2022

APRIL

 THE SECRETARIAT OF THE ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD) AND WIKIRATE PRESENTED THE FINDINGS OF A BENCHMARKING STUDY OF IMPLEMENTATION OF THE OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS OF MINERALS FROM CONFLICT-AFFECTED AND HIGH-RISK AREAS

The Secretariat of the OECD and WikiRate revealed a benchmarking study of the of the implementation of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (“Minerals Guidance”) by 503 “companies producing, trading and sourcing minerals or metals based on their public disclosures”. This study has shown “major shortcomings in disclosure related to implementation, especially on how companies use due diligence practically to identify and mitigate risks” and that “companies might do more than they disclose, or conversely exaggerate their performance in public-facing documents.”

THE IPCC RELEASED THE THIRD PART OF ITS SIXTH ASSESSMENT REPORT

At the begin of April the United Nations Intergovernmental Panel on Climate Change (IPCC) released the third part of its sixth assessment report, which showed that total net anthropogenic GHG emissions have continued to rise in the last two decades and has in fact been the “highest increase in average decadal emissions on record”. The report highlights that around 40% of the world’s population is “highly vulnerable” to the impacts of climate change. The report notes that the window of opportunity for action to meet the Paris Agreement goals to limit the average global temperature to rise to 1,5°C above pre-industrial levels and thereby secure a liveable future will be quickly closing as this would require emissions to peak by 2025. Without a strengthening of policies beyond those that are already implemented, GHG emissions are projected to rise beyond 2025, leading to a median global warming of 3.2° by 2100 which would have devastating and irreversible impacts on human kind, and other species, the ecosystems and the planet. The IPCC also made available a press conference presentation which focused on some of the key options to decrease the significantly greenhouse gas (GHG) emissions in the following sectors: energy; demand and services; land use; industry; urban; buildings; transport.

MARCH

 TO CELEBRATE INTERNATIONAL WOMEN’S DAY, EIGHTY-TWO CIVIL SOCIETY ORGANIZATIONS ADDRESSED A LETTER TO THE EUROPEAN COMMISSION, PARLIAMENT, AND COUNCIL URGING THEM TO ASSURE AN EFFECTIVE AND GENDER-RESPONSIVE CORPORATE SUSTAINABILITY DUE DILIGENCE LEGISLATION

To end the month of International Women’s Day, a group of 82 civil society organisations sent a letter to the European Commission, Parliament, and Council urgent the Euroepan institutions to take this unique opportunity and “fight gender inequality and discrimination in global value chains”. To do so, the organisations presented the following list of needed changes in the Corporate Sustainability Due Diligence Directive;

  1. “In line with the UNGPs and the OECD guidelines, the Directive should recognise that companies need to pay special attention in their due diligence to the actual and potential adverse impacts on groups or populations that may have a heightened risk of vulnerability or marginalisation. Companies should also take into account the different risks that may be faced by women and men, as women and people with gender diverse identities face gender-specific impacts;
  2. The list of rights and prohibitions and conventions used to define “adverse human rights impacts” in the Annex is too limited, particularly to prevent and remedy corporate women’s rights abuses. It must be made clear that this Annex is non-exhaustive. In addition, the list should be expanded to include additional violations and prohibitions in Part I and other key conventions should also be added in Part II;
  3. The company scope must be broadened so that all companies have an obligation to respect human rights and the environment. Furthermore, all companies under the scope must identify all adverse impacts. The current distinction where a group of companies active in high-impact sectors is allowed to limit identification to “severe adverse impacts,” instead of all their impacts is not justified. It contradicts international standards and is counter-intuitive as high-impact sectors are those where the risk of adverse impacts is the highest, where women are most present and thus where the need for intervention is the most crucial;
  4. The due diligence obligation must cover the whole value chain. The term “established business relationship” risks limiting the coverage of the obligation to the closest, only formal, or lasting suppliers. Such limitation risks leaving out entire layers of activities, including semi-formal and informal working schemes as well as unofficial subcontracting and home-based work, in which women are disproportionately represented;
  5. Companies must be required to safely and meaningfully engage with stakeholders, and in particular with vulnerable and marginalised individuals, communities and their representatives throughout each step of due diligence. Stakeholder engagement and complaints mechanisms must be gender-responsive. Furthermore, the protection of whistleblowers (article 23) should be expanded to protecting all Human Rights Defenders in particular when based outside the EU where their vulnerability is particularly heightened;
  6. Identification of risks as well as monitoring of operations and measures must include gender-sensitive human rights and environmental impact assessments and indicators, including by gathering and using disaggregated data (based on sex, ethnicity, age, migration status and others). Companies must also be required to map and disclose their value chain and business relationships;
  7. To ensure that the objectives of the proposed directive are achieved, the described due diligence obligation must go beyond procedural provisions. The text must clearly state that companies have an obligation to respect human rights and the environment, and this must be reflected in Article 1 on the purpose of the Directive and on Article 4 on Due Diligence, independent from the additional procedural requirements laid down in the proposal. It must also require companies to carry out detailed and qualitative assessment and evaluation of the measures taken to prevent and minimise actual and potential adverse impact, giving specific attention to women and girls and other marginalised groups, and do so through safe and meaningful consultation with stakeholders;
  8. Specify that the impact of purchasing practices and business models must be an integral part of a company’s due diligence policies and activities. Unfair purchasing practices on cost and schedules have a direct and disproportionate impact on women (low wages and incomes, unsafe conditions, abusive subcontracting);
  9. Include the explicit obligation for companies to remediate harm, as well as provisions for victims to access both non-judicial and judicial remedies. Available remedies must go beyond financial compensation (article 8.3.(a)), they must take into account the needs and interests of the affected party and be decided and designed in consultation with rightholders. Due attention shall be given to overcome the barriers that women, and other marginalised groups face in accessing and securing remedy, as well as in ensuring that all procedures are impartial, safe and free from undue influence;
  10. Include provisions to facilitate access to justice by ensuring a fair distribution of the burden of proof, reducing time limitations, allowing for collective redress and representative actions.”

THE COLUMBIA CENTER ON SUSTAINABLE INVESTMENT (CCSI) AND ADVANCING LAND-BASED INVESTMENT GOVERNANCE (ALIGN) PUBLISHED TWO COMPLEMENTARY RESOURCES (A BUSINESS GUIDE AND A LEGAL PRIMER) ON HUMAN RIGHTS RISKS TO COMMUNITIES LINKED TO WIND AND SOLAR PROJECT DEPLOYMENT

The Columbia Center on Sustainable investment (CCS) and Advancing Land-based Investment Governance (ALIGN) published two key resources on human rights risks to communities linked to wind and solar project development. The first one, a Business Guide, comes in the context of the recent allegations of adverse huma rights impacts in the renewable energy industry and notably linked to the wind and solar sectors.  The Guide is inspired by the UN Guiding Principles for Business and Human Rights and aims to provide practical recommendations on how to identify, prevent, mitigate, and account for adverse human rights impacts. The second resource, which serves as a companion to the first one, is a legal risk primer, providing general counsels and corporate legal teams of commercial wind and solar companies an overview of the key legal risks arising from community-related human rights impacts.

 RESOURCE CENTRE ON BUSINESS AND HUMAN RIGHTS PUBLISHES REPORT OF HUMAN RIGHTS DUE DILIGENCE ACTIVITIES FROM 93 COMPANIES OPERATING IN UKRAINE AND/OR RUSSIA

The Resource Centre on Business and Human Rights invited 273 companies operating and investing in Ukraine and/or Russia to answer questions about their HRDD processes. 93 companies responded to the survey. A majority of respondents listed general human rights policies, guidelines, and standards or sent general statements condemning violence, expressing concerns and sharing information about their donations in support of Ukraine, while 31 companies provided full or partial responses to the questions about their HRDD in response to the Russian invasion, including Bosch, Clifford Chance, Credit Suisse, Shell, Siemens, Twitter, Uber, and Unilever.

For example, Shell declared being committed to “stop all spot purchases of Russian crude oil” and “withdraw from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas (LNG) in a phased manner”, while noting that in the context of its operation in Russia, “…there may be circumstances in which our teams may have no choice but to supply military transport” for example if armed troops demanded fuel or if there was a legal obligation under martial law. Uber had set up a steering committee a few weeks prior to the invasion in order to identify risks, take mitigation action and plan for potential further escalation. In addition, “Uber began regular outreach and consultation with employees, business partners, and both local and national government officials in Ukraine to better understand the fast-evolving situation on the ground in Ukraine and the priority needs of our stakeholders.” The full survey and responses can be accessed here: https://www.business-humanrights.org/en/latest-news/russian-invasion-of-ukraine-what-companies-have-to-say-about-their-human-rights-due-diligence/.

UN GLOBAL COMPACT NETWORK UK MADE AN URGENT CALL ON BUSINESSES TO ACT IN FACE OF THE UKRAINE CRISIS, PROVIDING GUIDELINES AND GOOD PRACTICES

The UN Global Compact UK has published an urgent call for business action in the context of the Russian invasion of Ukraine. While recognizing that the conflict is causing economic disruption and affecting companies’ activities everywhere due to the increased cost of energy, shipping and certain commodities, the call refers to good practices from companies such as Airbnb, Vodafone, Google; Warner Bros, Disney, Marvel, H&M, Jaguar Land Rover, Ikea, Space X’s Starlink , Predica Group, Grammarly, Lyft and Wix. The guidelines for responsible action can be summarized to four actions:

  • Conducting (heightened Human Rights and Environmental Due Diligence
  • Supporting the Flash Appeal for people in Ukraine and the Regional Refugee Response Plan
  • Donating to the United Nations High Commissioner for Refugees (UNHCR)
  • Supporting Ukrainian Businesses and employing Ukrainians workers.

 “COTTON CAMPAIGN” LIFTED ITS CALL FOR A GLOBAL BOYCOTT OF UZBEKISTAN AFTER A REPORT FINDING NO EVIDENCE OF CENTRAL GOVERNMENT-IMPOSED FORCED LABOUR:

On March 2022, the “Cotton Campaign”, a coalition of NGO’s, Trade Unions, Industry representatives and academics, ended its ongoing call for a boycott on Uzbekistan following a report published by Uzbek Forum for Human Rights finding no evidence of government-imposed forced labour in 2021. The campaign, which has been in place since 2011, saw the engagement of 331 international brands and retailers.

The decision was praised by the ILO which has been working with Uzbekistan since 2013  in establishing social dialogue and collective bargaining practices and reforming the agricultural and economic practices in the cotton sector. Patricia Jurewicz, CEO of Responsible Sourcing Network and Co-founder of Cotton Campaign, highlighted that now “it will be up to the individual companies to do their own assessments of risks and make their own policy and sourcing decisions”, as the report still documented on episodes of coercion and interference by local authorities.

GROWING NUMBER OF COMPANIES CUTTING TIES WITH RUSSIA FOLLOWING ITS INVASION OF UKRAINE

Following the invasion of Ukraine by Russia on the 24th of February 2022, over 300 companies have decided to suspend their operations (in total or in part) in Russia. This includes companies such as McDonald’s, Universal Music Group, PepsiCo, Adidas, Google, Mastercard and Visa, Volkswagen, Mercedes-Benz, etc. Other companies such as Auchan that have so far decided against this measures have been under increased scrutiny and calls for boycotts have been issued. These decisions raise some important questions in terms of Business and Human Rights and require enhanced human rights due diligence process in relation to conflict-affected areas. The BIICL and the BHRRC have published important reflections on the requirements for a responsible exit from Russia. In addition, the Yaroslav Mudryi NLU in collaboration with Polish Institute for Human Rights and Business hosted a webinar on Business conduct in times of war and the Essex Business and Human Rights Project and the Global Business & Human Rights Scholars Association hosted a webinar on Business and Human Rights in Ukraine (the recording is available here). The NOVA BHRE is also launching a new research project on Corporate Due Diligence in Conflict-Affected areas coordinated by Laura Íñigo Álvarez.

DEMOCRATIC REPUBLIC OF CONGO’S HIGH COURT ORDERED PANDA INTERNATIONAL CONGO ENGINEERING TO PAY FULL HEALTHCARE COSTS AND LOST WAGES TO AN INJURED WORKER OF A COBALT MINE

In August 2021, a worker at a cobalt & copper mine was injured after a truck engine fell on his hand. Panda International Congo Engineering, the employer, refused to assist the worker with the medical costs, even though the incident occurred at the workplace.

The High Court in Kolwezi, Democratic Republic of Congo, ordered Panda International Congo Engineering is to pay the healthcare costs and lost wages to the injured employee. Despite the Congolese Labour Code stipulating that healthcare costs associated to workplace accidents should be covered by the employer, legal actions are rarely taken by the workers for fear of losing their jobs or for lack of findings. The High Court decision is now an important precedent on the matter and on workers’ rights.

THE INTER-AMERICAN COMMISSION ON HUMAN RIGHTS (‘IACHR’) RECOGNISED THAT CLIMATE CHANGE IS A HUMAN RIGHTS EMERGENCY AND CALLING ON STATES TO TAKE ACTION TO LIMIT THE ANTHROPOGENIC EMISSION OF GREENHOUSE GASES

The IACHR adopted Resolution No. 3/2021 “Climate Emergency: Scope of Inter-American human rights obligations”. The Commission recalled that ‘climate change directly affects the right to a healthy environment, which has been recognized as an autonomous and justiciable human right by the jurisprudence of the organs of the InterAmerican Human Rights System.’ It also emphasized that climate change is one of the greatest threats to the full enjoyment and exercise of human rights of present and future generations and the health of ecosystems and all species that inhabit the planet.

The Resolution was adopted after the IACHR received a mandate from the General Assembly of the Organization of American States and had as an objective to “systematize the human rights obligations of States in the context of the climate crisis in order for them to make public policy decisions under a rights-based approach”.  

MEXICAN SUPREME COURT ORDERED THE CANCELLATION OF MINING CONCESSIONS IN TECOLTEMI, ENDING TWO DECADES OF COMMUNITY OPPOSITION

The Nahua community in Tecoltemi, represented by different organizations, won last month a case against the Secretariat of Economy that put an end to two controversial mining concessions to the Canadian Almaden Minerals.  The area was to be exploited for the period of 50 years for its 7 million ounces of gold and 1.4 billion ounces of silver.

The decision was grounded on the lack of consultation with the indigenous community. Indeed, the right of indigenous community to prior consultation is not only an obligation under Convention 169 of the ILO, to which Mexico is a party, and is also entrenched in the country’s constitution.

FEBRUARY

THE EUROPEAN COMMISSION ADOPTED A COMMUNICATION ON DECENT WORK WORLDWIDE

The Japan Government stated its intention to draw up due diligence guidelines for companies in order to identify and prevent human rights abuses across the supply chains. These guidelines are aimed to increase the uptake of human rights due diligence expectations by companies. If they are not sufficient, the government will consider turning them into law.  

THE EUROPEAN COMMISSION ADOPTED A PROPOSAL FOR A DIRECTIVE ON CORPORATE SUSTAINABILITY DUE DILIGENCE

On the 23rd of February 2022, the European Commission released its much awaited proposal for a Directive on Corporate Sustainability Due Diligence. The Directive, which was developed on the basis of the findings of the Study on due diligence requirements through the supply chain, took stock of the limited uptake, by companies, of their human rights and environmental expectations under soft law and the need to move towards more stringent approaches. It aims to impose human rights and environmental due diligence requirements on companies, and in particular to require companies to:

– Integrate due diligence into their policies;

– Identify actual or potential adverse human rights and environmental impacts;

– Prevent or mitigate potential impacts;

– Bring to an end or minimise actual impacts;

– Establish and maintain a complaint procedure;

– Monitor the effectiveness of the due diligence policy and measures; and

– Publicly communicate on their due diligence measure.

These obligations will be appliable to:

+ EU companies

– Group 1: limited liability companies with more than 500 employees and more than €150 million in net turnover worldwide.

– Group 2: limited liability companies operating in “high impact sectors” – defined as textile, agriculture and minerals -, with more than 250 employees and a net turnover of €40 million worldwide and more. For Group 2 companies, the rules will only start to apply 2 years later than for the Group 1.

+ Non-EU companies with a net turnover threshold aligned with Group 1 and 2, but generated in the EU.

Member States will have to appoint national administrative authorities to supervise the compliance with these obligations and they may impose fines in case of non-compliance. The Draft Directive also contains a civil liability provision, a specific provision on climate change and sets out a duty of care for directors requiring them to take into account the consequences of their decisions for sustainability matters, including human rights, climate change and environmental consequences in the short, medium and long term. You can find our analysis here.

The proposal will be presented for approval to the European Parliament and the Council. Once adopted, the Member States will have two years to transpose the Directive into their national laws.

THE EUROPEAN COMMISSION ADOPTED A COMMUNICATION ON DECENT WORK WORLDWIDE

On the 23rd of February 2022, the European Commission published its Communication on Decent Work Worldwide, with the latest figures on forced labour – which concerns 25 million people – and child labour – which concerns one in ten children worldwide. The Commission also indicated that it is preparing a new legislative instrument to ban products made by forced labour from entering the EU market. The Communication sets out existing and upcoming tools in four areas:

+ EU policies and initiatives with outreach beyond the EU: 

– EU policies setting standards that are global frontrunners for corporate responsibility and transparency, such as the proposal for a directive on corporate sustainability due diligence and the forthcoming legislative proposal on forced labour.

– EU guidance and legal provisions on socially sustainable public procurement will help the public sector lead by example.

– EU sectoral policies, for instance on food, minerals and textiles, strengthen respect for international labour standards.

+ EU bilateral and regional relations:

– EU trade policy, which promotes international labour standards.

– Respect for labour rights in third countries is an essential part of EU human rights policies.

– EU enlargement and neighborhood policy, which promotes decent work in neighboring countries.

+ The EU in international and multilateral fora:

– EU support for the implementation of UN instruments on decent work, and the EU’s active contribution to setting labour standards through the ILO.

– EU support for the reform of the World Trade Organisation (WTO) to integrate the social dimension of globalization.

– In the G20 and G7 formats, the EU works with other global economic powers to promote decent work.

+ Engagement with stakeholders and in global partnerships

– EU support for social partners to ensure respect of labour rights in supply chains.

– EU engagement with civil society actors to promote safe and enabling environments for civil society.

– EU support for global partnerships and multi-stakeholder initiatives on decent work, in areas such as occupational safety and health”.

With this initiative the Commission invites the European Parliament and the European Council to support the approach set out the  Communication and to work together to implement its measures. The Commission will also report, regularly, on the implementation of the Communication.

THE PLATFORM ON SUSTAINABLE FINANCE PRESENTED ITS FINAL REPORT ON SOCIAL TAXONOMY

On the 28th of February 2022, the Platform on Sustainable Finance published the “Final Report on Social Taxonomy” which proposes a structure for a social taxonomy based on the EU Environmental Taxonomy. It is envisaged that it will have the following structural aspects: “(i) the development of social objectives; (ii) types of substantial contributions; (iii) ‘do no significant harm’ (DNSH) criteria; and (iv) minimum safeguards”. The Social Taxonomy would build on three proposed objectives:

– Decent work (including for value-chain workers);

– Adequate living standards and wellbeing for end-users; and

– Inclusive and sustainable communities and societies.

It is also suggested for the social taxonomy to contain sub-objectives that elaborate on different aspects of the three social objectives mentioned.

The Platform’s final report is meant to support the European Commission in its own report on the EU Social Taxonomy, which was planned to be published in 2021.

INTERNATIONAL OLYMPIC COMMITTEE (IOC) UNDER SCRUTINY IN RELATION TO THE PRODUCTIONS OF MATERIALS RELATED TO THE WINTER GAMESTITLE

Human Rights Watch and the Coalition to End Forced Labour in the Uyghur Region (EUFL) criticized the IOC for failure to conduct adequate human rights due diligence to address the risk that Olympic uniforms and other products would be related to human rights violations in China’s Uyghur region. The public statement follows a request of additional information in January 31 after IOC disclosed that they had relying on third-parties audits of its supplier’s production sites, as the civil society associations raised questions on the credibility of supply chain auditing in the Uygur region.  

NEW REPORT PAPER PROMISES? EVALUATING THE EARLY IMPACT OF AUSTRALIA’S MODERN SLAVERY ACT (MSA) SHOWS THAT COMPANIES ARE NON-COMPLAINT WITH THE 2018 LAW

The Paper Promises report examined statements submitted by 102 companies to the Australian Government’s Modern Slavery Register and evaluated the implementation of effective measures to address modern slavery. The document reveals that companies are failing to comply with the mandatory reporting requirements, since “Most companies reviewed demonstrate superficial and incomplete compliance with the reporting requirements of the MSA”. Apart from this, obvious modern slavery risks are not being identified or disclosed and “Less than a third of companies reviewed (27%) could demonstrate that they are taking some form of action against modern slavery risk”.

EFFECTIVE EU CORPORATE ACCOUNTABILITY LEGISLATION URGED BY COMPANIES AND INVESTORS

In February 2022, a joint statement was released by more than 100 large and small companies, investors and business associations calling the European Commission to adopt a legislative proposal on mandatory human rights and environmental due diligence (mHREDD). The statement underlined the concerns raised by the delay of the publication of the EU proposal for a mHREDD legislation and outlined some characteristics that should be included in the mentioned legislation, in order to make it effective, such as: the alignment of the legislation with the UNGPs to cover all businesses operating in the EU; due diligence obligations across the whole supply chain; requirements that go beyond tick boxing and credible accountability mechanisms.

TONY’S CHOCOLONELY IDENTIFIED CASES OF CHILD LABOUR IN THEIR SUPPLY CHAIN

The Tony’s Chocolonely published their annual report for 2020-2021 and reported 1,701 cases of child labor. According with the document, the huge increase between the 387 cases found in 2019/2020 and the present numbers are due to the onboarding of two cooperatives where 1,426 cases were detected. Beside this significant numbers, the company concluded the following – “We’ve learned that the longer we work with a cooperative (which always involves implementing Tony’s 5 Sourcing Principles and rolling out the CLMRS) the lower the prevalence of child labor”.

EUROPEAN COMMISSION’S COMPLEMENTARY CLIMATE DELEGATED ACT LABELS GAS AND NUCLEAR ENERGY AS SUSTAINABLE

On the 2nd of February the Commission adopted the final Complementary Climate Delegated Act  which follows the EU Sustainable Taxonomy, a comprehensive guide for private investors to invest responsibly in the context of achieving climate neutrality and a result of the EU Action Plan on Sustainable Finance. The Delegated Act, which is now subject to a period of 4-to-6 months scrutiny by the European Council and the European Parliament, includes for the first-time fossil gas and nuclear energy into the EU Taxonomy and labels them as sustainable investments. The proposal has been received with opposition from different stakeholders , including the EU Platform on Sustainable Finance, an expert advisory panel of the European Commission tasked with researching on sustainable policies in relation to finance, and Austria and Luxembourg  have threaten legal action against the commissions act.

JANUARY

THE CLIMATE CORPORATE ACCOUNTABILITY ACT WAS PASSED IN THE CALIFORNIA SENATE

The California Senate passed into law the Climate Corporate Accountability Act, that becomes the first US legislation requiring large companies to disclose greenhouse gas emissions. The new law obliges companies operating in California and with more than $1 billion in gross annual revenue to disclose annually on their emissions, including direct emissions, emissions from purchase and use of electricity and indirect emissions (including the ones from the supply chain). It is expected that the legislation will apply to most of US largest corporations. The bill still needs to pass the Assembly and only then can the Governor potentially pass it into law.