Human rights have become an integral part of the discussion among policymakers and business leaders and 2023 is a turning point. Ksapa CEO Farid Baddache and Senior Consultant Krystel Bassil look into the many factors driving businesses towards implementing human rights policies and that hold them accountable by making such commitments public.
Human Rights in 2023: Five key priorities for businesses by Farid Baddache and Krystel Bassil. With kind acknowledgements to Ksapa. First published on the Ksapa blog under the title Framing Business Priorities for Human Rights in 2023.
Keep up with the shifting regulatory framework
Across the globe, policymakers have shifted the regulatory framework from soft law to hard law, including Japan, Germany and Norway. In tandem, two key EU proposals, namely the Corporate Sustainability Reporting Directive (“CSRD”), coming into force in January 2023, and the Corporate Sustainability Due Diligence Directive (“CS3D”), still being discussed, 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. Additionally, many EU countries are already integrating such initiatives on national levels. CSRD is designed to ensure broad coverage of SMEs over time.
Double down addressing Forced Labour issues
Governments are taking a variety of steps to prevent and mitigate risks of forced labour along the value chain – from raw material to professional services executing low skilled services. Modern slavery acts have been adopted in the UK and Australia and are likely coming in Canada. In addition, the EU is currently drafting a Forced Labour directive.
EU taxonomy is calling upon investors and asset managers to explore the Primary Adverse Sustainability Risks of their investments in support of Green Transition, where they need to demonstrate genuine effort and engagement mitigating risks generated by solar panels, electric vehicles and other green buildings and infrastructures. In addition, there will be continued active enforcement of the U.S. Uyghur Forced Labor Prevention Act.
Governments are taking comprehensive and holistic approaches to prevent and disincentivize the use of forced labour – a trend that will continue in 2023. It is imperative to ensure that minerals, e-waste and other related materials are not sourced at the expense of human costs and social impacts.
An obligation to conduct mandatory human rights and environmental due diligence for specific sectors
While many businesses are embarking on their “human rights journey,” businesses and investors are expected to take positive measures to identify and minimise potential human rights violations in their supply and value chains. As such, policymakers are introducing regulations introducing an obligation to conduct human rights and environmental due diligence to curb structural issues like forced labour or other human rights abuses and environmental damages.
In response to ongoing calls to action, the US, followed by the EU, had recourse to trade controls and sanctions to combat the production and sale of products made by forced labour in the US/EU. Similarly, the EU all economic operators placing batteries on the EU market, except for SMEs, will be required to develop and implement a “due diligence policy” consistent with international standards to address the social and environmental risks linked to sourcing, processing and trading, of raw materials and secondary raw materials.
Integrating human rights in the green transition
Increasingly, leading businesses and investors with strong climate commitments are discovering the importance of just transition to make the commitments real. Failing to account for a just and inclusive transition will face legal, financial and reputational consequences stemming from disputes, resistance to change, discriminatory practices, and conflicts.
Effectively test and measure impact
2023 is the year of implementation, testing and measuring. We have moved beyond statements and commitments. Companies and investors are expected to prove impact and improve real-life outcomes for people and the planet. Moreover, stakeholders are also expected to meet this expectation by holding companies and investors to account at this level and go beyond what is mostly rated and benchmarked today – commitments that give us a false impression of how sustainable products and services are.
The same goes for those advising them, namely lawyers and consultants. It is time to invest in “on the ground” solutions engaging “real world workers” and improving the lives of the most vulnerable segments of the workforce across value chains.
Useful links:
- Link up with Farid Baddache and Krystel Bassil on LinkedIn
- Discover Ksapa, Sustainability and ESG consulting
- Browse their online library of briefing papers and reports
- Read a related article: How companies deal with human rights violations.
Learn more about the Council on Business & Society
The Council on Business & Society (The CoBS), visionary in its conception and purpose, was created in 2011, and is dedicated to promoting responsible leadership and tackling issues at the crossroads of business and society including sustainability, diversity, ethical leadership and the place responsible business has to play in contributing to the common good.
Member schools are all “Triple Crown” accredited AACSB, EQUIS and AMBA and leaders in their respective countries.
- ESSEC Business School, France-Singapore-Morocco
- FGV-EAESP, Brazil
- School of Management Fudan University, China
- IE Business School, Spain
- Keio Business School, Japan
- Stellenbosch Business School, South Africa
- Trinity Business School, Trinity College Dublin, Ireland
- Warwick Business School, United Kingdom.
