In recent years, there has been an increased focus on the issue of business and human rights. This has led to a number of regulatory developments aimed at addressing issues such as forced labour, modern slavery, and child labour. In this briefing article, we will examine three key recent business and human rights-specific regulatory developments: forced labour trade and procurement regulations in the U.S. and EU, human rights and environmental disclosure and due diligence requirements in the EU, and developments in modern slavery and child labour disclosure requirements in Canada and the U.S.
Businesses must ensure that they are complying with modern slavery and child labour disclosure requirements. Companies must identify and address the risk of forced or child labour in their operations and supply chains and develop measures to prevent such practices. Failure to comply with regulations can result in significant financial and reputational damage.
And increasingly we are seeing very reputationally damaging litigation brought by NGO's to enforce this legislation not only before the more traditional Domestic and European courts but also before OECD National Contact Points. Even large companies are missing this risk.
Forced Labor Trade and Procurement Regulations in the U.S. and EU
Forced labour is a serious human rights issue that affects millions of people around the world. Due to the prevalence of forced labour in supply chains, there has been a growing need for regulatory action to address this issue. In the U.S., the Trade Facilitation and Trade Enforcement Act (TFTEA) was enacted in 2015 to combat forced labour. The TFTEA gives the U.S. Customs and Border Protection (CBP) the authority to detain goods that are suspected of being produced with forced labour. The CBP has identified a range of products, including electronics, textiles, and seafood, that have been produced with forced labour. By detaining these goods, the U.S. is showing its commitment to ending forced labour in supply chains.
Similarly, the EU has recently adopted a regulation on the import of certain goods that could potentially be produced using forced labour. The regulation requires companies to conduct due diligence on their supply chains to ensure that they are not supporting forced labour practices. If companies violate the regulation, they face fines and exclusion from public procurement. The regulation is expected to be enforced strictly, and companies that fail to comply could face significant reputational harm.
Implications for businesses
Businesses that source or operate in countries where forced labour is prevalent need to be aware of regulatory developments aimed at combating this issue. Companies must ensure that they are not contributing to forced labour in their supply chains and that they are taking proactive steps to address this issue. Failure to comply with regulations can result in significant financial and reputational damage.
Human Rights and Environmental Disclosure and Due Diligence Requirements in the EU:
The EU has recently introduced the Corporate Sustainability Reporting Directive, which mandates that companies headquartered in the EU with more than 500 employees disclose information about their human rights and environmental impacts. The directive requires companies to identify, prevent, and mitigate actual or potential adverse human rights impacts that are directly linked to their operations, products or services, and business relationships, including their supply chains. The due diligence required under the directive extends beyond the company's own operations and encompasses the operations of its suppliers.
The directive sets out minimum standards for disclosure, but companies are encouraged to go beyond these standards. The disclosure requirements are comprehensive and include information on environmental, social, and governance matters. Companies that fail to comply with the directive could face financial or reputational damage.
Businesses must ensure that they are complying with the Corporate Sustainability Reporting Directive and are taking proactive steps to identify and address issues related to human rights and the environment. Companies must be transparent about their operations and disclose information on their environmental, social, and governance matters. This not only helps companies to comply with regulations but also builds trust with consumers and stakeholders.
Developments in Modern Slavery and Child Labor Disclosure Requirements in Canada and the U.S.
Both Canada and the U.S. have implemented disclosure requirements for public companies related to modern slavery and child labour. In Canada, the Modern Slavery Act requires certain companies to report annually on their efforts to identify and address the risk of forced or child labour in their operations and supply chains. The act also requires companies to develop measures to prevent such practices.
In the U.S., the Dodd-Frank Wall Street Reform and Consumer Protection Act requires public companies to disclose their use of conflict minerals in their supply chains. The minerals, including gold, tin, tungsten, and tantalum, are often linked to human rights abuses. Companies are required to report on their due diligence efforts to ensure that their supply chains do not benefit armed groups and are not linked to human rights abuses.
Conclusion
In conclusion, regulatory developments play a critical role in the business and human rights sphere. The recent developments discussed in this briefing article demonstrate the increasing importance of proactively addressing issues related to forced labour, modern slavery, and child labour. Companies must be aware of these developments and take proactive steps to ensure that their operations and supply chains are free from human rights abuses. By doing so, companies can protect their reputation, improve their operations, and promote sustainability and human rights worldwide.
Want to hear more from us? 
