Volume 3: Human Rights and Labour

25 Oct 2024

Inside this volume:
Industry updates
Longer article on Human Rights and Labour Practice
Media Recommendations

Human Rights and Labour Practice

Industry updates:

Leaders Urge World to Pay Up to Save Nature as COP16 Talks open

 At the COP16 (2024) biodiversity summit, world leaders called on wealthy nations to increase funding to protect ecosystems, crucial for meeting the 2030 global biodiversity targets. Developing countries emphasised the need for financial support, arguing that they house much of the world’s biodiversity but lack sufficient resources for conservation. The talks highlighted the ongoing debate over responsibility for nature preservation, with particular focus on implementing commitments made at COP15. The summit aims to secure stronger financial commitments for global biodiversity protection. Link here

BHP Faces 47 Billion Pound UK Lawsuit over Brazilian Dam Collapse

BHP, the global mining company, faces a $4.7 billion lawsuit in the UK over the 2015 collapse of the Fundão dam in Brazil. The disaster, which involved BHP’s joint venture, led to the deaths of 19 people and caused severe environmental damage. The claim represents more than 700,000 individuals and businesses affected by the collapse. BHP argues that the lawsuit duplicates efforts already underway in Brazil, but the case is moving forward in the UK courts. Link here

Ed Miliband Faces Crunch Decision on Speed of Greenhouse Gas Cuts

Ed Miliband makes an impending decision on how quickly the UK should reduce greenhouse gas emissions. With mounting political pressure, Miliband, the Climate Secretary, faces a challenge in balancing the country’s ambitious climate goals with economic and energy considerations. The decision will impact the UK’s efforts to meet international climate targets and address domestic energy needs amid a growing debate over the pace of the green transition. Link here

https://www.theguardian.com/uk-news/2024/oct/22/more-than-1000-homes-linked-to-20bn-green-energy-grid-expected-to-be-built-in-highlands

About 80% of Countries Fail to Submit Plans to Preserve Nature Ahead of COP16

Approximately 80% of countries have failed to submit their biodiversity action plans ahead of COP16, a crucial climate conference focused on preserving nature. This lack of preparation raises concerns about global commitment to biodiversity targets and the effectiveness of efforts to combat environmental degradation. Despite the urgency emphasised by scientists and activists, many nations have not provided the necessary frameworks or strategies needed to address biodiversity loss, highlighting a significant gap in global environmental governance. The situation raises questions about accountability and the ability to meet international conservation goals. Link here

Longer Article:

The intersection of human rights and ESG has gained significant attention in the business world. As companies face growing demands from investors, regulators, and the public, integrating human rights has become a critical concern. Despite advances in ESG frameworks, gaps remain in adequately addressing social factors in decision-making. Understanding the evolving role of human rights within ESG is crucial, as is the urgent need for companies to strengthen these considerations in their strategies.

Human Rights and ESG: Strengthening the Integration

Despite global frameworks like the United Nations Guiding Principles on Business and Human Rights (UNGPs) and regulatory developments such as the Corporate Sustainability Reporting Directive (CSRD), human rights remain insufficiently addressed within corporate governance. There are two major approaches to integrating human rights into ESG frameworks: the European Union Corporate Sustainability Due Diligence Directive (CSDDD) and Strategic Climate Change Litigation within the realm of private law. These efforts reflect the ongoing tension between legally binding frameworks and voluntary commitments, and the divergence between developed and developing countries.

Incorporating human rights into ESG is crucial, yet concerns persist about their lack of prominence in financial decision-making. The World Economic Forum has called for more robust attention to human rights risks across supply chains, which the CSRD seeks to address by enhancing transparency. However, many businesses still fall short in reporting these risks accurately, often engaging in "rightswashing"—the practice of giving the false impression of socially responsible conduct without sufficient backing through their actions.

This challenge has historical roots. Conversations about human rights and corporate responsibility gained prominence during the 1970s when developing countries began pushing for more equitable treatment of businesses operating within their borders. These countries sought a legally binding international treaty that would hold multinational corporations accountable for human rights violations, whereas many developed countries, including the United States and several European Union member states, supported voluntary approaches. The divide was evident in 2014, when the Human Rights Council (HRC) voted on a resolution to establish an intergovernmental working group on transnational corporations and human rights. While 20 member states supported the resolution, 14, including the U.S. and some EU members, opposed it.

In 2011, the UNGPs were endorsed by the HRC as a voluntary framework, emphasizing the responsibility of states to protect human rights and the obligation of businesses to respect them. However, critics argue that voluntary frameworks like the UNGPs, the UN Global Compact, and corporate social responsibility (CSR) initiatives have failed to drive large-scale improvements in human rights across sectors. Without legal enforcement, businesses are often slow to implement meaningful changes. Simply making Human Rights Due Diligence (HRDD) mandatory, as is required in some EU frameworks, does not guarantee transformative improvements for rights holders or fundamental shifts in business operations.

The EU Corporate Sustainability Due Diligence Directive (CSDDD)

One of the most significant developments in recent years is the EU’s CSDDD, which aims to address human rights violations within corporate value chains by introducing mandatory HRDD requirements. However, the directive has its limitations. One major criticism is that the burden of proof for adverse human rights impacts often falls on the victims rather than on the companies, making it difficult for individuals affected by corporate actions to pursue justice. While companies can bring cases before the European Court of Human Rights, individuals alleging violations by private entities face significant barriers, including the challenge of proving a direct link between corporate activities and harm suffered.

Additionally, while the CSDDD represents a move towards greater accountability, its legal enforcement mechanisms may not be sufficient to prompt widespread behavioural change across businesses. The directive highlights a broader issue: even when mandatory, human rights due diligence often becomes a procedural exercise rather than a transformative force for ensuring corporate accountability.

Strategic Climate Change Litigation and Human Rights

In parallel to legislative efforts like the CSDDD, strategic climate change litigation has emerged as a powerful tool to hold businesses accountable for human rights violations, particularly in relation to environmental degradation. Strategic litigation involves identifying and pursuing legal cases to create broader societal impacts—setting legal precedents, publicly exposing abuses, and influencing both policy and business practices. For instance, climate litigation cases have increasingly been filed against large corporations for their role in contributing to climate change, which often disproportionately affects vulnerable populations and exacerbates social inequalities.

This approach has proven effective in raising awareness and prompting regulatory shifts, but it faces its own challenges. Strategic litigation often requires considerable financial resources and legal expertise, limiting the ability of marginalized communities to access justice. Additionally, while such cases may bring attention to corporate misconduct, they do not always result in systemic changes or direct remediation for those affected.

Voluntary vs. Legally Binding Approaches: A Global Divide

The ongoing debate between voluntary and legally binding human rights frameworks reflects a deeper divide between developed and developing nations. Developing countries have long advocated for a legally binding treaty to regulate the conduct of multinational corporations, while developed nations have favoured voluntary guidelines like the UNGPs. This divergence in perspective underscores the challenges in creating universally accepted standards for business conduct, especially when economic interests and geopolitical power imbalances come into play.

Voluntary approaches, while flexible, often lack the enforcement mechanisms needed to compel businesses to act in a socially responsible manner. This has led to inconsistent application across industries and regions, with many businesses only engaging in superficial compliance. Conversely, making HRDD mandatory, as seen in the CSDDD, introduces legal obligations but does not necessarily lead to a fundamental transformation in how companies operate. There is a growing recognition that, for meaningful progress to be made, there needs to be a balance between voluntary initiatives and legally binding frameworks that provide clear accountability.

What Can Be Done?

To ensure human rights are sufficiently incorporated into ESG frameworks, businesses must move beyond compliance and actively embed human rights into their core strategies. This includes:

Embedding human rights into investment policies and corporate decision-making processes.
Conducting ongoing human rights due diligence, not as a box-ticking exercise but as a fundamental aspect of risk management.
Addressing and remediating adverse human rights impacts promptly and effectively.

Furthermore, regulators must ensure that victims of corporate human rights abuses can access justice through simplified legal processes and reduced burdens of proof. Strategic litigation will continue to play a key role in promoting accountability, but broader legal reforms are needed to support those most affected by corporate negligence.

In conclusion, while the integration of human rights into ESG frameworks is gaining momentum, much work remains to be done. Both voluntary and legally binding approaches have their merits and limitations, but a hybrid model—one that combines enforceable legal obligations with a commitment to ongoing dialogue and improvement—may offer the most effective path forward.

Media Recommendations:

ESG Insider

My first recommendation is ESG Insider by S&P Global, a weekly podcast offering nice and concise 20-minute episodes. This week’s episode revisits key takeaways from last year’s COP28 conference and looks ahead to the anticipated hot topics at COP29, set to take place in Azerbaijan in just a few weeks. The show regularly features industry leaders, providing direct insights from those shaping the ESG landscape in real time.

Jack – 7/10

Green Daily

Secondly, I’ve chosen Green Daily by Bloomberg. It is a free, daily newsletter that delivers quick, digestible updates into my inbox on the latest in environmental news and sustainable finance. Each edition features key headlines with brief explanations, making it easy to stay up to date with the industry. Being designed for a global audience, it is able to cover a broad range of topics, often highlighting important stories that might be overlooked by publications with a more regional focus. Even when I only have time to skim the headlines, it helps me stay in the loop!

Jack – 8/10