Resource Type: Publications

Corporate Accountability for Human Rights Abuses: A Guide for Victims and NGOs on Recourse Mechanisms

The summary is excerpted from the resource.

Summary

With this guide, the International Federation for Human Rights (FIDH) seeks to provide a practical tool for victims, and their (legal) representatives, NGOs and other civil society groups (unions, peasant associations, social movements, activists) to seek justice and obtain reparation for victims of human rights abuses involving multinational corporations. To do so, the guide explores the different judicial and non-judicial recourse mechanisms available to victims.

In practice, strategies for seeking justice are not limited to the use of recourse mechanisms, and various other strategies have been used in the past. Civil society organisations have for instance set up innovative campaigns on various issues such as baby-milk marketing in Global South countries, sweatshops in the textile industry profiting multinationals or illicit diamond trafficking fuelling conflicts in Africa. Such actions have yielded results and can turn out to be equally (or even more) effective than using formal channels. While this guide will not focus on such strategies, they are often used alongside and reinforce the use of recourse mechanisms. The main focus of this guide is violations committed in third countries by or with the support of a multinational company, its subsidiary or its commercial partner. Hence, the guide focuses in particular on the use of extraterritorial jurisdiction to strengthen corporate accountability.

This guide does not address challenges specifically faced by small and medium-size enterprises. While all types of enterprise play a crucial role in ensuring respect for human rights, we focus on multinational groups. At the top of the chain, it is considered that they have the power to change practices and behaviours, that their behaviour conditions the rest of the chain and that they are in a position to influence their commercial partners, including small and medium-size enterprises. The guide is comprised of five sections. Each examines a different type of instrument.

The first section looks at mechanisms to address the responsibility of States to ensure the protection of human rights. International and regional intergovernmental mechanisms of quasi-judicial nature are explored, namely the United Nations system for the protection of human rights (Treaty Bodies and Special Procedures), the International Labour Organisation complaint mechanisms and regional systems for the protection of human rights at the European, Inter-American and African levels, including possibilities provided by African economic community tribunals.

The second section explores legal options for victims to hold a company liable for violations committed abroad. The first part analyses opportunities for victims to engage States’ extraterritorial obligations, e.g., to seek redress from parent companies both for civil and criminal liability. The section then goes on to explore the promising yet still very limited windows of opportunity within international tribunals and the International Criminal Court. The guide sets out the conditions under which courts of home States of parent companies may have jurisdiction over human rights violations committed by or with the complicity of multinationals. The obstacles that victims tend to face when dealing with transnational litigation — which are numerous and important — are highlighted. While this section does not pretend to provide an exhaustive overview of all existing legal possibilities, it emphasizes different legal systems, mostly those of the European Union and the United States. In addition to practical considerations, this choice is also justified by the fact that parent companies of multinational corporations are often located in the US and the EU (although many are now based in emerging countries); the volume of legal proceedings against multinationals head-quartered in these countries has increased; and, these legal systems present interesting procedures to hold companies (or their directors) accountable for abuses committed abroad.

The third section looks at mediation mechanisms that have the potential to address directly the responsibility of companies. With a particular focus on the OECD Guidelines for Multinational Enterprises and the National Contact Points countries set up to ensure respect of the guidelines, the section looks at the process, advantages and disadvantages of this procedure. The section also briefly highlights developments within National Human Rights Institutions and other innovative ombudsman initiatives.

The fourth section touches upon one of the driving forces of corporate activities: the financial support companies receive. The first part reviews complaints mechanisms available within International Financial Institutions as well as regional development banks that are available to people affected by projects financed by these institutions. Largely criticized by civil society organisations in the last decades, these institutions have faced increased pressure to adapt their functioning for greater coherence between their mandate and the projects they finance. Most of the regional banks addressed in this guide have gone through recent consultation processes and subsequent changes of their policies, standards and structure of their complaint mechanisms. Their use presents interesting potential for victims. The second part looks at available mechanisms within export-credit agencies, as public actors are being increasingly scrutinized for their involvement in financing projects with high risks of human rights abuses. Not forgetting the role private banks can play in fuelling human rights violations, the third part of this section addresses one initiative of the private sector, namely the Equator Principles for private banks. The fourth and last part of this section discusses ways to engage with the shareholders of a company. Shareholder activism is an emerging trend that may represent a viable way to raise awareness of shareholders on violations that may be occurring with their financial support. Even more important, the increasing attention paid by investors (in particular institutional investors) to environmental, social and governance criteria can be a powerful lever.

Last but not least, the fifth section explores voluntary initiatives set up through multistakeholder, sectoral or company-based CSR initiatives. As mentioned above, various companies have publicly committed to respect human rights principles and environmental standards. As far as implementation is concerned, a number of grievance mechanisms have been put in place and can, depending on the context, contribute to solve situations of conflict. Interestingly, such commitments may also be used, including through legal processes by victims and other interested groups such as consumers to ensure that companies live up to their commitments. This section provides an overview of such avenues.

Improving Accountability and Access to Remedy for Victims of Business-Related Human Rights Abuse

Shift supported two rounds of workshops with member states that fed into this report’s development, particularly the recommendations on cross-border cases. The overview below is excerpted from the report.

Overview

The present report sets out guidance to improve accountability and access to remedy for victims of business-related human rights abuses, following the Accountability and Remedy Project of the Office of the United Nations High Commissioner for Human Rights (OHCHR) and in response to the request by the Human Rights Council in its resolution 26/22.

The report comprises two parts. The first part provides an introduction to the guidance, including an explanation of its scope, potential usage and important cross-cutting contextual issues. This is followed, in the annex, by the guidance itself, which takes the form of “policy objectives” for domestic legal responses, supported by a series of elements intended to demonstrate the different ways in which States can work towards meeting those objectives in practice. The report is complemented by an addendum (A/HRC/32/19/Add.1), prepared as a companion to the guidance, providing additional explanation and context drawn from the two-year research process of OHCHR.

Accountability and access to remedy: the urgent need for action

Business enterprises can be involved with human rights abuses in many different ways; because of the adverse impacts that business enterprises may cause or contribute to through their own activities, or by virtue of their business relationships. Ensuring the legal accountability of business enterprises and access to effective remedy for persons affected by such abuses is a vital part of a State’s duty to protect against business-related human rights abuse.

At present, accountability and remedy in such cases is often elusive. Although causing or contributing to severe human rights abuses would amount to a crime in many jurisdictions, business enterprises are seldom the subject of law enforcement and criminal sanctions.

Human rights impacts caused by business activities give rise to causes of action in many jurisdictions, yet private claims often fail to proceed to judgment and, where a legal remedy is obtained, it frequently does not meet the international standard of “adequate, effective and prompt reparation for harm suffered”.

State-based judicial mechanisms are not the only means of achieving accountability and access to remedy in cases of business-related human rights abuses. Other possibilities may include State-based non-judicial mechanisms and non-State grievance mechanisms, such as operational level grievance mechanisms. However, effective State-based judicial mechanisms are “at the core of ensuring access to remedy”.

Those seeking to use judicial mechanisms to obtain a remedy face many challenges. While those challenges vary from jurisdiction to jurisdiction, there are persistent problems common to many jurisdictions. These include fragmented, poorly designed or incomplete legal regimes; lack of legal development; lack of awareness of the scope and operation of regimes; structural complexities within business enterprises; problems in gaining access to sufficient funding for private law claims; and a lack of enforcement. Those problems have all contributed to a system of domestic law remedies that is “patchy, unpredictable, often ineffective and fragile”.

The challenges are exacerbated in cross-border cases. While many domestic legal regimes focus primarily on within-territory business activities and impacts, the realities of global supply chains, cross-border trade, investment, communications and movement of people are placing new demands on domestic legal regimes and those responsible for enforcing them. 

The experiences of those seeking remedy suggest that there remain serious deficiencies in the implementation by many States of their international obligations with respect to access to remedy. The right to an effective remedy for harm is a core tenet of international human rights law. The obligations of States with respect to this right have been reflected in the Guiding Principles on Business and Human Rights: Implementing the Protect, Respect and Remedy Framework in terms of a “State duty to protect” against business-related human rights abuses, of which providing access to an effective remedy is an integral part.

Rectifying these deficiencies — which, in many cases, are rooted in wider social, economic and legal challenges — will not be straightforward. It will require concerted and multifaceted efforts from all States, encompassing actions relating to law reform and legal development, improvements to the functioning of judicial mechanisms, law enforcement, policy development and closer international cooperation. However, this is essential work towards realizing the imperatives of accountability and remedy for business-related human rights abuses.

Business and Human Rights: A Five-Step Guide for Company Boards

Also see: Our Viewpoint | Launch press release

This resource was developed by Shift and the UK Equality and Human Rights Commission. It reflects input from directors and other senior corporate officers. The summary below is excerpted from the resource.

What is the aim of this publication?

This guide is primarily for boards of companies, particularly those in the UK (it is published by the UK Equality and Human Rights Commission, the National Human Rights Institution of the UK). It sets out five steps boards should follow to satisfy themselves that their companies identify, mitigate and report on the human rights impacts of their activities. These steps will also help boards to reflect their leadership and fiduciary duties.

This guide also provides advice on how boards can meet the UN Guiding Principles on Business and Human Rights, the global standard, which outline the role of business and governments in respecting human rights. The Guiding Principles do not create any new international legal obligations on companies, but they can help boards to operate with respect for human rights and meet their legal responsibilities set out in domestic laws.

The five steps

[The Equality and Human Rights Commission] recommends that boards should follow five steps to ensure that their company is fulfilling its responsibility to respect human rights in a robust and coherent manner that meets the expectations of the UN Guiding Principles and UK statutory reporting obligations. Boards should be aware of the company’s salient, or most severe, human rights risks, and ensure the company:

  1. Embeds the responsibility to respect human rights into its culture, knowledge and practices;
  2. Identifies and understands its salient, or most severe, risks to human rights;
  3. Systematically addresses its salient, or most severe, risks to human rights and provides for remedy when needed;
  4. Engages with stakeholders to inform its approach to addressing human rights risks;
  5. Reports on its salient, or most severe, human rights risks and meets regulatory reporting requirements.

Human rights due diligence: questions for boards to ask of their executive teams

(see p.17 of the resource)

Board members may find these questions useful to guide discussions with senior management about the company’s salient human rights issues.

1. What is the company doing to make respect for human rights a part of how it does business?

  • Do company functions that pose risks to human rights have sufficient resources and responsibility to manage and mitigate those risks?
  • Is there a senior manager actively leading on human rights in the company?
  • Are there procedures for human rights risks and impacts to be escalated to the board?
  • How are staff encouraged to raise human rights risks and take steps to mitigate and manage them? How are staff rewarded for doing so?
  • What indicators assess the effectiveness of human rights risk management processes?
  • Does a member of the executive team have expertise on human rights? Is there a board champion for human rights?

2. How does the company know what negative impacts it may have on people’s human rights?

  • Does the company assess its human rights risks across its operations and supply chain, geographic locations and decision making processes?
  • What has the company identified as its salient human rights issues and on what basis? Has it drawn on the experience and knowledge of a broad range of stakeholders?
  • How do senior management know whether the company’s policies and processes related to human rights are effective?

3. What steps is the company taking to reduce and mitigate its risks?

  • How does the company use its influence to reduce risks to human rights in its supply chain and other business relationships?
  • What does the company do to ensure it is not contributing to human rights impacts through its own actions and decisions?
  • Does the company work with others in the industry, or with multi-stakeholder groups to address human rights risks?
  • What is the company doing to provide remedy if its own actions or decisions lead to impacts on human rights?

4. How does the company engage with stakeholders to help it understand and address human rights risks?

  • Does the company engage with a broad range of stakeholders across its business to inform its understanding of human rights risks and its progress in reducing these risks?
  • How do people inside or outside the company raise concerns about human rights impacts, and how does the company know whether these channels work?

5. Does the company explain which human rights issues it is reporting on and why?

  • Does the company provide sufficient information to explain its human rights challenges and provide examples of how its actions are improving human rights outcomes?
  • Does the report include indicators or other metrics to provide evidence of progress over time?
  • Do senior management have enough information to meet regulatory reporting requirements?

“For the Game. For the World.” FIFA and Human Rights

Also see: Press release on publication of the report | Collaboration page on this work | Unofficial translation of this report supported by the Business & Human Rights Resource Centre.

Update: In March 2017 Shift Managing Director and Co-Founder Rachel Davis joined the newly established FIFA Human Rights Advisory Board. We see our participation in this Board as a significant opportunity to push for FIFA’s implementation of the report on this page. In Shift’s participation on this Board, we retain complete independence and do not accept any financial or other compensation for our time.

—

Shift supported the development of this report. The summary is excerpted from the resource.

Executive Summary

In December 2015, FIFA asked me to develop recommendations on what it means for FIFA to embed respect for human rights across its global operations. The authoritative standard for doing so is the United Nations Guiding Principles on Business and Human Rights (“UNGPs”), endorsed by the UN in June 2011, of which I was the author. This report first lays out the relevant human rights context for FIFA, and then presents 25 detailed recommendations for action. They fall broadly under three areas of necessary change:

  • From Constitution to Culture: FIFA needs to translate its commitment to respect human rights, included in its new Statutes, into its daily actions and decisions. This includes:
    • Setting clear expectations for the work of all parts of the administration and equipping and resourcing staff to deliver;
    • Ensuring that these efforts are fully reflected in and supported by decision-making on the part of FIFA’s leadership and governing bodies.
  • From Reactive to Proactive: FIFA needs stronger internal systems to address the increasingly predictable human rights risks associated with its business. This includes:
    • Evaluating the severity of risks to people across both its activities and its relationships;
    • Building and using its leverage to address these risks as determinedly as it does to pursue its commercial interests.
  • From Insular to Accountable: FIFA needs to provide greater transparency in managing human rights risks and improve access to remedy. This includes:
    • Routinely discussing key issues with external stakeholders, including those whose human rights are at risk, and disclosing its efforts and progress in addressing challenges;
    • Ensuring that access to remedy for human rights harm associated with FIFA is available not only on paper but also in practice.

Background to This Report

FIFA has been beset by allegations about human rights abuses in connection with its events and relationships. Prominent among them have been reported deaths among migrant construction workers in Qatar, which was awarded the 2022 Men’s World Cup, and the country’s kafala system that often leaves migrant workers in situations of bonded labor. Other tournaments have raised concerns about forced evictions of poor communities to make way for stadiums and other infrastructure, and clamp-downs on freedom of expression among citizens and journalists. There has been less media attention on some other human rights risks, though plenty of concern among those who follow these issues. They include risks to workers’ rights in FIFA’s own supply chains, alleged trafficking of young players, and endemic discrimination against women in the world of association football.

The UNGPs set out the basic policies and processes that enterprises need to implement if they are to know and show they respect human rights in practice. While FIFA is established as an association, it conducts significant commercial activities on a global scale, making the UNGPs the appropriate reference standard.

FIFA and I agreed that I would identify and advise on gaps in its policies and processes, and also author an independent public report with recommendations on how to embed respect for human rights across everything FIFA does. I have retained full editorial control over this report.

What Comes After This Report?

My recommendations are intended to be practical. That does not mean they are all easy. Some recommendations can be acted on immediately; others will take time to implement. Short-term priorities must include addressing human rights risks in tournaments that are already scheduled, and using every opportunity to press host countries to support FIFA’s new statutory human rights commitment. In addition, FIFA should finalize the integration of human rights requirements into the bidding documents for the 2026 Men’s World Cup. Other immediate steps should include developing a human rights policy and implementation strategy, creating the necessary internal operational and accountability structures to drive this work across the organization, and instituting more robust engagement with external stakeholders who have human rights expertise.

I have appreciated the willingness of individuals inside and outside FIFA to speak frankly with me and my team from the non-profit organization Shift. This has been critical in giving us the necessary insights to produce practical analysis and recommendations, notwithstanding the considerable complexity of the issues and institutional networks involved. There are many dedicated professionals in the FIFA administration who grasp the significance of human rights for the organization, and who are committed and motivated to achieving progress. Moreover, there are areas where work is already underway in FIFA towards meeting its human rights objectives. The new political leadership of FIFA and its restructured governing bodies must now empower the staff to take this work forward, provide them with the necessary resources, and lead by example in making respect for human rights part of how FIFA does business. FIFA’s own promise —“For the Game. For the World.”—demands nothing less.

Introduction to Salient Human Rights Issues

This resource was developed in support of the UN Guiding Principles Reporting Framework, developed jointly by Shift and Mazars. The Q&A on this page is an excerpt from a longer Q&A on salient human rights issues — see the full explanation here.

What are salient human rights issues?

Salient human rights issues: The human rights at risk of the most severe negative impact through the company’s activities and business relationships.

A company’s salient human rights issues are those human rights that stand out because they are at risk of the most severe negative impact through the company’s activities or business relationships.

This concept of salience uses the lens of risk to people, not the business, as the starting point, while recognizing that where risks to people’s human rights are greatest, there is strong convergence with risk to the business.

The emphasis of salience lies on those impacts that are:

  • Most severe: based on how grave and how widespread the impact would be and how hard it would be to put right the resulting harm.
  • Potential: meaning those impacts that have some likelihood of occurring in the future, recognizing that these are often, though not limited to, those impacts that have occurred in the past;
  • Negative: placing the focus on the avoidance of harm to human rights rather than unrelated initiatives to support or promote human rights;
  • Impacts on human rights: placing the focus on risk to people, rather than on risk to the business.

Salience therefore focuses the company’s resources on finding information that is necessary for its own ability to manage risks to human rights, and related risks to the business. In this way, it helps companies report on the human rights information that shareholders, investors, governments, customers, consumers, media, civil society organizations and directly affected people want to see.

What is the difference from materiality?

Materiality depends on the choice of a particular audience or goal for which things are then judged more or less important. The audience may be shareholders alone or other stakeholders as well. A goal may be profit-making alone, decisions of an investor more widely, or societal welfare generally. The choice of audience or goal then dictates the selection of material issues.

By contrast, salient human rights issues are not defined in reference to any one audience or goal. Salience puts the focus on those human rights at risk of the most severe negative impact. This provides a consistent, predictable and principled means of identifying the appropriate focus of human rights reporting. At the same time, it gives business an effective tool for understanding how human rights issues connect with risk to the business.

When conducting materiality assessments, many companies discount human rights issues due to common assumptions, such as:

  • Assumption of no risk to human rights: an assumption that the company doesn’t and couldn’t be involved with negative impacts on human rights, based on a limited knowledge of human rights and how they can be affected by business activities and through business relationships;
  • Assumption that risk to human rights doesn’t matter: An untested assumption that impacts on human rights are without substantial risk to the company and are, therefore, not material, ignoring the many ways in which such impacts can lead to tangible and intangible costs and loss of value for the business, particularly in the medium to long term;
  • Assumption that past impact defines future risk: An assumption that looking at past impacts will be sufficient for the identification of forward-looking risks to human rights, ignoring risks that might be identifiable from the experience of others in the industry, from other industries, from an understanding of emerging issues and from scenario planning.

Where materiality processes engage external stakeholders to help inform the company’s understanding of relevant issues for reporting, common pitfalls include:

  • Skewed feedback: Processes that engage with stakeholders based on their expertise in areas the company already assumes are material, such that their feedback reinforces the company’s starting assumptions.
  • Under-informed feedback: Engagement processes where stakeholders are not given sufficient insight into the company’s operations, range of business activities and business relationships in order to provide informed advice of where they most salient issues might lie.

As a result of these common assumptions and pitfalls, many companies’ existing materiality processes fail to adequately reflect human rights issues or to identify those human rights that are at greatest risk and are therefore priorities for management and reporting.

Jump to the complete Q&A resource to see answers to the following questions:

  • Why is this distinction between salience and materiality helpful for companies?
  • Why is this distinction between salience and materiality helpful for investors?
  • Are risks to human rights separate from risks to business?
  • Is materiality still relevant for reporting?
  • How should a company identify its salient human rights issues?

What Do Human Rights Have to Do With Mergers and Acquisitions?

This resource is based on Shift’s experience working with companies’ M&A teams on practical steps that can be taken as part of the existing M&A due diligence process. For more explanation and discussion of this topic, we also recommend our webinar with the UN Global Compact, Ericsson and Total.

Summary

Buying new companies and selling to other companies often involves inherent human rights risks – meaning the risk of harm to people. Those risks are steadily on the rise, and there is no shortage of examples of M&A transactions that fail, or cost significantly more for a company in the long term, because of a lack of consideration of human rights issues.

These kinds of inherent human rights risks are leading companies to start to integrate consideration for human rights into their M&A processes. Yet little information is publicly available about how they are seeking to do so. Revising due diligence checklists and crafting template representations and warranties alone will not work.

There is no shortage of examples of M&A transactions that fail, or cost significantly more for a company in the long term, because of a lack of consideration of human rights issues. Prominent examples include:

  • Meridian Gold, which acquired Brancote Holdings, the owner of a site in Argentina, for US$320 million. Although legal due diligence did not uncover any issues, Meridian Gold ended up with five years of litigation rising to the Argentinian Supreme Court and lost its entire investment because the surrounding community opposed the use of the land for an open-pit gold mine. The M&A team could have assisted by flagging that the legal title to the land alone may not be sufficient in light of the local dynamics around mining;
  • Nokia, which suffered a significant hit to its reputation when news broke that its products and services had assisted the Iranian government’s efforts to track, imprison and harm political dissidents during the 2009 Iranian elections. In reality, Nokia had divested the business six months prior to the elections to Iran Telecom. But public opinion was that if a company sells a business that can cause harm, the seller should seek to limit the risk of such harm by incorporating restrictions during the sales transaction, or seeking to sell to another buyer;
  • US company American Sugar Refining, which acquired Tate & Lyle Sugars for £211 million in 2010. Subsequent to the transaction, Tate & Lyle Sugars was subject to a £10 million lawsuit in the UK High Court for alleged connection to land grabbing in Cambodia. The M&A team could have assisted by flagging risks associated with Tate & Lyle Sugars’ suppliers and the fact that legal title to land in Cambodia can mask corrupt practices.

Based on work with companies that are at the leading edge of efforts to integrate consideration of human rights into their M&A processes, this article describes the notable differences between a traditional M&A process – one that seeks to identify and address risks to the company – and one that seeks to identify and address risks to people that play out throughout the M&A transaction. It describes the steps companies are taking to add the human rights lens when (i) identifying the issues to address in the course of due diligence, (ii) prioritizing the issues in preparation for contract negotiation and (iii) seeking to address these issues.

Although the article is intended primarily for companies and their in-house M&A teams, it will also be relevant for law firms that are increasingly seeking to advise clients in this area as well as other stakeholders interested in advancing business respect for human rights.

How to Do Business With Respect for Children’s Right to Be Free From Child Labour

This guidance was developed with input from companies and other stakeholders participating in the ILO’s Child Labour Platform. | Learn about the collaboration that supported the development of this resource.

For companies concerned about child labor connected to their business operations, particularly in global value chains, this comprehensive guidance walks readers through each step of implementing the Guiding Principles. It features an explanation of what constitutes child labor, foundational explanations of Guiding Principles elements, case studies, discussions about common dilemmas, diagnostic questions and tips about pitfalls to avoid. It builds on prior guidance from the ILO and IOE about how to prevent child labor in a company’s own operations, and focuses on the expectations of the Guiding Principles when it comes to preventing and addressing child labor that is several tiers removed in the supply chain. It includes a series of “hard questions” responding to real challenges that companies face.

Mapping the Modern Slavery Act Against the UN Guiding Principles

The UK’s Modern Slavery Act 2015 received Royal Assent on March 26, 2015. The Act is a critical step forwards in strengthening company disclosure on efforts to prevent some of the most serious abuses that exist in today’s global supply chains as a result of slavery, servitude, forced or compulsory labor and human trafficking.

However, the Act has raised questions for many UK companies about the relationship between its provisions, particularly Part 6, which deals with transparency in supply chains, and their broader responsibility to respect human rights. What exactly are they being asked to report on relating to modern slavery? And how does this new reporting requirement relate to what they are already doing to implement the UN Guiding Principles?

This short analysis by Shift aims to help companies and other stakeholders understand the relationship between the provisions of the Act and the expectations of the UN Guiding Principles. It is not intended as legal advice.

1. Context

The Act asks companies of a certain size to publish an annual “slavery and human trafficking statement” to disclose the steps the company has taken during that year to ensure that slavery and human trafficking is not taking place in any of its supply chains or in any part of its own business (Section 54(4)). Alternatively, a company can state that it has not taken these types of steps. Where a company has a website, it must publish the statement on its website (Section 54(7)). The statement must be approved by the board or its equivalent (Section 54(6)). Unlike a similar law in the state of California in the US, there is no requirement that companies conduct a certain amount of business in the UK for the law to apply. The Act applies if a company is carrying on business, or part of a business, in any part of the UK.

The law applies to a significant number of companies. In line with the general view expressed by both business and civil society stakeholders during the public consultation on this point, the Government announced on July 29 that the law applies to any company with an annual turnover of £36 million – the lowest of the proposed turnover thresholds. As a result, the Act applies to an estimated 12,000 UK active companies; that is more than the number that will be subject to the new EU non-financial reporting directive that is being transposed into UK law this year.

2. Analyzing the Modern Slavery Act through the Lens of the UN Guiding Principles

So what are UK companies that are subject to the Act being asked to do? Section 54(5) provides that a company’s statement “may include” the following:

  1. the organization’s structure, its business and its supply chains;
  2. its policies in relation to slavery and human trafficking;
  3. its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
  4. the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
  5. its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate;
  6. the training about slavery and human trafficking available to its staff.

The text is, admittedly, potentially confusing for those trying to assess its requirements against the expectations of the UN Guiding Principles. But in essence, paragraph (a) asks for critical context to enable a reader to understand the business; the remainder of the provisions reflect expectations set out under the UN Guiding Principles and apply them to the risks of slavery and human trafficking in a company’s own operations and in its supply chain. This is consistent with the UN Guiding Principles, which expect companies to seek to prevent or mitigate negative human rights impacts that are directly linked to their operations, products or services through their business relationships, even if they have not caused or contributed to those impacts.

In short, companies are being asked to disclose:

  • Evidence of a policy commitment in relation to slavery and human trafficking, as well as evidence of the effectiveness of the embedding of this policy specifically through training provided to staff;
  • The company’s human rights due diligence processes in relation to slavery and human trafficking in its operations and supply chains. This includes:
    • Identifying the parts of a company’s operations and supply chains where the risks of such impacts are the most salient, that is, where they would be the most severe in terms of the impact on people, were they to occur, and where they are the most likely to occur;
    • Explaining the steps a company has taken to assess and manage those risks and the effectiveness of its efforts, which are all parts of human rights due diligence as set out in the UN Guiding Principles.

The law does not specifically refer to information about companies’ remediation processes where negative impacts have taken place and the company has caused or contributed to them. (Remediation is the third element, together with a policy commitment and human rights due diligence processes, that the UN Guiding Principles expect companies to have place to meet their responsibility to respect human rights in practice.) However, the list of relevant information in Section 54(5) is non-exhaustive.

So companies can rest assured: the law does not introduce anything new. It is not asking for additional information beyond that which is already covered by the UN Guiding Principles. Rather, the Act is asking for evidence of specific policies and processes to prevent and address slavery, human trafficking and related severe impacts.

3. The Relationship between the Modern Slavery Act and Broader Human Rights Reporting

Companies and their stakeholders can now benefit from the UN Guiding Principles Reporting Framework – the first comprehensive guidance for companies to report on human rights in alignment with the UN Guiding Principles – in their efforts to meet the requirements of the Modern Slavery Act.

The table below illustrates the connections between the information asked for under the Act and the guidance provided in the UNGP Reporting Framework.

Modern Slavery Act, s 57

UNGP Reporting Framework


5(a) Information about an organization’s structure, business and supply chains


Reporting Principle A.

5(b) Information about an organization’s polices on modern slavery

Relevant information is contained under Question C1.

5(c) Information about an organization’s due diligence processes in relation to modern slavery in its business and supply chains

Relevant information is contained under Questions C2 through C5.
The four components of due diligence are: (i) assessing impacts, (ii) integrating findings and taking action, (iii) tracking performance and (iv) being prepared to communicate about a company’s efforts. Note: “Communicating” encompasses both formal reporting about the company’s efforts to manage its human rights risks, where appropriate, and communication with stakeholders through other means. Since the UNGP Reporting Framework itself provides guidance on formal reporting, its questions focus on the other main aspect of communication under C2 on stakeholder engagement.

5(d) Information about the parts of an organization’s business and its supply chains where there is a risk of modern slavery taking place, and the steps it has taken to assess and manage that risk

Relevant information is contained under Questions C2 through C5.

5(e) Information about an organization’s effectiveness in ensuring that modern slavery is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate

Relevant information is contained under Questions C2 through C5.

5(f) Information about the training on modern slavery available to its staff

Relevant information is contained under Question C1.1.
Note: The Implementation Guidance provides other examples of how a company can demonstrate that a policy commitment has been embedded into company practice beyond training.

The UNGP Reporting Framework provides additional resources on how companies can enhance the credibility of their disclosure in relation to their efforts to prevent and address risks related to slavery, human tracking and related impacts, particularly in terms of stakeholder engagement (see C2) and remediation (see C6).

Companies that use the UNGP Reporting Framework for their human rights reporting more generally, and for which slavery, human trafficking or related impacts are a salient human rights issue, will already have addressed the Act’s disclosure requirements by addressing the provisions of the Reporting Framework indicated above. In this way, companies’ disclosure on their efforts to prevent and address these severe impacts can become part of a broader, more coherent approach to human rights reporting.