Is the Concept of ‘Due Diligence’ in the Guiding Principles Coherent?
University of New South Wales
British Institute of International and Comparative Law; School of Law, University of Nottingham
January 29, 2013
The concept of due diligence is central to the corporate responsibility to respect human rights, as defined and elaborated in the UN Guiding Principles on Business and Human Rights. In our paper, we argue that the Guiding Principles confuse two different meanings of the term ‘due diligence’.
In some contexts, the term due diligence refers to a set of processes used by businesses to identify and manage risks. In other contexts, due diligence refers to a standard of conduct expected of an actor in order to discharge a responsibility, obligation or duty. The two meanings are not entirely unrelated - instituting due diligence processes may be one way in which an actor can ensure that it satisfies a due diligence standard of conduct required to discharge a given responsibility. However, the two meanings do not necessarily coincide. For example, it may be prudent for a business to implement due diligence processes to manage certain risks, even when it is not subject to any responsibility or obligation to avoid those risks. Similarly, due diligence processes may be useful even when a business is subject to a more exacting standard of conduct to avoid a given risk - for example, when a business has a strict responsibility not to cause certain types of harm.
Through an examination of the two meanings of the term due diligence we develop the argument that the responsibility to respect human rights is best understood as imposing a strict responsibility on business enterprises to avoid causing adverse human rights impacts, while imposing a lesser due diligence standard of conduct to prevent adverse human rights impacts caused by third parties with which the enterprise has business relationships. The due diligence processes described in the Guiding Principles should then be understood as the means by which business enterprises ensure that they discharge both aspects of their responsibility to respect human rights.
Our argument is consistent with Guiding Principle 13, which distinguishes between a business enterprises own adverse human rights impacts and the adverse human rights impacts of third parties with which a business enterprise is linked. Guiding Principle 13 suggests that a higher standard of conduct applies in relation to a business enterprise's own adverse human rights impacts. The distinction we propose is also consistent with international law, and is supported by strong policy justifications.
Keywords: business and human rights, Due Diligence, Ruggie, UN Guiding Principles
Date posted: January 30, 2013