Demystifying the Role of Due Diligence and Regulation in Human Rights – Webinar Recap

Last month, we hosted a webinar on the Role of Due Diligence and Regulation in Human Rights as part of our Demystifying Sustainability series. Focusing on the perspective of the Corporate Sustainability Assessment (CSA) and due diligence requirements, the webinar also sought to understand the new mandatory requirements for companies and tackle upcoming human rights risks related to artificial intelligence. The below summarizes the key takeaways from the webinar.

Insights surfaced

• There is a positive trend in all aspects of the human rights topic, but the level of performance and disclosure varies significantly.
• The CSA considers the human rights topic relevant for all 62 industries it covers but recognizes that specific human rights-specific issues are more relevant for some industries than others.
• There is a gap between companies' public commitments to respecting human rights and the disclosure of measures implemented to prevent human rights risks.
• States have a crucial responsibility in creating an enabling environment for the respect of human rights by businesses.
• Implementing human rights commitments at the local level can be incentivized through performance evaluations and rewards.
  
  

Key Takeaways

Human rights due diligence is a significant factor in business competitiveness

The webinar highlighted the importance of carrying out due diligence about human rights, emphasizing that it's not only a moral obligation for businesses but also a significant factor in their competitiveness. Dante Pesce Gonzalez, Executive Director of the Vincular Center at the business school of the Catholic University of Valparaiso, Chile, commented on this issue, stating, "Doing the right thing is also the smart thing to do," indicating that respecting human rights can benefit businesses in numerous ways.

He further explained, "It's a methodology to understand what matters, where the impacts might be, and then commit to avoid them or mitigate that." He emphasized that this process starts from a commitment at the highest level of a company and involves understanding potential impacts on human rights across all operations and supply chains.

Gonzalez also pointed out that governments have a role in creating an enabling environment for businesses to respect and protect human rights. He stressed that ensuring respect for human rights is about meeting not just legal obligations but also societal expectations and overcoming the lack of trust from civil society organizations.

There's a significant gap between commitments and their integration into specific  human rights measures.

The data presented during the webinar revealed a significant gap between businesses' commitments to respect human rights and the disclosure on integration of those commitments into effective measures and processes (i.e. through risk identification, assessment, mitigation and remediation practices)measures. Elena Salgado, an ESG analyst at S&P Global Sustainable1, commented on this issue, stating, "Data shows that there's still a very long journey ahead of us when it comes to human rights and corporates," and pointed out that although the journey is full of possibilities, all stakeholders have a role to play.

Salgado further noted that although companies are publicly committing to respect specific human rights, there needs to be more publicly available information on how these rights are integrated into their risk assessment processes. This lack of transparency and disclosure is problematic, as it does not help to build or regain the trust of stakeholders.

She concluded by stating that companies, investors, and organizations like S&P Global Sustainable1 all have a role to play in further advancing in the area of business and human rights. Information and data on the topics can help companies improve performance and allow stakeholders to make informed decisions.

Regulatory frameworks are viewed as essential for managing human rights-related challenges

The webinar highlighted the importance of regulatory frameworks in managing human rights-related challenges. In a poll conducted during the webinar, most participants chose regulatory frameworks as the most essential factor in addressing these challenges. Dante Pesce Gonzalez agreed with this sentiment and noted the increasing trend of soft law moving toward the complex direction.

Gonzalez explained, "When soft law moves in the direction of being more and more relevant and has been embedded and normalized as to be used, soft law tends to move into hard law and becoming a level playing field when it gets critical mass using it." He emphasized that governments need to create an enabling environment for businesses to respect and protect human rights, noting that this is a government obligation.

He pointed out that businesses also have a role to play in this regard and that due diligence processes can help companies understand their impacts on human rights and take necessary measures to prevent or mitigate them.

The webinar demonstrated the importance of due diligence processes in understanding and preventing human rights risks and the crucial role of regulatory frameworks in helping businesses comply with their human rights obligations. It is evident that businesses, investors, governments, and civil society organizations all have a responsibility in advancing the area of business and human rights and that collaboration between these groups is essential. To achieve this, transparency and disclosure of human rights-related data is key and can help to build or regain the trust of stakeholders.

Statements by persons who are not S&P Global employees represent their own views and opinions and are not necessarily the views of S&P Global.