Part II: In part I the author backgrounded the proposal for a new UK law to enhance corporate responsibility to respect human rights and the environment and gave a brief overview of the proposed law. In part II the author shows how the proposed law is informed by existing developments but supersedes these in important ways and concludes by discussing support for the law.

A law informed by existing developments but going beyond

A model to apply to businesses failing to prevent harm already exists in the UK. The Bribery Act 2010 made it a criminal offence for a business to fail to prevent bribery intended to benefit it, where the offence has been committed on its behalf by an ‘associated person’. The Act includes the defence – to have ‘adequate procedures’ in place to prevent bribery and has extraterritorial reach for UK companies operating abroad and for overseas companies with a UK presence.

The same model has been applied in the Criminal Finances Act, as well as the Economic Crime and Corporate Transparency Act.

The proposed Bill would enable victims of abuse to seek justice through the Courts of England and Wales against UK-registered companies alleged to have failed to prevent such harm from occurring, regardless of the location of the harm or the physical presence, registration, or domicile of a commercial organisation more directly linked to the harm. It would create a statutory duty of care with liability for damages if a commercial organisation fails to prevent human rights or environmental harms in its own or its subsidiaries’ operations, products or services or throughout its value chains – allowing the claimants to establish a rebuttable presumption of wrongfulness.

The effect of this rebuttable presumption – placing the onus on commercial organisations and public authorities to demonstrate why it is not liable – is something that sets this model apart from the EU’s proposed Corporate Sustainability Due Diligence Directive, and the existing French and German due diligence laws.

Under the Bill, it is a defence that the commercial organisation took all reasonable steps to prevent the harm from occurring. The reasonableness of the actions taken to prevent the harm from taking place would be judged on a number of criteria to determine whether the actions taken were sufficient. Such criteria would include the size, sector, operational context, ownership, structure, location, the nature and severity of the harm, and the degree of leverage exercised over third parties in the value chain.

The proposed Bill is informed by important case law developments. The Supreme Court has clarified when the courts in the UK have jurisdiction over a UK parent company for torts committed by its overseas subsidiaries – established  in Lungowe v Vedanta and reconfirmed by the courts in Okpabi v Shell. The Bill would establish a statutory basis for the courts to have jurisdiction over cases of parent company liability for acts of their overseas subsidiaries as well as liability for the acts of suppliers that could reasonably be prevented.

Support for a new UK law already exists

One year after Germany’s Supply Chain Due Diligence Act has come into force, and as many European countries have passed or are in the process of passing similar laws and the EU bloc is in its final stages of passing a corporate sustainability due diligence directive, it is far beyond time that the UK follows suit.

This Bill is proposing that the same model used to address criminal finances and other economic crime is one we can use for corporate abuses of human rights and the environment – to take the abuses suffered by workers and communities at the hands commercial orgnisations as seriously as we do those.

The working model already exists in the UK – the ‘failure to prevent’ model of the 2010 Bribery Act – recommended to be adapted to a rights-protecting approach by Parliament’s Joint Committee on Human Rights as early as 2017 and identified as legally feasible by the British Institute of International and Comparative Law in 2020.

A UK Business, Human Rights and Environment Act, like the Bill tabled by Baroness Lola Young, is called for by UK civil society organisations, trade unions, businesses, investors, and more than 120,000 people in the UK who have signed a petition. YouGov polling shows four in five people in Britain want new laws to make sure businesses stamp out environmental damage and exploitative practices in their supply chains.

The Labour Party has committed to “assess” such a new law, with the Lib Dems going a step further by committing to introduce duties of care on the environment and human rights, alongside the exercise of supply chain due diligence.

These commitments are important, but in order to be effective, they must lead to a strong model of law. The Bill proposed by Baroness Lola Young is an example of how this can be done.

Evie Clarke is a Policy and Advocacy Officer at the Corporate Justice Coalition.

Find articles on this topic in the Business and Human Rights Journal.