Where Business Needs to Step Up on Human Rights in 2024.

Michael Posner

By Michael Posner

In an increasingly unstable and polarized world, far too many governments are unwilling or unable to protect their own people, undermining core human rights. As a result, global companies are being pressed to assume greater responsibility for protecting these rights. Here are four areas relating to human rights where corporate leaders need to focus attention in 2024.

In one constructive response to certain nations failing to protect human rights, European governments are moving to regulate corporate conduct affecting workers and communities involved in global supply chains. The European Union’s Council and Parliament reached a preliminary deal in December to adopt an EU-wide Corporate Sustainability Due Diligence Directive (CSDDD), which is likely to be formally adopted in 2024. It will require each of the 27 EU member states to enact laws regulating corporate actions globally with respect to human rights and the environment. The directive envisions financial penalties for companies that fail to meet these obligations. A precursor to these region-wide regulations is the German Supply Chain Act which went into effect earlier this year. It requires companies to establish procedures to assess and report on risks throughout their supply chains, and requires remedial actions when they discover violations. Intentional or negligent violations can be punished with fines of two percent of annual global revenues for large companies. Though it will take several years for member states to enact CSDDR laws, companies doing business in Europe now need to build systems that will address these issues, and especially the rights of workers throughout their global supply chains, in anticipation of the EU’s evolving regulatory framework.

In the last year in the U.S., some conservative politicians and pundits have continued to attack environmental, social and governance (ESG) investment frameworks. They are challenging asset-management firms that offer ESG, in essence rejecting the legitimacy of any consideration of the environmental or social impact of companies as a form of illegitimate “woke capitalism.” In 2023, some states have withdrawn or threatened to withdraw public pension monies from asset management funds that include ESG funds in their portfolios.

Read the full Forbes article.
Michael Posner is the Jerome Kohlberg Professor of Ethics and Finance, Professor of Business and Society and Director of the NYU Stern Center for Business and Human Rights.