Legislating French values for the rest

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This blog post by Debadatta Bose is part of a Blog Series on Colonization in, of and through Business and Human Rights published on Rights as Usual. Debadatta Bose is a Doctoral candidate at the Amsterdam Law School, University of Amsterdam (Netherlands).

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As the foremost mandatory human rights due diligence (mHRDD) law, the French law on the duty of vigilance (French law) has wide acclaim as having ushered in a new era in business and human rights regulation. Owing to the French law, the possibility of holding corporations accountable for transnational human rights harms did not seem far off. Since 2017, civil society organisations have worked tirelessly to ensure that the objectives of the law are fulfilled. The objective of the law is, of course, corporate accountability for human rights violations … or is it?

Drawing from my recent article which analysed the legislative debates preceding the enactment of the law, this blog post reiterates the argument that a neo-colonial flavour is inherently attached to the law. This is due to three characteristics of the French law: first, as a self-described ‘law for the whole world’ enacted by France; second, as a national law of a Global North country (on the use of the terms Global North and Global South, see this post which is a reply to this post); and third, as a law of France and the Global North as opposed to a business and human rights treaty. Let us examine these characteristics one by one.

A French law for the whole world

One of the proponents of the French law said on the floor of the National Assembly that the law ‘is in the tradition of the French Revolution and the Enlightenment by stating the law in a new world, for the whole world.’ This is because France, in itself, represents ‘a foundation of values.’ To advance the French law, the left-wing bloc primarily focused on the narrative of the law as an effectuation of universal French values. In contrast, the right-wing bloc objected that the French law, which then was going to be the only mHRDD law, would impose a disproportionate burden on French companies resulting in a loss of their competitive advantage. The bargain seemed to be between, on one hand, the assertion of French values as exportable to the whole world and, on the other hand, a separation of the economic considerations of French companies from their human rights considerations: what an iconic illustration of a Faustian bargain.

In the latter case of nationalism, the argument was that the onus is on the capital-importing state where supply chains are located, to strengthen its regime of legal protection of human and labour rights, which France may perhaps take a role in setting up. This argument was put forward while ignoring the fact that Global South countries have been vocal since half a century ago about being unable to counter the power of transnational corporations through national measures. Further, the question posed on the floor was that when companies are already progressing in terms of transparency, labelling, etc. why were they being treated as ‘permanent culprits’?

In the former case of universalism, it was argued that it is only natural that France legislate for the whole world since French legislators cannot be blind to the suffering of people elsewhere, especially given France’s important role in the international economic order when international organisations have failed to act on the issue. Further, it was also stated on the floor of the Assembly, ‘Let us not neglect the fact that it is our ideals that ensure the “France brand” keeps all its influence. (…) [W]e can therefore show that our commitments to human rights and respect for the environment are sincere and truly universal.’

In that same session, legislators explained that they ‘cannot continue to ignore certain practices on the pretext that they take place abroad, in countries that do not respect the constraints and standards that apply to our companies on French territory.’ Perhaps, most interestingly, on the day of the adoption of the law by the National Assembly, it was also stated by a major proponent of the law that ‘[W]e are building a more equitable world (…). We humbly say to these people, who live hard in these [Global South] countries, that we will take care of them, and we ask their leaders to do the same.’ Perhaps it was about saving Global South people from Global South states after all.

How is the ‘whole world’ structured anyway?

A large, if not exclusive, focus of the French law was the protection of people in the Global South whose presence in a presumably ‘despotic state’ hinders their enjoyment of human rights, which France must now take it upon itself to guarantee, i.e., to ‘[protect] the weak in new forms.’ These mHRDD legislation by the Global North for the Global South have been aptly called to be of a ‘vigilante justice’ character by one of the seminal works on this topic. Given the historical decentring of Global South people in international law and the international economic order, the assertion of the Global North to set standards governing global corporate conduct, and Global South state conduct, through national laws is problematic to say the least.

This is not exclusive to France, however. For example, in the report introducing the recently adopted European Corporate Sustainability Reporting Directive, the Explanatory Memorandum states that in case these standards are set internationally or from other nations, ‘then sustainable development would be defined by a non-European vision, making it more difficult for European values to be effectively taken into account. (…) What is at stake is European independence and sovereignty (…).’ Yet somehow this is not a problem the other way round.

In this narrative, largely visible throughout the entirety of the legislative discussion, people from the Global South are the victims and France is conceptualised as the generous saviour. The world is therefore structured around the generosity of France and the haplessness of the Rana Plaza victims, who are highlighted in legislative discussions extensively. In this world, how much the experience of Rana Plaza victims counts or how much agency they have within the French legal system is a fair question to ask. The lived experience, agency, and voices of those who are the purported beneficiaries of the laws are decentred now to make way for expert opinions on legal issues that involve interpretations of the laws that would, e.g., in case of the French law, be embedded in the French legal system. What is also at stake is knowledge production since European national laws privilege European academic and professional discourse to advance interpretations and working of the laws, which is particularly unfortunate in laws that seek to regulate global conduct aimed at protection of Global South peoples.

So, why national laws after all?

Even in this context, why is a national law celebrated as a grand avenue of justice, and perhaps even rightly so? The answer is in the historical context of the struggle for regulation of transnational corporate activity with the Global North and Global South hardly having convergent views on either the form or the substance of regulation. Generalising to some extent, the Global North pushed for national regulation in capital-importing states and the Global South pushed for international regulation of the negative impacts of transnational corporate activity.

One may observe from the resolution establishing the treaty process that a clear North-South divide was visible where Global North countries voted against the establishment of the process, while Global South countries voted for. The USA, for example, was ‘extremely disappointed’ that the resolution was tabled, calling it an ‘ill-considered treaty drafting exercise.’ France, explained its negative vote by its preference for national law on the topic. The limited success of international law initiatives has made the celebration of the French law inevitable, partly because the Global North, including France, made (a French) national law from the Global North inevitable. This is because when national laws are the avenue it is possible to govern Fijian corporate conduct through French law but not the other way round. National laws for the whole world are only possible in the current legal architecture when legislated by the Global North. Such laws are not participatory in their legislative deliberation as regards Global South people and perhaps only partially empowering for Global South people (but adopted in a paternalistic manner). They enable Global North courts to subsume justice decisions in faraway territories as part of their ordinary functioning.

So what?

The question, ‘so what?’ as long as either human rights are protected ex-ante or remedy is provided ex-post whether in France or elsewhere is a fair one. However, it privileges pragmatism over asking why we ended up here in the first place. While the French law may have good effects, its contribution to Global South capacity building has to be further explored. This position is not one of no law from the Global North — but that the laws come in context of active erosion of economic power and capacity to respect human rights in the Global South have to be borne in mind; that is the problem to be solved, not that of lack of jurisdiction in French courts. At best, the French law is an ad hoc instrument towards that end, and at worst, a neo-colonial instrument.

European Corporations in Brazilian Regions Inhabited by Indigenous Communities: Colonial Legacies and Potential Room for Change

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This blog post by Luiza Pigozzo Rocha is part of a Blog Series on Colonization in, of and through Business and Human Rights published on Rights as Usual. Luiza Pigozzo Rocha is a research associate of the NOVA Knowledge Centre for Business, Human Rights and the Environment. She is currently on the Themis exchange programme at the University of St. Gallen, and enrolled on the 2nd year of the Nova School of Law Master’s in International and European Law.

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In this post I analyze the current efforts to include the protection of indigenous peoples’ rights in the EU Directive on Corporate Sustainability Due Diligence (hereafter the Directive) currently under negotiation. I focus on a practical example to illustrate the challenges of effectively protecting indigenous’ rights.

I first present the violent practices suffered by indigenous peoples during Brazil’s colonial period, and how similar patterns of indigenous’ rights violations are perpetuated by informal European powers nowadays. In light of this example, I then assess the approach taken by the European Commission, the Council of the European Union, and the European Parliament on the Draft Directive. Overall, I aim to stress the need for a more encompassing definition of business’ obligations in respect to indigenous peoples in the final Draft.

Indigenous peoples in Brazil

Brazilian lands were inhabited by indigenous peoples for several centuries before a permanent Portuguese settlement was stablished in 1500. Brazil’s colonisation was fundamentally driven by the dispossession of the local inhabitants’ homeland, and the exploitation of their bodies and labour through enslavement, religious persecution and sexual exploitation. Genocidal policies were implemented to repress insubordination and prevent potential reactions against the settlers. In short, Brazil’s history is marked with brutality, violence, and dominance over indigenous peoples.

After more than 300 years of struggle, the independency act of 1822 recognised Brazil’s sovereignty and formally ended any kind of foreign domination over its politics, peoples, and lands. Nonetheless, Brazil’s independency act was only the beginning of an ongoing process, as informal imperial powers continued to interfere and project dominance on the same lands and over the same people to fulfil neo-colonial political, cultural, and economic objectives.

Nowadays, capital accumulation continues to be fuelled by the violent dispossession of postcolonial subjects. Large-scale resources extraction, unsustainable development strategies, and irresponsible modes of production are often concretized through unjust processes of land appropriation, transgression of local and indigenous communities’ rights, and ethnic-racial hierarchization of populations.

One recent example of this reality is the Yanomami crisis that came to light in the beginning of 2023. The deplorable state of health and malnutrition of the Yanomami indigenous community was brought to light in areas of Brazil where economic projects are carried out, specifically in illegal mining areas. This fueled existing discussions of a never-ending colonial cycle of domination, subjugation and other forms of violence against indigenous peoples in Brazil. This systemic violence is devised and carried out under the auspices of corporate powers today.

 Colonial legacies

European corporations are very much involved in this cycle through their direct or indirect business activities. For example, in the meat sector, companies such as Carrefour, Aldi Süd, Rewe, and Tesco had their supply chain activities linked to indigenous peoples’ rights violations. Many of their imports come from indigenous lands where violation of labour laws, violent conflicts with landowners, and death threats and murders are a common reality.

Another example is the soybean trade and financing area. The Netherlands, Spain, Germany and France were identified as the home countries of corporations and financial institutions supporting soy exports from the Amazon and Cerrado regions in which unprecedented rates of deforestation and over-exploitation of indigenous lands were attributed to the soy industry. This pattern of violence against Indigenous peoples in Brazil exists in other sectors such as the sugar, timber, leather, cocoa, dairy and oil extractive sectors.

For many years the lack of corporate accountability for human rights abuses was not addressed in a way that balanced the asymmetries in power-relations between businesses and the people affected by their activities. However, in the last decade, critical discussions around this topic have attracted greater attention. Meaningful progress was made after the launch of the United Nations Guiding Principles on Business and Human Rights (2011), creating an optimistic ground for change in the coming years.

Most recently, the core ideas brought in the Guiding Principles were the basis for the development of national laws such the UK Modern Slavery Act (2015), the French Corporate Duty of Vigilance Law (2017), the Dutch Child Labour Due Diligence Law (2019), the Australian Modern Slavery Act (2019), the Norwegian Transparency Act (2022), the US Uyghur Forced Labor Prevention Act, (2022) and the German Supply Chain Due Diligence Act (2023). In a regional context, the protection of human rights from corporate activity impacts led the European Commission to propose a Directive on Corporate Sustainability Due Diligence, which is currently in the adoption process.

All those initiatives indicate significant advancement formalizing human rights protection in the context of global business operations. Notwithstanding these positive developments, the recent laws are insufficient when it comes to the protection of Indigenous peoples’ rights. As they stand, these legal frameworks cannot end the patterns of rights violations and stop the reproduction of colonial legacies, as discussed below.

 The Corporate Sustainability Due Diligence Draft Directive

In 2022, the European Commission proposed the Draft Directive on Corporate Sustainability Due Diligence aiming to make human rights due diligence mandatory for large companies in EU Member states. The duty to perform human rights due diligence includes ‘identifying, bringing to an end, preventing, mitigating and accounting for negative human rights, environmental and climate impacts in the company’s own operations, their subsidiaries and their value chains .’

During the process of adoption of the Directive, the European Commission, the Council of the European Union, and the European Parliament differently approached the notion of Indigenous peoples’ rights protection when performing human rights due diligence. As such, these three institutions are still grappling for a common ground.

The European Commission’s proposal of February 2022 made no reference at all to Indigenous peoples’ rights and human rights defenders. In November of the same year, the Council of the European Union presented amendments for the Directive and article 26(a) was introduced calling upon companies to consult affected stakeholders throughout the process of carrying out due diligence, indicating that affected individuals could possibly mean Indigenous peoples. This article did not specify any duties in relation to the consultation of Indigenous groups or environmental defenders, nor clarified how to perform due diligence when those communities are affected by business activities. At best, it fell back on mere recommendations to companies.

After months of dialogue, the European Parliament presented the latest amendments adopted on June 1, 2023, with greater progress on indigenous peoples’ rights. This updated document introduced article 8(d) which clarifies what carrying out meaningful engagement with affected stakeholders mean. But the text abandoned suggestions for a more incessive approach that would have strengthened due diligence practices. In addition, the same article mentioned the necessity to fully respect the United Nations Declaration on the Rights of Indigenous Peoples when engaging with stakeholders; and in the amendment of article 3, point n(a), indigenous peoples were included in the list of vulnerable stakeholders.

The Parliament also proposed an amendment to points 19 and 20 of the Directive’s subheading prohibiting environmental harms that affect the rights of Indigenous peoples to self-determination and their right to give, modify, withhold or withdraw their free, prior and informed consent to interventions, decisions, and activities that may affect them and their lands, territories and resources which they have traditionally owned.

Until now, only the European Parliament presented amendments that can bring meaning to the Directive in the sense of changing the colonial cycle of indigenous peoples’ rights abuses. By elucidating what a meaningful stakeholder engagement entails in practice, these amendments increased Indigenous people’s likelihood to benefit from human rights’ due diligence processes. Including Indigenous peoples’ voices in the due diligence process, however, is not a simple activity. Linguistic, geographic, educational, religious and other barriers can make the process very complex and time consuming. But if these crucial points are overlooked and the three institutions do not reach an agreement, Indigenous peoples’ rights violations will continue.

Applying a postcolonial perspective to business and human rights laws is vital to the drafting of effective legislation. Revisiting Brazil’s past colonial practices in light of contemporary corporate activity can contribute to our comprehension of the myriad challenges faced by Indigenous communities and how to develop impactful instruments of change. Overall, the amendments adopted by the European Parliament represent an initial advance in relation to the protection of Indigenous peoples’ rights. Yet, the possibility of changing the colonial cycle of indigenous peoples’ rights violations and rebalancing unequal power relations will depend on the fate of the Directive, which rests on the outcome of a wishful coordination between the three institutions.

A Divided World? A Lesson from the Energy Charter Treaty

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This blog post was authored by Dr Dalia Palombo – Tilburg University. She was one of the organisers of the Symposium: Colonisation in, of and through Business and Human Rights, held in April 2023 in Tilburg (the Netherlands). The blog post is part of a Blog Series published on Rights as Usual.

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The morning after the Symposium: Colonisation in, of and through Business & Human Rights | Tilburg University, I tried to connect the dots between the thought-provoking presentations I heard the day before. From the need to decolonize investment or tax law to the imperialist danger entailed in mandatory human rights due diligence laws, the image of a world divided in two, the West and the Rest, started to emerge.

In extreme synthesis, countries from the Global North often argue that the corporate accountability gap depends on the inability of developing states to regulate corporate conduct in their territories (with a focus on the lack of rule of law and corrupted institutions). Instead, several Global South countries, and especially the least developed countries, argue that the bulk of the business and human rights problems originate from an exorbitant power (often resulting from colonial legacies) concentrated in a few multinational enterprises, furthering the interests of the West at the expense of the Rest. This division inevitably affects the solutions proposed to address business and human rights problems: better and more effective implementation of existing rules versus reconceptualizing and reframing the core structures of the global economy. For a clear picture of the dichotomy, one could check the declarations made, for example, by Cuba (in favour of a treaty establishing internationally legally binding obligations on transnational enterprises) and the United States (arguing that the business and human rights (BHR) treaty initiative shall not to be pursued in its current form) at the Human Rights Council Seventh Session of the Intergovernmental Working Group on Transnational Corporations and other Business Enterprises with Respect to Human Rights.

Unfortunately, the division between the West and the Rest does not only touch the BHR realm. This summer, the UN Secretary General Antonio Guterres warned at the BRICS Summit about the dangers entailed in an increasingly divided world. Listening to his powerful words, the North/South divide in BHR seems nothing other than the expression of a deeper dichotomy that is emerging in every field and risks becoming the defining fracture of the XXI century.

In response to such a dark picture of division ahead of us, I wonder what could make us embrace a different world conception. In other words, what should happen for the West and the Rest to better understand each other’s discourses to avoid living in two parallel worlds that rarely meet? Maybe it is necessary for each camp to be in the other’s shoes.

An excellent example demonstrating how the West can change its perspective when put in the Global South’s shoes is the rise and fall of the Energy Charter Treaty (the “Charter”), which indeed was discussed during the Symposium: Colonisation in, of and through Business & Human Rights | Tilburg University. The Charter is a trade agreement signed by all European Union states as well as extra-European countries, such as several post-Soviet and Middle Eastern countries. It includes Investment-State Dispute Settlement (ISDS), a mechanism enabling investors to sue states for failing to provide fair and equitable treatment or for property expropriation. ISDS is highly criticised by several scholars and NGOs for de facto preventing (often developing) countries from enforcing human rights and environmental standards that could limit corporate profit.

In 2009, Russia withdrew from the Charter, which it had signed and agreed to provisionally apply until ratification.

The withdrawal was met with sharp criticism by the other European states, given the centrality of Russia in providing energy to Europe. The European Union interpreted the withdrawal, to a large extent, as an answer to the filing of the Yukos case, that was later decided in 2014. Based on the Charter, an arbitral tribunal ordered Russia to pay the investors in the energy company Yukos over 50 billion euros in damages. In response to the Russian exit, European countries have put an effort to promote the Energy Charter outside of Europe, particularly in African countries that also provide energy to Europe. This has resulted in the adoption of the International Energy Charter, a non-binding political declaration aimed at strengthening cooperation among the signatory states.

However, other commentators interpreted Russia’s exit as part of a bigger movement initiated by developing countries to leave their investment treaties or eliminate ISDS from their trade agreements. Indeed, in those same years, Ecuador, South Africa, Indonesia and Bolivia terminated their investment treaties. Other countries, such as Morocco, Nigeria, and The Gambia adopted innovative investment treaties. For instance, the Brazilian BIT model does not include ISDS, while the Indian BIT model subjects the possibility for investors to file a request for arbitration to the exhaustion of domestic remedies.

The Charter could be considered at the very centre of the ISDS debate, facing two opposite camps: Europe in favour of ISDS and an increasing number of developing countries opposing it.

But climate change changed everything.

In 2015, after a series of environmental protests, Italy passed a law banning oil and gas drilling within 12 nautical miles of its coasts. It became clear that this, and other energy-related laws, could expose Italy to ISDS complaints under the Charter. Thus, in 2016 Italy left the Charter.

Other European states also understood that the Charter could expose them to liability when adopting laws fighting climate change. A particularly significant case (later withdrawn as part of a bailout deal) was filed by the German company Uniper against the Netherlands, alleging that the Netherlands’ plan to stop coal-fired power stations would violate the Charter.

As a result of this and several other cases, a long list of European countries decided to exit the Charter. The European Commission (EC) proposed to modify the Charter in order to take climate change into account. But European states considered this proposal not enough to guarantee they would not be subject to lawsuits for enacting laws combating climate change. As a result, the European Parliament called on the EC to establish a mechanism for states to withdraw from the Charter. This summer, the EC finally proposed a coordinated withdrawal from the Charter.

But this does not enable Europe to get rid of the Charter’s ISDS. Indeed, the Charter includes a sunset clause, meaning that states will still be subject to ISDS for 20 years after their withdrawal. Italy has already experienced the effects of such a clause. Although the country left the Charter in 2016, British company Rockhopper filed for arbitration in 2017 based on the sunset clause. Rockhopper received the award condemning Italy to pay over 185 million euros in damages for the loss of income (expropriation) resulting from Italy’s 2015 law preventing Rockhopper from drilling in the Adriatic Sea.

As evidenced by this case, the sunset clause could be a liability to European countries adopting environmental laws. If any investor can sue any European state, like Rockhopper did, for enacting laws preventing them from developing coal, oil and gas, then the costs of the energy transition might become unsustainable. This is not the first time Europe has to face the sunset clause challenge. Indeed, after a long debate, the European Union adopted the Termination Agreement, terminating all investment treaties between member states, including the effects of their sunset clauses. The question now is whether Europe can also convince third parties to remove the Charter’s sunset clause effects.

The Charter history suggests that when European countries find themselves in the shoes of developing countries, they react in the same way: they want to exit investment treaties. Once European states risked facing lawsuits from investors seeking damages, they realized they no longer wanted to be part of the Charter. Remarkably, a better implementation of the existing rules was not considered a viable solution to the Charter crisis. An increasing number of European states demanded a complete reconceptualization of the energy sector, which inevitably entailed exit from the Charter. This “radical” approach sounds very much in tune with the decisions taken by several developing countries to leave their investment treaties. Is this going to be an exception to the rule or can the Charter become an exiting model for countries to leave ISDS?

Only time will answer this question, but the Charter experience can certainly become a laboratory for the “putting ourselves in the others’ shoes” strategy. We may adopt this strategy to overcome our differences on a series of global challenges that an increasingly divided world raises.

Reality Check: Navigating the Pitfalls of Human Rights Due Diligence

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This blog post was authored by Nazrin Huseinzade. Nazrin Huseinzade is an international human rights lawyer. She currently works as Business and Human Rights Advisor at Enact, a Stockholm-based consulting firm specialised in corporate human rights due diligence. She was a speaker at the Symposium: Colonisation in, of and through Business and Human Rights, held in April 2023 in Tilburg (the Netherlands). The blog post is part of a Blog Series published on Rights as Usual.

Disclaimer: The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the official positions of any entities she represents

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Human Rights Due Diligence (HRDD) straddles a spectrum of admiration and critique. At one extreme of this debate are those who endorse with blind devotion the bible that is the United Nations Guiding Principles for Business and Human Rights, and all the legislation inspired by it. At the other are those who cast a skeptical eye, viewing HRDD as an extended arm of neoliberalism.

This post is a pragmatic blend of concurrence and dissent with both factions. HRDD is clearly not a cure to a system of international trade and investment where inequality is a structural feature, rather than a bug. However, we should still be able to appreciate it for the symptom relief it offers.

As its significance solidifies extending into both national and EU legislation, the following are some of the common pitfalls that can erode the effectiveness of HRDD, even as a palliative measure.

The myth of equal partnerships

Universality of human rights has long been challenged by TWAIL scholars both on substantive grounds, for neocolonial “efforts to universalise an essentially European corpus of human rights”, and structural grounds, due to the unilateral imposition of European/EU HRDD laws upon trading partners in lieu of an international treaty with equal participation of the Global South states.

Both of these critiques materialise in the day-to-day practices in the corporate world. As a rule, the HRDD originates in the Global North headquarters where Business & Human Rights specialists, including myself, inevitably rely on a European interpretation of international human rights standards. Under scrutiny is usually the subsidiary/supplier based in the Global South.

However, despite the contradictions of promoting a European-/Western-centric take on human rights, inaction would be an even less desirable option. Some within the corporate world still readily resort to arguments such as “our workers in factory X want to work 60 hours a week, we have to accept their work culture” or “if children work from the age of 9 in country Y, who are we to tell them otherwise?” This rhetoric shuts down or circumvents any discussion about the social costs of trade. Moreover, it dangerously conflates tolerance towards exploitation with professed cultural tolerance.

The bigger problem with HRDD legislation is that it allows an economically stronger purchaser to impose rules on a weaker seller, while implicitly also asserting moral superiority over them. In an article dedicated to the ethical compliance audits in South Indian Garment Industry, Geert de Neve (University of Sussex) writes that “at the heart of corporate ethical sourcing policies lies a set of social auditing and monitoring mechanisms through which buyers instigate a regime of control that casts western companies and consumers as knowledgeable, caring and disciplined, and their non-western suppliers as backward, uncaring and lacking self-control”.

This is a sentiment I get even today within my work, and it is supported by a willful misreading of the UNGP’s requirements on leverage and contribution, where the former (“if the business enterprise has leverage to prevent or mitigate the adverse impact, it should exercise it”) is overly stressed and the latter (“if business enterprise contributes or may contribute to an adverse human rights impact, it should take the necessary steps to cease or prevent its contribution”) is largely ignored.

Reluctance to share the costs

Standalone initiatives like Responsible Contracting Project hope to transform the way companies negotiate the terms of their relationships with their suppliers, bringing an element of self-scrutiny on behalf of purchasers and a recognition of shared responsibilities. Similarly, the text of the Corporate Sustainability Due Diligence Directive (CSDDD) contains elements of cost-sharing when doing business with SMEs (Article 7(2)d).

This is, however, far from a universally accepted standard, and the HRDD practices today still pay little heed to how the company’s purchasing practices (i.e., chasing the lowest price, irregular orders, short lead times, no guarantee of continued sourcing, unpredictable and fluctuating orders) can create an environment where upholding basic human and labour requirements is virtually impossible.

Similarly to how companies are looking for the best price-quality ratio in business negotiations, they will have to develop a habit for a good price-sustainability ratio, which will also require taking on some of the costs of compliance.

Efficiency over accuracy  

As a process, HRDD is among the “odd ones out” in the world of mainstream economics. It interferes with the natural appetite for cost-cutting and does not bring any clear financial benefits, certainly not in the short term. Relying on muscle memory from other risk management procedures, companies seek quick fixes, often relying on dubious metrics and checkbox exercises.

In the practice of businesses, the starting point for an HRDD is often a so-called ESG country index/democracy index which will automatically place any company in the Global South in a higher risk category. Such geographic bias does not allow for nuanced information that might be crucial for businesses given their operational context. For example, Sweden and Finland will be ranked “low risk”, and while statistically the majority of companies in these countries might deserve this ranking, the overreliance on country rankings will overlook the systemic challenges prevalent in industries reliant on seasonal migrants, despite investigations revealing instances of forced labor (see also here).

This is just one example of how accuracy is sacrificed for scalability and conveniency of risk management tools. Here, one could hope that the shift of sustainability into the legal compliance domain would make the cost of mistakes higher for businesses and thus push for better quality services in the ESG ratings market.

Arbitrary cut-and-run

When it comes to confirmed cases of serious human rights impacts, many companies are too ready to switch suppliers. The focus is usually shifted from rightsholders to the company’s own reputational and legal risks.

In its negotiating position on CSDDD, the Council of the EU calls for a more nuanced approach to ending business relationships, and warns against worse human rights outcomes:  “severe adverse impact could occur if workers are deprived of living wage by the termination of the business relationship with their employer in order to bring to an end an adverse impact consisting of breaching the right to collective bargaining”.

Yet, there are conflicting opinions among the unions, NGOs and businesses alike on the ethical considerations surrounding the exit decisions. For example, while the global union IndustriALL pushed the brands to withdraw from Myanmar following the military coup in February 2021, the Myanmar Centre for Responsible Business regretted the withdrawals by major businesses drawing attention to the negative impacts it would have on thousands of women workers in the country. In other contexts, such as child labour in cobalt mining (DRC), the exclusion of artisanal miners from supply chains is said to help large companies clean up the supply chains on paper and protect their reputations, while pushing those risking their lives in unregulated mines, away from the sight, further down the supply chain.

The concept of a “responsible exit” stands out as the most vulnerable aspect within the existing HRDD frameworks, given the degree of discretion the companies enjoy in interpreting it. With the UNGP’s HRDD concept gradually moving towards hard law, it seems that businesses might face greater accountability for failure to disengage rather than ever be held responsible for the negative consequences of their disengagement.

Conclusion

In summary, the take of this blog post is that HRDD, often regarded as the pinnacle of CSR, belongs within the confines of the existing neoliberal economic order rather than harbours hopes of revolutionising it.

However, as long as the current trade and investment frameworks persist, HRDD remains a valuable tool, and its effectiveness in alleviating the excesses of these frameworks depends on the collective efforts of various stakeholders, including lawmakers, strategic advocates, NGOs, and in-house sustainability experts.

A critical aspect of these collective efforts involves companies transitioning from a policing approach towards their business partners to truly engaging with them on equal grounds, assuming the cost of their own purchasing practices, abandoning oversimplified scoring exercises and enlisting expertise and time required for nuanced human rights analysis, as well as reevaluating the effects of their disengagement. Without these transformative shifts, HRDD runs the risk of devolving into mere virtue signaling aimed at appeasing domestic consumers and regulators.

The cooptation of BHR: the looming threat of ‘CSR capture’

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This blog post was authored by Prof. Dr. Florian Wettstein – Universität St.Gallen (HSG) | unisg.ch, who was the keynote speaker at the Symposium: Colonisation in, of and through Business and Human Rights, held in April 2023 in Tilburg (the Netherlands). It is part of a Blog Series published on Rights as Usual.

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Corporate social responsibility (CSR) has become an essential part of doing business. There is hardly any large company that does not publish a report on its responsibility and sustainability efforts, that does not have staff or even a department dedicated to CSR, that does not showcase its various responsibility projects and initiatives on its website. While some applaud such efforts, others have warned early on that their deeper aim has never been to transform, but rather to legitimize the neoliberal agenda. They have compared CSR to a ’trojan horse’, that is, an instrument for corporate capture, rather than for corporate change. Such ‘CSR capture’ poses a threat also to the critical potential of the business and human rights (BHR) agenda. How this plays out in practice can be illustrated with the example of companies’ opposition against mandatory BHR laws.

Of course, corporations opposing – sometimes vehemently – new restrictive regulation is not a new phenomenon. They have spent staggering amounts to lobby law makers to design regulatory instruments in their favor and they exert influence at all stages of the process in the lead up and enactment of such regulation. Hence, the mere fact that corporations similarly tend to reject new human rights due diligence (HRDD) legislation both in various domestic jurisdictions as well as at the level of the EU, is not surprising and it fits the usual pattern.

Nevertheless, there seems to be a new feature characterizing the opposition specifically against such new HRDD laws. While commonly the resistance against new regulations tends to invoke what can be called ‘efficiency-based’ arguments, companies seem to have shifted towards ‘responsibility-based’ argumentation in their struggle against BHR legislation. The former set of arguments claims that new social or environmental regulation hampers corporations’ efficiency and thus leads to reduced profitability. Often such arguments are connected, implicitly or explicitly, to a so-called ‘exit threat’, i.e. corporations threatening that they may move their operations elsewhere. This puts pressure on governments to abandon their plans for tighter regulations if they want to remain competitive as an attractive location for lucrative businesses.

Such arguments abound also in the public discussions around mandatory HRDD laws, but there is an increasingly prominent focus on the latter, responsibility-based, set of arguments in this context. Responsibility-based arguments do not emphasize the economic, but the social impact of such regulation, claiming that such laws would undermine the responsibility that companies are already adopting through their voluntary CSR efforts. One argument is that the potential liability risk attached to such legislation would prevent them from continuing their long-existent engagement with affected communities on the ground and thus be counter-productive when it comes to enhancing the position of local stakeholders. In other words: BHR laws are claimed to lead to less, rather than more responsibility.

Accordingly, companies’ position against such laws is increasingly voiced by a group of company representatives whom one would not intuitively associate with a position against BHR regulation: CSR managers. Thus, the very same people who welcomed the UN Guiding Principles on Business and Human Rights (UNGPs) and were at the forefront of implementing them early on are now taking a stance against mandating those very same provisions they earlier voiced support for. What may seem counter-intuitive at first glance, follows a certain logic at a closer look.

When the UNGPs were published in 2011, early implementation efforts by companies leveraged largely on existing CSR structures and resources. This domestication of BHR in and through the existing CSR organization facilitated the reframing of BHR along CSR lines – and it has turned CSR managers into the ‘gate-keepers’ of this newly framed BHR agenda in business practice. The conventional CSR perspective views corporate responsibility essentially as private responsibility, which companies adopt on a voluntary basis at their own discretion. It is corporate-centric, apolitical, and tends to be driven by instrumental considerations. Legal mandates and government involvement do not fit this conventional CSR agenda neatly. In fact, CSR is commonly seen precisely to address the realm beyond such mandates. Thus, the opposition against BHR legislation is not counter to but in line with a conventional CSR mindset. And because BHR has been reframed in the categories of such conventional CSR, such legislation can essentially be portrayed as running counter the BHR agenda itself. Thus, the BHR agenda has successfully been turned against itself.

This is not to say that the new mandatory HRDD laws are the silver bullet to advance the BHR agenda and that companies ought to accept any such proposition without any reservations. However, rather than rejecting them across the board, corporate responsibility would require companies to engage with them in sincere and constructive ways. If the design of current legislative proposals distracts from practical engagement on the ground, the response should be to include stakeholder engagement and the inclusion of marginal voices a requirement both in the process of designing such laws as well as in the actual mandate of such laws. After all, this is a demand that also BHR advocates have voiced repeatedly and thus where business support could secure real improvements of existing proposals and laws. In other words, the answer would be to advocate for stronger mandates, rather than to lobby against weak ones. The UNGPs ask governments to enact a ‘smart mix’ of voluntary and mandatory measures to give practical meaning to the BHR agenda. Corporations who have endorsed the UNGPs early on must play a constructive role not only when it comes to showcasing voluntary efforts, but also in advancing the mandatory part of the deal.

Blog Series: Colonisation in, of and through Business and Human Rights

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This blog post was authored by Dr Dalia Palombo – Tilburg University.

The day I finally sent the last version of my article Transnational Business and Human Rights Litigation: An Imperialist Project? | Human Rights Law Review | Oxford Academic (oup.com) to the Human Rights Law Review, I wanted to forget about anything related to human rights and imperialism for a while. Thus, I turned to my post-submission period reading list, filled with interesting articles I did not have the opportunity to read during the writing process. The first article that sparked my attention was Betting on the Wrong (Trojan) Horse: CSR and the Implementation of the UN Guiding Principles on Business and Human Rights | Business and Human Rights Journal | Cambridge Core by Florian Wettstein. I started reading it and shivered when I realised the article analyses “[..t]he colonization of CSR by neoliberal free market ideology”. Not only could I not help ending up again on the topic of colonisation and business and human rights, but the illuminating article also reminded me that, as much as I spent countless hours analysing imperialism in business and human rights, there was a very different way to understand the topic. It could also be approached from the economic corporate capture, rather than legal transnationality, perspective. I felt that the interdisciplinarity of the topic deserved further investigation.

Thus, when I joined the Netherlands Network of Human Rights Research as a coordinator of the Business and Human Rights Working Group, I discussed the idea with my colleagues, dr. C (Chiara) Macchi – WUR , Jindan-Karena Mann | University of Amsterdam – Academia.edu, and TI (Tamara) Horbachevska – WUR, and it became clear my interest was not isolated. Thanks to funding from the Netherlands Network for Human Rights Research and the Department of Public Law and Governance (PLG) | Tilburg University, we were able to launch a call for abstracts for a symposium. The volume and quality of the abstracts received, as well as the widespread participation in the actual Symposium: Colonisation in, of and through Business & Human Rights | Tilburg University, were impressive. At the end of this long journey, we felt the need to continue our collaboration on the subject. In cooperation with N (Nadia) Bernaz PhD – WUR, we are now launching the Blog series Colonisation in, of and through Business and Human Rights on Rights as Usual | human rights & business (and a few other things). The series will run for a few months, publishing 2-3 blog posts per month. To kick off the series, we have three blog posts from Florian Wettstein (keynote speaker), Nazrin Huseinzade (symposium speaker) and myself.