Stretching the elasticity of soft law 

By Aaliya Waziri

In 2011, the world, as we know it, was introduced to the United Nations Guiding Principles (UNGPs) on Business and Human Rights (BHR). The criticism it originally generated resurfaces periodically. India has been one of the several countries to have drafted a National Action Plan (NAP) on BHR with a view to convey congruity with the UNGPs. All said and done, UNGPs are a quintessential example of soft law and its limitations. Naturally, the question that arises is: How far can we stretch the elasticity of soft law? The answer, glaringly obvious, is not long enough. No amount of persuasion will drive companies to assume responsibility for their corporate human rights violations in the absence of a legal compulsion. In one of the most detailed and constructive critiques of the Indian draft NAP, Pradeep Narayan explains how despite avid efforts made by international organisations, non-governmental organisations, environmental and human rights watchdogs, any nudge towards a BHR agenda will be directly proportional to the amount of willingness displayed by companies to accept their culpability.

The draft NAP pays a farcical homage to “corporate due diligence” without considering how multinational enterprises like Vedanta have deliberately filed inadequate compliance requirements to obtain environment impact assessment clearance, caused environmental degradation, loss of life, and unsafe working conditions and walked away unscathed due to conspicuous loopholes in our existing legislation. It has been reported that the Indian government has sought inputs from all stakeholders on access to remedy for the affected population. But with countless examples of companies circumventing legal measures, it is evident that the procedure in place is deficient in providing justice to victims of corporate human rights violations. Perhaps it might be prudent to look at other jurisdictions for inspiration.

In 2023, Germany passed its Supply Chain Due Diligence Act, which lays down an explicit requirement for conducting due diligence not only by German firms but also “German subsidiaries of foreign companies”. Prior to the current legislation, Germany had a voluntary set of guidelines for companies to follow on BHR. However, the German law now imposes a liability on the recalcitrant company in the form of monetary fines.

In 2017, France had promulgated a Corporate Duty of Vigilance law that is a leading example of a well-executed legislation expanding on real and perceived risks associated with a company’s activities. Stressing the importance of access to justice, it contains an elaborate procedure that allows victims of corporate human rights abuse to file a complaint before the authority prescribed in the statute.

When chronicling a shift from discretionary guidelines to a statute that mandates compliance, one of the most crucial aspects is that of holding the company accountable for a complex set of human rights violations in its supply chain. There is a reason the aforesaid laws have been successful and that lies in their enforceability. It is worth mentioning that the most significant one thus far, the European Union has recently passed a landmark piece of legislation titled Corporate Sustainability Due Diligence Directive (CSDDD) that is aimed at promoting due diligence by companies operating in the region and is based on the principle of corporate accountability. The CSDDD imposes a civil liability on an erring company while its principles are based on tort law. It operates on baseline requirements expected of companies to comply with to identify, pre-empt, mitigate, and remedy its human rights and environmental impacts. Such measures include due diligence not just of a company’s own value chain but its subsidiaries and third-country firms are also included within the CSDDD’s ambit. Most importantly, the CSDDD notes that the states must “ensure that the pecuniary penalty is commensurate to the company’s worldwide net turnover when being imposed”, a crucial aspect missing in India’s NAP. Interestingly, our NAP does not include “actual and potential adverse human rights impacts’ risks” associated with a company while the CSDDD, unironically, makes it a point to mention it 11 times. Principle 18 of the UNGPs covers this aspect of exercising corporate prudence, which makes for a worthy consideration for inclusion in the next draft of our NAP.

Another suggestion for our NAP is that it allows for transparency to exist outside of the ink on its paper, a critical detail that has been included in the CSDDD which allows worker unions to access information and accordingly submit complaints. Our NAP may consider a provision that allows the public to gain information on funds donated by companies to political parties (that may or may not be in power at the time) and a subsequent form of indulgence granted by the latter to the former in terms of legal restrictions. For instance, it was revealed that the Vedanta Group had donated Rs 457 crore to political parties in the last six years.

While the draft NAP signifies India’s commitment towards UNGPs, the draft pivots on an “expectation” that companies will carry out human rights due diligence along with building a sustainable value chain. The entire policy document hinges on the government endorsing UNGPs without having auxiliary policies in place that will compel businesses to carry out human rights compliances. As numerous examples suggest, it will simply not suffice.

(The author is an advocate at the High Court of Delhi. Views expressed in the article are personal opinions)