The Management and Oversight of Human Rights Due Diligence

American Business Law Journal 2021

38 Pages Posted: 24 Nov 2021

See all articles by David Hess

David Hess

The Stephen M. Ross School of Business at the University of Michigan

Date Written: July 30, 2021

Abstract

The COVID-19 pandemic showed how vulnerable workers in global supply chains are to adverse human rights impacts. Protecting such workers must be a primary policy goal in the efforts to “build back better” from the crisis, and businesses conducting human rights due diligence (HRDD) is a primary means to do so. In Europe, there is a fast-moving trend towards legislatively mandating HRDD and there is potential for similar movement in the United States. Whether HRDD will significantly improve human rights conditions, however, is an open question. Based on our experience with corporate compliance programs, it is clear that the management and oversight of HRDD is an essential factor in ensuring meaningful implementation, as opposed to corporations focusing on form over substance. This article identifies those key internal governance issues and provides advice on how best to ensure effective implementation. This article argues that for most corporations, the day-to-day management of HRDD best fits with the compliance function—not the legal function—and this new role could be part of the next step in the evolution of the compliance function. This article also discusses the role of the board of directors and how HRDD combined with recent developments in the law of fiduciary duties can push directors to engage in more rigorous oversight. In addition, this article discusses the types of information that are essential for supporting the management and oversight of HRDD.

Keywords: Business and Human Rights, Compliance, ESG, Human Rights Due Diligence

JEL Classification: K20, K38, K42, M14, M16

Suggested Citation

Hess, David, The Management and Oversight of Human Rights Due Diligence (July 30, 2021). American Business Law Journal 2021, Available at SSRN: https://ssrn.com/abstract=3956702 or http://dx.doi.org/10.2139/ssrn.3956702

David Hess (Contact Author)

The Stephen M. Ross School of Business at the University of Michigan ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-763-9779 (Phone)

HOME PAGE: http://https://michiganross.umich.edu/faculty-research/faculty/david-hess

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