Investors back EU plan for human rights due diligence rules

The Investor Alliance for Human Rights wants mandatory, rather than voluntary, reporting and due diligence rules for corporations

The Investor Alliance for Human Rights has called for EU companies to be held legally liable for human rights due diligence failures.

In a response to an EU consultation on the bloc’s proposed Sustainable Corporate Governance Initiative, the Investor Alliance called for mandatory human rights due diligence requirements for all companies based or operating in its jurisdiction.

“The focus of the legislation should be on effective prevention of human rights violations and negative impacts of business operations, with effective controls, sanctions and remedies,” the alliance said in its response.

David Schilling, senior program director at the alliance, said in a communication to members: “It is important to underscore the need for mandatory human rights and environmental due diligence given the lack of progress of most companies on embedding and integrating due diligence into business strategies and decision-making on the basis of voluntary reporting initiatives alone.”

The Investor Alliance for Human Rights is backed by a membership of more than 160 institutional investors representing more than $5trn in assets under management. Members include asset owners, asset managers, and product providers – including Minerva Analytics.

In April 202, the Investor Alliance’s members published a statement lobbying for mandatory due diligence requirements for companies. They argued that such a move would be “materially good for business, investors, and the economy” as well as “a necessary component” for investors seeking to fulfil their own responsibility with regard to human rights.

In a blog post on the Investor Alliance’s website published on 8 February, Johannes Blankenbach and Saskia Wilks of the Business & Human Rights Resource Centre explained that mandatory due diligence rules were “potentially the only component that will directly require ongoing business action to address adverse impacts, holding businesses accountable if they fail to act as well as ensuring access to remedy for affected people”.

“Improved transparency and reporting are necessary for civil society stakeholders and investors to assess responsible business conduct, but these requirements alone are insufficient to drive the change needed both in board rooms and for rights-holders,” they wrote.