by Steve Nickelsburg, David DiBari and Rebecca Hekman
The international legal obligation to protect human rights has long been understood to be the province of sovereign states, not of corporations or individuals. In the United States, litigation against corporations invoking statutes such as the Alien Tort Statute, the Torture Victim Protection Act, and the Trafficking Victims Protection Act has blurred that line – providing private plaintiffs a cause of action to address alleged human rights violations in a variety of circumstances.
The nuance of that litigation would take numerous additional posts to cover, but even against that backdrop, for corporations the general requirement to respect human rights traditionally has been more a matter of social expectation than legal and regulatory requirements, falling under the rubric “corporate social responsibility” (“CSR”) rather than “hard law.”
In 2011, the UN Human Rights Council unanimously endorsed the UN Guiding Principles on Business and Human Rights (PDF: 1,110 KB) (“Guiding Principles”), developed by the Special Representative of the UN Secretary General on Business and Human Rights, which seek to put into operation a three-pillar framework promoting corporate responsibility for human rights. While the Guiding Principles are not binding law, they confirm that states have a duty to protect against human rights abuses by businesses (the first pillar) and articulate a “corporate responsibility to respect human rights” (the second pillar), which requires corporations to act with due diligence to avoid infringing internationally recognized human rights and to address the negative impacts of their activities. The third pillar focuses on states’ responsibility to provide access to effective remedies for business-related abuses. The UN Working Group on Business and Human Rights has encouraged states to develop National Action Plans (“NAPs”) on business and human rights, as part of their responsibility to disseminate and implement the Guiding Principles. In December 2016, the US Government published its National Action Plan on Responsible Business Conduct (PDF: 17.4 MB) (“US NAP”), which was announced as providing “a framework by which the US Government intends to increase its commitment to coordinate and promote Responsible Business Conduct work with partners in the private sector.” In so doing, the US joins 11 other countries that have published NAPs since 2013 (with Germany, Italy, and Switzerland also releasing plans in December 2016)—and at least 20 more countries are reported to be developing their own.
The US NAP does not impose new legal obligations, but rather is largely a catalog of existing laws and regulations that impose criminal liability (e.g., for money laundering or terrorist financing), civil liability (e.g., for benefiting from human trafficking), or disclosure obligations (e.g., for conflict minerals in supply chains). But in announcing the US NAP, the State Department did a startling thing—it explicitly tied the human rights effort to its longstanding anticorruption agenda, stating that “the United States is committed to promoting human rights and leading the global fight against corruption,” and that “the United States has fought corruption overseas by encouraging companies to embrace high standards of responsible business conduct,” an effort that the State Department said the NAP was launched “to encourage.”
The anticorruption agenda and specifically the Foreign Corrupt Practices Act have for the past two decades been a significant source of corporate and individual liability and driver of business conduct, establishing expectations for corporate due diligence and compliance programs as well as imposing substantial liability through enforcement actions. If the US is signaling a convergence between its anticorruption focus (specifically, preventing and punishing bribery) and the more amorphous human rights agenda (which includes labor standards, women’s rights, minority rights, property protection, environmental protection, and protection of the rights of indigenous peoples), a transformation of “soft” standards of corporate responsibility into “hard” obligations creating broader and less predictable corporate liability is not unforeseeable.
In-house counsel and compliance managers should take note: The publication of the US NAP (and the NAPs of other countries) dovetails with increasing legal and regulatory measures under the business and human rights heading, as well as the encouragement, by intergovernmental organizations and business groups, of voluntary steps through market-wide standards, initiatives, and multi-stakeholder processes. Together, these trends signal that human rights issues require attention in transactional due diligence, the design and implementation of compliance programs, and ongoing business practices.
It is tempting to assume that human rights due diligence and compliance may simply be overlaid upon the now well-established anticorruption diligence and compliance programs that most corporations have developed. But the fit is not so simple. Some existing corporate controls could be adapted to identify and manage human rights risks consistently with the company’s approach to anticorruption. Supply chain management is an example, and areas in which both corruption and human rights impacts may arise—such as land acquisition—might be another.
But prescriptive policies and procedures developed for anticorruption do not translate easily to the human rights space. Existing diligence and compliance models focus on identifying and assessing risks to the corporation, whereas the Guiding Principles emphasize that human rights due diligence is primarily concerned with the risks to rights-holders. It is one thing to adopt policies to avoid violating a legal prohibition—i.e., a law prohibiting bribing doctors to prescribe your products or imposing sanctions for paying local leaders to allow you to build your offshore manufacturing facility. It is quite another to devise policies aimed at effectively mitigating the negative impacts of your operations—for example, to ensure that your offshore manufacturer has functioning emergency exits, or to direct your personnel to conduct effective consultations and engagement aimed at relocating an indigenous group that may be impacted by a new factory. Indeed, in some instances these imperatives may directly conflict. What does one do, for example, when the local leader one may not bribe will receive a new house under a relocation program?
Corporations’ human rights responsibilities have historically been loosely defined and regulated, leading many companies to house their social responsibility function outside of the legal and compliance function, staffing it with business people or CSR specialists, not lawyers. But the hardening of human rights responsibilities and emerging human rights due diligence practices suggests the need for communication between and integration of the two. In this process, the US NAP serves as an excellent resource—it is the most comprehensive and current catalog of US efforts to encourage and support responsible business conduct, and serves as a guide to US-based businesses on measures that need to be considered within due diligence programs aimed at avoiding adverse human rights impacts, and related legal and reputational risks.
While it remains to be seen how the new US Administration will direct the trajectory of the US NAP and business and human rights expectations more broadly, the publication of the US NAP emphasizes the ever-increasing importance for US and multinational companies to stay abreast of new developments in the business and human rights arena, in order to be in a position to understand, contribute, and lead in responsible business practices. Moreover, whatever the federal Administration’s priorities, any number of states could provide alternative enforcement avenues; and the voluntary and increasingly sophisticated human rights efforts of leading corporations are establishing a baseline to which others will likely be compared.
Steve Nickelsburg is a partner, David DiBari is the Managing Parter, and Rebecca Hekman is an associate in the Washington D.C. Office of Clifford Chance.
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