What you should know about Mandatory Human Rights Due Diligence
This article was originally published on the Remake website.
Increasingly, governments around the world are moving to require corporations to take responsibility for the impacts they have in their supply chains by conducting what’s known as human rights due diligence. The European Union will soon require all large companies operating within its borders to conduct due diligence of their human and environmental impacts, while New York State is currently considering a law that would require large fashion companies to report on any due diligence policies they might have.
However, human rights due diligence remains for many a difficult concept to grasp -much less to understand how it will work in practice. This article aims to break it down and explain exactly what due diligence does (in law and in practice), as well as delve into its potential as a tool for building a fairer and more responsible global fashion industry.
What is (mandatory) human rights due diligence (mHRDD)?
Human rights due diligence describes a process that companies undertake to understand, resolve and be accountable for any negative human rights impacts they cause, contribute to or are linked to throughout their entire operations, including their supply chains. The concept of human rights due diligence was established in 2011 by the UN Guiding Principles on Business and Human Rights (UNGPs), which acknowledged on a global stage that all business enterprises have a responsibility to respect human rights. While this process was voluntary at first, increasingly human rights due diligence is being mandated by governments, starting in some European nations.
Why is human rights due diligence an important development for fashion?
For decades, fashion brands were able to source clothing using long, opaque supply chains through factories they did not own and were not -in any way- accountable for. Any promises brands make to improve standards for factory workers or environments in supplier communities have been voluntary, and as a result, working conditions across the industry have suffered greatly. Mandatory human rights due diligence is part of a shift in thinking and approach in corporate governance, acknowledging that companies often cause and contribute to human rights harms all along their supply chain, and that they have an obligation to avoid them.
The Rana Plaza factory collapse in Bangladesh in 2013 cost the lives of 1,132 people and caused thousands of injuries. Despite the fact that many well-known brands operated in the factory, these companies were not legally responsible for what happened. If an effective mandatory human rights due diligence law had been in place at that time and applied to fashion companies, many experts believe this could have prevented the Rana Plaza accident from occurring, or at the very least, would have mandated that brands participate in remediation and compensation for survivors and victims’ families.
What rights are companies required to protect under mHRDD?
Fundamental human rights, as outlined in the United Nations Declaration on Human Rights, include a wide range of fundamental freedoms that all humans are entitled to, including freedom from forced labor, child labor and discrimination, freedom from environmental destruction and extreme degradation of the environment, protections for freedom to unionize, and freedom to have an adequate standard of living and social security, among others.
However, due diligence laws vary in which rights and impacts companies are responsible for. For example, Germany’s Act on Corporate Due Diligence in Supply Chains, which goes into effect in 2023, requires that companies meet a living wage in their supply chain and avoid dangerous chemicals defined as highly hazardous by the Stockholm Convention. Other laws, meanwhile, have narrower scope, such as the single-issue Netherland’s Child Labor Due Diligence Act.
When does due diligence become mandatory? Can’t companies just commit to respect human rights on their own without new laws?
Human rights due diligence becomes mandatory when countries and regions require businesses by law to identify human rights or environmental risks throughout their operations and effectively prevent those risks from occurring.
HRDD laws vary in strength, with earlier bills only requiring companies to identify and disclose their environmental and human rights risks and policies to address these impacts. The turn towards mandatory laws started in 2017 with France’s Duty of Vigilance Law. The most progressive mHRDD laws allow for those harmed to sue for damages when a company fails to prevent or contribute to human rights or environmental harms, which France’s 2017 Duty of Vigilance Law mandates for and remediation for victims is also includes in the EU’s proposed draft directive on due diligence.
As to why this is necessary for due diligence to be mandated: Multinational companies, including fashion brands, have been able to self-police their environmental and social impacts in other countries and throughout their supply chains for decades through voluntary initiatives. Although not all industry actors agree, there is evidence and growing industry consensus that this approach has mostly failed. As such, many supply chain actors, including some brands, believe that voluntary corporate measures are on the whole insufficient to prevent and remedy human rights violations and environmental harms in the supply chain.
Do we have examples of how mHRDD works?
Some of the most basic elements of mandatory human rights due diligence are considered to include the company committing to researching and knowing what the human rights risks are in the countries they operate within, as well as mapping their supply chain and developing a plan of action to mitigate those harms. Identifying human rights risks might include, for example, forced labor in cotton farms in Xinjiang, China, water pollution in leather factories in Bangladesh, child labor in India, sexual harassment in certain regions, and so on. However, as mHRDD is new regulatory terrain, how companies adopt these policies and put them into practice is evolving alongside the passage of mHRDD laws globally.
Why is liability for harms caused by an important part of mHRDD?
The earliest due diligence laws to pass did not include liability on companies for their human rights harms. Increasingly, civil liability is considered a key mechanism to getting companies to comply with due diligence laws and incentivizing them to take action to avoid and mitigate harming people and the environments in their supply chain. In France, there are five legal proceedings that are pending against corporations, using their Duty of Vigilance law, which includes civil liability on corporations. Two are against oil company Total for both failing to reduce its carbon footprint and for failing to comply with the law on oil and gas extraction in Uganda and Tanzania. Another lawsuit against energy company EDF is over land grabs of indigenous peoples in Mexico. The final is against a supermarket chain Casino for its links to illegal deforestation in the Amazon. However, because of ambiguities in the language of the French law, it’s unclear at the moment if the plaintiffs will win their case.
Who has adopted (or is considering) mandatory human rights due diligence laws (mHRDD)?
There are an increasing number of countries and regions introducing laws to require businesses to conduct human rights due diligence and some extending the requirement to environmental protections. France, Norway, and Germany, and the Netherlands have already passed legislation that requires companies to conduct mHRDD in some form. Of these existing laws, France’s Duty of Vigilance Law is the only one in force to date. Germany due diligence law will go into force in 2023. The European Union has also drafted mHRDD legislation that, when passed, will be significant as it will apply to large companies operating in the EU. New York State is also considering a bill, The New York Fashion Act, that applies exclusively to large fashion brands and that would require companies to have a human rights due diligence policy.
Here is a handy chart of all of the mHRDD laws that have already passed and how they compare.
What about the United States?
New York State is the first jurisdiction in the US to consider a law, The Fashion Sustainability and Social Accountability Act (The Fashion Act), that includes elements of human rights due diligence. But there is a wider debate in the US as to whether to follow Europe in mandating corporate due diligence versus pursuing laws that more directly hold corporations liable for the harms they cause. The United States has taken action towards curbing labor abuses in global supply chains, such as the Uyghur Forced Labor Prevention Act, and by leveraging tools, such as Withhold Release Orders, for products made with forced labor. A recent law passed in California, the Garment Workers Protection Act (in effect January 2022), also establishes third-party liability by making brands partially liable for wage theft that occurs throughout their California supply chain, even when they do not have direct ownership in the company. However, although some bills have attempted to legislate some form of mHRDD, no mHRDD laws currently exist in the U.S.
Does mHRDD only apply to the fashion industry?
No, but it depends on the law in each existing country. All existing mandatory human rights due diligence laws apply to all companies of a certain size (measured by either the number of employees or a specified threshold of annual turnover) in all sectors.
What fashion brands are in support of mHRDD laws?
Currently, fashion giants Adidas, Nike, ASOS, H&M, and Primark have all expressed support for mHRDD in Europe. You can find the most recent list of large business supporters (>1 bn € turnover) here.
Is mHRDD really enough to protect workers in fashion supply chains?
While many people believe that mHRDD seems promising, we don’t yet know whether or not it will be effective. MHRDD is a new concept in the legal field and only one country, France, has a due diligence law in effect, the impact of which is unclear. For many labor activists, mHRDD reflects one possible path forward towards increasing corporate accountability. Others feel that due diligence laws are too vague, leave too much to interpretation, and focus too much on the process instead of the negative impacts that companies have. There is also a concern that mHRDD laws could end up shifting obligations such as social welfare benefits that should be left up to the government (a democratically elected institution) to the company. Though it seems likely that mHRDD could be effective on paper, the specific language of each law, as well as the implementation of it, will impact how effective it is in practice. In short, it remains to be seen what kind of impact mHRDD laws will have.
About
Elisabeth Cline is a New York-based author, journalist, and expert on consumer culture, fast fashion, sustainability and labor rights in the apparel industry.
Laurel Anderson Hoffner is a researcher focused on global workers' rights. She has experience in research, program management, and partnerships at a variety of government, nonprofit, and international organizations.
Remake is a global advocacy organization fighting for fair pay for women in the clothing industry. Remake's goals are to end poverty wages, unsafe conditions and gender-based violence with which our clothes are made today. Want to learn more about Remake? Click here.