Key Human Rights and environmental considerations for 2023
2022: the year that was marked by ‘permacrises’ – war in Ukraine, the energy crises, rising migration, and the persisting fallout from Covid 19 continues to challenge both society and business. Each year Ardea has set out its top 10 issues facing companies. The changing environment of responsible business, human rights and climate change continue to challenge companies globally. Last year we listed our top 10 issues here.
Looking at what we believe are critical issues for business, many of the challenges highlighted last year remain true of this year. We have, however, added some additional concerns that we believe businesses and organisations will have to consider more carefully. Whilst many organisations may not fall within the legislative thresholds, we are seeing a growing trend for customers requiring their suppliers, including SMEs, to apply the supply chain standards set by legislation.
Of real interest too for 2023, is the Institute for Human Rights and Business which spotlights the influence of commercial entities that provide the financial, legal and technical infrastructure and advice on these issues. We agree with this and in response to working with clients across sectors, lawyers and legal counsel, Ardea has developed a new masterclass for lawyers on supply chain due diligence in March. Do join us!
The following ten issues, we believe, will have a significant effect on businesses and organisations in 2023:
- Pressure from all sides to be sustainable and to demonstrate: Environmental, Social and Governance (ESG) as the debate about ESG intensifying. The combined pressure from consumers, governments and investors alike means companies are increasingly having to prioritise sustainable practices.
- Mandatory due diligence regulation – the proliferation of mandatory due diligence regulation means companies will need to understand how to address their legal compliance requirements. We are likely to see more pressure from customers for suppliers to demonstrate compliance notwithstanding that suppliers do not fall within the legal thresholds.
- Supply chain transparency – the new year will see continued disruptions to supply chain operations, whether from existing or new geopolitical conflicts, inflationary pressure and the recessionary environment, climate change weather events. Managing your organisation’s response to these can be critical in the year ahead.
- Incoming forced labour bans – bans on imports suspected to have been produced from slave, forced or child labour is increasingly being used by states as a measure to encourage companies to adopt ethical production and procurement practices. This includes the focus on China’s forced labour of the Uyghurs in Xinyang province
- Greenwashing – towards the final six months of 2022, regulators in the U.S., Britain, Norway and the Netherlands have been taking enforcement action against companies falsely making environmental claims. Given the previous lack of standards aimed at determining what constitutes as an accurate sustainability claim, making misleading environmental claims has become a common practice. this is going to change with new legislation being enacted in Europe to address greenwashing concerns. The French Climate and Resiliance Law, as well as the European Union’s proposed Unfair Commercial Practices Directive seek to paint a clearer picture of the processes companies will have to adopt in order to make any environmental claim without the risk of greenwashing.
- Impact of the ongoing war in Ukraine causing instability and energy crises – the war in Ukraine has forced many European countries to find alternatives to sourcing Russian gas. Whether this energy crisis will accelerate a green-energy transition is a key consideration, together with addressing the role companies and consumers play in reducing consumption.
- Diversity & Inclusion –representation, pay and gender equality, retaining and attracting talent is a growing concern for companies who will also be expected to evaluate whether their corporate stance on social issues are authentic to the organisation and its workforce. There is growing customer and investor pressure on companies to ensure they ‘show up’ for inclusion.
- Stakeholder engagement is a cross-cutting issue in the UNGPs and other key human rights-based frameworks, such as the OECD Due Diligence Guidance for Responsible Business Conduct. Stakeholder engagement is critical to help companies build and maintain positive relationships with stakeholders. We saw increased attention to this issue at the 11th UN Forum on Business and Human Rights held in Geneva in November 2022.
- Addressing climate change and human rights – human rights and environmental issues continue to merge, both in law and in practice. Critically companies will have to put due diligence processes in place to be able to identify and manage both potential and actual human rights and environmental impacts.
- The parallel discussion of a ‘Just Transition’ – the need to understand the movement towards green energy should come with the parallel discussion of making sure it is a ‘just transition’ that does not exacerbate existing inequalities and human rights abuses.
As a consequence of these issues, businesses and organisations will need to consider:
- The need for a holistic approach to due diligence – human rights are increasingly approached as a lens through which environmental due diligence can be assessed, and vice versa
- Specialist training, that is ‘fit for purpose’ for lawyers, procurement professionals, sustainability managers and operational managers.
- Understanding the ongoing fall out of COVID-19 and increased migration across the globe- the disproportionate effect the pandemic has on vulnerable people, and the need for further protections on the right to health will continue to be an issue that companies will have to address in their supply chains.
- Moving beyond reactionary human rights compliance– in the midst of an increased focus on responsible business, companies must adopt policies and processes, underpinned by training, to allow them to take pre-emptive action against potential issues in their supply chains.
We hope all of our readers and partners have a prosperous 2023.
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