{"id":202387,"date":"2023-08-08T07:15:52","date_gmt":"2023-08-08T11:15:52","guid":{"rendered":"https:\/\/today.uconn.edu\/?p=202387"},"modified":"2023-08-07T11:12:39","modified_gmt":"2023-08-07T15:12:39","slug":"big-changes-for-big-business-as-eu-human-rights-law-nears-enactment","status":"publish","type":"post","link":"https:\/\/today.uconn.edu\/2023\/08\/big-changes-for-big-business-as-eu-human-rights-law-nears-enactment\/","title":{"rendered":"Big Changes for Big Business as EU Human Rights Law Nears Enactment"},"content":{"rendered":"

The European Union\u00a0will soon require thousands of large companies<\/a>\u00a0to actively look for and reduce human rights abuses and environmental damage in their supply chains. And although it\u2019s an EU law, it will also cover foreign businesses \u2013 including American ones \u2013 that have operations in the region.<\/p>\n

The European Parliament\u00a0approved a draft of the new rules in June 2023<\/a>, and now EU member states and the European Commission will negotiate to finalize the law, which is expected to begin rolling out in phases a few years from now.<\/p>\n

We study<\/a>\u00a0the\u00a0impacts of human rights<\/a>\u00a0disclosure and due diligence laws on businesses. In the past, governments have generally asked only that companies voluntarily comply with efforts to advance human rights. The EU law would be the biggest attempt yet to legally mandate compliance \u2013 with major implications for human rights and businesses around the world.<\/p>\n

Human rights and big business<\/strong><\/p>\n

Human rights are those fundamental rights<\/a>\u00a0that all individuals hold simply by virtue of being human, such as rights to life and freedom of thought.<\/p>\n

Human rights usually inform laws that limit what governments can do \u2013 for example, by obliging them to refrain from torturing people. Increasingly, however,\u00a0they are also informing business regulations<\/a>, because powerful companies can have serious impacts on individuals\u2019 human rights.<\/p>\n

Businesses have a\u00a0long history of human rights abuses<\/a>, from the British East India Co.\u2019s pivotal role in the\u00a0slave trade<\/a>\u00a0and IBM\u2019s complicity in\u00a0the Holocaust<\/a>\u00a0to more recent deadly environmental disasters involving\u00a0oil and mining companies<\/a>.<\/p>\n

More contemporary examples of this are\u00a0children in the Democratic Republic of Congo mining cobalt<\/a>\u00a0destined for cellphones or\u00a0forced labor being used in the production of cotton<\/a>\u00a0in China\u2019s heavily Muslim Xinjiang region.<\/p>\n

In 2011, the United Nations Human Rights Council took a step toward policing these abuses by unanimously adopting \u201cguiding principles\u201d on business and human rights. These principles\u00a0urge governments to compel<\/a>\u00a0companies in their jurisdictions to respect human rights wherever they operate. Such an approach stands in contrast to more common voluntary standards, such as\u00a0supplier codes of conduct<\/a>, which\u00a0some observers have suggested have been ineffective<\/a>.<\/p>\n

In 2017, France\u00a0became the first country<\/a>\u00a0to actually mandate that companies police their supply chains for human rights abuses.<\/p>\n

The EU\u2019s human rights due diligence law,\u00a0first drafted in 2022<\/a>, builds on the French version \u2013 but goes a few steps further.<\/p>\n

Doing your due diligence<\/strong><\/p>\n

Human rights due diligence<\/a>\u00a0is a process by which companies are meant to map out, understand and address all potential human rights abuses that occur throughout their operations.<\/p>\n

The term \u201cdue diligence<\/a>\u201d is borrowed from the common business practice of financial due diligence, wherein financial risks are investigated before any large investment. So just as businesses evaluate financial risks,\u00a0human rights advocates argue<\/a>\u00a0companies should put similar effort into investigating the risk that an activity might violate someone\u2019s human rights.<\/p>\n

The EU law would mandate that all large companies that operate in the bloc conduct human rights due diligence among their suppliers \u2013 by, for example, making sure child or forced labor wasn\u2019t involved \u2013 but also on how their products are used by consumers \u2013 such as when a piece of technology is used to surveil citizens.<\/p>\n

The law would cover most human rights, including labor rights and environmental rights, past or present. In practice, that would mean companies would have to map any harmful impacts that have occurred or could occur and take action to remedy or prevent them.<\/p>\n

The rules would also include provisions for enforcement and penalties for noncompliance through fines and other sanctions. And victims of abuse would be able to seek damages.<\/p>\n

In its current form, the law would cover EU companies with at least 500 workers and 150 million euros US$162 million) in net revenue, but those thresholds fall to 250 workers and 40 million euros ($44.5 million) in sectors with a higher risk of abuse, such as clothing, footwear and agriculture. Non-European companies must comply if they have EU revenues that meet those thresholds. An estimated 13,000 EU companies and 4,000 based outside of Europe \u2013 including household names like Apple, Amazon and Nike \u2013\u00a0would be subject to the law<\/a>.<\/p>\n

If it works as intended, the EU law\u00a0could be transformative<\/a>\u00a0in protecting human rights, including worker health and safety and workers\u2019 free speech, around the world. According to a recent report by human rights scholars, it could be \u201cparticularly valuable<\/a>\u00a0in the context of transnational supply chains, where the fragmented nature of production has long presented formidable legal and practical barriers to efforts to secure greater corporate accountability for labor rights violations and poor working conditions.\u201d<\/p>\n

Bad for business?\u00a0<\/strong><\/p>\n

While\u00a0many companies<\/a>\u00a0have already endorsed mandatory due diligence<\/a>\u00a0rules, others worry this kind of government mandate\u00a0would be too onerous<\/a>.<\/p>\n

A full map of risks in a company\u2019s value chain \u2013 from raw materials to consumers \u2013 is difficult to establish when suppliers are separate companies operating on the other side of the world and global supply chains are frequently large and complex.<\/p>\n

Some companies also\u00a0strongly resist<\/a>\u00a0the idea of being held responsible for human rights violations that take place in their supply chains overseas.<\/p>\n

Ripe for US rules<\/strong><\/p>\n

For this reason, the U.S.\u00a0has so far preferred voluntary rules<\/a>\u00a0when it comes to pushing companies to respect human rights.<\/p>\n

But that\u2019s slowly beginning to change.<\/p>\n

In 2012, California implemented the\u00a0Supply Chain Transparency Act<\/a>, which requires companies operating in the state to disclose their \u201cefforts to eradicate human trafficking and slavery\u201d in their global supply chains. And in 2021, Congress passed the\u00a0Uyghur Forced Labor Prevention Act<\/a>, which bans the importation of goods mined, produced or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of China \u2013 home of the Uyghur people, who have been\u00a0subjected to an intense program of state suppression since 2017<\/a>.<\/p>\n

Between these rules there is a clear trend developing of an increasing number of U.S. companies being obligated to implement some form of human rights due diligence. But these rules, unlike the developing European approach, are very narrowly tailored and don\u2019t require companies to routinely undertake due diligence.<\/p>\n

As a result, the U.S. companies that would be subject to the EU rules would be at a competitive disadvantage to many of their domestic rivals.<\/p>\n

That\u2019s why we believe the time may be ripe for Congress to consider its own more comprehensive human rights due diligence law, which would let the U.S. take the lead on the issue and have more of a say in these global standards. We believe that such a move would also be a major boon to protecting the human rights of marginalized groups across the world.<\/p>\n

 <\/p>\n

Originally published in The Conversation.<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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