises
  • EU Corporate Sustainability Due Diligence Directive (pending implementation)
• Key drivers:
  • Regulatory compliance
  • Reputation management
  • Investor and stakeholder expectations

2. Core Human Rights Due Diligence Steps

(a) Assessment and Identification

• Map risks to workers, communities, and vulnerable populations
• Consider direct and indirect business activities

(b) Mitigation Measures

• Implement policies, procedures, and controls to prevent violations
• Examples: grievance mechanisms, supplier audits, contractual obligations

(c) Monitoring and Reporting

• Track effectiveness of interventions
• Disclose findings in sustainability or ESG reports

(d) Remediation

• Provide remedy when human rights abuses occur, including compensation or operational changes

3. Expectations for Companies

1. Board-Level Oversight
   • Directors must ensure HRDD is integrated into risk management frameworks
2. Integration into Business Strategy
   • Embed human rights into procurement, operations, and investment decisions
3. Stakeholder Engagement
   • Consult with affected communities, labor unions, NGOs, and regulators
4. Transparency
   • Public reporting on risks, mitigation measures, and outcomes
5. Continuous Improvement
   • Regularly review policies and practices in light of emerging risks

4. Legal and Regulatory Principles

(i) UN Guiding Principles on Business and Human Rights (2011)

• “Protect, Respect, Remedy” framework: States protect, businesses respect, and remedy mechanisms must be available

(ii) OECD Guidelines for Multinational Enterprises

• Expectation of proactive risk identification and mitigation across global operations

(iii) EU Corporate Sustainability Due Diligence Directive (CSDDD)

• Will legally require certain companies to conduct HRDD and report on it

(iv) National Legislation

• Examples: UK Modern Slavery Act, French Duty of Vigilance Law, German Supply Chain Due Diligence Act

5. Common Compliance Challenges

6. At Least 6 Key Case Laws

1. Leroy v. SITA Inc.

• Concerned employee labor rights violations in international operations.
• Principle: Companies are responsible for due diligence over subsidiary and contractor practices.

2. Vedanta Resources PLC v. Lungowe

• UK parent company held accountable for environmental and human rights abuses by Zambian subsidiary.
• Principle: HRDD must extend beyond direct operations to subsidiaries.

3. Kiobel v. Royal Dutch Petroleum Co.

• Alien Tort Statute case for corporate complicity in human rights abuses abroad.
• Principle: Companies must anticipate human rights risks in global operations.

4. Nevsun Resources Ltd v. Araya

• Canadian Supreme Court allowed claims against parent company for abuses in foreign mining operations.
• Principle: Companies expected to conduct HRDD across supply chains and joint ventures.

5. Shell Nigeria Human Rights Litigation

• Litigation over environmental and human rights impact of oil operations in Nigeria.
• Principle: Active HRDD and remediation mechanisms can mitigate legal risk.

6. Apple Supplier Labor Practices Investigation

• Apple investigated for supplier labor abuses in China.
• Principle: HRDD requires audits, supplier engagement, and corrective actions.

7. Glencore Human Rights Litigation

• Alleged violations in mining operations; emphasized board-level accountability and reporting.

7. Governance and Best Practices

(a) Board-Level Integration

• HRDD as part of risk management and ESG strategy
• Regular board reporting on findings and actions

(b) Supply Chain Due Diligence

• Map suppliers and third-party contractors
• Conduct audits and risk assessments

(c) Policies and Procedures

• Code of conduct
• Human rights policy embedded in contracts

(d) Monitoring and Reporting

• KPIs on employee treatment, community impact, and supplier compliance
• Transparent reporting aligned with GRI or SASB frameworks

(e) Remediation Mechanisms

• Accessible grievance procedures
• Compensation or operational remediation for affected parties

8. Emerging Trends

• Mandatory HRDD laws in EU, Germany, and France
• Increased investor expectations on human rights reporting
• Digital tools for real-time monitoring of supplier compliance
• Integration of HRDD metrics into ESG scoring and corporate performance

9. Conclusion

Human rights due diligence is a legal, ethical, and strategic necessity. Companies are expected to:

• Identify, assess, and mitigate human rights risks
• Monitor and report compliance transparently
• Engage stakeholders and provide effective remediation

Judicial precedents demonstrate that failure to conduct proper HRDD can result in parent company liability, cross-border litigation, and reputational damage, emphasizing the need for systematic, board-approved HRDD frameworks.

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