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Business and Human Rights

Demonstrating respect for human rights is evermore important for businesses. We have been at the forefront of this area since its emergence and have the experience, perspective and innovative approach necessary to help you meet the challenges it presents.

With the rise of ESG, showing respect for human rights, which forms part of the “Social” limb, is increasingly an important area on which businesses should be looking to focus. The increased scrutiny on this area means implementing robust policies and processes to identify, prevent or mitigate adverse human rights impacts is increasingly relevant to investor relations, brand management and access to finance. It will also be important to minimise the risk of litigation and reputational damage. If managed successfully, these policies and processes can be significant brand and business enablers.

Since their introduction, there has been widespread business convergence around the ‘soft law’ human rights standard the UN Guiding Principles on Business and Human Rights. Increasingly the UNGPs are being reflected in mandatory reporting and other regulatory requirements introduced around the world. In light of this, many businesses are refining their human rights policy commitments and implementing them in earnest through due diligence processes, impact assessments and compliance systems.

Linklaters’ cross-border Business and Human Rights practice has been at the forefront of advising on these themes for a number of years.

How Linklaters can help you

Human Rights policies

A clear human rights policy commitment marks the foundation of a robust human rights risk management and compliance programme, and sets the “tone from the top” for an organisation’s approach to human rights issues. The UN Guiding Principles on Business and Human Rights require that a policy is approved at the most senior level, prepared with expert advice and made publicly available, amongst other things.

Increasingly, companies are developing and publishing specific human rights policies, or expanding existing policy commitments to cover human rights issues. But preparing a policy is only the beginning of the journey for most businesses. We help our clients design clear and concise policies that can be implemented in practice into their operations, business practices and ethos.

Human Rights due diligence

Due diligence is an important tool which can assist companies to manage risks and compliance with laws, regulations and standards. The UN Guiding Principles on Business and Human Rights state that organisations have a responsibility to respect human rights by acting with due diligence to avoid infringing on the rights of others.

Beyond this, alongside the rise of ESG, a number of legal regimes have developed with an aspect of mandatory human rights due diligence, imposing an obligation on businesses to take this into account.

Understanding what type of due diligence to conduct, and when to conduct it, is critical to fulfilling this responsibility and effectively managing risks and impacts. We have helped our clients develop bespoke systems and methodologies to manage this process and advise on how to manage due diligence findings and challenging situations.

Human Rights impact assessments

The UN Guiding Principles on Business and Human Rights provide that businesses should carry out human right due diligence to identify, prevent, mitigate and account for how they address their actual or potential adverse human rights impacts.

In certain circumstances, enhanced and bespoke human rights due diligence, in the form of a Human Rights impact assessment, may be required. This is particularly the case where there is a foreseeable risk of human rights impacts, for example if there is something inherent in the goods or services being provided which entails a risk of harm or if the activities or reputation of the counter-party to whom they are being supplied gives rise to such a risk.

We have helped a number of organisations with human rights impact assessments in a variety of complicated and difficult situations. Our expertise in this area allows us to provide our clients and their business teams with succinct, plain English and practical impact assessments that help them properly identify, understand and assess the implications of the proposed contractual arrangement and make informed business decisions.

Compliance programmes

A range of soft law standards require businesses to respect human rights and set clear practical expectations by providing a framework within which companies can build structured processes to identify and manage their impacts.

We have long advised companies on the review of their risk management and compliance systems to ensure that they take human rights issues into account. Where gaps are identified, we have helped them design and implement new measures, or upgrade existing systems, to ensure that they are able to manage their impacts and eliminate or mitigate risks to their, and their stakeholders’, satisfaction.

Linklaters has also partnered with the UN Global Compact to interview General Counsel across a wide range of organisations to develop two Guides for General Counsel on Corporate Sustainability. These provide practical guidance on how to advance corporate sustainability issues, while reinforcing the UN Global Compact’s Ten Principles that focus on human rights, amongst other things.

Supply chain risks

Ethical sourcing and supplier compliance with human rights standards are rapidly attracting greater scrutiny from a range of stakeholders, including investors, customers and NGOs, who are looking for companies to demonstrate a more responsible and sustainable approach to business.

This has pushed companies to look beyond more traditional methods of supply chain management, which have focused on the commercial aspects of procurement and on contingency planning, with a view to ensuring favourable supply terms and business continuity.

Also driving this change in approach are developments like the “transparency in supply chains” provision of the UK’s Modern Slavery Act 2015. We have led the charge in advising companies on applying these reporting requirements, which have recently helped inspire similar developments globally, including the Devoir de Vigilance, Dutch Child Labour Due Diligence Law and Swiss Responsible Business Initiative.

Human rights in major transactions

Linklaters has long advised a range of corporates on the human rights aspects of their M&A activity, recognising the potential for it to represent a material risk of a transaction, as well as advising on applicable international environmental and social requirements in relation to a large number of project financings on both the sponsor and lender-side.

Furthermore, as financial institutions increasingly recognise that ESG issues are relevant to credit and reputational risk, sustainable finance is fast becoming the benchmark for global financial and investment transactions particularly in the extractive and infrastructure sectors. Recent revisions to soft law standards in this area explicitly incorporated references to human rights.

We have the leading team on soft law standards, and we are acutely aware of the need for corporates (as businesses and borrowers) and financial institutions to consider and report on the environmental and social impact of their activities and to frame contractual requirements in a practical and commercial way. 

 

Human rights reporting

Increasingly companies are required to be transparent about and report publicly on their business practices. This trend has gained significant momentum over recent years. Regulatory reporting requirements are expanding to cover social, community and human rights issues as well as information about related policies, processes and their effectiveness. The “transparency in supply chains” provision of the UK’s Modern Slavery Act 2015 is a more established example, as is the EU’s Non-Financial Reporting Directive. There have also been numerous developments in recent years across the globe demonstrating the heightened need for companies and financial institutions to engage with this topic and ensure that their public commitments and statements align with their business practice.

We have an in-depth understanding of this area, from the systems that may need to be put in place to gather information, to the drafting and preparation of reports and statements and addressing any follow-up action taken by stakeholders.

Litigation and liability risks

As human rights garners more stakeholder and public interest and scrutiny, we are seeing a rise in the number of actions brought (in a variety of fora) against companies that involve allegations of adverse human rights impacts or failures to prevent or manage such impacts. This includes the recent trend of claims being brought against parent companies in respect of the actions of foreign subsidiaries.

Our team understands that such actions represent more than just liability risk and that a “win” for claimants does not necessarily require a court judgment in their favour. Our approach is therefore both to help with claims, complaints and other forms of action when they are brought but also to provide advice and assistance in advance to help minimise the risk of your business facing such actions in the first place. This includes providing advice on putting in place processes, policies and procedures to help avoid instances which could give rise to claims and advising in relation to operational level remediation mechanisms to help clients respond appropriately where impacts have been caused. 

 

Human rights as a defence tool

In certain jurisdictions, businesses also have human rights of their own. There are circumstances in which they may wish to take action to enforce those rights as protection against certain forms of State intervention, in the context of legal proceedings and/or regulatory investigations.

Our key Business and Human Rights experience

Getting your house in order – human rights governance & culture

Advising an FMCG company on a programme of governance reform and cultural change required to roll out and implement policy commitments and associated processes.

You and your operations – impact assessments and due diligence

Designing the methodology for and conducting human rights impact assessments across a range of high-risk sectors (e.g. Defence, Telecoms) and jurisdictions (e.g. conflict-affected areas).

Human rights how to – compliance programmes

Advising a major ICT company on the design and implementation of a human rights compliance programme incorporating the requirements of the UN Guiding Principles on Business and Human Rights.

Complex supply chains and risk management

Advising a large number of major corporations on US, EU and UK law and policy on modern slavery and human trafficking and their impacts on global supply chain risk management.

Big business and human rights – our role in major transactions

Advising on the application of social and human rights aspects of the Equator Principles, IFC Performance Standards and OECD Common Approaches on a range of market-leading project financings.

Parent company liability

Advising a multinational corporation on emerging law and policy in a number of jurisdictions on the liability of parent companies for human rights abuses or complicity by their subsidiaries.

Featured Content

The Hague Rules on Business and Human Rights Arbitration

In December 2019, the launch of The Hague Rules on Business and Human Rights Arbitration took place at the Peace Palace in The Hague, The Netherlands. The Hague Rules provide a set of rules for arbitration in relation to business and human rights disputes. A copy of the Hague Rules, including a commentary per provision and various model arbitration clauses, is available online.

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Our human rights video series

Our clients are now telling us that human rights risks are rising up the corporate agenda and increasingly treated as a compliance issue. In our human rights video series, our team discuss some of the most common issues for businesses, including the proliferation of ‘soft law’ standards, the transition from ‘soft law’ to ‘hard law’ and the consequences of non-compliance.

Discover the series

Business and Human Rights Arbitration: Widening the net of remedies

International arbitration moves closer to becoming a forum for business and human rights (“BHR”) disputes with the publication of draft BHR arbitral rules. Whilst some technical considerations remain, BHR arbitration offers many exciting advantages to current dispute resolution mechanisms and would be a welcome option for many.

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Ethics in Banking and Finance

This report, which has been prepared in partnership with UK Finance, is designed to help firms more easily engage with the many and varied sources of those requirements and evaluate whether they are living up to these expectations and the values they have set for themselves.

Explore the report
Key contacts
For more information on how our Business and Human Rights team can support you, please get in touch with one of the contacts below.

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