I welcome you to this episode of the ESG Report. Sarah Dadush and David Snyder are both law professors with backgrounds in human rights. In this conversation, they join me in talking about the role of contracting in ESG.
Robust Supplier Codes of Conduct
What steps are being taken to build more robust contract clauses? David explains that the process See more +
I welcome you to this episode of the ESG Report. Sarah Dadush and David Snyder are both law professors with backgrounds in human rights. In this conversation, they join me in talking about the role of contracting in ESG.
Robust Supplier Codes of Conduct
What steps are being taken to build more robust contract clauses? David explains that the process is still fairly in its initial state. Business lawyers have only recently adopted policies against forced labor and child labor. Lawyers advise their clients to sign on to these policies, which is only one of the first few steps. Getting them implemented, however, is the true challenge. “The policies sit there in the corporate minutes, and unless they’re in the contracts, they’re not going to be implemented,” David says. These policies need to be in operation. “To implement and operationalize them, they need to be in the contracts.”
Human Rights, Model Clauses & ESG
“Part of the history of ESG is focusing on equipping consumers to make choices that are more and more aligned with their values,” Sarah tells me. This has expanded to include not only consumers but investors, thus bringing in more money and leverage to influence corporate behavior. The S in ESG comes into play with model clauses because it looks at human and employee rights. “Our focus within the model contract laws is on worker protection,” Sarah remarks. “We often think of child labor, trafficked labor, forced labor in various shades. We are specifically including or addressing worker conditions in the model contract laws.”
Model Clauses & Regulatory Obligations
I would like to know if model clauses can help companies meet regulatory requirements. With model contract clauses in place, David and Sarah agreed that human rights due diligence would be more effective. “They show the regulators that you are serious about doing something about this,” David remarks. However, model contracts need to be put into place. All you have is paper if they are signed but not acted upon. “Once you’ve agreed to this human rights due diligence or a due diligence regime, and then we also have clauses about sharing information and generating documentation, then you are going to be able to document what you have done,” David adds.
Sharing information will result in communication and documentation of what’s happening at the company. See less -
