note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of
European and International Human Rights Law at Leiden University in the
Netherlands and a contributor to the Doing
Business Right project of the Asser Institute. 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 right due diligence (HRDD) is a key
concept of Pillar 2 of the UN Guiding Principles on Business and Human Rights
(UNGPs), the corporate responsibility to respect human rights. Principle 15 of
the UNGPs, one of the foundational principles of Pillar 2, states that in order
to meet the responsibility to respect human rights, businesses should have in
place a HRDD process to ‘identify, prevent, mitigate and account for how they
address their impacts on human rights’. However, how was the concept of HRDD
developed? What does it mean? What are its key elements?
This first blog of a series of articles
dedicated to HRDD answers these questions by providing an overview of the
concept of HRDD and its main elements (as set out in the UNGPs) as well as how
the concept was developed. It will be followed by a general article looking at
HRDD through the lens of a variety of actors including international
organisations, non-state actors and consultancy organisations. Case studies
will then be undertaken to look at how HRDD has materialised in practice. 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.
of the Concept of HRDD
The concept of due diligence was around
well before John Ruggie assumed the mandate of Special Representative on the issue
of human rights and transnational corporations and other business enterprises
back in 2005. Indeed the concept was initially a creature of American
securities law under the auspices of ‘reasonable investigation’. The Securities Act 1933 imposes strict civil
liability on certain people for untrue statements and omissions of material
fact in a securities registration statement.
However, an exception is carved out where ‘reasonable investigations’ have been
undertaken. The relevant standard of
reasonableness to be applied in this situation is that of a ‘prudent man in the
management of his own property’.
Following this, the concept of due
diligence emerged in other corporate contexts, particularly with respect to
financial transactions such as mergers and acquisitions.
While the due diligence carried out on such transactions in the 1980s was quite
limited, the process has gradually become much more extensive. Over time, the
concept has been transplanted into the international human rights law framework
– a positive duty has been imposed on states to conduct due diligence to
prevent human rights violations by non-state actors, including businesses.
Thus, in the international human rights law arena due diligence has been
applied as a standard of conduct that states are required to meet in order to
uphold human rights within their jurisdiction.
In the business and human rights sphere,
the concept of due diligence was first introduced back in 2003 when the draft Norms on the Responsibilities of Transnational
Corporations and Other Business Enterprises with Regard to Human Rights
(draft Norms) were introduced.
Article 1 of the draft Norms placed a primary responsibility on states to
ensure that businesses respect human rights. It also placed a separate
obligation on businesses ‘to promote, secure the fulfillment of, respect,
ensure respect of and protect human rights recognized in international as well
as national law’ within their sphere of influence. The commentary to
article 1 notes that businesses 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’. No further
explanation was provided on the due diligence to be conducted and the draft
Norms were not approved by the Human Rights Council in 2004.
The concept of due diligence was brought
back into the business and human rights arena when Ruggie was appointed as
Special Representative. Following
the failure of the draft Norms, Ruggie introduced the concept of HRDD back into the
international arena in 2008 and developed it over a period of about three years
until the UNGPs were endorsed by the UN Human Rights Council. As he acknowledges, until then due diligence was considered a ‘business
process’ used in ‘strictly transactional terms’.
However, Ruggie sought to broaden the concept into ‘a comprehensive, proactive attempt to uncover
human rights risks, actual and potential, over the entire life cycle of a
project or business activity, with the aim of avoiding and mitigating those
He did this by drawing on the key elements of due diligence and combining them
with the distinctive elements of human rights. This is what is now referred to
and articulated as the concept of HRDD in the UNGPs. Ruggie gave HRDD such a
key role in Pillar 2 of the UNGPs because he recognised that companies cannot know
or show that they are respecting human rights without conducting HRDD.
Indeed, he envisioned that HRDD would facilitate movement from ‘naming and
shaming’ businesses by external stakeholders to ‘knowing and showing’ through
internalising respect for human rights.
identified a number of benefits to business for undertaking HRDD, in particular
he highlighted that it wouldn’t impose additional burdens on business.
He argued that HRDD assists business to ‘address their responsibilities to
individuals and communities that they impact and their responsibilities to shareholders,
thereby protecting both values and value’.
He further acknowledged that HRDD assists companies to lower their risks,
particularly with respect to legal non-compliance.
He also noted that conducting HRDD has the ability to protect Boards against
claims brought by shareholders regarding mismanagement.
out the scope of HRDD, Ruggie stated that it is to be ‘determined by the context in which a company is operating, its activities, and the
relationships associated with those activities’
by reference to three factors, namely: (a) the country and local context in
which the relevant business activities take place; (b) what human rights
impacts the business’ own activities may have within that context; and (c)
whether the business’ own activities might contribute to abuse through the
relationships connected to their activities.
Importantly, he noted that the scope of HRDD is not fixed or based on
influence, rather it ‘depends on the potential and actual human rights
impacts resulting from a company’s business activities and the relationships
connected to those activities’.
With respect to the substantive content of HRDD, John Ruggie stated that
the minimum requirements are set out in the International Bill of Human Rights
and the ILO core conventions, as well as additional standards relevant to the
context of a particular business such as international humanitarian law.
As to the HRDD process itself, Ruggie set out four minimum requirements.
- Adopt a human rights policy.
- Conduct human rights impact assessments to ‘understand how existing and proposed
activities may affect human rights’.
- Integrate human rights policies through
the business, which requires a top down approach in order to ‘embed respect for
human rights throughout a company’ as well as training and the ‘capacity to
respond appropriately when unforeseen situations arise’.
- Track their performance through
monitoring and auditing processes with regular updates of human rights impact
Following these developments, the HRDD
concept was finally articulated in the UNGPs, which were endorsed by the UN
General Assembly in 2011.
of HRDD as articulated in the UNGPs
Meaning of HRDD and its Scope
Despite being a key element of the UNGPs,
HRDD is not defined in the UNGPs itself. Rather, as stated above, the UNGPs states
that HRDD is a process – that is, a process that should ‘identify,
prevent, mitigate and account for how [businesses] address their impacts on
human rights’. However, in interpretative guidance provided by the Office of
the High Commissioner of Human Rights, due diligence is defined as follows:
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”. 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.
It is clear from the definition above that HRDD
is separate to the due diligence processes generally carried out by a business
(for example, corporate due diligence). It is also clear that HRDD should be
undertaken by all businesses in order to respect human rights. However, the
extent of the HRDD to be carried out is dependent on various factors. As stated
in Principle 17, the scope of HRDD is dependent on the ‘size of the business
enterprise, the risk of severe human rights impacts, and the nature and context
of its operations’. Accordingly, the scope of HRDD processes should be tailored
to a specific business’ needs and should evolve as a business’ operations and
operating context develop – therefore, the process that is applied by one
business cannot necessarily be applied by another business. For example, larger
businesses are required to carry out more extensive HRDD than smaller
Elements of HRDD
The four key interrelated elements of HRDD
are set out in Principles 18 to 21 of the UNGPs, namely, assessing actual or
potential adverse human rights impacts, integrating findings across the
business and taking appropriate action, tracking the effectiveness of their
response and communicating with stakeholders. This process will be explained in
further detail below.
In order to conduct HRDD, businesses should
start by conducting regular human rights impact assessment in order to by
identify and assess ‘any actual or potential adverse human rights impacts which
they may be involved’ in both their activities as well as their business
relationships. Such an assessment is a critical aspect of HRDD as it is
necessary for a business to evaluate its human rights risks before it can
consider the steps to take to address those risks. The assessments should
assessing the human
rights context prior to a proposed business activity, where possible;
identifying who may be affected; cataloguing the relevant human rights
standards and issues; and projecting how the proposed activity and associated
business relationships could have adverse human rights impacts on those
The findings of such assessments should
then be integrated across a business’ relevant internal functions and processes
to prevent and mitigate risks identified. Further, action should be taken where
the business has had actual impacts so as to remediate those affected.
Complexities may arise with respect to this element of HRDD, with
situations existing where a business may not contribute to an adverse human
rights impact, but nevertheless because of the business’ relationship with a
third party the impact is directly linked to the business’ operations, products
or services. Situations may also exist where a business has little or no
leverage to address an impact. In such situations, businesses should seek
independent expert advice.
Businesses should then track the effectiveness of
their response to adverse human rights impacts. Tracking allows a business to
ensure that it is appropriately and adequately addressing the human rights
impacts of its operations and to adapt its response if required. It should be
‘based on appropriate qualitative and quantitative indicators’ and ‘draw on
feedback from both internal and external sources’.
The approach taken by businesses to address
their human rights impacts should be communicated externally, including to
those affected. Where severe human rights impacts exist within a business, how
the business responds to impacts should be reported in a formal manner. In
order to ensure that useful information is provided to external stakeholders,
all communications should be accessible to its intended audience and provide
sufficient information to ensure that business’ can evaluate the adequacy of
their response to a particular human rights impact involved. Such communication
ensures accountability and transparency on the part of the business.
The image below developed by Shift illustrates
the cyclical nature of the HRDD process and shows that it is an ongoing process
that must be undertaken in regular intervals in order to truly assist
businesses to identify, prevent, mitigate and account for how they address
their impacts on human rights.
As discussed above, HRDD lies at the heart of
the corporate responsibility to respect human rights in the UNGPs. While the
UNGPs were released in 2011, the concept of due diligence was around almost two
decades before that – however, it was applied purely in the context of
commercial transactions. The draft Norms imported the idea of due diligence
into the business and human rights sphere. After the draft Norms failed, Ruggie
revived the concept when he was appointed as Special Representative. He saw
HRDD as key to businesses being able to know and show that they respect human
rights to their stakeholders. Ruggie developed the concept from 2005 onwards, emphasising
its benefits for businesses. Leading to the final articulation of HRDD as a
central mechanism of the UNGPs in 2011.
From the discussion in this blog post, it
is clear that the UNGPs as well as Ruggie’s reports and statements in the lead
up to their inception do not (and probably could not) explicitly address how
HRDD is to be applied and operationalised by businesses in practice. This will
be explored in greater detail in the upcoming blog posts in this series.
Address by SRSG John Ruggie “Engaging Business: Addressing Respect for Human
Address by SRSG John Ruggie “Engaging Business: Addressing Respect for Human