News & Insights

Global Due Diligence: Human Rights Developments and Rules Updates

Within the practice of global due diligence, human rights developments and rule changes take place frequently, and it’s essential that businesses with national and international partners throughout their supply chains stay up to date.

Here we discus a sample of the major human rights developments and rules to be aware of, including:

  • A new ethical supply chain law in Germany
  • Non-compliant IT rules in India
  • Belarusian complaints of workers’ rights violations

Germany: Supply Chain Due Diligence for Large- and Medium-sized Businesses

What: Germany enforces global due diligence

In June 2021, the German Parliament passed a law by a large majority requiring “large and medium-sized businesses to do their due diligence in combating human rights violations along their supply chain.” This law perpetuates an international shift toward compliance norms regarding labor exploitation. Taking full effect in 2023, businesses of certain sizes will be obligated to perform global due diligence procedures along their supply chains to prevent human rights and environmental offenses.

Who: Large- and medium-sized businesses

Effective in 2023, this law affects companies with more than 3,000 employees. This threshold drops to more than 1,000 employees a year later. Putting these numbers into context, at the time of this writing, this law would affect approximately 4,800 businesses.

Why this matters: Companies of any size with international partners in their supply chains should take note of this new German law, as human rights norms and compliance are expanding throughout the globe. The penalty for failing to conduct up-front and regular due diligence or act upon any discovered violations can include fines up to two percent of the company’s international revenue and exclusion from public procurement for up to three years.

India: New Information Technology Tules Found to Not Conform to International Human Rights Norms

What: UN addresses India’s new IT rules

On May 25, 2021, India enacted new information technology (IT) rules, which spurred controversy over their implications on international human rights compliance. Experts at the United Nations’ Office of the Human Rights Commissioner signaled that the 2021 IT rules do not comply with international human rights norms. In their report, the UN’s special rapporteurs reference COVID-19 and other global concerns, along with other national affairs:

“We are concerned that these new rules come at a time of a global pandemic and of large-scale farmer protests in the country, where the enjoyment of the freedom of opinion and expression, including the right to receive information, and the right to privacy, is particularly important for the realization of several other civil, cultural, economic, political and social rights.”

The UN reportedly encouraged India to perform a thorough review of these rules as they pertain to international human rights compliance, and to “develop a legislation that can place it at the forefront of efforts to protect digital rights.”

Responding to this report, the Permanent Mission of India to the UN clarified that broad consultations with stakeholders and relevant organizations took place to finalize the IT rules. Some of the stakeholders, however, publicly disagreed with the Indian government, expressing that the published rules are “40% longer than the draft they put out for consultations.”

Why this matters: Criticism of India’s IT rules is relevant to any company with international supply chain partners, not only as it pertains to international human rights norms, but also as a study in due diligence before and after the enactment of company policies.

Belarus: Union Expresses Workers’ Rights Violations and Ethical Non-compliance

What: Scandia Steel responds to worker’s rights concerns

Several groups – the UK’s Professional Union of Belarusians in the UK, non-governmental organizations and those who identify as members of the Belarusian diaspora – have appealed to Scandia Steel and other Belarusian Steel Works (BSW) customers, expressing concern over violations of workers’ rights and ethical non-compliance.

Scandia Steel responded that they “take all allegations of human rights violations seriously,” regardless of whether they pertain to their own operations or that of their national and international partners. As a result, the board of directors at Scandia Steel reportedly phased out BSW as a supplier and suspended future product orders.

Michelin, the French tire manufacturer, was also alerted to workers’ rights violations at BSW. The company said it would look into this matter and shared plans to investigate workers’ rights, including interviewing workers who were dismissed from BSW after trying to create a separate trade union.

Why this matters: These events in Belarus showcase the significance of securing workers’ rights in each step of every supply chain and the vigilance that companies must take in third party risk management. They also, however, shine a light on the response discrepancies from parent retail partners. While Scandia Steel and Michelin have responded differently to the issues raised at BSW, the pertinence of supply chain due diligence and third party compliance is clear.

Partner With IntegrityRisk to Better Respond to Global Due Diligence Developments

This era of compliance and ethical obligation leaves little room for any company with international partners to neglect the due diligence of its supply chain. Partner with IntegrityRisk to perform global due diligence and ensure your supply chain is ethically compliant with international human rights norms. Contact us today.