Setting Higher Standards: How Governments Can Regulate Corporate Human Rights Performance
October 2024
Three months after the European Union’s landmark sustainability legislation, the Corporate Sustainability Due Diligence Directive (CSDDD), became effective, our report provides a roadmap for regulators and companies for navigating the new era of corporate human rights responsibility. Central to our prescription is the idea that governments need to develop and enforce substantive performance standards and metrics by which corporate compliance can be assessed and companies held accountable.
The report assesses the rise and key tenets of business and human rights regulation and recommends to governments and companies how to maximize the effectiveness of these legislative initiatives. As much of the regulatory activity to date has occurred in Europe, this report also argues for enhanced US government engagement.
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The report makes a series of recommendations.
To Governments:
- Consult and engage with international organizations, companies and civil society to address both business needs and the broader human rights interests of society.
- Build capacity now for the implementation and enforcement of regulatory frameworks, like CSDDD, including by creating national bodies with the expertise, resources and capabilities to define and assess company conduct.
- Prioritize the greatest risks in primary industrial sectors, including by collaborating with companies and focusing enforcement efforts in these areas.
- Share information, knowledge, guidance and support with other governments to create consistent and mutually reinforcing national laws. Governments should work with companies to produce practical guidance on how to address risks in key sectors.
- Develop substantive standards and performance indicators to measure progress in company compliance. This should be tailored to each specific industry.
- Incentivize and sanction based on company progress according to these standards.
To Companies:
- Start preparing now, even if not directly covered by incoming legislation. Companies should gather data on business operations, suppliers and existing systems and processes to determine what is working and what needs improvement.
- Build robust internal systems to integrate human rights into the business framework and value chain, including by improving collaboration among legal, human rights, sourcing and procurement teams.
- Prioritize risks and focus on outcomes. Companies do not need to solve all human rights issues immediately. They should focus on the most serious risks across the supply chain and concentrate on reforms that result in improved outcomes.
- Engage openly with government about human rights risks and the steps necessary to address them.
- Engage meaningfully with stakeholders, including by using stakeholder engagement to inform human rights approaches.
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