Andrina Kjellgren: Courts set to impose human rights obligations on companies?

In a globalized world, corporations operate also in countries with weak legal systems, or in post-conflict countries where the risk of human rights violations tend to be higher. Corporations therefore play an important role to safeguard the human rights of their employees, their customers, workers in their supply chain and the communities in which they operate.

Activities that are dangerous for the environment and the climate could constitute a human rights violation. If a company’s operation causes significant pollution to the environment and therefore jeopardizes the human right to health and property, is it the company’s responsibility for polluting, or is it State’s responsibility for not enforcing environmental laws, or, even worse, for setting the environmental standards too low?

The UN Guiding Principles on Business and Human Rights were issued in 2011 to answer such question of balance. According to the Principles, states have the obligations to prevent human rights violations by businesses, including by passing laws. Businesses, on the other hand, must refrain from violating human rights.

The enforcement of human rights obligations has been directed mostly against states, with limited enforcement against companies. But that is changing. According to the Business and Human Rights Resource Centre, there are currently more than 200 lawsuits against companies for human rights abuses and several of them are also related to climate change. Examples include a recent case from Australia, where an environmental group lodged an objection to a coal project, claiming that the coal company’s activity will infringe on their right to life and the protection of children.

How have courts reacted to human rights claim against companies? In the landmark decision Milieudefensie et.al v. Royal Dutch Shell (2021), the Dutch court concluded that the responsibility of business to respect human rights applies to all enterprises regardless of their size, sector, operational context, ownership and structure. The court went on to order Shell to limit its greenhouse gas emissions, to protect human rights. In Vedanta Resources PLC and another v. Lungowe and others (2019), the UK Supreme Court acknowledges the potential liability of a parent company in relation to human rights violation by its subsidiary overseas.

In international arbitration cases arising under international investment treaties, arbitral tribunals have also started to recognize corporations as subject of human rights law. In Urbaser v. Argentina, the tribunal highlights that companies operating internationally are indeed subjects of international law and therefore not immune to human rights obligations.

As an illustration of the increasing role of international business and the enforcement of human rights the Hague Rules on Business and Human Rights Arbitration were launched in 2019. The Hague Rules address a gap in the UN Guiding Principles on Business Human Rights for enforcement of human rights obligations against companies and therefore provide for arbitrations of disputes related to the impact of business activities on human rights.

In summary, recent developments demonstrate that human rights due diligence, especially for companies operating in many different countries, is more important than ever. A human rights due diligence is necessary for companies to understand, assess and prevent risks of human rights violations where they operate. Companies need to be aware of the development by which national courts and international arbitration tribunals to an increasing extent are prepared to make private companies subject of human rights law and liable to human rights violations. Modern corporations need to understand and build their capacity on human rights laws, international human rights standards and climate change law.

Author
Andrina Kjellgren
Co-founder Climate Change Counsel

About the author
Andrina's background is in research, international development and project management. Her experience includes advising investors on renewable energy law, advising World Health Organization on human rights integration in health programme and managing large conferences on climate change. At the Stockholm Chamber of Commerce in 2014-19, she conducted research on the interplay between international law and environmental protection and managed the crowdsourcing initiative Stockholm Treaty Lab. Andrina is the co-founder of Climate Change Counsel.

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Activities that are dangerous for the environment and the climate could constitute a human rights violation. If a company’s operation causes significant pollution to the environment and therefore jeopardizes the human right to health and property, is it the company’s responsibility for polluting, or is it State’s responsibility for not enforcing environmental laws, or, even worse, for setting the environmental standards too low?

Andrina Kjellgren
Co-founder Climate Change Counsel