YOUR HEADING

HERE10.05.2011

Human rights: compliance and beyondColleen Theron

Introduction

• who am I ?

• what do we do?

• what will I cover in this webinar today?

Background

• complex supply chains

– Rana Plaza,

• lack of transparency – Behind the Brands

• role of governments

Why should companies know about human rights?

• companies should have an understanding

of how their corporate activity and

business operations affect human rights

and vice versa

• number of risks to companies :

– legal and regulatory

– reputational

– operational

How can business violate these rights?

• directly

• indirectly

• by association or via business relationship

• investments

• consider how the principles apply to

human trafficking

Poll question

• Are you confident of what legal obligations related to human rights apply to your organisation?

• [answer options – yes / no / not sure]

Understanding the regulatory landscape

• US legislation

• EU Directive on disclosure of non-financial and diversity information

• EU proposal for Regulation on conflict minerals - supply chain due diligence

• Companies Act 2006 - Strategic Reporting Regulations

• Modern Slavery Bill?

US Regulation

• California Transparency in Supply Chains Act 2010

• section 1502 of the Dodd-Frank Act

• US Alien Tort Statute – grants aliens the right to sue in US federal courts for violations of law

• negligence

The EU Directive

• as a Member State all EU Directives apply to the UK and have to be transposed into UK legislation

• EU adopted Directive 15 April 2014

• Member States to transpose by 2017

• mandatory disclosure on non financial and diversity information

Who does the Directive apply to?

• large companies with

• >500 employees and

• A balance sheet of >EUR 20 million OR a net turnover of 40 million

• must include information:

– on environmental, social and employee related matters

– human rights and diversity, anti corruption and bribery issues

Changes to UK Companies Act 2006

• s. 414 (c)(7) Companies Act 2006 (as amended by regulation 3 of the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013

• effective from 1 October 2013 • listed companies to include disclosures on human

rights issues• report to state information on companies policies

and procedures • Non-compliance with obligations can result in

directors committing a criminal offence

Modern Slavery bill • currently being debated in the house of commons • extensive lobbying to include reference to business and

supply chains • different approaches being advocated by NGOs

– eg Finance Against Trafficking advocates amendment to Strategic Report Regulations and Companies Act to include supply chain reference.

• government reluctant to change Companies Act again in light of amendments to be made under the EU directive on disclosure of non-financial information

• recent government announcement– report due on 11 November 2014

Case law

• increased litigation on business and human rights

• English courts: Chandler v Cape PLC (2012) endorsed foreign direct liability

• about 180 disputes have been filed against business entities under the US Alien Tort Act

• key decision recently Kiobel v Royal Dutch Petroleum Co (2013)(Shell) narrows scope of US Act

Poll questions

• Is your company confident that it has assessed its compliance with human rights issues?

[Answers yes/no/not sure]

• Has your company identified potential human rights related risks?

[Answers yes/no/not sure]

The role of contracts

• code of conduct

• tenders

• standard form contracts

• development agreements

• JVs

What about (mis)representations and public commitments?

The role of voluntary frameworks

• the UN Guiding principles on business and human rights were endorsed in 2011

• they are effectively a game changer for All business

The UNGPs on business and human rights: 7 key features

1. set of universal standards

2. applies to ALL companies

3. not legally binding

4. accepted as universally applicable benchmarks

5. any company can be measured by them

6. aimed to prevent companies from violating human rights

7. ensure adequate legal redress

The UNGPs framework

• Rests on 3 pillars:

– the state’s duty to PROTECT

– Business responsibility to RESPECT human rights

– Both states and business to ensure access to redress or REMEDY for victims

How can the UNGPs assist companies?

• sets a framework on what is expected of companies. For example:

– policies and procedures

– due diligence

– supply chain management

– stakeholder issues

– understanding effective integration

– reporting

– operational level grievance mechanisms

Poll question

• Does your company have a human rights policy?

[Answers yes/no/not sure]

• Are there processes in place that sit behind and substantiate the policy statement?

[Answers yes/no/not sure]

Why develop a human rights policy?

• UNGPs guiding principle 16

• it shows forms the basis for embedding the responsibility to protect human rights

• 10 reasons set out on CLT envirolaw website

• consider impact of legislation and defences

Due diligence

• a familiar business tool

• enables companies to manage risk and reduce liability

• UNGPs requires companies to conduct human rights due diligence

• this means – adopting a human rights policy, conducting human rights impact assessments, integrating the policy into the companies operations and culture, and COMMUNICATING

Poll question

• Has your company developed a due diligence assessment to ensure that it can meet its commitment and uphold its policy statement?

[Answers yes/no/not sure]

What can business do to remedy/prevent violations?

• include human rights in the business agenda

• top management buy-in

• find the right resources and tools

– eg: ChainChecker

• understand:

1. where the business operates

2. who it works with

3. how to do this responsibly

Time for Reflection

Ask yourselves:

• will you consider putting human rights forward for discussion at board level?

• will you consider developing and implementing a human rights policy?

• will you review your due diligence procedures to incorporate human rights?

…And decide on key actions and steps

Want to have a chat?

We’d love to!

Get in touch with me at:

m: +44 (0)7714979936

e: colleen.theron@clt-envirolaw.com