The Management and Oversight of Human Rights Due Diligence

Abstract

The COVID-19 pandemic showed how vulnerable workers in global supply chains are to adverse human rights impacts. Protecting such workers must be a primary policy goal in the efforts to “build back better” from the crisis, and businesses conducting human rights due diligence (HRDD) is a primary means to do so. In Europe, there is a fast-moving trend towards legislatively mandating HRDD and there is potential for similar movement in the United States. Whether HRDD will significantly improve human rights conditions, however, is an open question. Based on our experience with corporate compliance programs, it is clear that the management and oversight of HRDD is an essential factor in ensuring meaningful implementation, as opposed to corporations focusing on form over substance. This article identifies those key internal governance issues and provides advice on how best to ensure effective implementation. This article argues that for most corporations, the day-to-day management of HRDD best fits with the compliance function—not the legal function—and this new role could be part of the next step in the evolution of the compliance function. This article also discusses the role of the board of directors and how HRDD combined with recent developments in the law of fiduciary duties can push directors to engage in more rigorous oversight. In addition, this article discusses the types of information that are essential for supporting the management and oversight of HRDD.

Keywords: Business and Human Rights, Compliance, ESG, Human Rights Due Diligence

JEL Classification: K20, K38, K42, M14, M16