Mr. Tahahashi had very kindly given me permission to share his presentation slides. The excellent and quite useful presentation material is provided below along with the JFBA's introduction to its English translation of the Guidance and a Model CSR Clause in a Supplier Contract.
In response to the adoption of the "Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework" (hereinafter referred to as the "Guiding Principles") at the United Nations Human Rights Council conducted in June 2011, the Japan Federation of Bar Associations (“JFBA”) hereby announces its issuance of the Guidance concerning Human Rights Due Diligence, based on such Guiding Principles, targeted at encouraging Japanese corporations to fulfill their responsibilities in respecting human rights.
1. Purpose of the Guidance
In Japan, in keeping with the “corporate social responsibility” (CSR) movement, environmental stewardship and societal contributions were initially considered the central issues for business management. However, since the United Nations Human Rights Council’s unanimous approval of the Guiding Principles, which call on business enterprises to fulfill their responsibility to respect human rights, the issue of human rights has become a key business management issue, and modern corporations must seriously address this important responsibility.
The Guiding Principles use “internationally recognized human rights” as the basis for human rights that should be respected by business enterprises. In the international human rights arena, there is a substantial gap between the Guiding Principles and the current state of affairs in Japan, which has not ratified a number of international human rights treaties and/or conventions. Therefore, in order for Japanese corporations and other business enterprises to fulfill their responsibility to respect human rights based on the Guiding Principles, they need to create organizations highly sensitive to human rights through ongoing discovery of new risks and continuous organizational learning, knowing that there are endless human rights challenges they have not yet faced. This will prevent the occurrence of human rights issues that might interfere with the sustainable growth of businesses and society, making it important to discover where human rights challenges exist and rethink, based on the Guiding Principles, how those challenges are being addressed.
The Guiding Principles position the duty of business enterprises to respect “internationally recognized human rights” as existing over and above compliance with national laws and regulations, and ask enterprises to treat the risk of causing or contributing to a gross violation of human rights as a legal compliance issue. Accordingly, we, the Japan Federation of Bar Associations, whose membership comprises lawyers, decided to create this Guidance to assist both Japanese corporations and lawyers giving legal advice to such corporations regarding how best to address their duty to respect human rights and incorporate human rights obligations into their business operations and legal compliance practices, in accordance with the Guiding Principles.
2. Points to Note in the Guidance
In this Guidance, we use the term “human rights due diligence” used in the Guiding Principles. Because the term “due diligence” in Japanese corporate practices is generally used to refer to tasks performed when acquiring a business in order to investigate and assess the value and potential risks of the business from operational, financial, legal, contractual, human resources/labor and environmental perspectives, some people understand the ‘human rights due diligence” to mean something similar to “a third-party certification process based on international standards.” However, this is incorrect.
The term “due diligence” originally means “actions or efforts carried out to exercise care appropriate to one’s position (in order to avoid or reduce negative impacts).” In the Guiding Principles, the term “due diligence” refers to “systems and programs for decision-making and business operations used by corporate leadership to ensure that they exercise due care appropriate for their positions,” which provide criteria to determine whether or not corporate responsibility exists. This means, in other words, internal controls regarding human rights risks.
This Guidance describes in specific terms how companies should incorporate human rights initiatives into their internal control systems.
3. Features of the Guidance – CSR Clause Proposal
This Guidance provides a model CSR clause for supplier contracts as well as an in-depth discussion of its legal basis. A CSR clause is the clause that obligates the supplier in a supply contract to comply with CSR-compliant procurement practices and codes of conduct. Today, where the need for compliance with human rights and CSR responsibilities is rapidly increasing, a CSR clause can serve various functions as a legal tool that effectively promotes compliance with human rights and CSR responsibilities throughout the supply chain. Including a CSR clause into a supply contract can provide an important opportunity for corporate legal departments and top executives, with the legal support of attorneys, to implement human rights due diligence. It is hoped that companies will strongly consider including a CSR clause in their supply contracts, based on an accurate understanding of its legal rationale.
4. How to Use the Guidance
It is expected that this Guidance will serve as guidelines for companies and lawyers to follow when creating internal control systems to assess human rights risks and avoid or reduce negative impacts based on the Guiding Principles. It is also expected that the Guidance will be used not only in corporate business activities but also in transactions with parties such as suppliers, contractors, customers, borrowers and business partners, as well as in business acquisitions, as a means to evaluate whether or not the other party’s activities are in compliance with its human rights responsibility and guide both parties toward optimal outcomes.
5. Process of Creation of the Guidance
In drafting this Guidance, we collaborated with nongovernment organizations (NGOs) active in the promotion of human rights and held numerous meetings with them to discuss important issues. The draft was reviewed by and finalized through dialogue with a number of Japanese companies that are members of the Global Compact Japan Network, as well as other interested parties such as the Business and Human Rights in Emerging Markets Study Group of the Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO). We extend our sincere appreciation to the help and support offered by all participating parties.
6. Construction of the Guidance
The Guidance explains in Chapter 1 the significance of the endorsement of the Guiding Principles by the United Nations Human Rights Council and provides an overview of the responsibility of business enterprises to respect human rights, as called for by the Guiding Principles. It then explains in specific terms the increasing need and importance of corporate efforts to respect human rights based on the Guiding Principles, and particularly the increased need for business enterprises to comply with their human rights-related and social responsibilities throughout the entire supply chain.
Chapter 2 describes specific methods that business enterprises should use to treat the responsibility to respect human rights as a legal compliance issue. The chapter first clearly identifies those internationally-recognized human rights which must be respected by business enterprises based on the Guiding Principles, and illustrates the priorities and human rights rules that must be followed. It then describes a framework for identifying human rights risks in business activities and promoting assessment of their impacts.
Chapter 3 provides practical advice with regard to human rights due diligence. Clarification is provided via specific examples and questions and answers regarding how companies can integrate management practices and human rights considerations in order to incorporate solutions to human rights challenges into their business operations. Concrete steps to follow and important points in promoting human rights compliance in accordance with the three key component elements of the Guiding Principles are also discussed.
Chapter 4 provides examples of companies’ compliance with their human rights responsibilities. Examples of implementation of human rights initiatives within the supply chain are first introduced. Also provided are specific examples of the fulfillment of corporate human rights responsibility focusing on various stakeholder groups, an overview of Women’s Empowerment Principles and Children’s Rights and Business Principles, and actual examples of companies successfully incorporating these principles into their business operations.
Chapter 5 proposes a model CSR clause for supplier contracts and discusses the legal rationale for the inclusion of such clause. The chapter discusses a preferred CSR clause and legal issues related thereto via comparison with a so-called OCE clause (Organized Crime Elimination clause), which many Japanese businesses have introduced into their supplier contracts.
When citing from the Guiding Principles, we have used the Japanese version co-translated by the Asia-Pacific Human Rights Information Center (Hurights Osaka) and the Sustainability Japan Forum. This version is reproduced herein as a reference. We are very grateful for their work.