If a week can be a long time in politics, this year has felt like an eternity in Business and Human Rights (BHR). After years of progress towards more stringent due diligence rules and increasingly accepted norms, we seem to have jumped into a new world of hostility towards the very idea of responsible business practices. If 2022 was the year of boundless ambition, 2025 is at best a reality check and at worst a deep regression.
But this article is not here to argue that BHR is dead or even in trouble. The field has a bright future – if its roots are not forgotten.
From bold ambitions to a new reality
When it appeared that the EU was more serious about imposing mandatory human rights and environmental due diligence (MHREDD) and reporting laws, larger European companies invested heavily in platform technologies and consultants to tell them where their operational and supply chain problems lay. For many, this was a genuine attempt to understand risks previously missed or discounted. For others, it may have been a way of delaying the action they knew was necessary to take.
With the rollback of EU ambitions in the MHREDD and reporting space, some companies have scaled back their human rights and environmental ambitions. There have been high-profile examples of DEI initiatives being cancelled and quieter examples of budgets being cut or human rights teams denuded.
But we also see another, more encouraging trend: a flight towards quality and a bias towards targeted action rather than mere advice or indiscriminate data points and this speaks to the core foundational principles of BHR as articulated in the UN Guiding Principles and OECD Guidelines.
The point of BHR is to change things – not just understand them. Companies are realising that yet another report, however beautifully arranged, is not what they need. If they are to satisfy what is left of the regulatory requirements, protect their reputations, keep clear of activist NGOs and litigators and attract new investment, they will need to demonstrate genuine progress on BHR matters.
However, generating real and consequential improvements in company BHR performance is easier said than done. Many companies are working with imperfect information, and BHR teams – where they exist at all – are usually small and underfunded. This is where specialised consultants can help.
Doing better with less
In a world of constrained budgets, BHR teams have to be careful about the help they buy. They need results rather than reports, and trusted, experienced counsel rather than cookie cutter platitudes. They need help from people who have been there and done it – who understand the nuances and the pressures of doing business in a world of tight deadlines, fragile supply chains and small margins. In other words, people who understand business as well as human rights.
Focusing on action will often involve narrowing the scope of what can be achieved. Instead of trying to address thousands of risks or impacts, companies may choose to look at a small number of problematic suppliers or operational sites and dive deep into those problems, working collaboratively with rightsholders and stakeholders to find real solutions.
In this regard, the advice issued by the BAFA in Germany regarding the implementation of the LkSG (RIP) is worth revisiting. In it, they stress the need for deeper and more effective (even if that means fewer) interventions. It is grown-up BHR to accept that you can only do so much at once and that it is better to do those things well than to skim over complexity at thousands of sites.
This is the essence of risk based due diligence: identify those areas that really need attention, prioritise the most severe risks and impacts and do something meaningful about them. Companies should continue to adopt this practical, flexible approach irrespective of the outcome of the changes to the EU Corporate Sustainability Due Diligence Directive. As I have said more than once to clients, if in doubt, the UN Guiding Principles and OECD Guidance are your friends. Stay close to them, and you will avoid most missteps.
Practical solutions in complex environments
At Control Risks we have been operating in complex and challenging environments for over 50 years. We know the value of boots on the ground – and we know that solutions to local problems are usually to be found locally. We are a company of problem solvers. Solutions can be found if you know where to look. Sometimes, as we've seen with Business and Human Rights, the answer lies in the root of the problem.
If you would like to discuss our business and human rights offering, please contact Dr James Sinclair ([email protected]) for a free initial consultation.