This article highlights how human rights have become an integral part of the discussion among policymakers and business leaders and how 2023 is a turning point.
There are many factors pushing companies to implement human rights policies and holding them accountable by making such commitments public. These developments will not be without lawsuits and financial and reputational consequences.
Here are five key priorities for 2023:
- Stay abreast of the changing regulatory framework. Policymakers around the world have shifted the regulatory framework from soft law to hard law, including Japan, Germany and Norway. At the same time, two major EU proposals, namely the Corporate Sustainability Reporting Directive (“CSRD”), which will come into effect in January 2023, and the Corporate Sustainability Due Diligence Directive (“CS3D”), which is still under discussion, are close to implementation . Under the CSRD and CS3D, companies and investors are expected to report their due diligence efforts in addition to other mandatory reporting requirements. Moreover, many EU countries are already integrating such initiatives at national level. CSRD is intended to ensure broad coverage of SMEs over time.
- Double down on tackling forced labor issues. Governments are taking a variety of measures to prevent and limit the risks of forced labor throughout the value chain: from raw materials to professional services that perform low-skilled services. Modern slavery laws passed in Britain and Australia and probably Canada too. The EU is currently working on a directive on forced labour. The EU Taxonomy calls on investors and asset managers to examine the primary adverse sustainability risks of their investments in support of the green transition, demonstrating genuine efforts and commitment to mitigating the risks generated by solar panels, electric vehicles and other green buildings and infrastructures. In addition to the continued active enforcement of the Uyghur Forced Labor Prevention Act. Governments are taking a comprehensive and holistic approach to prevent and discourage the use of forced labor – a trend that will continue in 2023. It is imperative to ensure that minerals, electronic waste and other related materials are not extracted at the expense of human costs and social impacts.
- Obligation to conduct mandatory human rights and environmental due diligence for specific sectors. As many companies embark on their ‘human rights journey’, companies and investors are expected to take positive action to identify and minimize potential human rights abuses in their supply and value chains. As such, policymakers are introducing regulations that introduce an obligation to conduct human rights and environmental due diligence to curb structural problems such as forced labor or other human rights violations and environmental damage. In response to continued calls for action, the US, followed by the EU, has resorted to trade controls and sanctions to combat the production and sale of products made by US/EU forced labor. Similarly, in the EU, all economic operators placing batteries on the EU market, with the exception of SMEs, will be required to develop and implement a due diligence policy in line with international standards to ensure address social and environmental risks associated with sourcing, processing and trade. of raw materials and secondary raw materials.
- Integrate human rights into the green transition. More and more leading companies and investors with strong climate commitments are discovering the importance of a just transition to meet the commitments. If we do not take into account a just and inclusive transition, there will be legal, financial and reputational consequences: disputes, resistance to change, discriminatory practices, conflicts.
- Effective testing and measuring. 2023 is the year of implementation, testing and measuring. We have gone beyond statements and commitments. Companies and investors are expected to prove their impact and improve real-world outcomes for people and the planet. Stakeholders are also expected to meet this expectation by pushing companies and investors to be accountable at this level and go beyond what is usually assessed and benchmarked today, mere commitments that give us a false impression of how sustainable products and services are. The same applies to those who advise them, namely lawyers and consultants. It’s time to invest in ‘on-the-ground’ solutions that engage ‘real-world workers’ and improve the lives of the most vulnerable segments of the workforce across all value chains.
Based in Paris, France, with offices in London and New York, Ksapa is a leading global platform that can help your business implement the lessons learned in this article. Ksapa works with many of the most influential investors and companies and operates with a network of more than 150 experts across Europe, North and Latin America, Africa and South East Asia. Contact us and let us know how we can help you.