Seeking a ‘Smart Mix’: Multi-Stakeholder Initiatives and Mandatory Human Rights Due Diligence (Dorothée Baumann-Pauly, Isabelle W. Glimcher) - White Paper

Originally published


I. Background

In today’s increasingly globalized economy, in which multinational companies outsource manufacturing, agricultural production, and the extraction of natural resources, human and labor rights abuses are commonplace. As a result of widespread news and social media coverage, consumers, investors, and governments increasingly expect multinational corporations to play a far more vigorous role in overseeing their global supply chains. In the last several decades, these large companies have come under growing pressure to act as responsible global citizens and to use their economic muscle to support a variety of social goals, from preserving clean air and water and reducing carbon emissions, to ensuring workplace safety and eliminating forced and child labor.

In 2011, the United Nations established an overarching framework called the Guiding Principles on Business & Human Rights, which articulate general responsibilities for governments and companies. Many multinational corporations have also developed their own unilateral codes of conduct and voluntary reporting systems related to their environmental and social efforts. But a decade after the adoption of the Guiding Principles, it is clear that this combination of UN and individual-company commitments is inadequate to accomplish meaningful rights protection and enforcement. Instead, it is now necessary to establish more concrete, industry-specific human rights standards and metrics that will mandate the necessary supply chain oversight to ensure rights violations no longer occur with impunity.

Recognizing this need, a number of mostly Western governments are beginning to adopt mandatory due diligence and reporting standards that address the global operations of multinational companies. Initially, these measures focused on child or forced labor and simply required companies to report on their efforts to address these challenges. But the EU and several of its member states are now going further, crafting mandatory human rights due diligence (“mHRDD”) requirements for all companies that do business within the EU.

The effectiveness of these measures will depend on how human rights due diligence is defined, interpreted, and applied. In developing criteria for what constitutes adequate due diligence under the law, regulators should look to the work of multi-stakeholder initiatives (“MSIs”) – organizations that involve companies, civil society organizations, and sometimes governments, in the establishment and application of industry-specific standards. Though MSIs vary greatly in their approaches and effectiveness, their work offers promising lessons to governments, in the EU and elsewhere, as they begin to adopt and apply mHRDD laws.