Five on Friday – Five Recent Developments that We’ve Been Watching Closely

It’s Friday iStock_000011057325XSmalland time for another overview of developments in the field of business and human rights that we’ve been monitoring.

This week’s post includes: new reports on the corporate responsibility to respect human rights; a report on sustainability disclosures in corporate filings with the U.S. Securities and Exchange Commission (“SEC”); a draft law in France that would require companies to conduct human rights due diligence; and developments in human rights litigation against Chiquita.

  • Also in mid-November, the World Business Council for Sustainable Development (“WBCSD”) released an issue brief titled Business & Human Rights – From Principles to Action. The brief highlights legal and regulatory developments around the world that incorporate the expectations framed in the U.N. Guiding Principles and states that “[b]usinesses should look to make sure that discussion about, and the management of human rights issues includes all relevant corporate functions and is not siloed in a ‘sustainability box’ disconnected from actual business operations.” Ultimately, the report observes that, “[t]he adoption of the UNGPs established a landmark in the broader sustainability debate, positioning corporate respect for human rights as a critical and dynamic issue that companies must face front and center, or run the risk of being left behind in terms of social, investor, regulator, or customer expectation.”
  • On November 29, the French National Assembly adopted a draft law on due diligence that would require certain companies based in France to have due diligence plans in place to prevent serious human rights impacts in connection with their operations, including the activities of their suppliers and subcontractors. Companies would have to make public disclosures regarding their due diligence plans and would face large fines for failure to implement due diligence efforts. The law, if enacted, would apply to France’s largest companies, including those that employ at least 5,000 employees in France, or 10,000 employees in total. The draft law will now go before the Senate for consideration. It will be re-considered for final adoption by the National Assembly in early 2017.
  • On November 29, the District Court for the Southern District of Florida declined to dismiss consolidated lawsuits filed against Chiquita Brands International. Plaintiffs in the case allege that individuals within the company knew, or should have known, that the company’s material support for the United Self-Defense Forces of Colombia (“AUC”), a paramilitary organization, would lead to the death or torture of their family members. The company had tried to dismiss the litigation on the basis of forum non conveniens, arguing that it would be more appropriate for the litigation to process in Colombia courts. Analyzing a range of factors, including security concerns and the adequacy of available remedies, the Court ultimately declined to dismiss the complaints. Notably, in March 2007, Chiquita admitted that it had provided payments to the AUC, stating that it had done so in order to ensure the protection of Chiquita employees and banana plantations in Colombia.
  • On December 1, the Sustainability Accounting Standards Board (“SASB”) released The State of Disclosure – 2016 (excerpt available with registration). The report includes an analysis of sustainability disclosures in the annual SEC filings of 692 companies. Specifically, the report assesses the extent to which companies disclosed material sustainability impacts tied to the topics identified in SASB’s industry standards. The analysis found that 81% of entries analyzed, across all industry sectors and topics, included some form of sustainability disclosure, but that the most common form of disclosure was generic boilerplate language “which is inadequate for investment decision-making.” Ultimately, as is noted in the report’s foreword, “markets would benefit from improved quality, consistency, and comparability of information[.]”

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