Under the UN Guiding Principles on Business and Human Rights companies have a responsibility to undertake human rights due diligence.Yet a decade after their adoption benchmarks and analyses demonstrate low levels of commitment: almost half (46.2%) of the largest companies in the world analysed in the latest Corporate Human Rights Benchmark failed to show any evidence of identifying or mitigating human rights issues in their supply chains. Similarly, KnowTheChain benchmarks find companies score on average a mere 29% for their human rights due diligence efforts. This is what mandatory human rights and environmental due diligence laws seek to address.
There is more and more understanding that the smart mix prescribed by the UN Guiding Principles on Business and Human Rights means that there needs to be legislation in order to reach the stated aims.
Heidi Hautala, Vice-President of European Parliament
There is growing momentum worldwide among governments, particularly in Europe, to require companies to undertake human rights and environmental due diligence, from the French Duty of Vigilance Law and the adoption in 2021 of new laws in Germany and Norway to the proposed EU-wide law. Major investors and companies are also speaking out in favour of such legislation.
Civil society across the world has been pushing for more robust requirements on companies for years and has been outspoken on the key elements these laws should include to be effective: a due diligence obligation for all businesses across their full global value chains; effective and safe stakeholder engagement; mandatory requirements that go beyond tick-box exercises and auditing, address irresponsible business models and purchasing practices, and are embedded in appropriate governance and accountability structures; and a strong civil liability regime.
This portal collects the latest newsonmandatory human rights due diligence,national and regional developments, public company statements in support of mandatory human rights and environmental due diligence,guidance for companies and governments,and examples ofcompany implementation of human rights due diligence. It also hosts a blog series where experts from civil society, governments and business discuss what mandatory human rights and environmental due diligence could mean for advancing human rights in business.
FAQs
Human rights and environmental due diligence would expressly require informed, meaningful and safe engagement with stakeholders, particularly workers, affected rightsholders and those defending human rights and the environment, throughout the entire process.
What are the 4 steps of human rights due diligence? ›
However, the key elements of human rights due diligence—assessing, integrating and acting, tracking, and communicating—when taken together with remediation processes, provide the management of any enterprise with the framework it needs in order to know and show that it is respecting human rights in practice.
What is a due diligence mandate? ›
Due diligence steps
Under the proposed rules, companies will be required to identify and address potential and actual adverse human rights and environmental impacts across their own operations, subsidiaries and value chain.
What is the due diligence proposal for human rights? ›
The new directive on corporate sustainability due diligence, informally agreed by EU co-legislators on Thursday, sets obligations for companies to mitigate their negative impact on human rights and the environment such as child labour, slavery, labour exploitation, pollution, deforestation, excessive water consumption ...
What are the 3 principles of due diligence? ›
Below, we take a closer look at the three elements that comprise human rights due diligence – identify and assess, prevent and mitigate and account –, quoting from the Guiding Principles.
What is the purpose of human rights due diligence? ›
The prevention of adverse impacts on people is the main purpose of human rights due diligence. It concerns risks to people, not risks to business.
How do you conduct HR due diligence? ›
Get the HR due diligence checklist
- Workplace relations (employee turnover, current or historic employee disputes, performance culture etc.)
- Organizational culture (leadership structures, company values etc.)
- Remuneration and benefits (leave and vacation policies, bonus plans, compensations)
- Employment agreements.
Areas to target for scrutiny in the due diligence checklist should include:
- Historical Financial Statements. ...
- Revenue and Expense Analysis. ...
- Assets and Liabilities Review. ...
- Taxation and Tax Compliance. ...
- Debt and Financing Agreements. ...
- Working Capital Analysis. ...
- Financial Projections and Assumptions. ...
- Cash Flow Analysis.
Due diligence is the steps an organization takes to thoroughly investigate and verify an entity before initiating a business arrangement, whether that's with a vendor, a third party or a client. In the general business sense, due diligence means vetting issues that affect the business thoughtfully and carefully.
Is due diligence mandatory? ›
Under the UN Guiding Principles on Business and Human Rights companies have a responsibility to undertake human rights due diligence.
The CS3D has two key objectives: to require companies to carry out due diligence to avoid adverse environmental and human rights impacts and to ensure accountability in case of actual adverse impacts being caused.
When should HR conduct due diligence? ›
When you're acquiring or merging with a new company, it helps to have an HR due diligence checklist that can help guide you through the process and make better decisions. With a checklist, you identify HR challenges and opportunities and resolve them before they occur.
What is human right due diligence directive? ›
The purpose of the Directive is to improve the regulatory framework on human rights and sustainability due diligence, which will aid in the EU's transition to a climate-neutral and green economy.
What are the 4 P's of due diligence? ›
A few tangible principles can help guide the way, including people, performance, philosophy, and process.
Is human rights due diligence mandatory? ›
The current wave of laws in this space are mandatory due diligence laws. These laws require disclosures, and also require companies to conduct due diligence of their global operations to identify, mitigate and prevent human rights risks.
What is the human rights due diligence management system? ›
Human rights due diligence involves the actions taken by a company to both identify and act upon actual and potential human rights risks for workers in its operations, supply chains and the services it uses.
What is the human rights due diligence audit? ›
Human rights due diligence (HRDD) refers to an actionable step for businesses to proactively manage and mitigate adverse human rights risks across their entire value chain. For businesses worldwide, operating ethically is becoming a must-have.
What does due diligence mean in business ethics? ›
Due diligence is the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care.
