The EU Parliament Position on the CSDDD : Towards Requiring Meaningful Stakeholder Engagement?
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Background
On the 1st of June 2023, the EU Parliament finally adopted its long-awaited position on the EU Corporate Sustainability Due Diligence Directive (CSDDD) with 366 votes in favour, 225 against and 38 abstentions. The legislative drafting process now proceeds to the trilogues, where attempts will be made to reconcile the Parliament’s position with that of the EU Commission and the EU Council in order to arrive at a final text of the directive.
The question of meaningful stakeholder engagement in the EU CSDDD has (pre)occupied scholars and civil society since the EU Commission released its draft in February 2022. This continued even after the Council’s draft in December 2022. Critics have argued that contrary to international standards contained within the United Nations Guiding Principles on Business and Human Rights (UNGPs) as well as the OECD Guidelines for Multinational Enterprises (OECD Guidelines), the commission’s proposal lacks a systematic approach to stakeholder engagement across the Human Rights Due Diligence (HRDD) process. In addition, concerns were raised about the “where relevant” formulation found in Articles 6 and 8 of the draft directive, requiring covered companies to engage with stakeholders only where relevant. Adding on to these concerns, I have elsewhere argued that a comparison of the Commission and Council positions reveals that not enough has been done in both these drafts to create the necessary architecture for meaningful stakeholder engagement in reality, given the wide discretion granted to in-scope companies. Relatedly, using a Third World Approaches to International Law (TWAIL) lens, I have previously illustrated how the EU CSDDD contributes to participatory injustice given its failure to include global south rightsholders in the processes of HRDD law making and implementation. This has serious implications for the creation and entrenching of a European epistemic and interpretive hegemony in BHR that does not do enough to ‘center the unique cultural, historical, and political experiences as well as lived realities of rightsholders from the Global South.’
The EU Parliament’s Position: Taking Critics Seriously?
Looking at the amendments proposed in the Parliament draft allows for some cautious optimism in as far as the progress towards meaningful stakeholder engagement is concerned. Amendment 34 sets the stage by introducing into the text of recital 27 a requirement that covered companies must engage with affected stakeholders throughout the due diligence process. Amendment 60 provides more detail by introducing a new recital 44c focusing on ongoing meaningful engagement. One notable development present in Parliament’s draft is the category of affected stakeholders. Covered companies are required to engage in genuine dialogue with these stakeholders and/or other relevant stakeholders such as civil society or human rights and environmental defenders where necessary. Stakeholders are to be given access to information with reasons for any refusal, and affected stakeholders must be protected from retaliation and retribution including by maintaining confidentiality and anonymity. Particularly welcome are attempts to inject policy coherence into the process of meaningful stakeholder engagement by aligning it with existing EU legislation applicable to rights to information, consultation, and participation.
As regards the operative provisions of the draft directive, a number of amendments are relevant. Amendment 121 introduces the category of affected stakeholders into the definitions laid out in Article 3(1)(n). Affected stakeholders are conceived of as ‘individuals, groups or communities that have rights or legitimate interests that are affected or could be affected by the adverse impacts stemming from a company’s activities or actions or the activities or actions of entities in its value chain.’ The legitimate representatives of such stakeholders are also granted standing. Additionally, adopting a formulation introduced in the Lara Wolter’s draft, the Parliament draft proposes amendment 122 creating a new Article 3 (1) (na) recognizing vulnerable rightsholders. These are affected stakeholders whose situations are compounded by marginalization due to intersecting factors such as ‘sex, gender, age, race, ethnicity, class, caste, education, indigenous peoples, migration status, disability as well as social and economic status.’
The most important amendment on stakeholder engagement proposed in the Parliament draft is amendment 206 which introduces a new Article 8 (d) titled ‘carrying out meaningful engagement with affected stakeholders.’ The provision is significant for a number of reasons. First, it requires engagement to be ‘comprehensive, structural, effective, timely and culturally and gender sensitive.’ In addition, it stresses the possibility of meaningful engagement involving legitimate representatives of affected rightsholders where it is not possible to engage the latter. Notably, in order to redress the information asymmetry that is emblematic of the relationship between companies and stakeholders, covered companies are required to provide ‘comprehensive, targeted and relevant information to affected stakeholders.’ Furthermore, affected rightsholders are allowed to request companies for additional information, and where such a request is refused written justifications must be given. Companies are expected to set up an appropriate framework for consulting affected stakeholders that ensures meaningful engagement throughout the due diligence process as set out in Articles 5-10 of the EU CSDDD. Special mention is made of company workers and their representatives, who must be kept informed of the company due diligence policy and engaged with throughout the implementation process. Finally, companies are required to identify and address barriers to engagement and ensure that participants are not subject to retaliation or retribution. The needs of vulnerable stakeholders must be given particular attention. Crucially, amendment 154 removes the ‘where relevant’ formulation and requires companies to carry out meaningful engagement in accordance with Article 8 (d).
What Next? A Call for Pragmatic Optimism
It is clear that the Parliament draft has laid down the legal scaffolding necessary for building an effective meaningful engagement architecture within the CSDDD. Compared to the Commission and Council drafts, the Parliament draft has arguably, and to a large extent, incorporated the concerns of critics of these earlier versions. Nonetheless, this contribution calls for the optimism with which these developments are likely to be received to be tempered with a healthy dose of pragmatism for three reasons.
Firstly, the nature of the trilogue process means that a number of tripartite meetings between Parliament, the Commission and the Council will now follow. Only at the end of this process will it be clear what version of stakeholder engagement will be captured within the final legislative text. Thus, the final text could either be stronger or weaker than the Parliament draft in this regard. Only time will tell.
Secondly, whereas the provisions in the new article 8 (d) are promising, it is not entirely clear if these provisions grant an enforceable right to stakeholders who are dissatisfied with how the company structures and carries out its meaningful engagement obligations. Will such stakeholders be able to raise a challenge against the company either through judicial or administrative proceedings – for instance within the context of the national supervisory mechanisms to be set up in each national jurisdiction? Legal rights are meaningless unless they are capable of being translated into reality. It remains to be seen whether and how affected stakeholders will actually be able to hold companies to account for any failures in their discharge of these meaningful engagement obligations.
Thirdly, as scholars such as Surya Deva and Debadatta Bose have cautioned, we must temper the enthusiasm with which we regard the move towards enhancing corporate accountability for violations of human rights and the environment through HRDD laws such as the EU CSDDD. These laws may promise more than they are able to deliver in reality, given the structural problems that characterize the global order, such as the massive asymmetries that exist between affected stakeholders and powerful Multi-national companies (MNCs) in terms of inter alia, access to resources, power and influence, and information.
HRDD laws are unable (and maybe even unwilling) to confront the material conditions of a post-colonial and neo-liberal international order that have allowed errant MNCs to be what they are today. Ultimately, even if Parliament’s version of the EU CSDDD is successful as regards the meaningful engagement provisions, this will be akin to treating only one small symptom while doing nothing to stop the disease.
The EC’s draft ban on products made using forced labour: Key measures to guarantee remediation for victims
I am very pleased to host two blog pieces which reflect on the 10 years which have passed since Rana Plaza as well as offering thoughts as to the way forward. The first one, by Rubana Huq was posted here. The second one, by Claire Methven O’Brien and Amy Weatherburn focus on the remedy gap in the Draft Regulation proposed by the EC.
These blog pieces were commissioned and edited by Sandhya Drew and Felogene Anumo for the Blog of the Business and Human Rights Journal but an IT blip on the CUP website is delaying publication, and so I have seized this opportunity. These pieces will be crossposted by the BHRJ Blog too at a later date.
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Claire Methven O’Brien and Amy Weatherburn
In 2022, the European Commission (EC) proposed a new Regulation to ban products made using forced labour from the EU market. In this post, we highlight the absence of provisions in the draft Regulation to guarantee remedies for victims, and put forward five remediation measures that could be introduced to address this gap.
The EC’s proposed ban on products made using forced labour in outline
The EC’s proposal seeks to prevent goods made with forced labour from circulating on the EU market. The draft Regulation would hence empower Member State authorities, where there are indicators of forced labour in the supply chain, to investigate products and businesses (Articles 4-5) and conduct checks and inspections inside as well as outside the European Economic Area. Where forced labour is implicated in their production, goods can be withheld or disposed of (Article 6) and penalties imposed for non-compliance (Article 30). Additional EU-level measures aim to promote the law’s effectiveness. These include an EU database of forced labour risk areas and products to supply data to guide investigations and checks (Article 11) and guidance (Article 23). In terms of checks and balances, enforcement action against businesses is to be subject to review and appeal before national courts.
Remedies for forced labour victims in the draft EU Regulation: a crucial omission
Despite its prohibition in international law and its designation as one of the five fundamental principles and rights at work, forced labour is on the rise globally, with 28 million victims worldwide, 86 % in the private sector and most women. Human rights standards, including those binding on the EU, demand that individuals who fall victim to forced labour must be remediated. Remedies must be sufficient and certain in practice and context-specific, with reference to victims’ individual circumstances. While these rules generally relate to forced labour occurring within a state’s jurisdiction, the UN Guiding Principles on Business and Human Rights (UNGPs) and Council of Europe standards affirm the need for ensure remedy also in cross-border and value chain settings.
It is striking, then, that the EC’s proposed Regulation omits measures that would secure remedies for victims of forced labour. As is well-known, victims of forced labour face extreme difficulties in securing remediation, facing obstacles such as trauma, precarity, resource constraints, language barriers, lack of rights awareness and risks of reprisals. As remarked also by stakeholders, this lack of remedy perpetuates injustice, undermines the rule of law, exacerbates risks of re-victimisation and hence stands to frustrate the policy goals of the draft Regulation as well as broader EU and international human rights and sustainable development objectives.
Fixing the EU Regulation’s remedy gap: A package of proposals
The European Parliament is currently developing its position on the EC’s draft forced labour Regulation. There is therefore still time and opportunity to fix the failure of the EC’s draft to advance remedy for forced labour victims. As we analysed in our recently presented Briefing for the European Parliament, this goal might be promoted through the following mechanisms.
First, the Regulation should explicitly affirm the goal of preventing and remediating harm for victims. What after all is the point of EU legislation in this area, if not redressing the affront to human dignity and significant harm to human beings inflicted via exploitative labour practices?
Second, the draft Regulation should require economic operators to provide evidence of remediation as a condition of having bans or restrictions lifted. Such evidence could relate to, for example, financial and non-financial compensation; restitutionary measures; formal apologies or future-oriented preventative measures or guarantees of non-recurrence.
Third, the proposed EU Regulation could direct fines and administrative penalties into a trust fund for victims. This could then be drawn on to secure remediation in cases where perpetrators cannot be identified or fines enforced, well known obstacles to recuperating compensation where it has been awarded. Such a fund could draw lessons from and coordinate with existing initiatives, such as the UN Voluntary Trust Fund on Contemporary Forms of Slavery and Alliance 8.7.
Fourth, the foreseen Union Network Against Forced Labour Products (Article 24) should be leveraged to involve stakeholders in identifying cases of forced labour as well as monitoring and following up on the implementation of remediation. The network could also facilitate stakeholders in the process of evidence gathering for investigations as this can be a burdensome task for organisations with limited resources given the covert character of forced labour practices, and can dissuade them from pursuing legal action that would hold businesses accountable for forced labour practices. Given the latter, competent authorities should also have a duty to identify and inform potential victims, or their representatives, of the right to remediation in the course of investigations or remedial action.
Fifth, the Regulation should be articulated with other controls on market access. EU public procurement law already provides for exclusions from eligibility to bid for public contracts based on corporate misconduct and corruption and multi-lateral development banks operate a scheme of cross-debarment on a similar basis. Adverse determinations against businesses under the new EU Regulation should activate these or similar exclusions with the possibility, as under EU procurement law and debarment regimes, for ‘self-cleaning’ based on remediation for victims as well as improvements to business systems.
Conclusion
Ten years ago more than 1,110 garment workers lost their lives in the Rana Plaza disaster. Despite some advances, today millions of workers across the world and their families still suffer the immediate and long-terms consequences of serious breaches of minimum labour, health, safety, and environmental standards. Even in cases where activists and workers have won remediation for victims , the risk of reoccurrence and re-victimisation remains high. An unequivocal commitment in principle to securing remedies for forced labour victims, as EU actors claim, is therefore crucial. By integrating the measures outlined here into the draft Regulation, we suggest, the EU would help to put that principle into practice.
Rana Plaza, 10 years on: time for brands, unions and the industry to work together
I am very pleased to host two blog pieces which reflect on the 10 years which have passed since Rana Plaza as well as offering thoughts as to the way forward. The first is by Rubana Huq. Rubana is a Bangladeshi businesswoman, university academic and poet. She is the current Vice-chancellor of Asian University for Women. She is the chairperson of the Mohammadi Group and served as the first female president of the Bangladesh Garment Manufacturers and Exporters Association during 2019–2021. She offers a close up assessment of the sector and the well being of the people who work in it.
These blog pieces were commissioned and edited by Sandhya Drew and Felogene Anumo for the Blog of the Business and Human Rights Journal but an IT blip on the CUP website is delaying publication, and so I have seized this opportunity. These pieces will be crossposted by the BHRJ Blog too at a later date.
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On February 3, 2014, I wrote here about the hell which workers at Rana Plaza had gone through, and finished by asking ‘Where do we go from here?’
My pessimism in 2014 about Bangladesh’s readymade garment industry exports has proved unfounded. In only seven months, from July 2022 to January 2023, exports stood at $27.42 billion, registering a growth rate of 14.31% on a year-on-year basis. Way back in 2013-2014, right after the Rana Plaza collapse, export from Bangladesh was $24.49 billion, followed by 2014-15 number of $25.49 billion and it has continued to grow ever since. The last export figure of 2021-22 registered an export figure of $42.61 billion.
What led to this growth? The answer is pretty straightforward this time around. Bangladesh has remediated over the last ten years. The factory situation with regard to structural, fire and electrical integrity stand at an A++ level. Thanks to the international partners, namely Accord and Alliance, who had come in and intervened as early as May 2013 and began pushing factories to change their ways of business, things worked, things turned around. Today, the industry boasts about having 55 out of the best 100 green factories in the world.
But can Bangladesh RMG sector brag about labour conditions? This answer, this time around, is not necessarily easy to respond to. Minimum wage stands at $88 dollars per day including overtime. Prices of essentials such as onion, rice, wheat and sugar have sky rocketed. Meanwhile, demand for compliance has also shot up leaving a distinct disconnect with sourcing practices. Prices of garments have dipped.
Who will pay the extra? At a time like this, when the countries are waging wars, clothes are not cut to be priorities. Therefore, brands and retailers are as tight fisted as ever, yet trying to cover their own margins. But if the workers need to be paid more, manufacturers need to receive the extra bit, without which changing the wage scene will be a utopia.
Thus, the readymade garment sector of Bangladesh is sprinting to its destiny of cheap volume products instead of marathoning to the ultimate destination of a value added sustainable future. Ten years after the tragedy, the sector needs collaboration from all sides, brands and unions both. The time for finger pointing has to come to an end. Blame doesn’t steer towards progress; it just handicaps innovation.
Unless the brands, unions and the industry work hand in hand, the real success that evolves around the people who work there will be undermined and shortchanged.
Maybe twenty years down the line, while we stand sufficiently distanced from the horror of 24 April 2013, the sector may even turn a new page where the story of the workforce being shielded from want will be etched forever.
Rubana Huq is chairperson of the Mohammadi group. Between 2019-2021, she was the first woman president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) She is Vice-Chancellor of the Asian University for Women.
Human Rights and Sovereign Debt Restructurings: A Proposal for an Optimal Outcome
I am very pleased to host Danny Bradlow’s exposition of his Dove Principles. Danny has used his vast experience to design these principles. This blog piece was commissioned and edited by Sandhya Drew and Felogene Anumo for the Blog of the Business and Human Rights Journal but an IT blip on the CUP website is delaying publication, and so I have seized this opportunity. This piece will be crossposted by the BHRJ Blog too at a later date.
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Daniel Bradlow, University of Pretoria
Zambia defaulted on its debt in November 2021 but has not yet reached an agreement with its creditors. Its president recently warned that this situation is hurting its citizens and undermining its democracy because “you cannot eat democracy”.
Given their adverse economic, social, and political impacts, it should be expected that human rights considerations would play an important role in sovereign debt restructurings. Unfortunately, this is not the case, even though all negotiating parties have human rights responsibilities or obligations.
It is unclear why these actors pay so little attention to human rights in the sovereign debt restructuring context. One possibility is that they are not sure how to incorporate human rights into their transactions.
This should not be surprising. It is difficult to understand the causal linkages between a sovereign debt crisis and the deteriorating human rights situation that follows. There can be multiple such linkages and the lines of causation can run in different directions.
Consequently, a human rights consistent debt restructuring will be fact and context specific and will require the parties to understand their role in both creating the situation and in mitigating or eliminating the adverse human rights impacts.
This requires the parties to have a common approach to analysing the debt crisis and its anticipated economic, financial, human rights, environmental, social and governance impacts. Thus, they could benefit from having a mutually acceptable set of principles that incorporates all these issues.
In 2021, I received a grant from the Open Society Initiative for Southern Africa to explore the feasibility of my proposal to establish a DOVE (Debts of Vulnerable Economies) Fund. This fund would buy the debts of sovereigns in distress and state that it would only support sovereign debt restructurings that were consistent with widely accepted international norms and standards, My work on this project revealed shortcomings with all the existing international standards and led me to develop the DOVE Fund Principles. The principles are based on 20 existing international norms and standards developed by states, international organisations, industry associations and civil society organisations. They can provide a common framework for the negotiations between states and their creditors. They are now set out and explained.
The DOVE Fund Principles
Principle 1: Guiding Norms: Sovereign debt restructurings should be guided by the following 6 norms: Credibility, Responsibility, Good Faith, Optimality, Inclusiveness, and Effectiveness.
- Credibility: The Negotiating Parties and the Affected Parties are confident that the restructuring process can produce an Optimal Outcome. The “Negotiating Parties” are the sovereign debtor, its creditors and their advisors. The “Affected Parties” are the residents of the debtor country and those individuals whose savings either directly or indirectly finance the debt being restructured.
- Responsibility: The Negotiating Parties seek an agreement that respects their respective economic, financial, environmental, social, human rights and governance obligations and/or responsibilities.
- Good Faith: The Negotiating Parties intend to reach an agreement that takes account of all their rights, obligations and responsibilities.
- Optimality: The Negotiating Parties seek an “Optimal Outcome”, that addresses the circumstances in which the transaction is being negotiated, the parties’ respective rights, obligations and responsibilities, and offers them the best possible mix of economic, financial, environmental, social, human rights and governance costs and benefits.
- Inclusiveness: All creditors can participate in the restructuring process and the Affected Parties are able to make informed decisions about how it will impact them.
- Effectiveness: The Negotiating Parties should seek an Optimal Outcome in a timely and efficient manner.
Principle 2: Transparency: The Negotiating Parties and the Affected Parties should have access to the information that they need to make informed decisions regarding the debt restructuring.
The creditors have access to sufficient information that they can make informed decisions about the scope of the sovereign’s debt problems, the options for their resolution and their potential economic, financial, environmental, social, human rights and governance impacts. The Affected Parties should also have access to sufficient information, subject to appropriate safeguards, that they can make informed decisions about how the restructuring may affect their rights and interests.
The creditors should inform the debtor and the Affected Parties about their environmental, social, and human rights obligations and responsibilities.
Principle 3: Due Diligence: The sovereign debtor and its creditors should each undertake appropriate due diligence before concluding a sovereign debt restructuring process.
The Negotiating Parties should utilize a debt sustainability analysis which credibly determines the sovereign’s debt restructuring needs and their impacts.
Principle 4: Optimal Outcome Assessment: At the earliest feasible moment, the Negotiating Parties should publicly disclose why they expect their restructuring agreement to result in an Optimal Outcome.
An Optimal Outcome requires the Negotiating Parties to assess the expected impacts of their proposed agreement on the economic, financial, environmental, social, human rights and governance condition of the sovereign borrower and the Affected Parties.
Principle 5: Monitoring: The restructuring process should incorporate credible mechanisms for monitoring the implementation of the restructuring agreement.
The Negotiating Parties should audit the financial aspects of the agreement and monitor its economic, social, environmental, human rights and governance impacts. This information should be published periodically.
Principle 6: Inter-Creditor Comparability: The restructuring process should ensure that all creditors make a comparable contribution to the restructuring of the sovereign’s debt.
The process should give creditors the confidence that all other creditors are making comparable contributions to an Optimal Outcome.
Principle 7: Fair Burden Sharing: An Optimal Outcome should share the burden of the restructuring fairly between Negotiating Parties and should not impose undue costs on any of the Affected Parties.
Both the debtor and the creditor bear some responsibility for causing debt crises and should absorb some of the restructuring costs. Moreover, they should seek to limit how much of the restructuring costs the Affected Parties will have to bear, considering their relative wealth and ability to absorb losses.
Principle 8: Maintaining Market Access: The restructuring agreement, to the greatest extent possible, should be designed to facilitate future market access for the borrower.
It is an unfortunate reality that debtor countries must seek financing from international financial markets. Thus, the Optimal Outcome should help the debtor regain access to financial markets as quickly as possible.
As the Zambian case demonstrates, the current arrangements for restructuring sovereign debt are sub-optimal. The DOVE Fund Principles seek to overcome this problem by offering both Negotiating and Affected Parties a common conceptual framework that facilitates a fair resolution of the crisis incorporating all its social, environmental, human rights, economic, financial and governance impacts. They therefore can promote an Optimal Outcome.
For further information on this ongoing project, contact: danny.bradlow@up.ac.za
Business and Human Rights Journal articles for further reading:
1) Social Bonds for Sustainable Development: A Human Rights Perspective on Impact Investing
Stephen Kim PARK
Journal: Business and Human Rights Journal / Volume 3 / Issue 2 / July 2018
pp. 233-255
2) The Record of International Financial Institutions on Business and Human Rights
Jessica EVANS
Journal: Business and Human Rights Journal / Volume 1 / Issue 2 / July 2016
pp. 327-332
Business and Human Rights Regulation after the UN Guiding Principles – a Critical Assessment
It is a pleasure to welcome back Dr René Wolfsteller and Dr Yingru Li on Rights as Usual. René is a Lecturer in the Department of Political Science at Martin Luther University Halle-Wittenberg where he analyzes the governance of business and human rights, sustainability, and climate change. Yingru is a Lecturer in Accounting at the Adam Smith Business School, University of Glasgow, and co-convenor of the Glasgow Human Rights Network. Her research focuses on corporate accountability for human rights and a sustainable economy. This post is theirs and it was first published on the Glasgow Human Rights Network’s website.
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Since the UN Guiding Principles on Business and Human Rights (UNGPs) were adopted by the UN Human Rights Council in 2011, they have diffused into policy frameworks, laws, and regulations across the globe and have become the lynchpin of the transnational business and human rights regime (BHRR). In a Special Issue of the Human Rights Review, we brought together a multidisciplinary group of human rights experts to critically examine the construction and effectiveness of key elements of that regime, including due diligence laws, National Human Rights Institutions and National Action Plans, as well as of proposals for a binding international treaty. Based on these analyses, we argue that the BHRR’s effectiveness is inhibited by three major constraints: the weak conception of corporate human rights accountability in the UNGPs; the insufficient regard to the perspective of victims of corporate human rights abuse; and the structural gaps and misalignments in the BHRR’s governance architecture.
The UN Guiding Principles and the Business and Human Rights Regime
Developed by the Special Representative of the UN Secretary-General (SRSG), the late John Ruggie, the UN Guiding Principles have over the past eleven years evolved as the focal point of a transnational regime complex for the regulation of business and human rights. The UNGPs were aimed at tackling and preventing business-related human rights abuses through a new regulatory framework based on three pillars: the state duty to protect against human rights abuse, including by third parties such as business corporations; the corporate responsibility to respect human rights; and the provision of access to effective remedies for victims of business-related human rights abuse. Despite persistent critique of their form and substance by many scholars and civil society actors, their endorsement by the UN Human Rights Council and other organisations has triggered a remarkable process of global norm diffusion, and it has encouraged the development of national systems for the regulation of corporate human rights conduct through instruments such as National Action Plans, National Contact Points, National Human Rights Institutions, as well as through the introduction of mandatory due diligence laws. Leading human rights scholars from political science, law, accounting, and philosophy have examined the construction and effectiveness of this business and human rights regime in a new Special Issue of the Human Rights Review on “Business and Human Rights Regulation After the UN Guiding Principles”. Their critical analyses suggest that the potential of the BHRR’s norms, actors, and instruments to bring about substantive and sustainable human rights change in the corporate sector is severely limited by three structural constraints:
(1) The weak conception of corporate human rights accountability in the UNGPs
The UNGPs rest on a weak and defensive conception of corporate human rights accountability as a social expectation of do-no-harm without proposing new binding obligations or sanctions for business. They define corporate human rights accountability as the responsibility to respect human rights, requiring business firms to “avoid infringing on the human rights of others” and to carry out “due diligence”, which means “to identify, prevent, mitigate and account for how they address their adverse human rights impacts.” (UNGPs 11 and 17) This confined definition was the deliberate outcome of a strategic process of international norm construction by Ruggie, as the contributions by Brigitte Hamm and by Benjamin Gregg demonstrate. Through a worldwide consultation process, Ruggie sought to establish the broadest possible consensus among stakeholders, especially from governments and the business community, in order to create a realistic prospect of support and implementation of the new framework by key actors on the ground. While he succeeded in establishing the UNGPs as the BHRR’s normative lynchpin, the diffusion of their norms and standards meant that subsequent regulatory instruments rarely went beyond the UNGPs’ limited do-no-harm approach.
(2) Insufficient regard to victims and vulnerable groups
The contributions to the Special Issue reveal a recurring pattern in the construction of the BHRR’s norms and instruments: victims’ groups and people at heightened risk of rights abuse are often not adequately represented in consultations and negotiation processes, as business interests often tend to be prioritised over the interests of those groups. For instance, the consultation process leading to the UNGPs did not involve visits of places where corporate human rights abuses had occurred and, hence, no encounters with people directly affected. Civil society organisations and victims’ groups also find it difficult to make their voices heard in the negotiations for an international business and human rights treaty because, in order to get access to the meetings of the UN Working Group in Geneva, NGOs have to acquire a consultative status with the UN Economic and Social Council through a selective accreditation process. The systematic study of the construction of National Action Plans for business and human rights by Claire Methven O’Brien, John Ferguson and Marisa McVey shows that most NAPs have not been based on stakeholder mapping exercises to identify relevant constituencies, and only a minority of states has taken steps to get particularly vulnerable groups involved in NAP development. The prioritisation of business interests over those of potential victims of corporate human rights abuses became visible also in the drafting process of the French Duty of Vigilance Law when the initial proposal to shift the burden of proof from victims to companies was abandoned before the passing of the bill – a change that created a considerable barrier to the law’s effective enforcement, according to Almut Schilling-Vacaflor.
(3) Structural gaps and misalignments in the BHRR’s governance architecture
The articles in the Special Issue also highlight significant implementation gaps and misalignments in the BHRR’s governance architecture regarding the envisaged functions vs. actual competences and capabilities of specific actors and instruments. René Wolfsteller demonstrates that most National Human Rights Institutions are currently unable to fulfill the role of state-based, non-judicial grievance mechanisms as originally envisaged by the UNGPs because the key international steering instrument for NHRIs’ design and functions – the Paris Principles – does not prescribe strong complaints handling powers against corporate actors; hence, most NHRIs are lacking this competence. Moreover, National Action Plans on business and human rights are often characterised by misalignments between their general aims and a lack of specific indicators and measurable targets, as well as by structural gaps in the capacity of states to effectively monitor and evaluate NAP implementation. And although the French Duty of Vigilance Law was the first comprehensive national due diligence regulation rendering companies and their subsidiaries liable for human rights abuses and environmental damages in transnational supply chains, the law suffers from a lack of state commitment to monitor its implementation and to sanction corporations’ non-compliance.
All of these intended and unintended gaps and limitations inhibit the BHRR’s potential to bring about effective human rights change in the corporate sector as they allow business actors to evade accountability through strategic ignorance, selective engagement or minimal compliance, as Alvise Favotto and Kelly Kollman show in their case study of the largest UK-based TNCs. However, recent proposals for a European Directive on Corporate Sustainability Due Diligence, as well as for an international business and human rights treaty, have restored hope for more stringent and coherent transnational regulations. Largely resembling the “progressive model” of corporate human rights accountability proposed by Nadia Bernaz, the latest treaty draft would – if adopted – not only establish a more ambitious benchmark. It would also present a crucial step toward the creation of a level playing field for a global economy more human rights friendly.
Human Rights Review, Vol. 23, No. 1 (2022), Special Issue:
“Business and Human Rights Regulation After the UN Guiding Principles”
Guest Editors: René Wolfsteller & Yingru Li
Table of Contents
by René Wolfsteller & Yingru Li
Beyond Due Diligence: The Human Rights Corporation
by Benjamin Gregg
by Alvise Favotto & Kelly Kollman
by Almut Schilling-Vacaflor
by René Wolfsteller
National Action Plans on Business and Human Rights: An Experimentalist Governance Analysis
by Claire Methven O’Brien, John Ferguson & Marisa McVey
by Nadia Bernaz
by Brigitte Hamm
My name is Nadia Bernaz and I am Associate Professor of Law and Governance at Wageningen University in the Netherlands.
My main area of research is business and human rights. I look at how corporations and businesspeople can be held accountable for their human rights impact through international, domestic and transnational processes.