Responsibility for human rights can get complicated

Summary: What seems to be rather poorly understood by some companies and investors is that in many cases, once a government has signed an international treaty and implemented it into national law, then all companies in that country (including their overseas subsidiaries) are also bound by the same obligations.

The big theme: Human rights issues are moving up the political and social agenda. And this goes a lot wider than most companies and investors will expect, covering the right to be protected from harm, and for culture and ways of life to be respected. And these rights increasingly have teeth.

Summary of an article published by The Grantham Institute:

• As temperatures soar, wildfires burn and floods wreak devastation, communities across the globe are feeling the impacts of climate change more acutely than ever before. It is clear that things must change – is legal action the tool needed to make governments and big corporations step up? In 2021 alone, legal cases have prevented the Australian government from going ahead with constructing a new coal mine and compelled Germany to bring forward its climate targets, while the fossil fuel giant Shell has been ordered to cut its global carbon emissions by 45% by 2030 compared to 2019 levels. Meanwhile, in the ‘case of the century’, the French state was convicted for failing to meet its climate commitments after a petition was signed by 2.3 million citizens.

• Climate litigation cases involving the state are a relatively novel phenomenon, but these recent cases are not the first. The landmark Urgenda Foundation v. State of the Netherlands case in 2015 resulted in the Dutch Supreme Court mandating that the Dutch government must reduce greenhouse gas emissions by 25% from 1990 levels by the end of 2020. Three years later, the Future Generations v. Ministry of the Environment and Others case resulted in the Colombian government being ordered by the Supreme Court to implement protective measures to stop deforestation in the Amazon. The Grantham Research Institute, London School of Economic (LSE), has identified 37 of these ‘systemic mitigation’ cases worldwide, and last year the International Bar Association released a Model Statute, which suggests that more of these cases can be expected in future.

Let's look at why this is important...

Why is this important?

• National courts are using international human rights to hold companies accountable. This process is both important, and often poorly understood by investors. Taking legal action against governments who fail to fulfil their obligations under treaties etc is on the rise – as reported by a World Bank blog earlier in the year (taking governments to court over climate change).