Some of the world’s largest companies have a poor grip on the legal human rights risks present in their supply chains, research on 152 major corporations has concluded. The study, published today, was completed by international law firm Norton Rose Fulbright and the British Institute of International and Comparative Law (BIICL).
Just 51% had performed a dedicated human rights due diligence assessment that included a full range of human right obligations. Of these 77% found actual or potential human rights impacts, and 72% cent identified adverse impacts linked to the activities of their third party relationships.
Norton Rose Fulbright partner Robin Brooks (pictured) told the Gazette there was ‘some reluctance’ among companies to use human rights terminology. That reluctance increased the risks faced by businesses, as risks viewed through a ‘human rights prism’ accurately identified many more risks. The use of corporate responsibility, employment rights or health and safety analysis was ‘less effective at identifying impacts’, he noted. ‘The reluctance to use human rights terminology is unsustainable.’
For UK businesses, an immediate legal risk arising from failings identified in the report comes from liabilities established by the Modern Slavery Act. BIICL director professor Robert McCorquodale said human rights due diligence was ‘assuming a hard legal dimension’ that transcended the ‘traditional understanding of CSR’.
Brooks added: ‘There is an emerging body of legal claims in a number of different jurisdictions against companies for human rights abuses in their supply chains and we expect this to continue.’ Courts in jurisdictions such as England and Wales and Canada were increasingly willing to give jurisdiction to claims against companies that had their origins in foreign supply chains.
In November, for the first time, the Corporate Human Rights Benchmark (CHRB) will publish a ranking of the world’s largest publicly listed companies on their human rights performance.
Major news stories on supply chain risks, such as the 2013 Rana Plaza factory collapse in Bangladesh, have illustrated risks of poor human rights compliance for the clothing industry. But today’s report identifies mining and energy as the industries carrying the greatest risks.