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What influences the effectiveness of mHREDD laws?

Dr Sofia Gonzalez De Aguinaga on the latest evidence on the effectiveness of mandatory human rights and environmental due diligence in addressing forced labour in business supply chains.

Published: 24th April 2024

On Wednesday 24 April, members of the European Parliament voted through the Corporate Sustainability Due Diligence Directive (CSDDD), the only mandatory human rights and environmental due diligence (mHREDD) legislation developed at the supranational level, which promises to harmonise the current fragmented space of such laws.

This is part of a transition from voluntary to mandatory human rights due diligence measures enacted by States due to a growing sense that voluntary mechanisms are insufficient to address human rights abuses, as evidenced by growing evidence of exploitative practices present in global supply chains, poor compliance with modern slavery transparency legislation and slow voluntary implementation of human rights and environmental due diligence processes by companies.

France was the first country to develop a mHREDD law in 2017, other countries, such as Germany, the Netherlands, Norway, and Switzerland have developed their mHREDD laws too. Many other European countries such Austria, Belgium, and Luxemburg, and non-European ones such as Japan, are considering developing similar legislation. These laws differ in many ways, including what businesses they include in their scope or consequences for non-compliance, among other factors, but they have in common that they require businesses to undertake human rights due diligence, somewhat following international human rights normative frameworks such as the UN’s Guiding Principles on Business and Human Rights and the OECD guidelines, and impose sanctions for non-compliance.

But do mHREDD laws work? This is what we explored in a Policy Brief, commissioned by the Modern Slavery PEC, which we recently updated with the latest available evidence.

Overall, and based on the limited available evidence, we can say that, so far, they work at influencing some positive corporate changes, but fall short of the substantial changes that are needed to protect the rights of workers in global supply chains.

Evidence from the implementation of mHREDD laws in force, mainly in France and Germany, show that they can improve corporate disclosure of human rights risks, encourage businesses to implement human rights due diligence processes, including increasing human rights risk management, and generally increase corporate human rights practices, especially of those falling behind in the voluntary adoption of HREDD. However, the evidence also shows businesses are taking a compliance approach, passing the responsibility down the supply chain without the necessary support and engagement, and not engaging with rightsholders and people with lived experience of human rights abuses.

"[...] so far, they work at influencing some positive corporate changes, but fall short of the substantial changes that are needed to protect the rights of workers in global supply chains."

In our Policy Brief, we identify specific factors that may influence the extent to which mHREDD laws work and under which conditions. . For example, we identify that having a State-based monitoring and enforcing mechanism and establishing incentives for companies may influence business compliance. We also found that legal clarity and specificity, along with detailed disclosure requirements and engagement with suppliers, may influence internal corporate changes related to human rights due diligence.

The Policy brief thus offers insights for policymakers to better design mHREDD laws that can influence effective implementation and contribute to protecting vulnerable people. This includes considering rightsholders and people with lived experience in their design to ensure that these ultimately work to protect them, connect the process of human rights due diligence with outcomes for workers, and to design them as part of a “smart mix” of voluntary and obligatory measures that complement each other, preventing contradictions or overlappings.

However, we still need more evidence to fully answer this question as it is still early days to provide any conclusions given their recent implementation and the lack of empirical evaluations on their effectiveness.

The Bingham Centre for the Rule of Law will soon publish a separate brief focused on the unintended consequences of mHREDD laws and BIICL (British Institute of International and Comparative Law, where the Bingham Centre is based) will publish in October a report on the impact of mHREDD legislation on internal corporate practice.

Dr Sofia Gonzalez de Aguinaga is a Research Fellow in Business, ESG & Modern Slavery at the Bingham Centre for the Rule of Law. Follow her on Twitter at @sofiadeaguinaga.

Image: Peter Bond via Unsplash