Ten years since launching negotiations on a business and human rights treaty: Selected reflections on the way forward

The activities of businesses can have adverse effects on individuals, communities and the environment. And with so many companies operating across borders, the potential harms they can inflict, and the challenges of holding them to account, have only grown. Kinda Mohamadieh looks at how ongoing negotiations to craft an international treaty to regulate business conduct could help safeguard human rights from corporate encroachment.

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WITH the process of negotiating an international legally binding instrument on business and human rights (hereinafter referred to as LBI) having passed the 10-year mark, is this a sign of hope that the process is progressing, even if slowly, towards a meaningful outcome, or is this a sign of a challenging journey that might falter with no outcome?

There are views on both sides of the aisle. Yet, there are a few elements that ought to inform such assessment. In comparison to previous years, the most recent negotiation sessions saw delegations present in bigger numbers and more actively engaging on the substance of the negotiation text. Social movements and indigenous peoples’ and civil society groups accompanying and engaging in the process remain strong and well-mobilised across the different regions. This helps in ensuring that the proposed instrument remains rooted in the lived experiences of victims of corporate misconduct and their quests for justice. In the upcoming period, the process will benefit from a number of intersessional meetings focused on discussing core issues of concern to negotiating States. This is unlike previous years where States and civil society only engaged with the negotiation text during the formal negotiation week that takes place once a year. The current Chair-rapporteur of the negotiations, the Ambassador of Ecuador to the United Nations in Geneva, has demonstrated strong commitment to an engaging and effective negotiation process, as was reflected in his approach to the first negotiation session he chaired in December 2024.

The process of negotiating the proposed LBI is a rich experience of intergovenrmental exchange and deliberations which will leave a valuable negotiation history. Over the past 10 years, the thinking and the practice pertaining to business and human rights have seen significant evolution. This includes emerging national and regional practices¹ as well as increasing litigation pertaining to parent-company liability and climate-change-related obligations for companies. The LBI negotiations could benefit from such developments and could incorporate lessons learnt, but ought not to be dictated by any one model.

Furthermore, the proposed LBI ought to be situated in the web of legal instruments and other mechanisms, domestic, regional and international, that tackle corporate legal accountability. While it might not provide answers to all the challenges emerging in the realm of regulating the interaction of businesses with their societal context, it has its specific added value. Its nature as an instrument of international cooperation means it could facilitate responses to harms emerging in the context of business activities that extend beyond the territorial boundaries and jurisdiction of any single State. Furthermore, it could contribute to avoiding fragmentation in the standards and ensure more convergence in the practices across various jurisdictions.

The negotiation process of the LBI could shed light on and encourage additional attention to reforms that are needed in legislative and normative frameworks that play a major role in governing the corporation, such as reforms needed in corporate law. Generally, these domestic regulatory regimes remain focused on the internal workings of the corporation and are often nascent and sometimes totally blind to governing the externalities or negative spillovers of the company’s activities on its societal surrounding, including harms to individuals, communities and the environment.

The negotiations thus far have shown that each and every element of the negotiation text is important for an effective instrument. The intersessional meetings² will be an opportunity for negotiating States to delve deeper into core operational elements pertaining to victims’ rights and protections, access to remedy, prevention and due diligence, liability, adjudicative jurisdiction and related issues. Discussing the scope and definitions in relation to these operational elements could contribute towards the final determination of the scope of application of the proposed instrument. This article addresses selected elements in the negotiation text and highlights certain cross-cutting issues of importance for an effective instrument.

Reflections on some elements of the draft negotiation text

The emerging convergence over the importance of mandatory due diligence obligations for businesses, reflected in the expansion of such practice in several jurisdictions, is a significant development. Yet the proliferation of national and regional models might mean fragmentation of practices across jurisdictions. The LBI could help in avoiding fragmentation by adopting a multilateral standard for such an obligation.

Attention is needed for the implementation of such an obligation in the context of corporate groups and value chains. The design of this obligation ought to take into account the dynamic relationships of influence within corporate groups and value chains and how those are exercised. Besides situations of direct or indirect control, a business enterprise could exercise sufficient influence by virtue of different forms of intervention, including but not limited to acts of supervision and management. The approach of the United Nations Guiding Principles on Business and Human Rights and recent due-diligence-related legislations³ looks beyond direct relationships of control, supervision and management to cover business relationships and activities linked to a business’s operations, products or services. It is important to consider situations where there is a level of dependence between the concerned business entities and a reasonable expectation that such relationship will last. It is also important not to exclude situations where there might only be a one-time transaction but where it is clear that the company should have known the risks attached to the activities concerned (e.g., transport of toxics). In the context of investment relations, the UN Working Group on Business and Human Rights has recommended that investors request human rights due diligence for all investees, relevant to their size, scale and sector, as well as to asset class and type of investment, on their actions to identify, prevent, mitigate and account for potential and actual adverse human rights impacts, including on environmental and climate change damage, and in conflict-affected and high-risk areas.⁴

The burdensomeness of the due diligence obligation on small and medium enterprises has been an issue of concern to various participants in the LBI negotiations. The draft text currently tackles this issue under one provision⁵ that attempts to replicate the approach of the Guiding Principles.⁶ It is important to effectively address this issue while considering that the term ‘small and medium enterprises’ differs in the way it is defined across jurisdictions. A small enterprise in terms of its number of employees and turnover in a developed economy might stand for a medium-sized or large company in a developing economy.⁷ 

Furthermore, it is of importance to account for comprehensive preventative measures, including mitigation of risks through precautionary measures by both States and concerned businesses in order to avoid the emergence of harm, especially in cases of foreseeable risk and similarly potential irreparable harm. When harm arises, accountability should follow. Mere formalistic fulfilment of the requirement to set up and implement a due diligence plan should not become a shield from liability in cases where harm emerges.⁸ Furthermore, where the risk of complicity with human rights violations is high, such as in conflict-affected areas where the risk of gross violations is high, the due diligence procedure ought to effectively provide for divestment and termination of the business relationship.

Multiple instruments pertaining to business activities give specific attention to the role of business in conflict-affected areas,⁹ which reflects the importance of affording this issue specific attention in any such instrument, including the proposed LBI. Suspension and termination are well-recognised, under multiple reference documents and legislation related to business responsibilities (including the Guiding Principles), as legitimate and necessary acts by businesses in certain circumstances.¹⁰ The Office of the UN High Commissioner for Human Rights (OHCHR) points out that ‘[t]he severity of potential or actual impacts (judged by their scale, scope, and irremediable character) is a key consideration in whether and when to terminate a business relationship’ and that ‘the severity of risks and impacts is also relevant to the speed with which decisions and action should be taken’.¹¹

Accounting for environmental harm, including climate change, is also key to an effective approach to due diligence obligations. The environment, including climate-related issues, is intrinsically connected with the human rights issues that arise in the context of business activities. A comprehensive and integrated approach to these issues across various elements of the proposed LBI, including due diligence, will help make the instrument more effective in addressing harms that emerge in the context of business activities. (For more discussion of these issues, see the article entitled ‘Grounding the new legally binding instrument on transnational corporations on the right to a healthy environment’ on pp.15–17.)

Multiple recent developments have reflected on the interactions of human rights, environmental and climate-related norms, including the UN resolutions that recognised the right to a safe, clean, healthy and sustainable environment.¹² Environmental issues, including climate change, have been considered central to recent practice pertaining to due diligence required from business. This includes the French duty of vigilance law¹³ that covers risks to the environment, and the European Union Directive on corporate sustainability due diligence that establishes a human rights and environmental due diligence requirement and includes a section on climate change transition. The 2023 edition of the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct¹⁴ covers a non-exhaustive list of environmental impacts including climate change. In addition, decisions in many recent climate-change-related litigation cases have approached climate change unequivocally as a human rights crisis.¹⁵ 

The drafting of the LBI could thus be an opportunity to clarify the climate-related dimensions of the State’s obligation to regulate the conduct of businesses domiciled or operating in its territory or jurisdiction, in order to prevent climate-related harm caused by businesses. The proposed LBI could also reflect the environmental and climate change dimensions under the due diligence obligation and related definitions. This would be in line with the recommendation of the UN Special Rapporteur on the human right to a healthy environment that a comprehensive due diligence approach would cover ‘impacts to human rights, the environment (inclusive of the climate and biodiversity) and good governance’,¹⁶ including a requirement to undertake environmental, climate and biodiversity-based assessments. The due diligence obligation could also mandate that impact assessments be made publicly available.

One of the key cross-cutting issues in the proposed LBI is effective access to relevant and reliable information, which is addressed in multiple articles of the negotiation text (such as rights of victims, access to remedy and due diligence). Communities affected by business activities often face particular challenges in gaining access to needed information on the ground, such as where subsidiaries are operating or at the lower end of the value chain. In relation to climate change, the UN Special Rapporteur on climate change documented that ‘obstacles to accessing information are often coupled with the lack of clear legal requirements on the transparent reporting and verification of energy transition programmes, which is combined with lack of accuracy and consistency in reporting standards by businesses’.¹⁷ 

Timely disclosures of reliable information to people at risk of harm could be a determining factor in regard to access to justice. While business disclosures have generally focused thus far on financial performance and the materiality relevant to investors and shareholders, there is a need for robust disclosure regimes pertaining to the impacts of the business on its societal surroundings, including through its direct and indirect actions and throughout its operations. This ought to include information necessary to grasp the internal workings of a business activity, thus allowing understanding of the elements of influence in a corporate group or a value chain, which should in turn inform liability for any emerging harm. It should also necessarily include information pertaining to the fulfilment of the due diligence obligations, which would enable an assessment of the adequacy of the measures taken in light of the potential human rights impacts of the business activity concerned. 

The Guiding Principles, under principle 21, highlight the importance of availability of information, recommending that business enterprises should be prepared to communicate externally regarding their human rights impacts, in ‘a form and frequency that reflect an enterprise’s human rights impacts and that are accessible to its intended audiences’, and that the information be ‘sufficient to evaluate the adequacy of an enterprise’s response to the particular human rights impact involved’. In regard to climate change, the Special Rapporteur on climate change recommended that ‘businesses should accurately report and disclose their climate impacts in an accessible manner that is sufficient to evaluate the adequacy of their efforts to prevent climate change-related human rights harms’ and ‘States should adopt and enforce regulatory measures on the mandatory disclosure of accurate information on the climate and human rights performance of business’.¹⁸ It is worth nothing that an earlier version of the LBI draft negotiation text included a requirement for business enterprises to undertake and publish regular human rights, labour rights, environmental and climate change impact assessments throughout their operations.¹⁹

A potential key added value of the LBI is clarification of a legal liability standard applicable in cases of harm arising from business activities in which multiple entities located in multiple jurisdictions are involved. This would be a concrete way in which the proposed LBI could contribute to addressing issues arising in the context of transnational business activities. Apart from covering cases where one business enterprise legally or factually controls another entity involved in the harm, it is important to cover instances of intervention and sufficient influence by one entity over another. Such instances may include those where one entity sets the corporate group policies relevant to a harm arising, or sufficiently influences the practices in a supply chain where harm arises. Besides, it is also important that the liability standard covers instances where the business enterprise should have reasonably foreseen a risk of harm arising in an activity within its business relationships but did not take reasonable and necessary measures to prevent it.

The effectiveness of a liability standard to be agreed under the proposed LBI will depend on the extent of guidance that would be available to implementing States. For victims or plaintiffs, this would translate into clearer legal avenues to access justice and less time and costs in legal proceedings. For companies, this would imply more clarity on what is expected from them and how their practices would be assessed under the applied regime of legal accountability. 

While the liability standard is key, effectively addressing access to justice also requires tackling a number of key issues that often create barriers for victims and their representatives. These include jurisdictional barriers that victims often face, the need for international cooperation in investigating cases connected to entities operating in multiple jurisdictions, aid in meeting legal costs, and cooperation in recognition and enforcement of judgments pertaining to businesses involved in transnational activities.

Looking forward towards an outcome

The proposed LBI will potentially become one additional piece in the complex mosaic of normative and legislative reforms and innovations that are required to bridge the gap between corporate accountability and the realities of corporate practice. It would be a very important piece rooted in international cooperation to address challenges thrown up by a world of globalised markets and transnational business activities.

It is important to approach the proposed LBI as a dynamic instrument that will continue evolving over time given the continuously changing nature of business activities and entities that are its core subject-matter. The instrument should be designed in a way that builds on the latest developments yet does not preclude further developments and clarifications in the future. This is why it is important to also pay attention to the institutional framework that will be established to oversee implementation of the LBI.                                           

Kinda Mohamadieh is a legal advisor and senior researcher with the Third World Network office in Geneva. Her work focuses, among others, on issues of corporate legal accountability, business and human rights, international investment governance and WTO negotiations. She holds a PhD in international law from the Graduate Institute in Geneva, an LLM in international economic and commercial law from the University of Lausanne, and a master in public policy from the University of California at Los Angeles. Kinda is part of the group of legal experts selected to support the open-ended intergovernmental working group negotiating the LBI. This article is written in her capacity as TWN staff.

Notes

1.See for example: Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859, 5 July 2024 (CSDDD); the French duty of vigilance law, Article L. 225-102-4.-I. of the French commercial code; the German Supply Chain Due Diligence Act, in German: Lieferkettensorgfaltspflichtengesetz (LkSG), enacted in 2023, English translation available at: https://www.bmas.de/SharedDocs/Downloads/DE/Internationales/act-corporate-due-diligence-obligations-supply-chains.pdf?__blob=publicationFile&v=3; and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, available at: https://mneguidelines.oecd.org/mneguidelines/

2. See the OEIGWG Chair-Rapporteur updated 2025 Roadmap for the implementation of HRC Decision 56/116, including the intersessional thematic consultations, available at: https://www.ohchr.org/sites/default/files/documents/hrbodies/hrcouncil/igwg-transcorp/session10/igwg-10th-chair-rapporteur-updated-2025-roadmap.pdf

3. See supra note 1.

4.  See Report of the Working Group on the issue of human rights and transnational corporations and other business enterprises, ‘Investors, environmental, social and governance approaches and human rights’, A/HRC/56/55, May 2024.

5. See Article 3.2 of the draft negotiation text, which provides that ‘…States Parties may establish in their law, a non-discriminatory basis to differentiate how business enterprises discharge these obligations commensurate with their size, sector, operational context or the severity of impacts on human rights’. Available at: https://www.ohchr.org/sites/default/files/documents/hrbodies/hrcouncil/igwg-transcorp/session10/igwg-10th-updated-draft-lbi-with-proposals.pdf 

6. See Guiding Principles on Business and Human Rights, commentary of GP14, available at: https://www.ohchr.org/sites/default/files/documents/publications/guidingprinciplesbusinesshr_en.pdf. The commentary provides that ‘the means through which a business enterprise meets its responsibility to respect human rights will be proportional to, among other factors, its size. Small and medium-sized enterprises may have less capacity as well as more informal processes and management structures than larger companies, so their respective policies and processes will take on different forms. But some small and medium-sized enterprises can have severe human rights impacts, which will require corresponding measures regardless of their size. Severity of impacts will be judged by their scale, scope and irremediable character. The means through which a business enterprise meets its responsibility to respect human rights may also vary depending on whether, and the extent to which, it conducts business through a corporate group or individually’.

7. See South Centre Analytical Note SC/AN/TDP/2017/4 (April 2017), available at: https://www.southcentre.int/wp-content/uploads/2017/08/AN_TDP_2017_4_Micro-Small-and-Medium-sized-Enterprises-MSMEs_EN.pdf

8. The discussions in the intergovernmental working group negotiating the proposed LBI have generally focused on a comprehensive liability regime that extends beyond liability for failure to fulfil the due diligence obligations being negotiated. One crucial element that had been negotiated under the draft LBI was that fulfilment of human rights due diligence shall not automatically absolve an entity from liability for causing or contributing to harm. A previous version of the draft negotiation text included a proposed article to that effect. See updated draft legally binding instrument (version with tracked changes), Article 8.7, available at:  https://www.ohchr.org/sites/default/files/documents/hrbodies/hrcouncil/igwg-transcorp/session9/igwg-9th-updated-draft-lbi-track-changes.pdf

9. See Guiding Principles, principle 7 on risks that emerge in conflict-affected areas and commentary of principle 23. See also the International Law Commission draft principles on protection of the environment in relation to armed conflicts, and UNGA A/RES/77/104 adopted in December 2022; General Comment No. 16 by the Committee on the Rights of the Child on State obligations regarding the impact of the business sector on children’s rights (2013); and OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (2023), para. 45. See also Regulation (EU) 2017/821 of the European Parliament and of the Council of 17 May 2017 – the Conflict Minerals Regulation; and Swiss Conflict Minerals and Child Labour Due Diligence and Transparency Ordinance. See also Report of the Working Group on the issue of human rights and transnational corporations and other business enterprises, ‘Business, human rights and conflict-affected regions: towards heightened action’, A/75/212, July 2020.

10. See Guiding Principle 19 and related commentary. See also the EU Corporate Sustainability Due Diligence Directive, under which suspension or termination of business relations is recommended ‘as a measure of “last resort” when all other actions have failed, and where severe impacts are at stake and only where these impacts outweigh the foreseeable negative consequences of disengagement…’. Available at: https://commission.europa.eu/document/download/7a3e9980-5fda-4760-8f25-bc5571806033_en?filename=240719_CSDD_FAQ_final.pdf. The OECD Guidelines recognise the importance of ‘appropriate responses with regard to the business relationships … includ[ing] … temporary suspension of the relationship while pursuing ongoing risk mitigation; or, as a last resort, disengagement with the supplier either after failed attempts at mitigation, or where the enterprise deems mitigation not feasible, or because of the severity of the adverse impact’. OECD Guidelines for Multinational Enterprises, Commentary on General Principles, paragraph 22. See https://mneguidelines.oecd.org/global-forum/2017-GFRBC-Session-Note-Responsible-Disengagement.pdf

11. GP 14 and related commentary. See also OHCHR (August 2023), ‘Business and Human Rights in Challenging Contexts: Considerations for Remaining and Exiting’, https://www.ohchr.org/sites/default/files/documents/issues/business/bhr-in-challenging-contexts.pdf. The OHCHR points out that ‘the more severe the harms involved, the more justifiable it would be for a business to consider terminating the business relationships involved. Indeed, if there are risks of “being involved in gross abuses of human rights such as international crimes, [a business] should carefully consider whether and how it can continue to operate with integrity in such circumstances”’. OHCHR Corporate Responsibility to Respect Interpretive Guide, p. 80, available at: https://www.ohchr.org/en/publications/special-issue-publications/corporate-responsibility-respect-human-rights-interpretive, referenced in ibid., OHCHR (August 2023).

12. Resolution adopted by the General Assembly, ‘The human right to a clean, healthy and sustainable environment’, A/RES/76/300, 28 July 2022; and resolution adopted by the Human Rights Council, ‘The human right to a clean, healthy and sustainable environment’, A/HRC/RES/48/13, 8 October 2021. The Human Rights Council also decided to establish a new mandate for a Special Rapporteur on the promotion and protection of human rights in the context of climate change. See Human Rights Council, ‘Mandate of the Special Rapporteur on the promotion and protection of human rights in the context of climate change’, A/HRC/RES/48/14, 8 October 2021.

13. Article L. 225-102-4.-I. of the French commercial code.

14. OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, available at: https://mneguidelines.oecd.org/mneguidelines/

15. See European Court of Human Rights in the Verein Klimaseniorinnen Schweiz and Others v. Switzerland climate case (Application no. 53600/20), judgment available at: https://hudoc.echr.coe.int/#%7B%22itemid%22:%5B%22001-233206%22%5D%7D.  The court found Switzerland in violation of the European Convention on Human Rights (ECHR) for failing to implement sufficient measures to combat climate change. The approach of the Court reinforces the centrality of acting on climate-change-related obligations as part and parcel of acting to fulfil human rights. In relation to this case, see CIEL press release, ‘Historic climate ruling: States must step up climate action to protect human rights’, available at: https://www.ciel.org/news/historic-climate-ruling-on-climate-justice/. In the Urgenda case, the Supreme Court of the Netherlands concluded that the Netherlands has an obligation under Articles 2 and 8 of the ECHR to ‘do its part’ to prevent dangerous climate change, even if it is a global problem. The Supreme Court ruled that the obligation to take appropriate measures under Articles 2 and 8 includes the obligation of States to take preventive measures against an impending danger, even if it is not certain that the danger will materialise. This may include both mitigation measures (measures to prevent the materialisation of the danger) and adaptation measures (measures to absorb or soften the consequences of that materialisation). Supreme Court (20 December 2019), ECLI:NL:HR:2019:2006, Nederlands Juristenblad 2020/41. In 2022, the Brazilian Federal Supreme Court ruled climate change is a constitutional matter and that treaties on climate change are a species of treaty on human rights. Source: Federal Supreme Court of Brazil, 7 April 2022 (PSB et al. v. Brazil).

Other cases addressing climate change and human rights include the 2015 Leghari judgment of the Lahore High Court in Pakistan that considered climate change poses a serious threat to access to water and food, among other things, and constitutes a violation of the right to life. Lahore Hight Court, 4 September 2015, case no. W.P. No. 25501/2015, para. 7 (Leghari/Federation of Pakistan). A decision by Colombia’s Supreme Court in relation to Amazon deforestation ruled that this deforestation and the resulting emissions are a serious attack on fundamental rights, including the right to life. Supreme Court of Colombia, 5 April 2018, no. STC4360-2018, p. 13 (Future Generations/Ministry of the Environment).

16. David Boyd and Stephanie Keene, ‘Essential elements of effective and equitable human rights and environmental due diligence legislation’, available at: https://www.ohchr.org/sites/default/files/documents/issues/environment/srenvironment/activities/2022-07-01/20220701-sr-environment-policybriefing3.pdf

17. Report of the Special Rapporteur on the promotion and protection of human rights in the context of climate change, ‘Access to information on climate change and human rights’, A/79/176.

18. Ibid., report of the Special Rapporteur on the promotion and protection of human rights in the context of climate change, p. 19. The Special Rapporteur proposes that ‘Companies should share the climate footprint of their products and services; technical and physical characteristics and impacts of high-emission projects, and available technologies; as well as broader sustainability efforts, compliance with environmental regulations and investments in renewable energy and eco-friendly technologies. Companies engaged in projects to address climate change should share information prior to starting these projects’ (citing A/76/154 and A/HRC/55/43).

19. See the 2019 draft LBI text, 3rd revised version, proposal by Panama and Philippines, under Article 6.4a, available at: https://documents.un.org/doc/undoc/gen/g23/008/93/pdf/g2300893.pdf

*Third World Resurgence No. 362, 2025/1, pp 6-11