Human Rights Due Diligence
Special Representative
of the Secretary
General (UN)
(Prof. John Ruggie)
(2005-2011)
HR Due diligence (2008)
Due diligence: a ‘concept [that] describes the steps a
company must take to become aware of, prevent and
address adverse human rights impacts.’ (2008)
Key steps:
• adopt human rights policies,
• conduct impact assessments,
• integrate human rights policies throughout the
company’s departments,
• track performance through monitoring and auditing
HR Due diligence (2011)
‘A human rights due-diligence process to identify, prevent,
mitigate and account for how they address their impacts on
human rights’ (UNGPs 15b)
‘The process should include assessing actual and potential
human rights impacts, integrating and acting upon the
findings, tracking responses, and communicating how
impacts are addressed.’ (UNGPs 17)
‘Business enterprises need to know and show that they
respect human rights.’ (UNGPs 15 Comm.)
DD: 2008 -> 2011
Elements of HR DD
2008
Policy (commitment to respect HR)
x
Impact assessment (identify & assess impacts)
x
x
Integration (of policy/findings into company systems)
x
x
Appropriate action (to address impacts)
Tracking (of policy & actions taken)
Reporting (communicating)
2011
x
x
x
x
DD as risk management
Risks to whom? To business or to rightholders?
‘Human rights due diligence can be included within
broader enterprise risk-management systems, provided
that it goes beyond simply identifying and managing
material risks to the company itself, to include risks to
rights-holders.’ (GP17)
‘an enterprise’s human rights risks are the risks that its
operations pose to human rights. This is separate from
any risks that involvement in human rights impact may
pose to the enterprise, although the two are increasingly
related.’ (OHCHR Interpretive Guide)
To prioritize or not? ‘Severe’ impacts
Severity of impacts judged by
•Scale (gravity of the impact),
•Scope (number of individuals impacted) and
•Irremediable character (any limits on the ability to restore
those impacted to a situation at least the same as, or
equivalent to, their situation before an adverse impact)
(GP 14, Commentary)
(OHCHR, An interpretive guide (2011))
GP24: ‘business enterprises should first seek to prevent
and mitigate those [impacts] that are most severe’.
To prioritize or not? ‘Salient’ human rights
Most salient human rights: rights most at risk
depending on sector and operating context.
GPs clarify to ‘not focus exclusively on the most
salient human rights issues and ignore others that
might arise.’ (OHCHR Interpretive Guide)
Conclusion: company should not prioritise its HR
DD actions based on ‘salient HR’, but on the
‘severity’ of impacts.
Due diligence – an on-going process
On-going, not one-off process of assessing and
acting on impacts
‘Should be ongoing, recognizing that the human
rights risks may change over time as the
business enterprise’s operations and operating
context evolve.’ (UNGPs 17c)
A defense of due diligence?
‘Conducting appropriate human rights due diligence
should help business enterprises address the risk of
legal claims against them by showing that they took
every reasonable step to avoid involvement with an
alleged human rights abuse.
However, business enterprises conducting such due
diligence should not assume that, by itself, this will
automatically and fully absolve them from liability
for causing or contributing to human rights abuses.’
(UNGPs 17 Comm)
Difficult contexts (GP 23)
• Clash between domestic laws & IHRL standards
‘Where the domestic context renders it impossible to
meet this responsibility fully, business enterprises are
expected to respect the principles of internationally
recognized human rights to the greatest extent possible
in the circumstances, and to be able to demonstrate their
efforts in this regard.’
• Conflict zones and other areas where gross HR abuses
are committed by other actors (like security forces)
Risk for complicity in gross abuse -> take very seriously
such situations (‘treat this risk as a legal compliance
issue’), ensure to not exacerbate the situation, and
consult externally with credible, independent experts on
how best to respond to the situation.
HR impact assessments (GP 18)
‘The purpose is to understand the specific impacts
on specific people given a specific context of
operations.’
• Based on IHRL ( rel. to env & soc IAs)
• Vulnerable groups
• Stakeholder participation (‘meaningful
consultation’)
• Prior to major transactions and periodically after
Integration (GP19)
Policy be ‘embedded into all relevant business
functions’
‘Effective integration requires that… Internal
decision-making, budget allocations and
oversight processes enable effective responses
to such impacts.’ [identified through HRIAs]
Tracking (the effectiveness of
response) (GP20)
Aim: to know if policy and actions taken work
effectively
• Ways of tracking: Reviews (surveys and audits)
& grievance mechanisms
• Impacts on the vulnerable/marginalized
• Stakeholder consultation (feedback from
external sources) - affected groups, experts,
NGOs
Reporting (GP 21)
• HR DD as ‘know and show’ respect for HR
• Forms of communicating: in-person meetings, online
dialogues, consultation with affected stakeholders, and formal
public reports (annual reports, CSR reports, on-line updates,
and integrated financial and non-financial reports)
• Severe HR impacts -> report formally (form, frequency, detail)
• Verification: ‘Independent verification of human rights
reporting can strengthen its content and credibility.’
• Reporting & accountability: ‘Showing involves communication,
providing a measure of transparency and accountability to
individuals or groups who may be impacted and to other
relevant stakeholders, including investors.’
Ruggie’s comments on EC Directive on
conflict minerals (2014)
• formal reporting: under GP 19, ‘formal reporting’ for
‘severe impacts’, as in conflict situations.
• Reporting mandated by law?
‘the legislative proposal before the Commission may view
such reporting as merely optional. … a move to make
reporting entirely optional risks leaving the most
responsible companies exposed while those least
attentive to their human rights responsibilities continue
their current practices undeterred. It is surely through
requiring the same reporting standards across companies
that the Commission can help drive improvements where
they are most needed and advance corporate respect for
human rights in practice.’
http://business-humanrights.org/media/documents/ruggie-letter-barroso-eu-conflict-minerals-04-03-14.pdf
UN Norms (2003)
david weissbrodt.jpg
David S. Weissbrodt - Minnesota Law School
General provisions of implementation
As an initial step towards implementing these Norms:
• adopt, disseminate and implement internal rules of
operation in compliance with the Norms, (-> GPs 16 and 19)
• periodically report, (-> GP 21)
• conduct periodic evaluations concerning the impact of
their own activities on human rights, (-> GPs 18 & 20)
• incorporate these Norms in their contracts or other
arrangements and dealings with contractors,
subcontractors, suppliers, licensees, distributors, or
natural or other legal persons that enter into any
agreement with the transnational corporation… (Art 15)
TNCs ‘shall have the responsibility to use due diligence in
ensuring that their activities do not contribute directly or
indirectly to human rights abuses, and that they do not
directly or indirectly benefit from abuses of which they were
aware or ought to have been aware.’ (Commentary 1 (b))
Due Diligence in a broader context
DD outside the UNGPs (1)
DD in international law: State’s responsibility for actions of third parties
• Alabama Arbitration case (1872): a neutral State is bound to ‘use due diligence
to prevent the fitting out, arming, or equipping, within its jurisdiction, of any
vessel which it has reasonable ground to believe is intended to cruise or to carry
on war against a Power with which it is at peace …’
• Corfu Chanel case (ICJ, 1949): State not to allow its territory to be used for acts
contrary to the rights of other States; obligation to prevent (or stop) those acts.
DD in IHRL: State ‘obligation to protect’ HR
• Velazquez case (I-ACtHR, 1988): ‘forced disappearance’ case. Illegal act of a
private person triggers State liability because of ‘lack of due diligence to prevent
the violation or to respond to it’.
• Osman case (ECtHR, 1998) – no use of term ‘DD’, but detailed reasoning in a
similar way.
• UN Declaration on the Elimination of Violence against Women (1993). ‘Exercise
due diligence to prevent, investigate and… punish acts of violence against
women, whether those acts are perpetrated by the State or by private persons’
(art 4.c)
DD outside the UNGPs (2)
DD in EU law: defense if one acted with DD
• Employer Sanctions Directive of 2009 (liability of employers
for employing irregular non-EU workers). Contractor liable
when subcontractors employ undocumented workers unless
DD was exercised. (art 8c)
DD in commercial law: defense if one acted with DD
• US Federal Securities Act of 1933: issuer of securities &
underwriters -> registration statement -> misstatements or
omissions -> a DD defense for inadequate disclosure of
material information to investors IF broker conducted a good
faith investigation: "he had, after reasonable investigation,
reasonable ground to believe and did believe" there were no
misstatements or omissions of material facts.
Transactional/commercial DD & HR DD
State of Play (2012) http://www.ihrb.org/pdf/state-of-play/State-of-Play-Full-Report.pdf
Regulatory strategies ref. DD
Four main regulatory approaches
• DD as compliance with law (direct legal obligation or
defense against criminal/civil/administrative violations)
• DD to obtain benefits/incentives (export credit, labeling
schemes)
• DD and transparency laws (disclose DD measures and
harms. Securities laws, consumer protection laws, CSR
reporting based on the logic that information will
prompt action by consumers, investors, local
communities and regulators.)
• DD and a combination of previous approaches.
Olivier De Schutter et al., Human Rights Due Diligence: the Role of States
(International Corporate Accountability Roundtable 2012) 93 pages.
Definition of Due diligence
Legal definition (-> amount of effort expected)
• ‘Due diligence has been defined as “such a measure of prudence, activity,
or assiduity, as is properly to be expected from, and ordinarily exercised
by, a reasonable and prudent [person] under the particular circumstances;
not measured by any absolute standard, but depending on the relative
facts of the special case”.’
(OHCHR Interpretive Guide)
Definition in the UNGPs (-> systematic way of dealing with impacts)
• ‘In the context of the Guiding Principles, human rights due diligence
comprises an ongoing management process that a reasonable and
prudent enterprise needs to undertake, in the light of its circumstances
(including sector, operating context, size and similar factors) to meet its
responsibility to respect human rights.’
(OHCHR Interpretive Guide)
Conclusion: UNGPs silent about the amount of effort (that requires a caseby-case analysis), but very detailed about the management process and its
key elements.
Impact assessments
• Environmental
• Social (Chad-Cameroon pipeline; Baku-TbilisiCeyhan (BTC) pipeline)
• Human rights
First HRIA: BP’s Human Rights Impact Assessment
of the Tangguh LNG Project (Indonesia)
‘Human Rights Compliance Assessment’ - Danish
Institute for Human Rights
Pulp Mills on the River Uruguay
• ICJ litigation: Argentina v. Uruguay (decided April 20, 2010)
• Environmental impact assessment is an international
obligation of states (Court found no evidence that Uruguay
failed to act with the requisite due diligence or that pollution
from the pulp mill has had a harmful effect on the water
quality)
• The interesting part:
o NOGs invoked the IFC Safeguard Policies and petitioned the
IFC Compliance Advisor/Ombudsman -> improved
environmental controls and monitoring of operational impacts
o NGOs invoked the Equator Principles -> 1 lender pulled out