The world is moving towards the New Economy, and all segments of society are committed to energy transition, which imposes the duty of a just transition. In this context, the productive sector, globally, is experiencing the construction of a new paradigm in the social dimension of the corporate sustainability agenda, where respect for human rights gains more importance and demands more structured actions for managing risks related to this issue. Consequently, failure to adapt to this new scenario may result in loss of business, financing, competitiveness, and reputation.
The change in perspective on human rights issues has been driven by the intense international regulatory process and also by the demands of funding agents, investors, clients, and certifiers, who seek assurances regarding companies’ adherence to good sustainability and ESG practices. A key issue within this context is the adoption of due diligence as one of the obligations for preventing human rights violations.
Human Rights Due Diligence consists of a set of procedures to identify, prevent, mitigate, and remedy adverse impacts on human rights, both in direct operations and in their value chain, in a continuous approach. The current corporate human rights agenda goes beyond labor issues. It addresses aspects related to health and well- being; diversity and equity; clean and healthy environment; and indigenous peoples and traditional communities.
Two new legislations, which ultimately have global implications, came into force in 2023: the EU Anti-Deforestation Law (EUDR) and the German Supply Chain Due
Diligence Law (LkSG).
The first reflects growing concern about deforestation and respect for human rights in the supply chain, especially in environmentally significant areas such as the Amazon and the Cerrado. The German Law, on the other hand, requires monitoring of global supply chains of German companies to ensure respect for human rights at all stages of production, including issues such as child labor, forced labor, and safe working conditions.
The latest development in the EU is the approval of the Corporate Sustainability Due Diligence Directive (CSDDD) by the European Council, which reinforces the need for adoption of more effective risk and impact management systems for human rights and the environment. The new rules will affect Brazilian companies doing business with the 27 bloc countries. Consumers and companies from various countries are pressing for the adoption of this legislation.
In Brazil, Bill 572/2022, currently under consideration in the Chamber, establishes the national framework on Human Rights and Businesses and sets guidelines for the promotion of public policies on the subject.
The legal enhancement of the topic of Business and Human Rights is expected to compel companies to mature in this regard. For now, the scenario is different. A recent survey based on the application of the Human Rights Thermometer by Proactiva Results, involving 365 companies in Brazil, showed that, although many of them are more advanced in their ESG agendas, less than half achieve the average of good human rights management practices.
Recognizing the vital intersection between climate change, carbon reduction, and human rights is essential to promote sustainable and inclusive development for a just transition. It is crucial for organizations to be proactive in the social aspect and initiate their Due Diligence processes, recognizing these changes not only as regulatory requirements but as opportunities to promote more sustainable and ethical business practices, thereby strengthening their sustainability, reputation, and competitiveness in the New Economy.
Rafael Benke: Lawyer, CEO of Proactiva Results, holds a Master’s degree in International Law and is a specialist in International Environmental Law and Sustainable Finance. He is the Chair of the BCCC ESG & Sustainability Committee.