1. Pressure from all sides to be sustainable
The first and general overarching trend that will continue in 2022 is the continued pressure on companies from all angles to uphold their legal compliance and moral obligations relating to climate change and human rights and responsible business.
For one, the rise of ‘green consumerism’ means consumers are increasingly choosing to spend their money with companies they feel are committed to ethical and sustainable practices. Additionally, the agreements of COP26 have only put further impetus on governments to force private sector businesses to play their part in fighting climate change. Which will mean an increase in climate focused legislation that will on one hand penalise companies who do not meet their compliance requirements in relation to ESG. While on the other, afford tax and potentially tariff breaks to companies who prioritise investment in sustainability. Furthermore, investors increasingly seek to integrate sustainability into their portfolio management, withholding investment and/or removing directors from companies who do not have effective ‘green’ regimes. Forbes estimates $35 Trillion is invested in funds that assess environmental, social, and governance (ESG) factors so companies that do not prioritise human rights and climate change issues risk missing out on their share of the investor fund pie.
As this line between what is morally good and what is profitable continues to shrink, companies must prepare to balance pressure from above and below to be ethical, as well as profitable, entities. Moving into 2022, companies must ensure they have robust and transparent due diligence management, implementation, monitoring and reporting strategies to appease these various shareholders, and avoid the ever-increasing reputational, legal and economical cost of falling behind.
2. The need for a holistic approach to due diligence
Another trend to look out for in 2022 is the growing consensus that keeping climate due diligence and human rights due diligence in separate silos of policy leads to ineffective and inconsistent action. Human rights and climate change are frequently interrelated with one inevitably impinging on the other. The effects of climate change, such as scarcity of resources and large-scale displacement often create a breeding ground for increased vulnerability to labour exploitation, trafficking and other gross human rights abuses. Likewise, modern slavery is a classic example of how human rights abuses lead to the destruction of the climate, with Modern Slavery being the third largest emitter of carbon dioxide in the world. The trend of protections for human rights being increasingly enshrined into law alongside environmental due diligence will ramp up as this acceptance for a holistic approach to due diligence is more widely acknowledged.
As human rights will increasingly be used as a lens through which environmental due diligence is assessed, companies are advised to consider the wider human impact of unsustainable practices they may be guilty of. Embedding human rights and anti-slavery into existing sustainability and responsible sourcing efforts is a vital step in maintaining a holistic approach to ethical business and due diligence.
3. Mandatory regulation – continued drive for increased transparency
Voluntary human rights and environmental transparency rules have been shown to be largely ineffective, with only a select few of the best performers choosing to produce transparency reports on their human rights and environmental standards. However, through the advocacy efforts of charities, NGOs and political actors alike there is an increasing drive towards far more effective mandatory due diligence regulations, with Europe leading the way in this movement.
France has long had its own mandatory due diligence regime. But 2021saw Germany, Norway and the Netherlands follow suit by approving legislation to bring about their own versions of mandatory due diligence laws in the near future. With many other European nations debating comparable proposals. Such developments are happening in the backdrop of The European Parliament passing a resolution approving the proposed text of the Corporate Due Diligence and Accountability Directive. Which looks set to accelerate the mandatory due diligence regime within Europe further. At a more global level, the release of the third draft of the binding treaty on business and human rights and the negotiations following its publication show progress continues to be made towards an agreed global consensus on the minimum standard of due diligence regulation.
Due diligence can be a challenging, complicated and often costly process. As 2022 will likely be the year we see how widespread mandatory disclosure regulation looks in practice, company leadership should seek to act pre-emptively to the incoming wave of legislation. Ensuring they have more than enough time to work around the various factors that can draw out the due diligence process and keep an eye on wider global developments, to ensure they stay ahead of potential standard changes.
4. Incoming slave labour import bans
The spotlight on the human right abuses related to forced labour and modern slavery practices taking place in Xinjian will be entering their third year in 2022. The US has largely led charges against China through a series of executive actions and federal sanctioning laws in response to what it labelled ‘a system of repression against Uighurs and other Muslim minorities.’ 2021 saw the US expand such efforts but also multiple other actors condemning China’s actions also.
Looking ahead, this year will likely be shaped by a discussion on forced labour import bans at a much wider and general level. Especially in its use as a complementary measure to ever-increasing mandatory due diligence laws. In June 2021 the G7’s committed to taking action against the use of forced labour in all global supply chains. Committing to using ‘available domestic means and multilateral institutions to ensure the eradication of the practice’, import bans of forced labour goods look set to be part of this process for many actors. The EU Commission announced plans in September 2021 for laws that ban products made by slave labour. Similarly, the UK and Canada have forced labour import bans of different types while Australia is considering implementing its own sweeping law. While the US has adopted various executive and legislative orders to target China specifically, it still continues to enforce its Tariff Act against goods produced through forced labour from across the world.
Forced labour bans are the natural next step from the various modern slavery acts implanted over the years and the increased proliferation of mandatory due diligence legislation seen more recently. The topic of import bans looks to be picking up further pace throughout 2022, so companies should look to integrate modern slavery policies into any of their responsible sourcing efforts so as to ensure they do not have issues with procuring or selling products across the world.
5. Continued momentum of strategic litigation against private-sector corporations – a widening scope of liability
Something to keep an eye out for is the continued global surge in legal action on climate change. The rise in climate litigation against private actors forces companies to acknowledge they have just as important a part to play in the net-zero drive as nation states. Moreover, the continued acceptance of the need for a holistic approach to due diligence means companies increasingly find themselves subject to climate lawsuits that draw heavily on the human rights aspect of sustainability requirements. Therefore providing further avenues for victims to hold companies liable for failures in their due diligence process.
For example in 2019, Royal Dutch Shell had litigation brought against them by a group of NGOs and other persons of interest alleging the corporation had violated its duty of care anchored in Dutch law, Human Rights law and the Paris Agreement. The case was decided in 2021 as the Dutch court made the precedent-setting decision to order Shell to cut its emission by 45% by 2030. Central to the case against Shell was the assertion that companies have a responsibility to protect human rights independently of states’ abilities and/or willingness to fulfil their own human rights obligations.
This case matches an increasing trend of courts, especially those in Europe, finding both national governments and companies to be in breach of the aims within international climate and human rights obligations, and imposing modifications to their policy to rectify such failures. Companies should recognise that failing to commit to adequate due diligence policies and practices looks ever more likely to leave them (and potentially soon its individual directors) subject to increasingly aggressive national court proceedings as the explosion of climate litigation continues.
6. Moving beyond reactionary human rights compliance and looking at toolkits to address the need to carry out pre-emptive & actionable due diligence in supply chains
In the backdrop of an increased focus on corporate responsibility for the abuses in supply chains through the proliferation of mandatory due diligence laws, import bans and increased litigation proceedings amongst other things. There has been growing interest in developing toolkits that allow companies to be proactive in assessing and dealing with human rights violations in their wider supply chain.
The UN guiding principles point to a range of approaches for doing this, one which has garnered a lot of interest is the implementation of integrated human rights impact assessments (HRIAS). Integrated HRIAs are studies that seek to identify, understand, assess, and address the adverse effects business activities in a company’s supply chain have on the human rights enjoyment of impacted rights-holders such as workers and community members, as well as the wider environmental, social and health impact of said activities.
Procedures like integrated HRIA’s will take many different formats depending on the type of business supply chain one is assessing. What will prove vital for companies in 2022 is that these proactive measures are taken to ensure they have the suitable toolkits to effectively assess their entire supply chain, and formulate clear and actionable plans to stay ahead of increasingly stringent regulations. We at Ardea offer similar impact assessments as we specialise in helping companies develop modern slavery policy procedures that allow them to identify gaps in policies and processes and develop an effective due diligence program in line with global standards.
7. The need to accelerate the movement towards a circular economy and more effective waste management
The inefficient processing, production and use of material and products is a major factor in climate change, made worse by the major human rights and social harms that arise in these manufacturing cycles. ‘Fast fashion’ brands are coming under increasing criticism for their role in the wasting of raw and processed fabric and the dire labour conditions in which their products are produced. Similar criticisms have been levied at the cocoa and tech industries which rely on the procurement of raw materials and metals often of the back of child labour.
As the world increasingly searches for alternative avenues to achieve its sustainability goals, while maintaining the protection of human rights. The inefficient and sometimes immoral procurement of raw materials in supply chains combined with wasteful use of commercial products has led to a growing interest in a ‘circular economy’. By increasing focus on ensuring the efficient use, and repurposing, of raw materials already in circulation, the ‘circular economy’ movement works to limit excess waste. Which in turn reduces dependence on supply chains and the environmental and human rights risks that come with them, instead stimulating new industries and jobs in a way that is beneficial for the environment and more likely to be in line with human rights standards.
So in 2022, the drive towards sustainability must be understood not just in the context of emissions released, but also through efficient consumption. Companies can do their part in reducing their material footprint by firstly adopting sustainable work culture and energy efficient measures into their everyday business practices. While also looking into implementing sustainable procurement procedures into company policy.
8. The ‘role of sport’ in relation to human rights, a platform to help or hide ?
The question of the role of sport has been covered at Ardea in great detail, and the topic looks set to be a poignant point of discussion in 2022. Over the last year we have seen a variety of athletes use their platform within sports to forward important human rights and social issues like racial inequality, slave labour and LGBTQI+ rights. With this in mind, one issue which looks to be a major point of discussion in 2022 is the debate around the ‘role of sport’ in driving positive social change vs its potential to be used as a way of ‘sportwashing’ the crimes of human rights abusers.
No events exemplify this ongoing debate more than the two major sporting competitions of 2022, The Beijing Winter Olympics and the Qatar FIFA World Cup. The Beijing Winter Olympics has already been subject to diplomatic boycotts from the US, UK, Canada, Australia and Japan in protest of the IOC’s decision to allow the games to be held in China in spite of continued reports of modern slavery practices in Xinjiang. Players from Germany, the Netherlands and Norway have already held on-pitch protests against Qatar in the lead up to the World Cup to speak against its treatment of the LGBTQI+ community as well as its treatment of migrant workers and labour practices which have been said to amount to modern slavery. While corporations such as Coke and Visa have been called to US congress to explain their sponsoring of sportwashing events.
The debate around the role of sport in helping either shine a light on, or brush over, human right abuses will be sure to continue in 2022. What seems clear is that in this new era of increased due diligence and focus on corporate social responsibility there will be an increased push for such trends to stretch into the sporting world also.
9. Parallel discussion of a ‘just transition’
Businesses and governments alike must also consider the risk that comes with pursuing the various climate goals that were reinforced during COP26.The substantial relocation of capital required in working towards a greener world means companies and governments must be careful to not exacerbate inequalities and ensure a ‘just transition’ to green energy.
Plans to move towards renewable infrastructure still face age-old challenges of operating in areas of indigenous/cultural heritage and importance. Adequate consideration and dialogue with local communities is key to ensuring the drive towards sustainability in 2022 and beyond is a just one. Furthermore, one cannot ignore the threat of widespread job losses and other labour risks related to the winding down of polluting industries and supply chains seen as unsustainable and/or exploitative. The ILO Guidelines highlight that the just transition away from fossil fuels must be ‘human rights centred’, meaning it considers the impact on employment, provides social protection for unemployment, affords avenues for skills development and facilitates social dialogue.
So, a key issue likely to gain a continued spotlight in 2022 will be the critical need for a more concerted effort from companies and governments involved throughout the process of replacing fossil fuels with green energy, to ensure they engage and listen to workers, local communities and land defenders by seeking meaningful solutions to their respective concerns.
10. COVID 19 – exposing inequalities and the need for greater protection of the right to health
One cannot talk about issues relating to climate change and human rights in responsible business in 2022 and not talk about the effects of COVID-19. Systemic socioeconomic inequalities have been shown to further exacerbate the dangers of COVID(in a similar way to climate change) as vulnerable populations have been worse affected by the effects of the virus. Lower-income workers for example are less likely to have jobs that allow them to work from home and have faced an increased risk of exposure over the pandemic. As we all try to navigate the ever-changing landscape of the pandemic’s variants, lockdowns and restrictions. The matter of worker protection and the parameters of the right to health will continue as one of the many pertinent discussions stemming from the pandemic. The ILO’s proposed proposals of “a new self-standing declaration which addresses exclusively the safe and healthy working conditions as a fundamental worker”, is something to keep an eye on in relation to this question of the responsibility companies have to protect their worker’s health.
Further afield, the race for the vaccine has exposed inequalities in access to health at the global level. While wealthy nations of the global north are administering booster shots, the majority of the developing world are yet to give the full vaccine to significant portions of their population. Blame has largely been put at the feet of states upon which accusations of hoarding vaccines have been levied. However, there are a growing number of actors taking issue with corporations’ role in the inequalities within the right to health. As company pricing structures, their unwillingness to share intellectual properties, knowledge and technologies have been increasingly blamed for the situation we are in with COVID-19.
The debate over how far the right to health should stretch and to what extent corporations have a responsibility to help in the protection of this right will be sure to continue throughout a pandemic-ridden 2022.
Ardea supports organisations to address their legal obligations and develop best practice procedures to manage their sustainability, business and human rights and modern slavery risk by providing training, on line guidance and consultancy services.
Drawing on our combined experience of environmental law and human rights law, we can help organisations to develop a range of resources to help meet their legal and compliance obligations and to develop best practice processes.
For example, REGISTER for the Ardea International Director’s Liability workshop, taking place online on 10th and 17th February 2022
Our next human rights and environmental due diligence frameworks (EHRDD) workshop will take place on 15 March 2022.
Contact us or to book a complimentary 15-minute call/zoom with Ardea International CEO and tri-qualified lawyer, Colleen Theron, to discuss your environmental business and human rights requirements, simply click here
Did you know?
We have a range of free and paid resources on our website and we hope that you will enjoy browsing!
Contact us to see how we can support you.