It’s become a commonplace approach among lawmakers and regulators: if you want to enforce new rules, get big companies to do it for you among their suppliers. And so it is with human rights due diligence. Although there are concerns that while this approach could bring about compliance, it might dissuade companies from introducing the very business models needed to safeguard human rights.
EcoDa, the European Confederation of Directors Associations, has made it clear that due diligence in supply chains—forcing big companies to regulate the behaviour of their suppliers—could be counterproductive. Indeed, statements from ecoDa’s policy chief suggest that enforcing due diligence could turn board directors into “legal departments”, distracting them from the essential work of ensuring sustainability.
In an interview given to the British Institute of International and Comparative Law, Michel de Fabiani, chair of ecoDa’s policy committee, said: “Directors can set for the management the expectations but turning boards into legal departments will not bring more capabilities and real engagement of board members.
“Regulators should remember that the primary purpose of boards is to deal with strategy, control of the executives, including risk management processes.”
The European Commission is currently working its way through a study on the possibility of introducing laws to make human rights due diligence mandatory for EU companies.
Jan Wesseldijk, ecoDa’s chair, said in a statement that companies should not be responsible for the obligations of politicians.
“When it comes to environmental and social issues, it is up to the regulators to define the playing field within which companies may freely operate. They cannot just offload their police role through board members.”
The issue of due diligence has become an increasingly sensitive issue as politicians grapple with ways to enforce higher degrees of corporate responsibility in response to pressure from the public and lobby groups.
The commission is looking at human rights due diligence following a request from the European Parliament in June last year. Since then there has been much activity to convince the commission that reforms are necessary.
In April this year a coalition of campaign groups, including Greenpeace, Oxfam and Amnesty International, called for new laws to make due diligence for human rights and environmental standards mandatory.
A joint statement from the group says the call was driven by concerns that many companies are “linked to serious abuses; exploitative working conditions, including modern slavery and child labour, toxic pollution, rampant destruction of rainforests; land grabs and evictions of indigenous peoples and local communities; and violent attacks on human rights defenders.”
Mandatory due diligence, they say, would “give consumers the confidence that human rights abuses and environmental damage aren’t part of the price tag for products.”
Given the range of institutions pushing for greater due diligence, ecoDa and other business groups may struggle to resist further measures from the European Commission. In July last year the UN’s working group on business and human rights stressed the importance of due diligence. It said: “Human rights due diligence provides the backbone of the day-to-day activities of a business enterprise in translating into practice its responsibility to respect human rights.”
Some national governments are attempting to get ahead of the commission. In February, German legislators introduced a draft law asking companies to not only monitor their own behaviour for human rights issues, but also the behaviour of business partners.
The protests may be correct: forcing companies to police the behaviour of suppliers and partners may have unintended consequences. Lawmakers, however, appear keen to push ahead nonetheless.