Five on Friday – Five Recent Developments that We’ve Been Watching Closely - July 2018

by Foley Hoag LLP - Corporate Social Responsibility
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Foley Hoag LLP - Corporate Social Responsibility

It’s Friday and time for another overview of developments in the field of business and human rights that we’ve been monitoring.

This week’s post includes: developments with respect to the proposed Australian Modern Slavery Act; the dismissal of another climate change-based lawsuit; and an initial draft of the proposed Business and Human Rights Treaty.

  • On June 28, the proposed Modern Slavery Bill was introduced to the Australian Parliament.  If enacted, the Australian Modern Slavery Act would apply to companies based, or operating, in Australia, which have an annual consolidated revenue of more than $100 million. Companies would be required to report annually on the risks of modern slavery in connection with their operations, including their supply chains. Reports would need to be approved by the principal governing body for the corporate entity. Debate on the bill is expected to begin in August.
  • On July 16, the Government of Ecuador, as chair of the U.N. Open-Ended Intergovernmental Working Group tasked with working on the proposed Treaty on Business and Human Rights posted a “zero draft” to facilitate future discussions. The next meeting of the Working Group will be in October 2018. With respect to legal liability, the draft text states that “State Parties shall ensure through their domestic law that natural and legal persons may be held criminally, civil or administratively liable for violations of human rights undertaken in the context of business activities of transnational character.” With respect to the prevention of human rights impacts, the draft states that “State Parties shall ensure in their domestic legislation that all persons with business activities of transnational character within such State Parties’ territory or otherwise under their jurisdiction or control shall undertake due diligence obligations throughout such business activities, taking into consideration the potential impact on human rights resulting from the size, nature, context of and risk associated with the business activities.”
  • On July 18, Shift, an non-profit organization dedicated to business and human rights, released a new publication, The Human Rights Opportunity: 15 Real-Life Cases of How Business is Contributing to the Sustainable Development Goals by Putting People First. The report was prepared in collaboration with the World Business Council for Sustainable Development (“WBCSD”). Topics addressed in the case studies include living wages, forced labor, gender equality, and land rights. In the report, Shift notes that individual companies may be tempted to report on efforts to achieve the Sustainable Development Goals (“SDGs”) in a manner that repackages existing activities without a true focus on the impacts that that any one company actually impacts people. Shift calls for an approach to the SDGs that is aligned with the expectations set forth in the U.N. Guiding Principles on Business and Human Rights. Companies should assess the most severe risks that their operations may have on people and the planet as part of determining which SDGs will be a focus of their efforts.
  • On July 19, the District Court for the Southern District of New York dismissed a lawsuit filed by the City of New York against five multinational oil companies, BP, Chevron, Conoco-Phillips, ExxonMobil, and Royal Dutch Shell.  A similar lawsuit was dismissed in California in June. The New York lawsuit sought to hold the companies accountable for present and future damages resulting from the impacts of climate change. In dismissing the case, the Court held that the City of New York’s state law claims were displaced both by federal common law and the Clean Air Act. The Court also held that the City’s claims interfere with separation of powers and foreign policy, noting that “the immense and complicated problem of global warming requires a comprehensive solution that weights the global benefits of fossil fuel use with the gravity of the impending harms.”
  • On July 24, the District Court for the District of North Dakota dismissed a lawsuit filed by Energy Transfer Partners, the primary developer of the Dakota Access Pipeline (“DAPL”), against BankTrack, a non-profit foundation based in The Netherlands. Energy Transfer Partner alleged the BankTrack had engaged in criminal racketeering through its advocacy efforts in connection with the financial institutions involved in funding the pipeline. The Court observed that “[a]lthough unassociated individuals and groups may have used arson and violence to physically prevent the construction of DAPL, BankTrack’s letter-writing is not reasonably or plausibly related to these activities to show association-in-fact with that source of conduct. None of BankTrack’s actions promoted, assisted, or condoned violent criminal conduct.” The Court ultimately held that Energy Transfer Partners had failed to state a claim under the Racketeer Influenced and Corruption Organizations Act (“RICO”).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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