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Blog: Governments can help make business more diligent on human rights

In the last few months, a host of new initiatives and regulations have been announced around mandatory transparency and mandatory due diligence for companies

  • On 29 November 2018, the Australian Parliament approved the Modern Slavery Act, which will require companies headquartered or with operations in Australia to submit a 'Modern Slavery Statement'.

    By virtue of the AUD$100 million threshold, the Australian Act will apply to fewer companies than the UK Modern Slavery Act, but it imposes more onerous and mandatory reporting requirements.

    The statements must disclose the structure, operations and supply chain, exposure to risk and the effectiveness of measures taken to address the risk.
  • In Finland, more than 70 companies, civil society organisations and trade unions are calling for a Finnish law on mandatory human rights due diligence. The campaign, coordinated by Finnwatch, sets out to promote a law that, based on the UN Guiding Principles on business and human rights, would oblige companies to map and prevent human rights impacts.
  • The Swiss Responsible Business Initiative (RBI), launched in April 2015 and currently under review in the Parliament, aims at adding an article to the Swiss Constitution that would entail a mandatory due diligence provision for corporations and a liability provision.

    In June 2018, one chamber of the parliament adopted the text of a counter-proposal, which would include the due diligence obligation of the RBI, but it is narrower in scope: only companies of a certain size and those with particular human rights or environmental risks are subject to the requirement.

    The process has led to a workable compromise that may well be brought into law in 2019.
  • The German government has established a process to evaluate their National Action Plan with the goal of having 50% of German companies with more than 500 employees establish effective due diligence policies and practice by 2020. If businesses fail to meet this goal, the government will consider legally binding measures.

    On 5 December 2018, the EU Economic and Financial Affairs Council endorsed three measures requiring banks to disclose environmental, social, and governance (ESG) related financial risks.

    Civil society has called on the European Commission to overhaul the reporting framework for corporate disclosure on human rights, environment, and anti-corruption issues to create a common standardised reporting framework and compulsory metrics.

    This is a prerequisite for creating a sustainable and just economy, and allowing investors to fulfil their current and planned legal ESG obligations.
  • These initiatives are the latest in a series of regulatory developments around the world towards mandatory corporate human rights due diligence.These actions would seem to suggest that broadly liberal governments, at least in Europe, are being shaken from their timidity. This might be a response to the public backlash and collapse of public trust in global markets since the 2008 financial crash.The Edelman Trust Barometer shows that in the public mind, economic globalisation, far from being associated with a Golden Age of Progress, is associated with stagnant wages, precarious employment, inequality and environmental harm.Unscrupulous politicians are exploiting this growing public fear, anger, and sense of vulnerability to advance causes of chauvinist nationalisms, authoritarian demagoguery, and withdrawal from multilateralism.Demagogues use public fear of rootless corporations, with their lack of loyalty or sense of due diligence in their introduction of automation and out-sourcing, for instance.But, rather than focus on real solutions, such as putting human rights and climate security at the core of business, they deflect it onto the weakest: migrants, refugees, ethnic minorities, and the poor.There is no better time for responsible politicians to demonstrate their commitment to a new era of shared prosperity and shared security. And there are few better ways of demonstrating this, to an increasingly distrustful public, than to introduce mandatory due diligence and transparency legislation around the world.This article was originally published on

    Business and Human Rights Resource Centre

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