Blog, 
By Andrea Shemberg
Yes: We’ve all heard the question. “Now that we have increased legislative obligations, and especially the EU Directive on human rights and environmental due diligence, why do we still need to consider the UNGPs? Shouldn’t we just drop the UNGPs and go for a full compliance approach?”
This question is popping up inside company corridors and in compliance departments around the world. As companies start to plan, and frankly panic, about new legislation, they assume they are asking the right question. And they also assume they are answering it correctly by beefing up legal and compliance departments – often to the budgetary and decision-making detriment of their UNGPs human rights work.
This is a misguided strategy that hinders risk management today and will limit a company’s ability to anticipate and plan for future risks.
Instead, right now is precisely the time that companies should be doubling down on their UNGPs commitment and taking cues from those who have the internal know-how and experience of carrying out meaningful human rights due diligence (HRDD).
Why is this the case? Because this is the only way to:
- ensure that the company’s risk management approach will continue to reflect stakeholder expectations beyond compliance risks
- help achieve a more level playing field globally
- ensure that HRDD continues to bring value to the business
- appropriately prepare for the development of future legislation in this area.
Abandoning the UNGPs now would leave companies vulnerable to a new era of uncertainty as EU governments start to transpose the Directive and a number of governments outside the EU (including in Colombia, Mexico, Canada and New Zealand) are designing and considering new business and human rights legislation.
Let’s take each of these arguments in turn.
1. The UNGPs – Better risk management than compliance alone
The UNGPs were designed to drive cumulative change - allowing many governance systems to push in the same direction to shape company behaviour. As designed, the UNGPs have become the authoritative foundation for many actors and stakeholder groups - forming a common set of expectations for what the company responsibility to respect human rights looks like.
Investors, banks, export credit agencies, civil society, human rights experts, UN Special Procedures, the OECD National Contact Points, law makers, international organisations, companies, employees, the public and others have now taken on board the expectations for companies set out in the UNGPs. Thirteen years of implementing the UNGPs has consolidated this consensus.
What this means is that if companies now pivot to a “compliance only” approach under the EU rules or others, they will be turning a blind eye to societal expectations and risks to people that do not have their roots in specific laws - yet can have financial, reputational and even legal consequences for the company.
2. The UNGPs - the only route to a more level playing field
While rarely discussed, one of the greatest achievements of the UNGPs is that it is an expression of a hard-won consensus – a global consensus – on company responsibility for human rights. No other business and human rights standard has the authority of the UNGPs globally.
Why is that important? This authoritative expression of a shared set of ideas about where company responsibility for human rights begins and ends offers companies two things. First, it offers companies a response to claims outside the scope of their agreed responsibility. Second, it offers a practical, constructive roadmap for engaging effectively with the development and implementation of new laws to help increase harmonisation and achieve a more level playing field globally.
It is easy for those who are new to business and human rights to overlook that in the not-so-distant past, there was a large coalition of international civil society organisations that were in favour of placing the same duties on companies as States have under international human rights law.
Thanks to the UNGPs, gone are the days when civil society can legitimately claim that companies should step into the role of the State and fulfill human rights. No longer can human rights advocates legitimately claim that companies have a duty to fix human rights challenges unrelated to the company’s impacts. Today if such inappropriate claims are made, companies will not be alone in holding up the UNGPs in their defence.
The UNGPs also provide the perfect tool for companies to engage constructively with lawmakers and implementing authorities to help craft the rules and their application in line with established consensus. Many companies have more than a decade of experience implementing the UNGPs. That experience and know-how are fundamental to helping administrations shape and implement rules that provide effective incentives and disincentives to enable and reward responsible behaviour.
For example, the EU Directive on corporate sustainability due diligence entered into force on 25 July 2024. EU Member States have two years to transpose the Directive into national law. This two-year window of time is where the rubber hits the road. Now is the time when the work for alignment begins. Now is the time when a global consensus and shared language, as well as a long body of work to implement the UNGPs, can facilitate the achievement of a more level playing field.
Interpretations of terminology and ideas in the Directive should be guided by a deep understanding of what meaningful human rights due diligence means in practice. Positive engagement, based on UNGPs experience, is absolutely necessary now.
If companies abandon their UNGPs commitment, and the practice that grew out of that commitment, they are discarding one of their most valuable tools for shaping both imminent and future business and human rights legislation. They will give up that consensus that they helped to shape, and they will shepherd in a new era of uncertainty where the scope of company responsibility for human rights will be up for grabs.
3. The UNGPs preserve the value to the business of HRDD
Companies which have experience of implementing human rights due diligence, as elaborated in the UNGPs, know that meaningful HRDD is not the same as demonstrating compliance with a requirement. HRDD is a tool that allows them to foresee and manage risks to people and the company.
Let me offer an example. A company I worked with did a survey of workers to find out about risks associated with their working conditions. Unsurprisingly, the surveys came back indicating that no worker had any complaints to report. From a compliance perspective this is a great result. The company can demonstrate that it is doing well.
However, those who were responsible for human rights in the company were unhappy because the survey had not provided helpful insights into potential and actual negative impacts on workers that needed attention. They went back to the drawing board to shift their methodology to try to obtain better information – and they did. The company could then draw up a plan to avoid and mitigate harms based on real facts about risks.
HRDD, when done meaningfully, helps companies see risks that were not visible previously. A compliance approach to HRDD is simply going through a process to be able to show the world you have done it - irrespective of whether it provides good and useful data to the company.
The good news is that those companies which have been carrying out HRDD since 2011 will have an enormous head start on ensuring their compliance with the new EU laws and other laws that will come on line in years to come. These companies have known since 2011 that they should be considering risks to people and not just risks to the business. The idea of double materiality in the CSRD is not new to them – and that risk conversation internally will have already begun. But HRDD must continue to be driven by professionals who have built up years of experience and have developed the know-how to do it right.
Put simply, HRDD requires a different set of skills from what lawyers or compliance officers are trained to do. So augmenting legal departments to the detriment of human rights skills in response to new human rights due diligence legislation is counterproductive. It robs the company of a valuable HRDD process - all in the name of complying with a specific law.
4. The UNGPs – A tool to predict and plan for future legislation
Companies should never forget that the UNGPs have been, and will continue to be, a set of guardrails for business and human rights legislation.
GBI looked at business and human rights legislation enacted between 2017 and now and found, without exception, every single general business and human rights legislation is reflective of the standards set out in the UNGPs.
We also looked at new business and human rights legislation being proposed or considered in countries like Canada, Mexico, New Zealand, Colombia and Brazil. Again, every single proposal reflects standards originating in the UNGPs. And while not legislation as such, the recent guidance notes published by both the Chinese and Japanese governments also refer to the UNGPs and human rights due diligence.
What’s more, we also looked into specific regulations passed or being proposed on issues like modern slavery, responsible batteries or conflict minerals. While these measures do not mandate human rights due diligence, it is clear that performing HRDD as prescribed by the UNGPs would facilitate compliance with their requirements.
In sum, the UNGPs is a tool that can serve companies as their North Star for addressing present and future human rights compliance - as well as risks beyond compliance - globally. That is a game changer for companies which complain of struggling with how to comply with what are seen to be a plethora of new legal and other expectations across their operations and value chains around the world.
Conclusion
If company leadership is asking whether it makes sense to continue pursuing a commitment to the UNGPs in the context of rapid legislative developments, there is only one good answer.
The UNGPs should be valued as fundamental to effective risk management, to creating a more level playing field globally, to preserving value to the business of HRDD, and to future-proofing the company in preparation for imminent and upcoming business and human rights legislation.
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[1] John Ruggie, Just Business. (New York: W.W. Norton & Company 2013) 28.
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