But because situations may change, broader periodic assessments are necessary to ensure that no significant issue is overlooked.
How does a company avoid infringing on the rights of others, and address adverse impacts where they do occur? The appropriate response to managing the risks of infringing on others’ rights is to exercise adequate due diligence.
Human rights due diligence is a potential game changer for companies: from “naming and shaming” to “knowing and showing.”
Naming and shaming is a response by external stakeholders to the failure of companies to respect human rights. Knowing and showing is the internalization of that respect by companies themselves through human rights due diligence.
Companies routinely conduct due diligence to satisfy themselves that a contemplated transaction has no hidden risks. Starting in the 1990s, companies began to add internal controls for the ongoing management of risks to both the company and stakeholders who could be harmed by its conduct—for example, to prevent employment discrimination, comply with environmental commitments, or prevent criminal misconduct.
Drawing on the features of well-established practices and combining them with what is unique to human rights, I have laid out the basic parameters of a human rights due diligence process. Because this process is a means for companies to address their responsibility to respect human rights, it has to go beyond simply identifying and managing material risks to the company itself, to include the risks a company’s activities and associated relationships may pose to the rights of affected individuals and communities.
Of course, one size does not fit all: there are 80,000 multinational corporations in the world, ten times as many subsidiaries and countless national firms, many of which are small-and-medium-sized enterprises. My aim is to provide companies with universally applicable guiding principles for meeting their responsibility to respect human rights and conducting due diligence, recognizing that the complexity of tools and the magnitude of processes they employ necessarily will vary with circumstances.
Considered in that spirit, human rights due diligence comprises four components: a statement of policy articulating the company’s commitment to respect human rights; periodic assessments of actual and potential human rights impacts of company activities and relationships; the integration of these