Social responsibility and human rights (including labor standards) – the S in ESG – are of rapidly increasing importance for companies across the economy.
Sidley’s cross-jurisdictional team is uniquely placed to support our clients in this challenging landscape, seamlessly fitting the “S” piece of the puzzle into our broader ESG and sustainability practice, and looking ahead to anticipate further challenges.
Mandatory due diligence regimes are increasingly being implemented as mechanisms to promote corporate social responsibility and address human rights concerns across global supply chains. A growing number of domestic legal instruments reflect this shift, including the EU’s Corporate Sustainability Due Diligence Directive (CS3D), Batteries Regulation, Deforestation Regulation, and Anti-Forced Labour Regulation (AFLR); Germany’s Supply Chain Due Diligence Act; Norway’s Transparency Act; the UK’s Modern Slavery Act; Switzerland’s Child Labour Law; and the U.S. Uyghur Forced Labor Prevention Act. These include, among others, due diligence requirements which require companies to address (in addition to environmental impacts) the human rights impacts posed by their own operations and their supply chain.
The mandatory requirements in these jurisdictions are being complemented by firmly established international standards setting out how businesses should identify, assess, and manage adverse impacts on human rights and labor standards in their supply chains. Most notably, the UN’s Guiding Principles on Business and Human Rights establish best practice standards applicable through companies’ operations and value chains, serving as a practical tool for businesses to implement principles originally enshrined in international human rights treaties like the International Covenant on Civil and Political Rights, and the core Conventions of the International Labour Organization (ILO).
We help our global clients in navigating this complex and rapidly changing legal and reputational landscape.
Our Work
In the EU, Sidley is at the forefront of advising clients on the sweeping package of emerging ESG and sustainability-related measures. Together, these form a complex patchwork of overlapping compliance obligations in which human rights and labor issues are a key – but far from the only – plank. We work with our clients to build and implement compliance programs for the entire spectrum of relevant EU requirements.
Our areas of experience include EU regulations imposing both reporting and due diligence on negative impacts arising from companies’ supply chains, including, specifically, in regard to human rights, such as offshore labor practices, child labor, and forced labor. Some of these obligations extend to obligations to identify, prevent and mitigate adverse impacts. We assist companies in building their human rights policies, integrating human rights considerations into existing due diligence procedures, designing and drafting codes of conduct and onboarding suppliers into the due diligence framework. We also advise on additional human rights-related obligations arising under relevant EU Member State requirements, including Germany’s Supply Chain Due Diligence Act and France’s Corporate Duty of Vigilance Law.
Still further issues can arise for companies under the Anti-Forced Labour Regulation (AFLR), which bans from the EU market any product made with forced labor as defined under the ILO’s Convention; and industry-specific instruments like the Batteries Regulation, under which covered companies must identify, mitigate, and prevent human rights issues arising in battery supply chains.
In the UK, Sidley advises clients on legal obligations arising from the Modern Slavery Act 2015 and on corporate responsibility in relation to human rights due diligence. The UK is currently considering proposals to strengthen the Modern Slavery Act 2015, including to require companies to consider and report on the entirety of their supply chains in respect of slavery. We proactively consider and advise on any forthcoming changes and implications for global clients.
In the U.S., we assist clients with issues arising under the Uyghur Forced Labor Prevention Act, including supply chain due diligence/risk assessments and contingency planning. We also advise on compliance with California’s Transparency in Supply Chains Act.
We can further leverage our unique expertise on the intersection of labor, human rights, and international trade, to spot risks arising under international trade instruments, such as the novel labor and dispute settlement provisions in free trade agreements.
