The regulatory drive to encourage businesses to adhere to environmental and human rights standards in their global supply chain operations was exemplified by the European Council’s March 2024 approval of the Corporate Sustainability Due Diligence Directive. The approval was followed by the 2024 United States Government’s National Action Plan on Responsible Business Conduct.
These rules and action plans will most likely impact the Asia Pacific due to European and US businesses’ deep supply chain integration in the region.
A raft of guidelines and voluntary best practices have existed for years, such as the OECD’s Due Diligence Guidance for Responsible Business and the United Nation’s Business and Human Rights Guidelines. Multilateral discussions at the United Nations on best practices are ongoing, most recently at the 37th session of the Working Group on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises. Cross-sectoral and geographically diverse stakeholders continue to convene around the world, including at the 13th United Nations Forum on Business and Human Rights to be held in November 2024.
While the United Nation’s efforts are notable, other multilateral activity and developments in ‘soft law’ evidence the growing attention paid to the nexus between business and human rights. Trade agreements in Asia — such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) — contain obligations to address labour rights violations. Chapter 19 of the CPTPP obliges member states to affirm their commitments to the 1998 International Labour Organization Declaration on Fundamental Principles and Rights at Work. The commitments include allowing freedom of association and collective bargaining. The chapter also promotes initiatives to reduce forced labour, child labour, and discrimination in employment and occupation.
The evolution of binding ‘hard law’ shows that compliance with the rules governing businesses and human rights is moving from ‘good to have’ to ‘must have’. Examples of this shift include the 2021 US Uyghur Forced Labor Prevention Act, which addresses a form of infringement of rights in a specific country, and Germany’s more broadly applicable 2023 Supply Chain Due Diligence Act.
Within the ecosystem of firms and non-profits that assist businesses in navigating these rules, international business associations seek to bridge the gap between commerce and rights advocacy. Though business associations are non-profits, they represent the interests of their for-profit members. But their diverse corporate memberships empower them to assess the impacts of due diligence and supply chain rules across industries, identify industry-wide problems with due diligence reporting on rights and engage both host governments in Asia and home governments in the West. This is especially useful when individual companies may not be politically positioned to advance discussions on human or environmental rights. The COVID-19 pandemic saw rapid policymaking embolden many infringements of rights. International business associations played a significant role in Asia during the crisis as force multipliers, ‘matchmakers’, fundraisers and lobbyists for rights-based principles, according to a survey conducted by non-profit management consultancy APAC GATES.
The research found that business associations active in Asia during the height of the COVID-19 pandemic advocated for human rights where business interests aligned with rights-based principles such as access to information, freedom of movement, equal treatment and non-discrimination. Some associations undertook even greater social and public interest roles in organising the distribution of personal protective equipment and matchmaking civil society needs with the resources of member businesses. They occasionally collaborated with national human rights committees and lobbied local governments over policies relating to internet access and access to medical treatment.
Businesses have long self-regulated using strategies aligned with the concepts of corporate social responsibility (CSR), ESG and ethical financing to maximise their social impacts. Leading enterprises such as OpenAI have chosen to incorporate as non-profits or accredit themselves under standards such as the B Corp certification to signal to stakeholders their commitments to public interest principles.
Business associations can play a vital role in advocating for and supporting international businesses in Asia and those bound to adhere to US and EU laws as their rights-based obligations become increasingly fundamental to strategic and operational decisions. They can also ensure that politically motivated or superficial ‘rightswashing’ — the deceptive promotion of a business’s social responsibility — is identified and avoided.
Seth Hays is a lawyer and co-founder of non-profit management consultancy APAC GATES. Morgan Hughes is Director of Research at and co-founder of APAC GATES.
Source: East Asia Forum
