The Case for Human Rights in 2021: Key Takeaways for Australian Businesses
Updated: Mar 19
In a continuous effort to combat modern-day slavery, there will be increased scrutiny on how businesses operate from domestic and international trading partners, governments, regulatory bodies, investors, civil society, consumers and shareholders.
We summarise below the key developments in human rights and what organisations should take note of:
1. Increased Surveillance on Supply Chains
Businesses can expect increased pressure from governments, stakeholders and consumers to clarify any link they have to Chinese labour. This comes after the harsh treatment of ethnic minorities in China’s Xinjiang region gained international concern, resulting in several countries such as the US, UK and Canada to ban imports from Xinjiang. While such ban is being considered in Australia, companies are expected to provide transparency regarding their connection to Chinese supply chain in the 2021 reporting season.
2. Adherence to Human Rights and Environmental Due Diligence
The European Union (EU) is aiming to pass legislation making human rights due diligence mandatory for organisations. Regulated EU companies will owe a “legal standard of care” which requires them to adequately address any risk of human rights. For Australian companies, human rights due diligence is a requirement under modern slavery law, obliging organisations to report on how modern slavery risks are identified and mitigated.
3. Increased Focus on Climate Engagement, Activism and Litigation
Shareholder activism and litigation in relation to climate change is expected to increase this year. You may recall our update on the case of McVeigh v REST, which saw a fund member suing his superannuation fund for failing to identify the risks climate change poses to his superannuation. Climate change is increasingly expected to form the agenda of major Australian business and organisations should be prepared for litigation if due diligence is not met.
4. Human Rights Governance and Disclosure
The Australian Financial Review (AFR) has reported that Australia is the top performer in connecting executive remuneration to environmental social & corporate governance (ESG). 2021 will likely see an increased focus in such area with stronger governance and disclosure if ESG risks, as well as investors keeping the pressure on organisations to adopt a sustainability reporting framework.
5. Anti-Bribery and Corruption Reform
A debate in relation to the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 is expected to take place in Australian Parliament in 2021. The proposed legislation includes a new offence of “failure to prevent bribery” by companies. This indicates the Australian Government’s improved efforts to minimise fraud and corruption, and improving the integrity of business operations. The objective is to eliminate adverse effects on human rights caused by illegal misconduct.
6. Responsible Corporate Conduct in Areas of Conflict
The UN Working Group on Business and Human Rights released a report last year addressing business conduct and human rights in regions of conflict. For example, Myanmar has been recognised as a conflict-affected area in 2021 and businesses are encouraged to strengthen corporate action in light of the military coup in the country. The conflict poses risks to business sustainability and supply chain integrity in Myanmar and as such, organisations should consider their responsibility when conducting businesses with entities in Myanmar.
As concerns over human rights continue to grow, the world is starting to place more attention and pressure on organisations, who have considerable amount of power and influence, to affect change through the way they operate their businesses.