Norway has become the latest country to push for mandatory human rights due diligence, with large companies having to check their supply chains and face new reporting obligations on their actions to prevent human rights abuses.
It becomes the latest in a short list of countries to take action, increasing the pressure on multinational corporations to take responsibility for human rights in their operations, whether directly or indirectly.
A report from the Ethics Information Committee of the Norwegian government, published at the end of November and now available in translation, said the act, still in draft form, aims to provide a “right to information” about the impact companies may have on fundamental human rights. It also aims to advance the cause of “respect” for human rights among companies and their supply chains.
The Norwegian government seeks to enable “consumers to make informed choices and question responsible business conduct”.
Perhaps most significantly, the report suggested the government has lost confidence in voluntary measures for business to improve human rights.
It said that while many companies have adopted principles from the UN, OECD and the International Labour Organisation, further action is necessary. “Experience nevertheless shows that voluntary compliance is not sufficient to raise corporate accountability to the required level: mandatory legislation is necessary,” the report said.
Norway is not the first country to take action on human rights due diligence. It follows the introduction of the Modern Slavery Act in the UK and France’s Devoir de Vigilance. The Netherlands this year introduced the Child Labour Due Diligence Act.
The European Commission is under pressure from a coalition of campaign groups to mandate human rights due diligence across its member states.
Meanwhile, earlier this year the UN began discussions on a new binding treaty for business and human rights.
Norway’s draft law imposes a duty for companies to know the “salient risks” to human rights in their direct operations and in their supply chains. However, in a legal innovation, the law will create a new right for “any person” to access “information about how an enterprise conducts itself” in relation to human rights.
The key clauses say large companies should undertake due diligence “in order to identify, prevent and mitigate any possible adverse impact on fundamental human rights and decent work and account for how they address any adverse impacts”.
Companies face new reporting demands too, including the publication of the results of due diligence, including actions to taken to “limit serious risk or injury”.
Observers welcome the draft law, given the reach of Norwegian companies globally and growing pressure to impose responsibilities on companies in relation to human rights. Johannes Blankenbach, a researcher with the Business & Human Rights Resource Centre, said the reform flags that attitudes are changing.
“It’s a sign of Europe rapidly changing visions of companies’ social and environmental responsibilities,” he said. “Enlightened companies, investors and policy makers, along with civil society, are demanding binding rules and many European governments are responding to this.”
Some observers see the measures as part of a trend. According to Leo Martin, director of specialist consultancy GoodCorporation, Norway has a history of “taking principled business seriously”. The task of human rights due diligence should not be underestimated. It is complicated. But, said Martin, it’s a step toward shining a light on “murky parts” of the supply chain.
“For corporates around the world, it is clear that the demands for a transparent supply chain are on the increase, not only from governments but also from shareholders,” said Martin.
“While this is challenging for businesses, increasingly companies are acknowledging that they need to take more proactive steps to minimise the risk that their activities may be linked to human rights abuses.”
For the authors of the report it was “crucial” for Norway to adapt to changing attitudes towards regulation on human rights.
Mark Taylor, a researcher with the Fafo Institute for Labour and Social Research in Norway, and a member of the ethics committee behind the draft legislation, hailed its flexibility in the way it applies to large, medium and small companies.
But he also noted that other countries will need to examine the law’s creation of a new right to information. Though he conceded some questions remain to be answered.
“Other jurisdictions are going to want to look at the proposed law’s use of an innovative mechanism—a citizen’s right to ask companies about conditions in their supply chains, which is combined with a corporate duty to know, based on due diligence,” said Taylor.
“A key question remains how to enforce this right, for example under existing consumer protection regulatory oversight.”
Not everyone agrees that companies should be responsible for supply chain human rights. Indeed, some think such obligations could be counterproductive.
That issue aside, Norway’s move brings human rights due diligence back into the headlines and its innovations will offer serious food for thought among policymakers elsewhere. Boards need to take note.