Human rights on the corporate sustainability agenda – 03/14/2024 – Market

The world is moving towards the New Economy and all segments of society are committed to the energy transition, which imposes on us the duty of a fair transition.

In this context, the productive sector, globally, is experiencing the construction of a new paradigm in the social dimension of the corporate sustainability agenda, in which respect for human rights gains more importance and requires more structured risk management actions related to this question.

As a consequence, failure to adapt to this new scenario could mean loss of business, financing, competitiveness and reputation.

The change of perspective on the issue of human rights has been stimulated by the intense international regulatory process and also by demands from financing agents, investors, clients and certifiers, who want guarantees regarding companies’ adherence to good sustainability and ESG practices.

And a key issue within this context is the adoption of due diligence as one of the obligations to prevent human rights violations.

Human Rights Due Diligence consists of a set of procedures to identify, prevent, mitigate and remedy adverse impacts on human rights, both in direct operations and in its value chain, in a continuous approach.

The current corporate human rights agenda goes beyond labor issues. Addresses aspects related to health and well-being; diversity and equity; to a clean and healthy environment; and to indigenous peoples and traditional communities.

Two new pieces of legislation, which end up having global implications, came into force in 2023: the European Union Anti-Deforestation Law (EUDR) and the German Supply Chain Due Diligence Law (LkSG).

The first reflects the growing concern about deforestation and respect for human rights in the supply chain, especially in areas of great environmental importance, such as the Amazon and the Cerrado.

German law requires the monitoring of German companies’ global supply chains to ensure respect for human rights at all stages of production, including issues such as child labor, forced labor and safe working conditions.

The Corporate Sustainability Due Diligence Directive (CSDDD) is also under discussion in the EU, which reinforces the need to adopt more effective systems for managing risks and impacts on human rights and the environment.

The new rules will affect Brazilian companies doing business in the bloc’s 27 countries. Consumers and companies from several countries are pushing for the adoption of this legislation.

In Brazil, Bill 572/2022, currently being processed in the Chamber, creates the national framework on human rights and companies and establishes guidelines for the promotion of public policies on the topic.

The legal improvement of the topic of companies and human rights should force companies to mature in this regard. For now, the scenario is different.

A recent survey carried out using the Proactiva Results Human Rights Thermometer, involving 365 companies in Brazil, showed that, although many of them are more advanced in their ESG agendas, less than half reach the average of good human rights management practices .

Recognizing the vital intersection between climate change, carbon reduction and human rights is essential to promoting sustainable and inclusive development for a just transition.

It is crucial that organizations are proactive on social issues and begin their “due diligence” processes, recognizing these changes not only as regulatory requirements, but as opportunities to promote more sustainable and ethical business practices, thus strengthening their sustainability, reputation and competitiveness in the New Economy.