An International Business & Human Rights Treaty: Is Your Company Prepared?

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Courtesy of Assent Compliance Inc.

The international community is moving towards the adoption of a legally-binding United Nations (UN) instrument that regulates the activities of corporations with regards to human rights.

Under the EU Non-Financial Reporting Directive, many companies already report on human rights. However, this international instrument can be expected to go much further, requiring companies to carry out due diligence and be held legally accountable for human rights abuses in their supply chains.

The initiative dates back to June 26th, 2014, when the UN Human Rights Council adopted a resolution to establish an intergovernmental working group tasked with developing an instrument to regulate the activities of transnational corporations and other business enterprises. Different from the UN Guiding Principles on Business and Human Rights, which are voluntary, this agreement would be legally-binding.

Despite pushback from governments, including the United States and the United Kingdom, the intergovernmental working group met for the first time in July 2015. Currently, many decisions around the content, form, scope and enforcement of the agreement are still to be determined. Central to many of the proposals submitted by researchers and civil society organizations is the request that the treaty commit businesses to take measures to prevent human rights abuses throughout their entire supply chain. If this treaty is adopted, we can expect it to be accompanied by the establishment of international monitoring and national enforcement mechanisms.

The second session of the intergovernmental working group will take place October 24-28 of this year in Geneva, with the aim to present a draft for the instrument by their third session in 2017. Currently, there are no clear indications of what the treaty will look like or require.

According to both the UN Guiding Principles Reporting Framework and the Ethical Trading Initiative, an essential first step of human rights due diligence should be to assess actual and potential human rights risks. Although it may be some time before the final treaty is elaborated and ratified by governments, companies need to start preparing. Establishing due diligence programs to understand and address human rights impacts is a complex process requiring resources, commitment and visibility into supply chains. Companies need to think about engaging their suppliers in this process and collecting information from their supply chain to better understand where risks may lie, and prioritize and target their efforts.

Businesses who demonstrate their commitment to respecting human rights early will benefit by better protecting their organization against risk, gaining a strategic competitive advantage and by protecting the human rights of workers.

Assent Compliance’s regulatory experts are closely monitoring developments with this initiative. Contact info@assentcompliance.com with any questions or comments.

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