Human Rights Due Diligence (HRDD)
Human rights due diligence (HRDD) refers to the investigation and assessment of negative human rights impacts, specifically human rights risks such as forced labor, child labor, and harassment, in a company's operations, supply chain, and the services it uses, and the measures it takes to address them.
Since corporate activities have a direct or indirect impact on the human rights of stakeholders, the international community requires companies to make efforts to respect human rights. For global companies, human rights risk is an important factor in considering the direct and indirect impact of corporate activities on society, just like OHS (Occupational Health and Safety) risk. EDD (Environmental Due Diligence), also called due diligence (DD), is a highly confidential, short-term investigation that is limited to the evaluation of acquisition target companies in M&A, whereas HRDD is not limited in such a way. In addition to research as an evaluation target in M&A, HRDD generally involves ‘long-term and continuous research targeting a wide range of stakeholders and publication of the results’ as an initiative of the target company itself.
In Japan, in August 2022, the Ministry of Economy, Trade and Industry solicited public comments on the "Guidelines on Respect for Human Rights in Responsible Supply Chains (Draft)" and announced the guidelines in September. Each company is now required to take specific measure to protect human rights.
Implementation of HRDD in line with the UN Guiding Principles
While human rights efforts are many and varied, issues for companies arise particularly in relation to the people engaged in their production activities, their workers. To address this issue, companies are required to take action to detect and address actual and potential risks to employees in their operations, supply chains, and utilised services. Many Japanese companies have come to EnBio with questions about human rights, and they are often not sure exactly what they should do to fulfil their obligations. At EnBio, we believe that following the four steps below to implement HRDD in line with the UN Guiding Principles on Business and Human Rights is the most efficient approach and the most promising strategy for creating long-term change.
Identify and assess actual/future adverse human rights impacts that the company may cause or contribute to through its operations, services, commercial partnerships, activities, etc.
Incorporate the results of assessments of impacts on human rights into relevant business and operational processes, and take necessary measures according to the respective impacts.
Monitor the results of procedures and actions implemented to reduce adverse human rights impacts and investigate their effectiveness and sustainability.
Disseminate to stakeholders, especially those affected, how the results of the evaluation are being addressed and demonstrate that the policies and procedures are well established.
Typical Risk Areas to Consider in Assessing Impacts on Human Rights
All value chains with which a company is associated are subject to assessment as part of a HRDD because of their potential to negatively impact the human rights of the people involved. Because human rights concerns are critical to the operations of all groups and departments within an organisation, both management and employees need to be aware of potential risk areas where human rights issues may exist. Potential concerns vary according to position:
- Employee
- Low minimum wages, working hours, benefits, etc. and inadequate social insurance/pension systems, etc.
- Unfavourable treatment in hiring, promotion or retirement without reasonable grounds
- Denial of workers’ rights to organise and bargain collectively
- Hazardous working conditions, long working hours, abusive supervision, child labour, etc.
- Supplier
- Insufficient attention to supplier performance on human rights, environmental protection and worker protection
- Failure to take any action despite a whistle-blower complaint regarding supplier behaviour that adversely affects human rights
- Customer
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Failure to respond responsibly to consumer complaints
(e.g. provision of contact information, efforts to prevent recurrence of problems, etc.)
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Pursuit of corporate profit only
(e.g. prioritizing ease of marketing by intentionally concealing or not disclosing unfavourable information that could influence consumer choices
Human Rights Management Approaches
EnBio can assist companies with domestic and international offices in establishing human rights management systems through the following approaches.
Companies doing business in multiple countries need to consider human rights risks in light of various factors, such as compliance with local laws and regulations and comparison with Japanese standards, which makes it difficult to establish standards that fulfil the requirements of all stakeholders. Therefore, one possible way to safeguard human rights risks is to deploy management standards like SA8000 to each site, thereby nullifying human rights risks on a company-wide basis.
SA8000 mentions that, as a requirement for certification, a company must do more than simply comply with the standard in order to obtain and retain it. This is similar to the ISO standard in that it requires continuous improvement.
SAI lists the following nine criteria items as requirements of SA8000.
- Child Labour
- Forced or Compulsory Labour
- Health and Safety
- Freedom of Association & Right to Collective Bargaining
- Discrimination
- Disciplinary Practices
- Working Hours
- Remuneration
- Management System
Q&A
- In what cases do human rights become an issue in corporate activities in Japan?
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Abuse by some companies of the foreign technical internship system has become an issue. The purpose of this programme is to accept technical intern trainees from foreign countries (developing regions, etc.) to Japan and to provide them with practical training in Japanese workplaces so that they may acquire, master and improve skills that are difficult to acquire in their home countries. The maximum period of the programme is 5 years (initially 3 years). However, since the late 2010s, it has become a major social issue that technical intern trainees are being overworked as "cheap labour" and are being placed in poor working conditions especially in Japan’s agricultural and manufacturing industries.
In recent years, legal and regulatory reforms have been implemented to improve the situation, and an increasing number of companies now employ technical intern trainees under the same conditions as Japanese nationals, with the aim of having them contribute to production activities on a long-term, albeit fixed-term, basis.