NFU Blog

Europe moves on Human Rights Due Diligence?

At NFU we are constantly monitoring the development in the sectors, both at Nordic, European and global level. 2019 has been characterized by an increasingly intense focus on sustainability, and particularly relating to the environment and climate change. In the wake of this green focus, another issue has (re)emerged at European level, namely the issue of Human Rights Due Diligence (HRDD).

The discussions on human rights due diligence have grown exponentially in Europe during 2019. Several signs are pointing to the formalization and regulation of HRDD at both European and national level. France has been leading the way, when they already back in 2017 adopted the Duty of Vigilance Law. In Finland for example, the government led by Antti Rinne had committed to moving forward with a proposal on human rights due diligence both at national and EU level. However, it remains to be seen what approach the new coalition government, led by Sanna Marin, will have.

Civil society, including UNI Europa and ETUC, is also calling for the EU to introduce mandatory Human Rights Due Diligence and the implementation of existing standards, such as the UNGPs and the OECD Guidelines, into European legislation. The European Commission also seem to be directing increasing amount of attention to the issue. Both the EU Action Plan on Sustainable finance, the regulation on disclosure related to sustainable investments and the revision Non-Financial Reporting Directive include references to human rights due diligence and both Commissioners Urpilainen and Reynders made references to it in their commissioner hearings.

Human rights due diligence has its origin in the UN system. The “Protect, Respect and Remedy: Framework for Business and Human rights” sets out the state duty to protect against human rights abuses, the corporate responsibility to respect human rights and the access to remedy. The UN Framework was groundbreaking in many ways, not at least as it was the first successful attempt at codifying businesses responsibilities towards human rights at global level. This responsibility to respect was shortly after translated into a hands-on guide to support companies; the UN Guiding Principles on Business and Human Rights (UNGPs).

The UNGPs introduce the concept of human rights due diligence; a due diligence process for companies to identify, prevent, mitigate and account for how they address their impacts on human rights; which they may cause or contribute to through their own activities or which they may be directly linked to through their operations. It is also further elaborated in the OECD Guidelines for Multinational Enterprises (but here it is called risk-based due diligence). The OECD also recognizes the special challenges for certain sectors and sets out two guides for the financial sector; the OECD guides “Responsible business conduct for institutional investors” (2017) and “Due Diligence for responsible corporate lending and securities underwriting” (2019). The implications are that investors, for example, have a responsibility to ensure that the firms they invest in also respect human rights. If not, they should use their leverage as investors to create change or, if all other fails, disinvest. This responsibility does of course also extend to trade union investments, for example related to pensions.

What does this mean for trade unions? Well, many things. As a start, HRDD emphasizes the importance of “meaningful stakeholder consultation” in order to identify, mitigate and remedy adverse human rights impact. Here, trade unions are key stakeholders, both in terms of mapping risks to human rights and ensuring safe and sound whistleblowing mechanisms (which is crucial for access to remedy), as-well as the implementation and monitoring in the daily business operations. In addition, this could be an important process to have in place (or put in place) to ensure a just transition that takes the social perspective into consideration in the process of greening the economy. The HRDD process should also be continuous, i.e. not a one-time exercise, meaning that key stakeholders such as trade unions should be consulted on a regular basis.

In addition, through the OECD Guidelines for MNEs, there is a possibility to take action against adverse human right impact via the OECD National Contact Points (NCPs). The NCPs have the mandate to handle complaints of alleged breaches against the OECD Guidelines taking place both inside the NCP country by a company headquartered elsewhere in the world and against breaches that take place elsewhere in the world by a company headquartered in the NCP country. In the Nordic countries, trade unions are represented in the NCP bodies. This provides trade unions with a unique opportunity to emphasize the business responsibility towards social and labor rights.

Whether the EU will legislate on mandatory human rights due diligence remains to be seen but doing so could have the potential of strengthening the social rights dimension and help support a just transition in Europe and beyond – where no one is left behind.

Annika Stenström

Policy Advisor
Email: ast@nordicfinancialunions.org
Phone: +46 704 147 770
Twitter: @AnnikaStenstrm

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