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29 Sep 2023

Jasmine Elliott & Irene Pietropaoli, British Institute of International and Comparative Law (BIICL)

Negotiating the scope of human rights due diligence in the UN binding treaty & the EU CSDDD

As trilogue negotiations for the proposed EU Corporate Sustainability Due Diligence Directive (CSDDD) continue and an updated draft of the UN legally binding instrument on business and human rights (UN Treaty) was recently published in advance of the 9th working group session in October, there is an opportunity to influence both debates and negotiations. While the two proposed instruments have different scope, it is imperative they align and complement each other. Here, we discuss three aspects related to mandatory human rights and environmental due diligence (mHREDD) requirements in both drafts and consider ways in which these two proposals can be further strengthened through alignment.

Climate change

First, amid a climate change crisis, UN bodies are increasingly recognising climate change affects the enjoyment and realisation of all human rights – both directly and indirectly. While the UN Guiding Principles on Business and Human Rights (UNGPs) did not address climate change or environmental rights explicitly, the UN Working Group on business and human rights has clarified States and business have obligations and responsibilities in relation to human rights harms linked to climate change. Likewise the 2011 OECD Guidelines on Multinational Enterprises did not reference climate change – but the 2023 updated Guidelines now includes the expectation that enterprises conduct human rights due diligence (HRDD) on environmental harms associated with their operations, products and services, including in relation to climate change and biodiversity (Chapter VI). This emphasis is also reflected in the proposed CSDDD, which requires directors of companies to consider ‘the consequences of their decisions for sustainability matters, including, where applicable, human rights, climate change and environmental consequences’ (Art 25.1). The updated UN Treaty draft, however, has dropped any mention of climate change. The previous (third) draft stated that States Parties shall ensure HRDD measures undertaken by business enterprises shall include ‘undertaking and publishing regular human rights, labour rights, environmental and climate change impact assessments throughout their operations’ (Art. 6.4.a). The new 2023 draft now reads ‘undertake and publish on a regular basis human rights impact assessments prior and throughout their operations’. This is a disturbing regression which should be reversed during the October negotiations.

High impact sectors

Another discrepancy is the differentiation between high impact sectors and other sectors in the CSDDD – a distinction not reflected in the UN Treaty. While Article 6.3 of the third draft of the UN Treaty gave states some flexibility in implementing mHREDD obligations with consideration of company size and sector, this language is not reflected in the updated draft UN Treaty, which instead says states should ‘regulate effectively the activities of all business enterprises’ through ‘appropriate legislative, regulatory, and other measures’ (Article 6.1-2). Furthermore, the updated OECD Guidelines cover all sectors equally (including the financial sector) without applying different expectations to sectors classed as high impact or high risk.

The CSDDD, on the other hand, restricts or delays mHREDD obligations by company size and sector, including ‘high impact sectors’ like mining, agriculture, and textiles. Unlike climate change, where the CSDDD incorporates it more clearly into its scope than the UN treaty, treating certain sectors as ‘high impact’ limits the scope of HRDD in the CSDDD in ways the UN treaty does not. This sector focus in the CSDDD dangerously leaves out important considerations for how all sectors can impact human rights, as has been noted in joint statements by NGOs asking the CSDDD to include considerations of sectors like finance and tech.

Adverse impacts

Finally, discussions of ‘adverse impacts’ are also still not aligned between the two proposals. The updated UN Treaty now gives a definition of the term “adverse human rights impact” and uses this term in its discussion of human rights due diligence; this update brings the UN Treaty more in line with how the CSDDD discusses human rights impacts. Yet, the CSDDD also introduces “severe human rights impact”, where a subset of companies would only have to consider severe human rights impacts in their due diligence obligations. Like the discussion on high impact sectors, the CSDDD is limiting the scope of HRDD by potential severity of adverse impacts in a way that the updated UN Treaty does not. The UN Guiding Principles recognise that business should consider the severity of the harms caused in their human rights due diligence, but severity should not be used to limit or excuse companies from their mHREDD obligations.

These three examples of where the UN Treaty and the CSDDD differ are important in the overall discussion of how mHREDD applies to all businesses. Both drafts have limited the scope of human rights issues under consideration, either by not including them - in the case of climate change in the UN Treaty - or by introducing limited language, like ‘high impact sectors’ or ‘severe human rights impact’ in the CSDDD. Excluding consideration of relevant, substantive issues like climate change or specific sectors as it relates to mHREDD could be negotiating away key aspects of human rights considerations for businesses.

By Jasmine Elliott, Research Fellow in Business and Human Rights, and Irene Pietropaoli, Senior Fellow in Business and Human Rights, British Institute of International and Comparative Law (BIICL)

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