The Rise of Human Rights Due Diligence (Part V): Does it Foster Respect for Human Rights by Business?

Editor’s note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of European and International Human Rights Law at Leiden University in the Netherlands. Prior to commencing the LLM, she worked as a business and human rights solicitor in Australia where she specialised in promoting business respect for human rights through engagement with policy, law and practice.

 

Human rights due diligence (HRDD) has emerged as a dominant paradigm for doing business with respect for human rights. It is a central concept to the UNGPs and describes what ‘steps a company must take to become aware of, prevent and address adverse human rights impacts’ in order to discharge the responsibility to respect.[1] The case studies examining Adidas’ and Unilever’s HRDD practices (the Case Studies) have demonstrated how businesses are working with the concept of HRDD and translating it into practice. They provide an opportunity to consider the adaptable nature of HRDD and whether it has the potential to transform business internal frameworks in order to generate greater corporate respect for human rights. This will be reflected on in this final blog of our series of articles dedicated to HRDD. It will also reflect on the role that hard law initiatives play in incentivising substantive human rights compliance by business (in addition to soft law initiatives such as the UNGPs).

 

The Adaptable Nature of HRDD

There is no ‘one-size-fits-all’ approach that can be taken by businesses when implementing HRDD. Although the elements and parameters of HRDD are defined in the UNGPs (discussed in detail in a previous blog in this series), it is, by its very nature, an open-ended concept that has been ‘articulated at a certain level of abstraction’. Indeed, this level of abstraction was arguably intentional given the use of the term ‘due’ in HRDD, which ‘implies variation of effort and resources necessary to address effectively adverse impacts in a particular context’.[2]

The flexibility built into the concept of HRDD acknowledges that there are more than ‘80,000 multinational corporations, ten times as many subsidiaries and countless national firms’ globally that differ in many respects.[3] Accordingly, the shape of HRDD within one business cannot be the same as that of another business – it should be ‘determined by the context in which a company is operating, its activities, and the relationships associated with those activities’.[4] As Ruggie acknowledged in 2010, his aim was to ‘provide companies with universally applicable guiding principles for … conducting due diligence’, rather than prescriptive guidance. Therefore, the ‘complexity of tools and the magnitude of processes’ employed by businesses will vary depending on the circumstances. As such, businesses can exercise a great deal of discretion as to how to translate HRDD into practice.

However, this adaptable nature of HRDD has been critiqued for lacking clarity, embodying a ‘high degree of fragility and flexibility’ and for containing an ‘inbuilt looseness’.[5] These complexities arise due to the absence of ‘sufficient specificity of expected action’.[6] Bijlmakers argues that the ‘ambiguity and openness’ of HRDD can ‘lead to uncertainty about what conduct is required from companies for the effective implementation of their responsibilities’.[7] This can result in a lack of compliance by businesses or differing levels of compliance, which ultimately means that HRDD ‘may or may not achieve the desired outcome – i.e. non-violation of human rights – in all cases’.[8] Indeed from the Case Studies it is clear that despite the extensive efforts made by Adidas and Unilever to put HRDD into practice, there are still gaps between the paper-based processes and practices of both businesses, e.g. there are human rights abuses present within their supply chains that are not being identified by their current HRDD practices and therefore not being addressed. Mares also argues that the looseness surrounding HRDD as a concept can also result in ineffective implementation, whereby businesses take action that is ‘largely symbolic, generates limited improvements, and fails to address underlying issues’.[9] As a result, businesses are not addressing the root causes of human rights issues within their business, but rather ‘applying bandaids to symptoms’. [10]

The flexibility of HRDD as a concept also allows businesses to employ various tools and processes in order to ‘create plausible deniability’, instead of discovering and understanding issues within their supply chains and how they should be managed.[11] Through conducting on the ground research at the local level, Bartley demonstrates that businesses appear to be using these tools and processes in order to ‘collect just enough information to produce assurances of due diligence’, allowing human rights issues and impacts to be kept out of sight.[12] Accordingly, their is a risk that businesses take advantage of the open-ended nature of HRDD by implementing HRDD processes as window-dressing to give the impression that they are engaging with the human rights risks and impacts in the context of their business, when in fact they are not.

However, despite these critiques the Case Studies demonstrate that the adaptable nature of HRDD has proven to be transformative on businesses. Embracing HRDD has led Adidas and Unilever to transform their operations to fit the different phases of the HRDD process. In doing so, they have avoided using a cookie-cutter approach that does not account for the differences between the businesses and they way they operate.

The use of customised HRDD approaches is of particular importance given that the salient human rights risks and impacts identified by a business will always differ in some respects to those of another business. With respect to Adidas and Unilever, despite having some overlapping identified risks (e.g. discrimination, working hours, freedom of association and fair wages), both businesses also focus on a number of specific salient risks, which are determined using various factors including the assessed risks of the countries in which they operate. On one hand, land rights are a particular focus for Unilever given the negative impacts it can have on individual’s and communities’ land tenure rights, particularly through its suppliers. On the other hand, child labour is more of a salient risk for Adidas given the pressure on brands in the apparel sector to produce garments at low costs in a quick time frame. In light of this, the HRDD processes followed by each business after identifying these risk areas are different such that the actions taken to integrate and address risks and impacts are directly responsive to those risks.

 

Is HRDD Effective to Foster Corporate Respect of Human Rights? 

The Case Studies also demonstrate that HRDD is not solely a paper tiger. Businesses that truly engage with the HRDD process can indeed transform internal processes, enhancing corporate attention on human rights. Both Adidas and Unilever have not sought to use HRDD as a buzzword with no institutional consequences. Instead they have introduced concrete mechanisms aimed at preventing human rights impacts from arising within their business context. 

So how has HRDD had a transformative impact on Adidas and Unilever? As I have shown in the Case Studies, it has provided a framework for embedding institutional and regulatory changes geared towards the prevention of adverse human rights impacts. On paper, they have translated the cycle of HRDD into a maze of internal procedures involving different stages of their activities as well as different corporate entities integrated in their supply chains. Moreover, they have built-up enforcement mechanisms in an attempt to trigger change if a potential human rights risk is identified. In short, the transformative impact of HRDD on the structure and operations of the two corporations is clear, whether this impact is effective to tackle human rights violations in their supply chains is another matter. The Case Studies conducted cannot evidence effectiveness, as it would require much more time-consuming and expensive on-field studies to observe whether the compliance of, for example, the working conditions of Adidas’ or Unilever’s suppliers with core labour rights improves thanks to these changes.    

It is certain that neither Adidas nor Unilever have a perfect HRDD process in place – gaps and blindspots will always exist which allow serious human rights issues to continue to emerge in their supply chains. Nonetheless, as evidenced above, it is also true that embracing HRDD had a transformative impact in the way these businesses operate. Whether these transformations are correlated with a decrease in human rights violations across their supply chains is a fundamental question that cannot be answered by my research, even though it will be at the centre of future assessments of the practical effects of HRDD on human rights throughout supply chains.    

 

The Catalyst Role of Hard Law Initiatives

Soft law HRDD initiatives such as the UNGPs and the OECD Guidelines have been primarily relied upon to date in order to regulate corporate human rights behaviour. Over the past years, however, several countries have either adopted or started to consider adopting legislation that embeds HRDD into their legal framework. For example:

  • The UK and Australia have both adopted legislation requiring specific businesses to report on their HRDD processes and efforts in their operations and supply chains in relation to modern slavery.
  • The Netherlands has adopted legislation that requires specific companies to undertake HRDD related to child labour in their supply chains.
  • France has taken a broader approach, rather than focusing on thematic issues, and adopted legislation that requires certain businesses to undertake HRDD to identify and prevent serious violations of human rights and fundamental freedoms, health and safety as well as the environment.
  • Further, the Human Rights Council’s Open-Ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises with Respect to Human Rights is in the process of developing a binding business and human rights treaty. The current draft of the treaty includes a HRDD article requiring state parties to ensure that their domestic legislation requires all businesses to which the treaty applies to undertake HRDD throughout their business activities.[13]

The rapid rise of such hard law initiatives imposing HRDD across the board means that transformation observed in the context of Unilever and Adidas will spread to many more businesses in the coming years. The turn to binding HRDD might be a response to the lack of willingness of businesses to embrace HRDD voluntarily. This is particularly the case in light of the dire landscape highlighted by benchmarking initiatives. For example, the results of the Corporate Human Rights Benchmark demonstrates that 40% of the companies ranked scored no points at all in relation to the systems they have in place to ensure that due diligence processes are implemented.

Hard law that complements the business and human rights soft law already in existence might create the ‘compliance pull’ that is needed to ensure that businesses undertake HRDD by legally mandating that they engage in the process. Further, it can clarify and create greater certainty as to the expectations on business with respect to HRDD, as well as incentivise meaningful HRDD by imposing the risk of civil liability onto businesses failing to conduct proper HRDD. The turn to binding HRDD will necessarily have transformative effects on the way affected businesses operate. It will trigger the emergence of a whole HRDD bureaucracy involving rules, processes and institutions. Yet, whether it will lead to greater respect for human rights remains to be seen in practice and depends on the way HRDD will be implemented as well as on the intensity of control exercised by national authorities.

 

Conclusion

This blog series has delved into the operationalisation of HRDD from theory to practice by business. Through the detailed examination of the HRDD practices of Adidas and Unilever in their supply chains, it has demonstrated that HRDD can profoundly change the internal operations of businesses embracing it.

Despite the fragility and flexibility of the concept that gives rise to uncertainty and ambiguity as to how it should be complied with, businesses that choose to fully engage with the process are transformed by it with a potential effect on their human rights footprint. Truly implementing HRDD throughout a business’ operations and supply chains has the potential to result in human rights risks and impacts being better embedded within the business’ corporate governance framework. This is because HRDD focuses on identifying and managing these risks and impacts and to use those findings to inform business decisions, such as whether to engage in business activities in a particular country or whether to enter into contractual relations with a particular supplier. The development and adoption of hard law imposing HRDD complementing existing soft law initiatives contributes to the diffusion of HRDD into a greater number of businesses.

This blog series paves the way for further research into whether the HRDD mechanisms implemented by Adidas, Unilever and other businesses are truly effective to protect human rights. On the ground research at a local level involving engagement with the relevant business being assessed and its stakeholders is crucial to determining the effectiveness of specific HRDD mechanisms in practice. A broader examination of a greater number of businesses’ HRDD practices will allow for conclusions to be drawn as to how businesses can effectively conduct HRDD and whether there are particular practices and mechanisms that are more effective.


[1] Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie: Protect, Respect and Remedy: a Framework for Business and Human Rights (7 April 2008), UN Doc. A/HRC/8/5, [56] [2008 Report].

[2] Radu Mares, “Respect” Human Rights: Concept and Convergence, in R Bird, D Cahoy and J Darin (eds) Law, Business and Human Rights: Bridging the Gap, Edward Elgar Publishing (2014), p 8.

[3] John Ruggie, The Corporate Responsibility to Respect Human Rights (2010).

[4] 2008 Report, supra note 1, [25].

[5] Justine Nolan, The Corporate Responsibility to Respect Human Rights: Soft Law of Not Law?, in S Deva and D Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (2013), p 140 [Nolan]; Radu Mares, Human Rights Due Diligence and the Root Causes of Harm in Business Operations: A Textual and Contextual Analysis of the Guiding Principles on Business and Human Rights, 10(1) Northeastern University Law Review 1 (2018), p 45 [Mares].

[6] Mares, ibid, p 6.

[7] Stephanie Bijlmakers, Corporate Social Responsibility, Human Rights, and the Law, London: Routledge (2018), p 120.

[8] Ibid; Surya Deva, Treating Human Rights Lightly: A Critique of the Consensus Rhetoric and the Language Employed by the Guiding Principles, in S Deva and D Bilchitz (eds) Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect?, Cambridge University Press (2013), p 101.

[9] Mares, supra note 5, p 45.

[10] Ibid, p 1.

[11] Tim Bartley, Rules without Rights: Land, Labor, and Private Authority in the Global Economy, Oxford University Press (2018), p 178.

[12] Ibid.

[13] The HRDD article of the treaty is discussed in further detail in a previous blog.

The Rise of Human Rights Due Diligence (Part IV): A Deep Dive into Unilever’s Practices - By Shamistha Selvaratnam

Editor’s note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of European and International Human Rights Law at Leiden University in the Netherlands. Prior to commencing the LLM, she worked as a business and human rights solicitor in Australia where she specialised in promoting business respect for human rights through engagement with policy, law and practice.

 

The consumer goods industry is shaped by businesses’ desire to engage with the best-quality suppliers at the cheapest price in order to sell goods at a high-profit margin in the burgeoning consumer markets. Accordingly, they continue to build their value chains in order to provide goods to consumers. The resulting effect of this is that potential human rights risks and impacts are likely to arise in the supply chains of businesses that operate in the industry. Risks that often arise in this sector include forced labour, non-compliance with minimum wage laws and excessive work hours, land grabbing and discrimination. Accordingly, businesses such as Unilever face the challenge of preventing, mitigating and addressing adverse human rights impacts in their supply chains through conducting human rights due diligence (HRDD). As Paul Polman (former CEO of Unilever) has stated: ‘We cannot choose between [economic] growth and sustainability—we must have both.’

This fourth blog of a series of articles dedicated to HRDD is a case study looking at how HRDD has materialised in practice within Unilever’s operations and supply chains. It will be followed by another case study examining another that has also taken steps to operationalise the concept of HRDD. To wrap up the series, a final piece will reflect on the effectiveness of the turn to HRDD to strengthen respect of human rights by businesses.More...