Building a "Globally Accepted" Business & Human Rights Framework: Practical Steps for Companies

TL;DR

• The UN Guiding Principles define a corporate duty to respect human rights, now hard-law via Germany’s LkSG and the coming EU CSDDD.
• A sound BHR framework follows seven UNGP-aligned steps: policy, governance, impact assessment, integration/action, tracking, reporting and grievance mechanisms.
• Early, meaningful stakeholder engagement is critical and must run through every step, not sit at the end.

Table of Contents

• The Foundation: Corporate Responsibility to Respect Human Rights
• Practical Steps to Implementing Human Rights Due Diligence
• The Importance of Stakeholder Engagement
• Conclusion: A Business Imperative

The expectation for businesses to respect human rights throughout their operations and supply chains is no longer just a matter of voluntary corporate social responsibility (CSR); it's rapidly becoming a core component of responsible business conduct and, increasingly, a legal requirement. Driven by the UN Guiding Principles on Business and Human Rights (UNGPs) and the proliferation of mandatory Human Rights and Environmental Due Diligence (HREDD) laws globally (such as Germany's Supply Chain Act - LkSG and the forthcoming EU Corporate Sustainability Due Diligence Directive - CSDDD), companies worldwide, including Japanese firms and multinationals operating in Japan, need robust frameworks to manage their human rights impacts. This post outlines practical steps for establishing an effective BHR initiative aligned with international standards.

The Foundation: Corporate Responsibility to Respect Human Rights

The cornerstone of any BHR framework is the Corporate Responsibility to Respect Human Rights, the second pillar of the UNGPs. This principle holds that all businesses, regardless of size, sector, or location, have a responsibility to:

• Avoid Causing or Contributing to adverse human rights impacts through their own activities.
• Seek to Prevent or Mitigate adverse impacts directly linked to their operations, products, or services through their business relationships (e.g., supply chains), even if they have not directly contributed to those impacts.

This responsibility exists independently of a state's own human rights obligations. The primary way businesses fulfill this responsibility is by implementing Human Rights Due Diligence (HRDD) – an ongoing risk management process tailored to the company's specific context.

Practical Steps to Implementing Human Rights Due Diligence

Building a "globally accepted" BHR framework involves operationalizing the HRDD process. Here are key practical steps based on the UNGPs and evolving best practices:

1. Policy Commitment (方針策定・コミットメント):

• Develop a Standalone Policy: Create a board-approved, publicly available Human Rights Policy. This statement should explicitly commit the company to respecting internationally recognized human rights (at minimum, those in the International Bill of Human Rights and core ILO conventions) across its value chain.
• Set Expectations: The policy should outline expectations for employees, suppliers, and other business partners regarding human rights.
• Communicate Widely: Ensure the policy is effectively communicated both internally to all relevant staff and externally to suppliers, joint venture partners, and the public (e.g., via the company website).

2. Establish Governance and Internal Systems (体制構築):

• Top-Level Commitment: Demonstrable commitment and leadership from senior management and the board ("tone at the top", 経営層 keiei-sō) are crucial for driving BHR integration.
• Clear Responsibility: Assign clear responsibility for overseeing BHR implementation (e.g., a dedicated BHR officer, a cross-functional committee involving legal, procurement, HR, sustainability departments).
• Integration into Governance: Embed BHR considerations into existing corporate governance structures, including board oversight, enterprise risk management (ERM) systems, internal audits, and potentially executive compensation metrics.

3. Conduct Human Rights Impact Assessments (人権影響評価):

• Identify & Assess Risks: This is the core analytical step. Systematically identify and assess potential and actual adverse human rights impacts associated with the company's:
  • Own operations (factories, offices, employees).
  • Supply chain (direct and potentially indirect suppliers).
  • Products and services throughout their lifecycle.
• Scope: Consider the company's specific sector (e.g., labor rights in apparel manufacturing, data privacy in tech, land rights for infrastructure projects), geographic operating contexts (countries with weak governance or specific risks), and business relationships.
• Methodology: Utilize diverse methods for risk identification, including internal data analysis, desktop research (country risk reports, NGO reports), supplier questionnaires, site visits/audits (where appropriate), and, crucially, meaningful consultation with potentially affected stakeholders.
• Prioritize Salient Issues: Focus resources on addressing the most severe potential human rights impacts ("salient human rights issues") identified through the assessment.

4. Integrate Findings and Take Action (統合・取り組み):

• Embed Findings: Integrate the results of the impact assessment into relevant company functions, policies, and procedures (e.g., updating procurement processes, revising contract clauses, modifying product designs).
• Preventative Actions: Implement measures to prevent potential adverse impacts before they occur. Examples include:
  • Strengthening supplier codes of conduct and contractual requirements.
  • Providing human rights training for employees and suppliers.
  • Improving workplace health and safety protocols.
  • Adjusting purchasing practices that might indirectly incentivize poor labor conditions (e.g., unrealistic deadlines, excessively low prices).
• Mitigation and Remediation: Where the company identifies that it has caused or contributed to an actual adverse impact, it must take action to cease the activity and provide for or cooperate in remediation through legitimate processes. If linked to an impact through a business relationship, the company should use its leverage to try and prevent or mitigate the harm. Actions might involve:
  • Engaging with suppliers to develop corrective action plans.
  • Supporting victims' access to remedy.
  • Changing internal processes to prevent recurrence.
  • Collaborating with peers or industry initiatives on systemic issues.
  • As a last resort, reconsidering or ending the business relationship if leverage is insufficient and severe impacts persist.

5. Track Performance (モニタリング・追跡調査):

• Monitor Effectiveness: Regularly track the implementation and effectiveness of the preventative and remedial actions taken. Are the measures actually reducing risks or addressing impacts?
• Use Indicators: Employ relevant qualitative and quantitative indicators to assess performance.
• Review and Update: Periodically review the findings of impact assessments and monitoring, and update policies, procedures, and action plans accordingly. HRDD is an ongoing, dynamic process, not a one-off exercise.

6. Communicate and Report (情報開示・コミュニケーション):

• Transparency: Communicate externally how the company addresses its human rights impacts. This builds trust and accountability with investors, consumers, NGOs, and other stakeholders.
• Reporting Content: Reports should typically cover the company's BHR policy, governance structure, due diligence processes, key risks identified, actions taken to address them, and performance monitoring results.
• Use Frameworks: Aligning reporting with established international frameworks like the UNGP Reporting Framework, Global Reporting Initiative (GRI) Standards, or Sustainability Accounting Standards Board (SASB) standards can enhance comparability and credibility. Note the increasing trend towards mandatory sustainability reporting in jurisdictions like the EU (under the Corporate Sustainability Reporting Directive - CSRD).

7. Establish Grievance Mechanisms and Ensure Access to Remedy (苦情処理メカニズム・救済):

• UNGPs Pillar 3: Companies have a responsibility to provide for or cooperate in remediation when they identify they have caused or contributed to adverse impacts. They also play a role in enabling remedy for impacts they are linked to.
• Operational-Level Grievance Mechanisms: Establish mechanisms that allow employees and external stakeholders (e.g., supply chain workers, affected community members) to raise concerns or complaints about potential or actual human rights impacts directly with the company, safely and without fear of retaliation.
• Effectiveness Criteria (UNGP 31): Effective grievance mechanisms should be legitimate, accessible, predictable, equitable, transparent, rights-compatible, and a source of continuous learning. They should facilitate dialogue and help identify and address grievances early. Options range from internal hotlines to collaboration in industry-wide or multi-stakeholder mechanisms.

The Importance of Stakeholder Engagement

Meaningful engagement with potentially affected stakeholders (rights-holders) and other relevant parties (NGOs, unions, industry associations, experts) is not a separate step but should be integrated throughout the HRDD process. Consulting those potentially impacted is crucial for accurately identifying risks, understanding diverse perspectives, designing effective preventative and remedial measures, and ensuring grievance mechanisms are accessible and trusted.

Conclusion: A Business Imperative

Implementing a comprehensive BHR framework aligned with the UNGPs is moving from a voluntary ideal to a fundamental expectation and, increasingly, a legal necessity. Driven by mandatory HREDD legislation like Germany's LkSG and the EU's CSDDD, alongside mounting pressure from investors, consumers, and employees, companies can no longer afford to treat human rights as a peripheral issue. By proactively embedding human rights due diligence into their governance and operations – through policy commitment, risk assessment, concrete action, monitoring, transparency, grievance mechanisms, and stakeholder engagement – Japanese and multinational companies can not only mitigate legal and reputational risks but also build more resilient, sustainable, and ethical businesses for the long term.

• Mandatory Human-Rights Compliance in Japan: Meeting Growing Expectations
• Beyond Borders: Germany’s Supply-Chain Act & the Rise of Mandatory Human-Rights Due Diligence
• Japan’s 2023 Takeover Guidelines: Investor Perspectives and Activism
• Cabinet Office – Guidelines on Human-Rights Due Diligence (Japanese)