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Human rights due diligence (HRDD) has become the buzzword of much of the advocacy and work today around business and human rights. This is reflected not only in emerging business practice but also in a growing number of civil society campaigns and legislative initiatives. A number of recent laws and legislative proposals, mostly in Europe, establish or seek to entrench in law a requirement for companies to carry out HRDD. In some cases, they also establish or seek to establish some form of legal liability for failure to comply with the HRDD obligation or, in other cases, for the harm caused to third parties as a result of such failure. 1 In April 2020, the European Commission’s Commissioner for Justice, Didier Reynders, announced a European Union (EU)-wide legislative initiative to require companies across the EU to carry out HRDD. 2 While civil society campaigns have been the main engine behind much of the momentum for mandatory HRDD, businesses and investors are increasingly also in favour of this call. 3
Due diligence as a business concept and practice has existed for years and well before it began to be debated in the context of business and human rights. In the business context, due diligence is a process of investigation of facts and data to identify and manage commercial risks, including the potential for legal liability, ahead of a given commercial transaction or activity. 4 It is in the interest of a business enterprise to carry out this process thoroughly to identify and prevent commercial and financial risks to the business itself.
The concept of human rights due diligence was developed in the course of the work of former Special Representative of the Secretary General (SRSG) on business and human rights, John Ruggie, from 2005 to 2011. 5 Ruggie’s mandate culminated with the endorsement of the United Nations Guiding Principles on Business and Human Rights (UNGPs) by the Human Rights Council (HRC) in June 2011. 6 HRDD is a core element of the UNGPs’ second pillar that focuses on the business responsibility to respect human rights. Despite initial scepticism, most stakeholders sooner or later began accepting it and incorporating it into their work. However, the relatively broad consensus that emerged around HRDD in...