A New, Coordinated Human Rights & Anti-Corruption Compliance Regime is On the Horizon

Last fall, the Business at OECD (BIAC) network and the International Organization of Employers (IOE) issued a guide “Connecting the anti-corruption and human rights agendas: A guide for business and employers’ organizations.” How might this impact your current risk management processes?

Human rights compliance takes center stage

The guide underlines the overall trend towards enhanced anti-bribery and corruption (ABC) and human rights due diligence. In January, the European Parliament adopted a report, which provides for new legislative action to strengthen corporate environmental and human rights due diligence. Other countries have joined the conversation. In 2017, France adopted a Corporate Duty of Vigilance law and the German coalition government has just agreed on a new Lieferkettengesetz, a legislative measure aimed at mandatory human rights due diligence for supply chains of German entities. In July 2020, the US State Department, along with the Departments of the Treasury, Commerce, and Homeland Security, jointly issued the Xinjiang Supply Chain Business Advisory warning companies about the risks of supply chain links to entities engaging in human rights abuses in Xinjiang and elsewhere in Greater China.

Human rights & anti-bribery and corruption regulation: Two sides of the same coin

In line with these ambitious commitments, the BIAC-IOE guide highlights the need for a transcending approach to human rights and ABC compliance. While some differentiation is and will be necessary, the advantages of a comprehensive approach are clear. More often than not, corrupt practices and human rights abuses share the same root causes. Both seem to be facilitated by weak governmental oversight and can heighten reputational, financial, legal, and operational risks for entities involved.

As the time and expense of risk management programmes continue to climb, a comprehensive approach that rethinks the traditional silos of compliance and risk management optimizes third party and supply chain management.

What does a coordinated approach look like in practice?

In practice, the BIAC-IOE guide points to the synergies companies should consider when adopting a coordinated approach to human rights and ABC compliance. A harmonized approach that brings together a cross-functional team can streamline the assessment of suppliers and other business partners both in terms of human rights and ABC compliance.

The guide emphasizes the added benefit for entities if they consider joint reporting mechanisms as well. Since violations often occur under similar circumstances, providing accessible grievance tools as well as confidential whistle-blower channels are pivotal in order to deal with these issues.

Alongside these measures, the guide suggests a range of B2B initiatives that encompass broad cooperation between and within industries to strengthen the fight against human rights abuses and corruption. Collective action and collaborative approaches foster self-regulation, enable effective ESG strategies and boost the reputations of the entities involved.

The bottom line: Amid a global shift towards more substantial regulatory oversight on human rights due diligence, entities around the world are well-advised to follow this trend. The new BIAC-IOE guide has highlighted that supporting an interconnected approach to human rights and ABC compliance generates a number of benefits, both for the fight against corrupt practices and human rights abuse, as well as for the companies involved. Streamlined due diligence efforts result in an elevated understanding of reciprocal effects human rights and ABC issues have on businesses. At the same time, companies around the world can enhance their reputation both with investors and consumers by strengthening their ESG strategy as a part of a substantial CSR approach.

What’s next?  

1. See how Nexis Diligence™ helps companies align due diligence to their own ESG programmes.
2. Take a closer look at our bribery and corruption risk factsheet.
3. Keep the conversation going by sharing this article with your colleagues and connections.