Only half (51%) of companies have ever undertaken a dedicated human rights due diligence process or a human rights impact assessment, according to research from the British Institute of International & Comparative Law (BIICL) and law firm Norton Rose Fulbright.
The study, which included a survey of 152 major companies, found that of the companies who had conducted such assessments, 77% identified actual or potential human rights impacts, and 72% identified adverse impacts linked to the activities of their third party relationships.
By contrast, only 19% of those companies who did not conduct express human rights due diligence and instead used other mechanisms, identified potential or adverse impacts, and only 29% identified adverse impacts linked to the activities of their third party relationships.
Robin Brooks, partner at Norton Rose Fulbright, explained that human rights considerations go beyond just the immediate organisation.
“Human rights impacts of businesses include impacts occurring in their value and supply chains,” he said. “Companies are realising that they may be responsible for activities of their business partners and third-party suppliers. Unless a company undertakes a specific human rights due diligence exercise, it is unlikely to identify the kinds of impacts linked to such third parties for which it may be responsible.”
The two main incentives for undertaking human rights due diligence, selected by two-thirds (67%) of respondents, were found to be avoidance of legal risk and reputation. Compliance with regulatory reporting requirements, and compliance with other relevant and local laws, were chosen by 60%.
Brooks warned that there are consequences for ignoring the issue. “There is an emerging body of legal claims in a number of different jurisdictions against companies for human rights abuses in their supply chains and we expect this to continue,” he said. “Businesses must also be mindful of any gap between public statements they make about their approach to human rights and reality.”
The Modern Slavery Act 2015, introduced last October, requires companies with an annual turnover of £36 million or more to produce a yearly statement outlining steps they have taken to address the risk of modern slavery in their supply chains and within their business.
