Taking note of human rights

This week marks the seven-year anniversary of the UN Guiding Principles on Business and Human Rights. Law firms are increasingly working with African law firms and others on these issues, in the second of ALB’s two-part analysis.

Last year, the international development law charity Advocates for International Development (A4ID) worked with the East Africa Law Society (EALS) to run professional development workshops on the United Nations Guiding Principles on Business and Human Rights (UNGPs), which set out those international standards on businesses’ responsibility to respect human rights.

The workshops, delivered in various jurisdictions in the region, helped local lawyers implement the UNGPs which assist in the mitigation of corporate-related human rights harm within some of East Africa’s fast growing economies.

Both Morrison & Foerster and Allen & Overy (A&O) worked with A4ID in delivering the roadshows in Rwanda, Burundi, Kenya and Zanzibar, with follow-up training being done by EALS locally.

A4ID’s chief executive Yasmin Batliwala said that, with East Africa recording the fastest economic growth on the African continent, “this is an opportune moment for an exchange between legal practitioners on the fundamental role of the legal profession in driving responsible and sustainable growth and development”.

This was a development welcomed by Isaac Okero of Behan & Okero Advocates, the chairperson of the EALS professional development committee who called the initiative “an essential component of professional development” in supporting knowledge building on business and human rights.

Brenda Dosio, also of EALS, added: “Disseminating information on the responsibilities of companies towards human rights with regard to, for example, labour practices, and the development of human rights policies are important and timely given the large plantations and growing extractive sector in the region.”

TAKING HUMAN RIGHTS SERIOUSLY

Gauthier van Thuyne, an A&O partner based in Brussels and a member of the International Bar Association’s taskforce on climate change and human rights, told ALB that: “Our commercial clients across the world are increasingly taking human rights considerations into account when making major investment decisions, in M&A transactions or when scrutinising their supply chains.”

He says: “We approached our workshops in Tanzania and Uganda as a collaborative process and peer-to-peer learning experience. We had just as much to learn from our East African colleagues with their on the ground knowledge of things like the real impacts of large mining and development projects, as they do from us.”

Cooperation with EALS on the workshops “certainly galvanised their members to take part”, he adds,  it was “essential to partner with local law firms and law societies, as well as business, government and the community, to help integrate consideration of human rights risks as part of business transactions”.

That journey, said van Thuyne, required some delicacy: “One issue which requires particular sensitivity here and which we are learning more about is the treatment and responsibilities of state-owned enterprises, which are more prevalent in Africa, as well as issues of transparency and corruption.”

He noted: “We have seen Kenya take a lead in Africa on developing a National Action Plan on business and human rights, with the national baseline assessment being carried out by the Kenyan Human Rights Commission and the Danish Institute on Human Rights.”

To him, such developments are all positive as a form of “North/South collaboration” in reflecting local conditions, and providing guidance for other countries in the ‘Global South’, saying: “Our workshops are just one small piece of a puzzle which is building up over time through the efforts of the UN working group on business and human rights, the African Union, forward-looking businesses, civil society organisations and many others.”

TRANSPARENCY AND COMPLIANCE

One issue that arises out of the work done by law firms on human rights, as previously reported by ALB, is that to companies which arises from being transparent about risks and impacts in their operations and supply chain.

Issues about transparency and corporate compliance have arisen in cases involving conflict minerals, for example, with African nations giving rise to significant concerns, over time.

The ‘soft law’ responsibility to respect human rights, like the UNGPs, is increasingly changing into ‘hard law’, with corporates, including African-focused companies and their local subsidiaries, looking at whether they have the jurisdiction to consider human rights impacts which occur overseas and throughout a business’ supply chain.

Those businesses that fail to take compliance seriously open themselves up to potential criminal and civil liability, not to mention devastating adverse publicity. While not exclusively aimed at Africa, UK-headquartered law firm Norton Rose Fulbright and the British Institute of International & Comparative Law (BIICL) have also looked into how supply chains might be affected.

Following in the footsteps of Hogan Lovells and Debevoise & Plimpton in raising awareness of this issue, Lise Smit, associate senior research fellow in business and human rights at BIICL explains why it is important: “The UNGPs expect companies to undertake human rights due diligence to identify, prevent and mitigate their human rights impacts, including those which occur in their supply chain.”

MANAGING SUPPLY CHAINS

Both bodies published a major report on managing human rights in supply chains, entitled ‘Making sense of managing human rights issues in supply chains’ which aims to provide a comprehensive overview of the legal and regulatory framework relevant to the management of human rights in supply chains.

Like the IBA’s Practical Guide on Business and Human Rights for Business Lawyers, the new report discusses the components of human rights due diligence in supply chains and sets out observations of current practice and best practice recommendations.

The 2018 report follows a 2016 global study by Norton Rose Fulbright and BIICL which revealed that a significant number of businesses neglected potential human rights risks in their supply chains.

That survey revealed that almost half of surveyed businesses had never undertaken human rights due diligence exercise – leading to the 2018 survey.

Among the key findings, the study revealed that beyond a handful of leading companies with more sophisticated human rights and supply chain management programmes, there appears to be a lack of knowledge about managing human rights issues in supply chains, particularly among smaller companies.

Additionally, the report found, collective action, including through sectoral, cross-sectoral and multi-stakeholder initiatives, is particularly beneficial where the nature of the supply chain is more opaque.

Indeed, without effective intra-industry collaboration in carrying out human rights due diligence, while also aligning purchasing practices with human rights expectations, suppliers may be subject to unnecessary cost and time burdens to comply with multiple audits, training and screening exercises of their customers.

BATTLES OVER CORPORATE PARENTAL LIABILITY

 ALB readers will be aware that, following the 2018 judgments in Lungowe v Vedanta Resources and Konkola Copper Mines and Okpabi v Royal Dutch Shell, both in the English Court of Appeal, there is developing case law around the recognition of a legal duty of care based on principles of control.

Although the majority decision in Okpabi found that the claimants were unable to demonstrate that Shell owed a duty of care to those affected by the actions of a subsidiary, there was a significant dissent by Lord Justice Sales, who found for the claimants.

Sales LJ, while agreeing with the majority that setting global standards to guide the conduct of operating subsidiaries would not lead to the imposition of a duty of care, considered that such global standards were significant, where, for example, such standards provided a mechanism for the projection of real practical executive control.

With the claimants aiming to reach the UK Supreme Court, Okpabi illustrates that such an issue is not going to go away, with a briefing from A&O commenting that a responsibility for implementing and overseeing policies, including human rights focused ones, “should be… firmly seated at subsidiary level”.

That, the firm said, “should help to promote better compliance and awareness of… human rights issues by foreign subsidiaries”.

Cases like this underscore why NRF partner Milana Chamberlain commented at the time of the launch of her firm’s report: “Global supply chains continue to increase in complexity and it is vital that companies build a complete picture of the impacts that their activities have on human rights, local communities and the environment.”

She added: “As illustrated by our 2016 study, many businesses are unaware of their actual human rights impacts and lack tools for effective supply chain management,” saying that the report went some way to illustrating why this was an issue, and how to address it.

Smit agrees, saying: “Many companies are only just starting to explore the complexities of such supply chain human rights due diligence. The legal landscape is developing fast, with increasing focus on a company’s control over the human rights impacts of its supply chain.”

NRF is not the only firm to engage with clients on this issue.  Hogan Lovells has also published its own guidance, aimed at the energy and natural resources sector.  Research carried out by the UN reveals that business-related human rights impacts are more common in this sector than any other.

Hogan Lovells partners Warren BeechJulianne Hughes-Jennett and consultant Peter Hood, have developed an Energy and Natural Resources Guide for in-house lawyers, launching the same at an industry event in Johannesburg for companies operating in the African extractive sector, with other guides set to follow.

Such initiatives illustrate that, where Africa is concerned, human rights and business law go hand-in-hand.

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