The EU is expected to formally propose a
Human Rights Due Diligence law that would require businesses to identify human rights risks and implement due diligence in their value chains. Meanwhile, the U.S. Supreme Court
ruled that American corporations are not liable under the Alien Tort Statute for alleged child labor violations abroad.
EU Supply Chain Directive Proposals: The proposed EU regime builds on mechanisms in the UK's Modern Slavery Act. Companies will be required to identify and assess potential human rights violations in their “value chain,” a new concept that includes both upstream suppliers and downstream customers. In addition to tracking violations, companies might be required to consult with at-risk stakeholders and trade unions. Furthermore, the directive can require businesses to establish grievance mechanisms for affected parties and provide stakeholders with opportunities to raise concerns.
Pressure on the U.S. to consider similar approach: Some advocates have urged Congress to enact stronger legislation against human rights violations, to align with current efforts in Europe. The Biden administration has taken a strong position against China’s Xinjiang forced labor accusations.
The U.S. Supreme Court stopped short of finding that companies are completely immune from suits brought under the ATS, instead holding that they cannot be liable under the ATS for extraterritorial claims. The ATS gives federal district courts jurisdiction over civil claims by foreign citizens for violating “the law of nations” or a U.S. treaty.
What it means: Despite the recent Supreme Court ruling, global companies should monitor policy changes to ensure ongoing compliance and preparedness with developing human rights standards and a more meaningful strategic integration with business operations.
