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Human Rights is the New Business Risk

Reading Time 3 minute read


Corporate Social Responsibility Law Bulletin

Operating abroad, outsourcing services or relying on supplies from abroad but don’t have a robust human rights policy yet? Here is why you should start thinking about human rights as a real business risk.

In 2005, when John Ruggie, then the UN Secretary-General's Special Representative on Business & Human Rights, began his journey to encourage businesses worldwide to adopt sustainable and socially responsible policies, only a handful of corporations worldwide were known to have adopted human rights policies to mitigate against human rights abuses. With the implementation of, among others, the OECD Guidelines for Multinational Enterprises, the IFC Sustainability Framework, and the UN Guiding Principles on Business and Human Rights, human rights is becoming a real business issue.

If these so-called soft law principles are adopted on a large scale by global corporations operating abroad, they could become customary international law, or at the least industry standard, applicable by international and domestic courts and tribunals. Moreover, with the recent adoption of mandatory transparency legislation in many countries, enforcement of human rights principles in the private business sector is no longer a mere aspiration for human rights NGOs but rather a real risk for corporations.

Lawyers and corporations nevertheless too often focus on the hard law vs soft law debate when it comes to human rights. Because they are “voluntary” initiatives, human rights frameworks are given less attention in the core business strategy and have historically been confined to a marginal corporate social responsibility department.

This is changing.

A recent research conducted by Legal Business suggests that adopting a human rights policy no longer is a marginal practice: responses from 275 general counsels and senior counsels reveal that 46% of corporations now have a human rights policy in place.[1] The ratio is even higher when considering major corporations (over $10 billion), where the number is closer to 84%.[2]

Due to mandatory reporting laws and commercial contracts containing human rights clauses, human rights issues are making their way to legal departments.[3] Nearly half of the general counsel and senior counsel reported having encountered human rights clauses in commercial contracts.[4] Supply chain management is one of the sectors attracting more attention: 51% of the corporations, surveyed as part of the research, report having made changes to their supply chain management policies and procedures in response to human rights concerns[5].

Needless to say failing to respect human rights is no longer free of consequences for corporations and that human rights issues are getting more and more attention in the business sector. More than ever, corporations must develop and implement robust human rights policies and consider human rights issues in their risk management strategy – as both a reflection of good corporate citizenship and of sound risk mitigation strategy.

[1]       Legal Business, “The new risk front for GCs – nearly half of contracts have human rights clauses, LB research finds”, on line: Legal Business.

[2]       Ibid.

[3]       Ibid.

[4]       Ibid.

[5]       Ibid.

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