Five on Friday – Five Recent Developments that We’ve Been Watching Closely: September 2016 #2

by 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: the GAO’s latest report on the conflict minerals rule; a civil society report on the SEC’s efforts to modernize financial disclosure requirements; and an independent impact assessment of the Better Work Programme.

  • At the end of August, the U.S. Government Accountability Office released its second annual report on the conflict minerals rule. The report, SEC Conflict Minerals Rule – Companies Face Continuing Challenges in Determining Whether Their Conflict Minerals Benefit Armed Groupsnoted that nearly 70% of the companies that filed Conflict Minerals Reports in 2015 could not confirm the sources of conflict minerals in their products and that nearly 97% of those companies could not determine whether their sourcing of conflict minerals benefited armed groups in the Democratic Republic of Congo and adjoining countries. The report highlights the significant challenges facing companies seeking to gather information regarding multi-tiered and complex supply chains. The report also noted that the U.S. Department of Commerce has not yet met its obligation to submit a report to Congress that includes its assessment of the accuracy of the independent audits of corporate due diligence efforts and has not yet developed a plan to do so. The GAO specifically noted that Commerce “did not yet have the internal knowledge or skills to conduct reviews of the [audits] or to establish best practices.”
  • On September 19, more than 350 attendees, including many business leaders, gathered in New York for the annual U.N. Private Sector Forum. One year after the U.N. General Assembly’s adoption of the seventeen Sustainable Development Goals (“SDGs”), part of the 2030 Agenda for Sustainable Development, the event sought to encourage further private sector engagement in achieving the SDGs. In connection with the Private Sector Forum, the U.N. Global Compact launched a new “Partnership Passport,” a resource intended to facilitate corporate efforts to find opportunities to partner with the United Nations, individual governments, and civil society in pursuing sustainable development initiatives. Notably, in October 2016, the Global Commission on Business and Sustainable Development is expected to release a paper, authored by Shift, that clarifies the relationship between the SDGs and the U.N. Guiding Principles on Business and Human Rights.
  • On September 20, a coalition of organizations, including the International Corporate Accountability Roundtable, the AFL-CIO, and the Center for American Progress released a joint report reviewing the comments that were submitted to the Securities and Exchange Commission (“SEC”) in response to a recent concept release soliciting views on efforts to modernize financial disclosure requirements. The report, Towards a Sustainable Economy, argues that “[i]nvestors and the public overwhelmingly seek more and better disclosures on a range of topics so that they can better support the long-term sustainability of our economy.” In calling for the SEC to ensure that its disclosure reform efforts result in the production of more information on environmental, social, and governance topics, the authors note that, of the 26,000 comments received by the SEC, 10,113 referenced environmental issues, including climate change, and 9,994 referenced political spending.
  • On September 26, the Better Work Programme, a collaboration between the International Labour Organization and the International Finance Corporation, released an independent impact assessment of its work to date. Better Work aims to improve working conditions and promote competitiveness in global apparel supply chains and is currently working with more than 1,300 factories in countries around the world. Researchers from Tufts University conducted the assessment, during which the assessors reviewed nearly 15,000 survey responses from factory workers and 2,000 responses from factory managers in Haiti, Indonesia, Jordan, Nicaragua, and Vietnam. Key highlights from the report include the finding that participation in the program has increased both productivity and profitability for factories, with supervisory skills training increasing productivity by 22%. The report also found that participation has had a significant and positive impact on working conditions, with Better Work’s “regular monitoring of compliance with ILO standards and national legislation” playing a “pivotal role.”
  • On September 27, the Eleventh Circuit Court of Appeals issued an opinion in Melo et al. v. Drummond Companya case involving allegations that the company aided and abetted human rights abuses in Colombia through its support for the AUC, a paramilitary group. The district court had previously dismissed plaintiffs’ Alien Tort Statute (“ATS”) claims after finding that plaintiffs had not overcome the presumption against extraterritoriality. The appellate court found that the district court had erred in dismissing the claims with prejudice and remanded with instructions that the claims should be dismissed without prejudice, which would give plaintiffs an opportunity to refile. The appellate court remanded claims brought against two corporate executives  pursuant to the Torture Victims Protection Act with instructions that plaintiffs should either be able to proceed on those claims or the district court should dismiss “with an articulation of the basis and reasoning for the dismissal.” Finally, the court similarly remanded plaintiffs’ wrongful death claims with an instruction that the claims should either proceed or be dismissed with further articulation for the basis of the dismissal.

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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