Despite Contemporary Challenges, Adopting a Human Rights Lens to Risk Analysis Has Never Been More Critical 

The 13th UN Forum on Business and Human Rights has concluded, successfully meeting our expectations with a blend of intensity and excitement as we reconnected with familiar colleagues and forged new relationships. That said, I believe many will agree that the long waits for badge activation and coffee were less favorable aspects of the experience.

The recommendations presented at the conference were insightful, but largely aligned with existing ideas and practices. Almost all of the takeaways from the sessions I attended highlighted the importance of adopting a ‘right mix’ approach to effectively implementing the UN Guiding Principles on Business and Human Rights. This approach integrates national, international, voluntary and mandatory measures to address various challenges. Discussions emphasized the need for tailored strategies in key areas such as state action, technology, climate change and human rights due diligence, promoting a comprehensive and collaborative framework to improve impact and access to remedy. Overview.

3 Key Findings

Many experts have stressed that it is essential to ensure that initiatives are not just a passing ‘trend’; they must be backed up by robust implementation to achieve a long-lasting impact. While pilots and tests are beneficial, the current climate demands urgent action, especially in the face of rapid and unregulated artificial intelligence, transnational digital attacks on human rights defenders in an unstable geopolitical landscape, and ongoing conflicts.

However, the Corporate Sustainability Duty of Care Directive (CSDDD) was undoubtedly the star of the show, dominating discussions and capturing significant attention from participants.

The Corporate Sustainability Duty of Care (CSDD) Directive [see below for an overview of what this means for European companies] represents a significant turning point for business and regulatory frameworks, as it introduces crucial expectations around corporate responsibility and the protection of human rights in supply chains. The mixed results of this directive lie in its potential to reshape business practices by promoting greater transparency and accountability; however, it also poses challenges for transposition and implementation across diverse regulatory environments. At the heart of this discussion is the issue of administrative burden, following Ursula von der Leyen’s statement last week, suggesting that ‘the European Commission would propose omnibus legislation with the aim of “cutting red tape [and] reducing reporting burdens”.’ This implies that the EU should reopen and merge CSRD, CS3D and Taxonomy.

EU experts offered words of comfort, but their tone was marked by hesitation, especially after the recent postponement of the EU Deforestation Regulation (EUDR). Critics raised three major concerns about this consolidation.

But, despite contemporary challenges such as climate crises, social unrest and war, the issues surrounding due diligence regulation, business and human rights have never been more critical.

1. A human rights perspective means we can better anticipate crises rather than suffer them

Companies are operating in increasingly uncertain and volatile international environments – climatic incidents, social crises, wars, etc. Effective implementation of the duty of care anchors the issues, the risks and the types of concrete solutions that can be applied at the operational level of each company. This improves understanding of the risks and the solutions that need to be implemented. At the same time, delays can lead to missed opportunities, regulatory non-compliance and increased risks. Rapid decision-making ensures that resources are allocated efficiently, stakeholder expectations are met and organisational performance is enhanced.

2. Operating in an increasingly tight labor market and using the methodologies of due diligence in this respect

In an increasingly tight labor market, where reliance on vulnerable or migrant workers is becoming commonplace, it is essential to address issues such as job insecurity, inclusion and training. Human rights due diligence provides a framework for systematically addressing these issues, contributing to programs that promote responsible management of human factors.

3. Identifying long-term sustainability levers that are resilient regardless of political uncertainty

Promoting human rights as a strategic lever is essential for companies due to several interconnected factors. It enables effective risk mitigation by identifying and addressing potential social and environmental issues before they escalate, protecting companies from legal liability and reputational damage. A commitment to human rights fosters trust among stakeholders-employees, customers, investors and communities-improving loyalty and brand image. In addition, as human rights regulations continue to increase, aligning business practices with these standards ensures compliance and avoids sanctions. This focus also attracts socially responsible investment, as investors look for companies with sound environmental, social and governance practices. Furthermore, a commitment to human rights can differentiate a company in a competitive market, appealing to consumers who favor ethical brands. Ultimately, by integrating human rights into their strategic framework, companies can navigate geopolitical volatility more effectively and contribute to long-term sustainability and social responsibility, fostering a fairer and more equitable society.

Regulatory and methodological framework for risk and uncertainty management

In today’s fast-paced global environment, companies need to adopt a human rights perspective to manage risks such as climatic events, social crises and geopolitical conflicts. This approach not only helps in identifying and addressing risks at an operational level, but also prevents delays that can lead to missed opportunities and compliance issues. With the labor market increasingly dependent on vulnerable workers, it is crucial to focus on inclusion, training and job security. Companies that prioritize human rights can mitigate legal and reputational risks, build stakeholder trust, ensure regulatory compliance and attract socially responsible investment. Integrating human rights into business strategies helps to navigate political uncertainties and contributes to a fairer society.

Focus on CS3D

The CSDDD is a legislative proposal by the European Commission aimed at ensuring that companies operating within the EU address the social and environmental impacts of their operations. The directive seeks to integrate due diligence processes into companies’ core activities to identify, prevent, mitigate, and account for adverse human rights and environmental impacts. 

The objectives of CS3D

Who is Affected? 

The CSDDD will apply to large EU companies as well as non-EU companies that do significant business in the EU market. Specifically, it targets: 

• EU companies with more than 500 employees and net worldwide turnover of more than €150 million. 
• Certain high-impact sectors will have lower thresholds of 250 employees and €40 million in turnover. 

What are the Requirements? 

1. Conduct Regular Due Diligence Assessments	This involves identifying, preventing, and mitigating potential human rights and environmental issues throughout their supply chains.
2. Engage Stakeholders	Companies must engage with stakeholders to understand the impacts of their operations and seek their input in mitigating adverse effects.
3. Publicly Report on Due Diligence Activities	To ensure accountability, companies will need to publish regular reports detailing their due diligence processes and the results.
4. Remediation	When harm is identified, companies must take steps to provide remedies to affected communities or address environmental damage.

Implications for Businesses

The directive represents a significant shift towards mandatory sustainability practices for businesses. It integrates sustainability into the core business strategy and operational risk management. Companies will need to reconsider their supply chain relationships and engage in more comprehensive stakeholder engagement. 

What are the consequences in the event of poor or non-implementation of the requirements for companies?

The CSDDD requires member states to appoint one or more supervisory authorities responsible for overseeing adherence to the obligations outlined in the directive. These authorities will have the authority to enforce compliance with both due diligence and climate change-related requirements. 

In performing their duties, the supervisory authorities will be granted at least the following powers: 

• To mandate the cessation of any infringement 
• To require the avoidance of repeating the specific conduct 
• To ensure appropriate remediation 
• To levy penalties 
• To implement interim measures in situations where there is an imminent threat of significant and irreparable damage

Conclusions

The conclusion is paradoxical. Discussions at the 13th United Nations Forum on Business and Human Rights were tinged with pessimism due to the geopolitical context (increasing conflict zones around the world, a succession of worrying elections in Europe and the USA in particular) and various recent regulatory setbacks (EUDR). At the same time, economic decision-makers are faced with complex situations driven by numerous contradictory injunctions: regulatory compliance, market trends, access to resources and capital.

In response, the methodologies and expertise provided by the work and programs dealing with human rights offer a unique opportunity for companies to gain a better grasp of complexity, identify the dynamics that create uncertainty, and reduce the risks and imponderables involved.