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 U.S. National Action Plan on Responsible Business Conduct, corporate disclosures pursuant to the California Transparency in Supply Chains Act, and shareholder proposals on social and environmental issues; the second discussion paper published by the Thun Group of Banks; and comments submitted to the Securities and Exchange Commission on the conflict minerals rules.

  • On March 1, the International Corporate Accountability Roundtable (“ICAR”) released its assessment of the U.S. National Action Plan on Responsible Business Conduct. Although, the assessment found that the National Action Plan provided a comprehensive overview of U.S. Government efforts to date to promote responsible conduct by U.S. companies operating abroad, the Plan did not provide much in the way of specific time-bound commitments for future action. The Assessment also notes, with regret, the decision by the U.S. Government to focus the National Action Plan on efforts to address the extraterritorial conduct of U.S. companies as opposed to domestic business practices.
  • On March 7, Development International released its second benchmarking study of corporate disclosures pursuant to the California Transparency in Supply Chains Act. The report was based on a review of the disclosures of 1,961 companies. Although the report found that, overall, compliance with the disclosure statute is improving, nearly 50% of companies have not made all of the requested disclosures, especially with regard to corporate verification and audit efforts. As discussed in previous posts, the legislation applies to retail sellers and manufacturers doing business in California that have annual gross receipts exceeding one hundred million dollars. Companies are required to disclose, on their corporate websites, what actions they are taking, if any, to address the risks of human trafficking and slavery in their supply chains. Foley Hoag served on the stakeholder forum that provided feedback on the draft indicators used in developing the study.
  • On March 8, As You Sow, the Sustainable Investments Institute, and Proxy Impact released their latest Proxy Preview, which provides an overview of 430 non-binding shareholder proposals concerned with social and environmental issues that had been filed, as of February 15, by investors for the 2017 proxy season. Of the 430 proposals, 40 focus specifically on human rights-related concerns. Issues focused on by investors include investments in areas of conflict including contested areas of Israel and Palestinian territory; indigenous rights policies at both financial institutions and energy companies connected with the Dakota Access Pipeline; and corporate implementation of the U.N. Guiding Principles, including through the efforts to conduct human rights risk assessments.
  • In late January, a group of global banks known as the Thun Group released a second discussion paper exploring the implications of the U.N. Guiding Principles for financial institutions. The first discussion paper, released in 2013, was previously discussed here. The second paper specifically focuses on Principles 13 and 17 and the responsibilities of banks in instances in which adverse human rights impacts may be directly linked to their operations, including through situations in which their clients may be causing or contributing to such impacts. The paper has sparked a number of critiques, including from Professor John Ruggie, the primary author of the Guiding Principles, especially with regard to the banks’ assertion that they may only “contribute to” human rights impacts through their own direct activities and not through the activities of their clients. The discussion paper, the critiques, and the Thun Group’s responses to those critiques can be found here.
  • As noted previously, the Securities and Exchange Commission (“SEC”) has issued a call for comments on all aspects of the conflict minerals rule. The deadline for comments is March 16. On February 17, a group of 127 socially responsible investors submitted a letter in support of the rule, noting that “As fiduciaries, with a long-term view of capital appreciation, assessing and integrating environmental, social, and governance (ESG) data into our investment decision-making process is necessary and prudent. Sustainable investors value companies’ responsible management of global supply chain risks and have been particularly concerned in recent years by the use of four minerals, referred to as ‘conflict minerals’ to fund the continuing violence in the DRC.”

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