Human Rights and Labour Standards

By signing the UN Global Compact, companies commit themselves to respecting human rights and not to be complicit in human rights violations, including with a view to demanding that fundamental rights are respected by business partners and along the value chain. Particularly central to this are the so-called Core Labour Standards covered in Principles 3 to 6, which are also an essential component of decent work. Human rights also play a central role in the 2030 Agenda: Almost all of the 17 Sustainable Development Goals (SDGs) are linked to one or more human rights. In order to realise the vision of a sustainable and fair global economy, it is essential that companies live up to their human rights responsibilities.

Guidance on how to implement this responsibility in practice is described in the UN Guiding Principles on Business and Human Rights adopted in 2011. Accordingly, companies are required to carry out human rights due diligence to identify and prioritise risks of human rights violations directly or indirectly related to their activities and to take appropriate mitigation measures. In other words, they should know their human rights risks and be able to show how they use their leverage to address them. Engaging stakeholders, reporting transparently on their human rights approach, and providing grievance mechanisms accessible to affected parties therefore also plays an important role in meeting human rights due diligence requirements.

Companies can also make an important contribution to the SDGs through effective due diligence processes. A company that engages in a multi-stakeholder initiative to improve working conditions in its supply chain and to pay living wages not only contributes to the achievement of SDG 8 (decent work), but also to the achievement of SDG 1 (poverty eradication), SDG 3 (health and well-being) or SDG 5 (gender equality).

A proactive approach to human rights is not only important for the many different groups of people a company comes into contact with, it also entails clear benefits for the company. Human rights due diligence actively contributes to broader risk management. After all, human rights violations can easily turn into reputational, financial, operational or even legal risks if they remain unaddressed - for example, in the case of conflicts over land use or stoppages of work as a result of disregarded employee rights. Increasingly, human rights due diligence obligations take on a legally binding form. For instance, mandatory due diligence standards exist in France and the Netherlands. In Germany, the Supply Chain Due Diligence Law is expected to require companies to pay greater attention to human rights in their supply chains from 2023.

However, taking a proactive stance towards their human rights impacts is not only important for companies due to growing expectations from legislators and as part of risk management, but also for strategic reasons. In a world where investment and financing decisions increasingly take into account sustainability criteria, consumers are becoming more aware of their consumption habits, and values and purposes gain in importance over materialistic aspects for young professionals, a convincing and effective approach to respecting human rights ultimately contributes to ensuring a company’s viable future.