On 29 November, Swiss voters gathered for a referendum. They affirmed that the country’s constitution should be amended to impose human rights due diligence (HRDD) requirements on multinational firms headquartered in Switzerland. The proposed amendment, which would require companies to proactively manage the adverse human rights impacts of their business activity, ultimately failed.
It was opposed by a majority of the cantons, whose approval, along with a popular majority, is required to amend the Swiss constitution. Switzerland will instead implement an attenuated counterproposal that affords limits, favoured by Government and industry, on the breadth and reach of a corporation’s reporting duties. But that HRDD achieved national attention and garnered support from a narrow majority of voters evidences the progress made under the banner of business and human rights. Yet, while the Swiss referendum is situated amongst an increasing number of states advancing mandatory HRDD legislation, Canada remains non-committal.
Corporations have become significant international actors whose political and economic influence exceeds that of many states. The rise of transnational corporations has brought wealth, investment, employment, and innovation to much of the world. But as we repeatedly see, from the German industrialists’ trials at Nuremberg to Facebook’s role facilitating aspects of the Rohingya genocide, corporations possess the capacity to adversely and egregiously impact human rights. HRDD provides a regulatory tool to mitigate the potential harms that accompany business activity. Pre-emptively orientated, the UN Guiding Principles on Business and Human Rights (UNGP) state that “to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry out human rights due diligence.” These processes assume a crucial role in advancing a preventative agenda, have been recommended within the OECD’s Guidelines for Multinational Enterprises and the ILO’s Tripartite Declaration of Principles, and have been included in the Second Revised Draft of the Legally Binding Instrument that is advancing within the Human Rights Council.
This blog is part of the research project Changing Orders: Shaping the Future and Securing Rights in a World in Transformation, funded by the Alex Trebek Forum for Dialogue as part of the initiative Smart Changes of a Better World.
As HRDD is increasingly viewed as an international norm of behaviour, a growing number of states and organizations are imposing mandatory due diligence requirements. France’s duty of vigilance law, adopted in 2017, is the most comprehensive example of HRDD legislation to date. It requires that large corporations establish, publish, and implement plans to prevent business activities that threaten to violate human rights or cause environmental derogation. Thirteen other European countries have either begun drafting or are committed to mandatory HRDD legislation. These initiatives build upon existing legislation in various jurisdictions, like the recently adopted Dutch Child Labour Due Diligence Act or the United Kingdom’s Modern Slavery Act, that impose partial due diligence obligations by requiring businesses in designated sectors to report on efforts taken to ensure that their supply chains do not violate human rights standards. Additionally, following the European Commissioner for Justice’s April 2020 announcement, the EU is readying a regulation that will introduce comprehensive human rights and environmental due diligence requirements by next year.
Such robust endeavours have yet to extend to Canada. Despite calls from civil society organizations, Canada lacks an explicit legal framework detailing the obligations of or imposing comprehensive HRDD requirements upon Canadian companies operating abroad. Instead, a series of patchwork initiatives, spurred by high-profile disclosures of egregious human rights violations by Canadian mining companies, have taken only incremental steps to advance due diligence requirements. The Federal Government’s 2014 Corporate Social Responsibility strategy offered a series of bromides that wove deferential calls for “more fulsome risk management assessment” with the promotion of undefined “Canadian values.” Bill S-216, introduced to the Senate in October 2020, will impose supply chain reporting obligations on large companies whose activities rely on human labour abroad. And Export Development Canada recently publicized an HRDD strategy that purports to align with the UNGP. Critics have, however, noted inadequacies in each initiative that collectively positions Canadian efforts to advance the business and human rights agenda well behind undertakings seen elsewhere.
Yet momentum is discernable. Amidst concrete international advancements, Canada recently began a public consultation on renewing its Responsible Business Conduct Strategy. Following prompting from the Subcommittee on International Human Rights, Employment and Social Development Canada is working to inform global supply chain legislation. And the mandate of the recently appointed Canadian Ombudsperson for Responsible Enterprise prioritizes promoting the implementation of the UNGP. But if the UNGP is to be positioned as the normative lodestar of Canada’s commitment to responsible business conduct, its efficacy is contingent on acknowledging that due diligence is the lynchpin for initiatives that strengthen the corporate responsibility to respect human rights.
When drafting the UNGP, John Ruggie purposefully employed the language of “due diligence” because both corporate officers and human rights advocates were conversant with the concept. The capacity of mandatory HRDD to ensure human dignity by preventing adverse human rights impacts constitutes the principal reason to adopt legislative initiatives. However, as momentum towards such initiatives grows, the persuasiveness of efforts to advance HRDD in Canada can be furthered through interest or identity-based appeals to due diligence’s broad utility.
HRDD legislation should not be resisted as a regulatory burden. Instead, it can be embraced as a necessary tool to safeguard human rights by advancing business interests. The trans-jurisdictional nature of corporate operations, coupled with the array of national initiatives that impose requirements upon corporate activity, creates a complex regulatory web. Due diligence requirements can facilitate regulatory harmonization. By identifying the array of often disjointed provisions that regulate business activity and prescribing processes to enable adherence to these expectations, HRDD provides corporations with the regulatory clarity and predictability necessary to advance compliance.
Furthermore, Canadian law recognizes that due diligence can reduce a corporation’s liability if substantive, preventative efforts have been taken to avoid harm. Following the Supreme Court’s decision in Nevsun Resources Ltd. v. Araya, corporations may be found liable in Canada for foreign conduct amounting to a breach of customary international law (a small and contestable category of serious violations). Far-reaching supply chains, the autonomous actions of subsidiaries, and fragmented decision-making structures increase potential sources of liability. As corporations face necessary scrutiny, an effective and genuine HRDD strategy can promote business practices that avoid harm at the periphery of a business’s operations and allow a business to reduce liability should unintended harm occur despite it having taken substantive, preventative efforts.
Human rights due diligence is not a panacea. Alone, it will not repeal the harmful costs of corporate activity or ensure accountability when the pursuit of profit supplants a company’s social licence. But it is a tangible step, increasingly viewed as an expected norm of business conduct that is broadly accepted by human rights NGOs and business organizations alike. And it is a step that Canada can take as it begins the process of amending the Responsible Business Conduct Strategy and further defining the mandate of the Ombudsperson for Responsible Business. Advancing mandatory HRDD through these processes will align Canadian business requirements with many of its foreign counterparts, and it will belatedly position Canada—as John Ruggie remarked in his final presentation to the UN Human Rights Council—at the “end of the beginning” of efforts to ensure the corporate responsibility to respect human rights.