Academic Board Insight: Human rights due diligence

By: Attila Kun (Professor at Károli Gáspár University and University of Public Service, Ludovika, Hungary).

Human rights – including workers’ rights (as defined by ILO standards) – risks and impacts in companies' value chains are of paramount importance, especially in the era of the COVID-pandemic, as value chains are shaken by the current economic shocks. The corporate obligation to carry out meaningful human rights due diligence, including mitigation of adverse impacts (and implementing sustainability targets), has recently become a ‘hot topic’, under the banner of MHRDD (mandatory human rights due diligence). Human Rights Due Diligence (HRDD) is generally understood as the means by which businesses can effectively identify, prevent, mitigate and account for the negative human rights impacts of their activities or those linked to their business relationships, which often comprise subsidiaries, subcontractors, suppliers etc.

A growing number of Member States have already introduced specific mandatory due diligence schemes or initiatives related to corporate governance, including the French Duty of Vigilance Law, adopted in 2017, or the Dutch Child Labour Due Diligence Law, adopted in 2019. In sum, there seems to be an emerging trend towards MHRDD regulation in Europe.

On EU-level, in April 2020, after the publication of the European Commission study on due diligence requirements through the supply chain, the EU Commissioner for Justice, Didier Reynders, officially committed to an EU initiative on MHRDD. A legislative proposal is expected in 2021. In parallel, the European Parliament has stressed the need for MHRDD regulation at the EU level in several occasions (see the report ‘Human Rights Due Diligence Legislation -Options for the EU’, June 2020[1]). Such duty could be designed by building on existing authoritative guidelines using well-established definitions as developed by the UN (United Nations Guiding Principles on Business and Human Rights) and later expanded by the OECD and the ILO (see the OECD Due Diligence Guidance for Responsible Business Conduct supporting the implementation of the OECD Guidelines for Multinational Enterprises). The draft EU-initiative, once developed, is likely to be cross-sectoral and provide for sanctions in the event of non-compliance.

What implications MHRDD might have in terms of labour law? First, labour rights have become a key component of due diligence (the ILO also uses the notion of “labour rights due diligence”). Second, MHRDD might serve as a new, additional avenue and medium for labour rights enforcement (at least in terms of core labour rights). Third, MHRDD can boost a better management of sustainability-related risks and better taking into account the interests of all stakeholders, including workers’ representatives. Due diligence can be a new platform for action for unions and it opens a new horizon for the promotion of social dialogue and collective bargaining.

[1] https://www.europarl.europa.eu/RegData/etudes/BRIE/2020/603495/EXPO_BRI(2020)603495_EN.pdf