Human rights due diligence focuses on risks to people, not risks to the business.

It is an ongoing process through which a company understands when, where and how it could impact on human rights, prioritises these risks for action, takes steps to address them, tracks the effectiveness of its efforts, and communicates with internal and external stakeholders.

The UN Guiding Principles make clear that companies should prioritise human rights risks based on their severity, that is, how grave, widespread and hard to remedy they are. These are the company’s salient human rights issues.

The process of identifying the salient human rights issues not only helps a company understand where the greatest risks to people lie across its business, it also helps a company uncover where rights-related risks to the business are likely to be found.

Certain risks to human rights can be integral to what a company does, where it works, how it is structured and the way it makes decisions. The board should periodically review these high-level risks. Examples include:

Business model risks:

for example, companies that rely on bringing cheap products to market with narrow profit margins for suppliers, on being fastest to market, or on highly seasonal production, may incentivise suppliers to pay their workers below the living wage, require excessive overtime, and cut corners on safety.

Business relationship risks:

for example, a company in a joint venture with a government that has a poor human rights record may find that its licence to land or mineral rights is awarded without due process and consultations with local communities, or that police or military suppress community opposition.

Operating context risks:

for example, a company working in regions with high levels of conflict, corruption or weak rule of law is likely to face increased risk of involvement with human rights abuses, which arise more easily and are less likely to be remedied in these contexts.

Workforce risks:

for example, a company with a significant proportion of low-skilled migrant labour in its workforce or supply chain, or which encourages the use of workers on contract from a third-party employer, may find that these workers lack full legal protection, freedom of association rights and access to remedy, and also face exploitative working conditions.

Public policy risks:

for example, a company that lobbies against laws and regulations that protect human rights may undermine a state’s duty to do so, making it more difficult for companies in general to operate in that country with respect for human rights.