Human rights are increasingly the subject of a range of requirements under both “hard” law — such as the mandatory obligations promulgated by governments regarding conflict mineral restrictions, forced labor prohibitions, and supply chain management under, e.g., Dodd-Frank in the U.S., the Modern Slavery Act in the UK, and the Corporate Duty of Vigilance Law in France — and “soft” law, which covers more jussive norms established by industry, civil society, etc. (e.g. the United Nations Guiding Principles on Business and Human Rights or the private corporate governance of organizations such as the International Council on Mining and Minerals). New legal standards continuously develop, such as with current calls for the recognition of environmental rights within the field of human rights. Additionally, “soft” laws can harden into government mandated requirements over time, such as with the current development of mandatory environmental and human rights due diligence in the European Union. But these soft and hard laws have not always converged across jurisdictions to produce a globally accepted understanding of obligations. This poses a unique challenge for multinational corporations (“MNCs”), which need to navigate requirements across multiple jurisdictions, including any tensions between jurisdictions of incorporation and jurisdictions of operation.
However, MNCs can stand a much better chance of navigating this thicket of obligations using the following:
- Understand the standards applicable to the company. This, of course, includes any legal or regulatory mandates of the jurisdictions in which a company is located or operates. However, it also includes understanding the state of the industry and related industries in the company’s value chain. For example, if manufacturers establish certain requirements for the critical minerals they use, then those requirements serve as an effective norm for companies producing those minerals and seeking to do business with those manufacturers.
- Have clear and thorough governance and risk management structures in place. As the adage goes, “an ounce of prevention is worth a pound of cure.” Human rights, like sustainability generally, should be embedded in the processes and procedures adopted for the management of the company, including having clear policies that help to define (1) what the company’s procedures are for identifying and managing human rights risks, (2) how those procedures are to be implemented, and (3) who is responsible for implementing them. This often requires both a top-down and a frontline approach. Even if governance and risk management programs are in place for these risks, if the programs are implemented hastily, there may be gaps and ambiguities in the practical implementation process. This makes both advanced planning and ongoing testing of the risk management programs fundamental.
- Engage specialist counsel early and often. Specialized counsel can be invaluable in helping to address compliance concerns. This counsel can include technical consultants who help to establish or monitor company procedures and performance. However, it should also include legal counsel to identify the applicable hard law and softer laws that may impact the company’s operations and to help vet programs for clarity and alignment with such standards. Because these standards often change, including upon entry of the company into new jurisdictions (or, in certain cases, sub-regions thereof), this engagement should be recurrent in order to (A) assess the continued sufficiency of the company’s programs and policies and (B) implement any modifications required.
These issues will be explored in greater detail this International Human Rights Day on a panel I am moderating on how MNCs navigate varied human rights regimes. See the link here to register.