Civil society groups in the UK are campaigning for a new law, which would be modelled on the 2010 Bribery Act, to establish a 'failure to prevent' offence for corporate human rights abuses. This new law would impose liability on companies that fail to take adequate steps to prevent human rights and environmental abuses in their operations or supply chains.
The idea for such an obligation was first proposed in 2017 by the parliamentary Joint Committee on Human Rights (JCHR) which recommended that the UK Government bring forward legislation to impose a duty on all companies to prevent human rights abuses and which requires all companies to put in place effective human rights due diligence processes (as recommended by the UN Guiding Principles on Business and Human Rights), both for their subsidiaries and across the entire supply chain.
At that point, the recommendation was not pursued by the Government.
The current campaign in the UK is being coordinated by the Corporate Justice Coalition and the proposed legislation comprises the following principle elements –
- Overarching duty – Commercial and other organisations have a duty to prevent adverse human rights and environmental impacts of their domestic and international operations, products and services including in their supply and value chains.
- Due diligence – Commercial and other organisations must develop and implement reasonable and appropriate due diligence procedures to identify, prevent and mitigate adverse human rights and environmental impacts.
- Prevention mechanism – Commercial and other organisations must publish a forward-looking plan describing the procedures to be adopted in the forthcoming financial year, and an assessment of the effectiveness of actions taken in the previous financial year.
- Liability – Commercial and other organisations shall be liable for harm, loss and damage arising from their failure to prevent adverse human rights and environmental impacts of their domestic and international operations, products and services including in their supply and value chains.
- Defence – It could be a defence from liability for damage or loss, unless otherwise specified, for commercial and other organisations to prove that they acted with due care to prevent human rights and environmental impacts.
- Civil penalty – Commercial and other organisations, and their senior managers shall be subject to a civil penalty if they fail to develop, implement and publish a due diligence plan within a reasonable time, or publish a misleading or inadequate plan.
- Criminal penalty – Commercial and other organisations, and their senior managers shall be subject to a criminal penalty if they fail to prevent serious human rights or environmental impacts.
The proposed law would apply to all businesses, no matter their size, nature or sector. It would also capture public sector bodies, including those bound by public procurement rules and other public bodies providing financial and other support to businesses, such as export credit agencies, development agencies and development finance institutions.
The proposal reflects a global trend towards laws requiring companies to undertake human rights due diligence – most recently seen in the proposed EU law on human rights due diligence which is expected by the end of the year. With wider ESG concerns gaining traction in public discourse, such measures are increasingly popular. Recent survey results indicate a high level of public support for the law in the EU with over 80% of citizens from across multiple EU member states wanting strong laws to hold companies liable for overseas human rights and environmental violations.
The proposed 'failure to prevent' law would bring the UK in line with its international commitments on human rights and the environment and would build on the 2017 recommendation for such a law from the UK's JCHR. While the Government is not currently looking to implement similar legislation, growing public awareness of corporate human rights and environmental issues is likely to increase demand for a similar law in the UK. Indeed, a survey of UK-based multinational companies published in February 2020 found that they would prefer tougher human rights and environmental laws which would mirror corruption provisions in the Bribery Act 2010. In addition, where companies selling into other jurisdictions are required to conduct human rights due diligence in any event, one can see how they may be anxious to ensure a level playing field that ensures that their competitors in the domestic market are faced with the same costs.
In circumstances where the UK Government is currently reviewing the obligations that the Human Rights Act 1998 places on public authorities, a law placing human rights obligations on private companies may seem very far in the future. However, given increasing support for such a law from the public, civil society and the business community itself, such obligations may be closer than many think.
If you have any queries about this, please contact Kieran Laird.