Human rights due diligence

Human rights due diligence is a process for identifying, preventing and mitigating adverse human rights impacts in business activities, and explaining how they are addressed.^{※ 1}.

Due diligence literally means "reasonable/appropriate efforts" and originally referred to the investigation of finances, legal affairs, human resources, etc., conducted to understand the risks and benefits when M&A or investment is made. Human rights violations are a problem in the first place, but in business, being complicit in human rights violations through business operations can lead to boycotts, a damaged reputation, and even financial risks, so in recent years, companies have become increasingly interested in human rights due diligence.

Human rights due diligence requires identifying any involvement in human rights violations not only in the manufacturing and sales processes of a company's products and services, but also in its supply chain.

When taking action, it is important to first formulate and announce respect for human rights as a corporate policy, then take the following steps and continue to do so.

<Basic process of human rights due diligence>

1) Identify and assess the adverse impacts in the company's operations, supply chains and business relationships
(For example, collect and analyze information on sector (supply chain, etc.), geographical (conflict areas, etc.), and product risks from governments, international organizations, NGOs, etc.)
② Cease, prevent and mitigate identified negative impacts
(Example: Identify high-risk businesses, suppliers, regions, etc. and stop, prevent, or mitigate them)
③ Follow up on the implementation status and results
(Examples: third-party reviews and audits, regular dialogue with labor unions, NGOs, etc.)
4) Communicate how you have addressed the identified impacts
(e.g., by publishing in CSR reports, on websites, etc.)

Source: Based on OECD "OECD Due Diligence Guidance for Responsible Business Conduct" (p23)

In carrying out human rights due diligence, we follow the OECD "Guiding Principles on Business and Human Rights," which was created based on the "Guiding Principles on Business and Human Rights" approved by the United Nations Human Rights Council in 2011.OECD Due Diligence Guidance for Responsible Business Conduct" and the Japan Federation of Bar Associations "Guidance for Human Rights Due Diligence" etc. can be helpful.

Human rights due diligence is being legalized in Western countries (Figure 2022). As of June 6, the Japanese government has also established a law in the Ministry of Economy, Trade and Industry.Office for Business and Human Rights Policy CoordinationThe Office has been established to consider guidelines for respecting human rights in the supply chain. A draft of the guidelines is scheduled to be announced in the summer of 2022, so it is important for companies to take action as soon as possible.

(Fig. XNUMX)
(As of 2022 year 7 month)

In addition to the above, the EU willHuman Rights and Environmental Due Diligence Directive IssuedIn addition, a due diligence law is scheduled to come into force in Germany in 2023.

*1 Ministry of Foreign Affairs, Guiding Principles on Business and Human Rights: Implementing the UN "Protect, Respect and Remedy" Framework (provisional translation)
https://www.mofa.go.jp/mofaj/files/000062491.pdf