In two sentences, what does this law do?
This law is designed to prevent corporate abuse before it happens, placing a legal duty on UK public bodies and companies doing business in the UK to prevent human rights and environmental harms in their own operations, subsidiaries, and value chains, including by carrying out ‘due diligence’ to identify, prevent and address harm.
It then introduces civil liability and criminal penalties for those that fail to take reasonable action, creates an enforcement body with the powers to investigate and penalise non-compliance and creates new mechanisms to improve access to justice for victims.
What types of harms would this law address?
This law protects against harms to all human rights and labour rights including but not limited to those recognised in the International Bill of Human Rights, the Right to a Clean, Healthy and Sustainable Environment and the ILO Declaration on Fundamental Principles and Rights at Work. Where local labour protections are higher than international ones, the law requires companies to follow the higher standards.
It also protects against adverse impacts on the environment including climate change; biodiversity loss; degradation of land, marine and freshwater ecosystems; deforestation; air, water and soil pollution; mismanagement of waste, including hazardous policy substances.
What requirements would this law place on public bodies and companies doing business in the UK?
This law would make human rights and environmental due diligence – a process for identifying, preventing and addressing human rights and environmental risks throughout company operations, subsidiaries and value chains – a mandatory requirement rather than a voluntary expectation as at present.
As part of this, companies have to carry out informed, meaningful, safe and gender-informed engagement with rightsholders throughout the due diligence process, to engage with trade union processes where they exist and to establish or participate in an effective mechanism for victims to report grievances.
In line with the UN Guiding Principles, due diligence requirements would be proportionate to company size and the level of risk their activities pose to people and planet. So, if there is little risk, as is the case with many small companies, requirements are much smaller.
Finally, the public sector and companies with an annual worldwide turnover exceeding £36 million would be required to submit rightsholder-verified information to a publicly accessible registry, covering:
- Reporting on human rights and environmental harms identified, preventative and remedial measures taken, rightsholder engagement and outcomes achieved.
- Disclosure of the value chain and ownership structures to provide transparency on where responsibility for harm should be placed.
How would these new rules be enforced?
This legal proposal applies the ‘failure to prevent’ legal mechanism, which is a tested, world-leading British model for enforcing business regulation, already being applied through the Bribery Act, the Criminal Finances Act and the Economic Crime and Corporate Transparency Act.
This mechanism would hold commercial organisations and public authorities legally liable for damages if they fail to prove that they have taken all reasonable steps to prevent harm from occurring.
The law would also require the Government to appoint an independent enforcement body that provides guidance on the law, can receive and investigate complaints about harm and take decisive action against businesses for breaking the law, including direct fines. Learn more about CJC’s view on enforcement here.
How would the law strengthen access to justice and remedy for victims of corporate harm?
This law would introduce multiple accessible mechanisms for workers and communities to report and gain access to justice for harm linked to UK commercial organisations or public authorities.
- Businesses would have to establish effective local grievance mechanisms so that harm can be caught early.
- There would be a mechanism to submit complaints to the independent UK enforcement body.
- Victims would also be able to bring their case to a UK court.
Crucially, this law would also address the unfair information imbalance between victims of harm and companies working with large legal teams and complex global structures. This law would reverse the ‘burden of proof’ so that once a victim has shown that there has been harm, responsibility would shift to the business to demonstrate that it took all reasonable steps to prevent the harm. This approach would create a fairer balance of power in legal disputes and thus incentivise faster settlement processes and early remediation of harm.
The requirement for large businesses to be more transparent about their value chains and ownership structures will also help to ensure that victims of harm, courts and the enforcement body have access to the information necessary to provide access to justice.
Finally, this proposal would empower a UK enforcement body and UK courts to ensure victims receive appropriate remedy for harm. This would include not only financial compensation but also orders on companies to cease harmful activity, clean up environmental damage and carry out other appropriate action.
In Parliament, the model law is known as the “Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill”.
Read the full text of the model law here.
Posted by: CJC Team | Tagged as: Other
