The ayes—or as they say in Britain’s House of Lords, the “contents”—have it.
A first-of-its-kind private member’s bill that seeks to require U.K. businesses to conduct human rights and environmental due diligence—as well as be held accountable for failing to prevent abuses—will now move to the committee stage, having successfully run the gauntlet of its second reading on Friday.
But while legislators in the British Parliament’s unelected second chamber broadly agree that the destruction of the planet and the exploitation of workers by unscrupulous corporate actors needs to be stopped, they remain split over how to do so—or even if it’s the United Kingdom’s responsibility in the first place.
It’s this equivocation that Lola Young, Baroness Young of Hornsey, who introduced the Commercial Organisations and Public Authorities Duty Bill—COPAD for short—in November described as disappointing, particularly given the history of the country.
“I often think about those who fought for the legislation that would abolish the incitement and trade in Africans in the 19th century,” said Young, a patron of Anti-Slavery International and an honorary associate professor at Nottingham University’s Rights Lab. “Who would have thought that almost 200 years later, legislators still needed to develop laws that seek to eliminate the gross violations and abuses that we know far too many endure in supply chains across the world today?”
Pre-Brexit, the United Kingdom would have been a member of the European Union, whose corporate sustainability due diligence directive is heading off to be rubber-stamped, albeit in a watered-down form. Britain’s only supply chain accountability instrument is its 2015 Modern Slavery Act, which despite being hailed as groundbreaking at the time it was enacted, is now being criticized for shallow reporting obligations that don’t require companies to take concrete action or supply access to remedy.
“As Parliament stated in 2021, with references to Xinjiang, the Modern Slavery Act is not fit for purpose in ensuring supply chains are free from forced labor,” said David Prentis, Baron Prentis of Leeds.
COPAD would establish a duty for companies and public authorities to prevent human rights and environmental harms “so far as is reasonably practicable” both in their own operations and throughout their supply chains, including conducting due diligence. One of its clauses covers principles of “responsible disengagement” that would apply if a company suspends or terminates a business relationship as a result of its due diligence assessment. Another requires companies with an annual turnover above a certain amount—to be determined—to submit a due diligence report covering the effectiveness of measures it took in the past year and what it’ll do in the next. Still another would set up a regulator to oversee compliance with the bill, which includes collective responsibility for the board of directors.
Penalties could include criminal liabilities, including imprisonment for a maximum of 12 months in England, Wales and Scotland and up to six months in Northern Ireland, and a fine of up to 10 percent of a business’s global turnover.
The bill is not a “panacea for all the harms caused by the global economic system,” Prentis said. Rather, if passed, it would provide a “significant milestone” in the continuing work to offset the negative impacts of some companies on “communities, on the environment, on human rights” while creating a level playing field. And not just the private sector but the public one, too, he said, bringing up the government’s use of Supermax, a Malaysian company that was accused of employing forced labor, to supply personal protective equipment to the National Health Service during the Covid-19 pandemic.
“We urgently need clear and comprehensive legislation, which is vastly preferable to delaying the inevitable under the mistaken impression that inaction is business-friendly,” he said. “Nothing could be further from the truth.”
Young said that legislation like COPAD is necessary because the world is in an “era of complex corporate structures” where companies operate with “hyper-extended supply chains.” Environmental and social abuses continue to be a problem, she said, because low-priced business models, the United Kingdom’s “current legislative shortcomings,” extensive outsourcing, continued reliance on weak auditing and certification schemes, and attacks on freedom of association have created the conditions where harms happen on a “regular basis.”
Many due diligence frameworks currently in play are also voluntary, meaning that “too many companies, commercial and otherwise, don’t feel obliged to conform to those principles or to acknowledge the voluntary approach has not worked,” she added.
John Selwyn Gummer, Baron Deben of Winston, said that large businesses and trade groups such as the British Retail Consortium, John Lewis and Sainsbury’s have called for new legislation because they would otherwise be “undermined by people who do not take these things seriously.” But he said that he would support the bill even if that wasn’t the case.
“There are some things that are right and there are some things that are wrong, and this is right,” Gummer said. “It is not proper for rich people to live off poor people or to use exploitation as a means of improving their own lives. And therefore for me, this is the kind of bill we in this House ought to be supporting and pressing.”
The EU aside, the governments of France, Germany, Norway and the United States have developed or are developing their own due diligence requirements. Referring to Brexit, Gummer said that “we did not take back control to get worse” and, indeed, “it would be very peculiar if Britain were behind the others.”
The burden on businesses
As with the CSDDD, which was nearly derailed by naysayers who decried the rules as too onerous on businesses, the House had its critics. Among them was Iain Mackenzie McNicol, Baron McNicol of West Kilbride, who expressed concern about the “potential burden” the bill could place on both businesses and public bodies without “full and proper consideration.” He asked for clarification from Young on what thresholds, if any, the bill would impose on qualifying entities. (The Modern Slavery Act applies to organizations doing business in the U.K. with a total turnover of 36 million pounds—$45 million—or more.) McNicol also described supply chain emissions reporting, in particularly Scope 3, as “nothing more than a guestimate.”
“I want to see further consultation with both trade unions, businesses, NGOs and other organizations to review how best to bring this policy into action in a timely, considered manner,” he said. “We want to balance the needs of these regulations with the need to minimize the burden on businesses.”
Explaining the “government’s thinking,” meanwhile, was Malcolm Ian Offord, Baron Offord of Garvel, parliamentary undersecretary of state in the Department for Business and Trade, who likewise did not support the bill, mostly because it wasn’t necessary.
The United Kingdom, he said, is a signatory of the Organization for Economic Cooperation and Development Guidelines for Multinational Enterprises on Responsible Business Conduct and serves as a national contact point, which provides a nonjudicial mechanism for cases to be filed when a company contravenes those same guidelines. Since 2015, 13,000 statements have been submitted to the registry under the Modern Slavery Act. The government is also “committed to step forward” an “ambitious package” to strengthen the act, including mandating companies to publish details of their due diligence processes where it has them.
The Modern Slavery Act also sits alongside other initiatives tackling environmental and human rights violations, Offord said. The Department for Environment, Food & Rural Affairs is building on the 2013 Timber and Timber Products Regulation, which requires due diligence from timber-trafficking firms, to cover other commodities threatened by deforestation and illegal land use.
Relating to the Supermax case, the 2023 Procurement Act has “taken steps” to shore up the rules around modern slavery and environmental misconduct for companies supplying public authorities. Enterprises can also use the IFRS Sustainability Standards developed by the nonprofit International Financial Reporting Standards Foundation to boost their climate reporting.
“These initiatives demonstrate this proposed bill enters a crowded landscape, interacting with a wide range of existing and forthcoming legislation,” Offord said. “I therefore worry that the bill would create confusion and cost for businesses that would need to wrestle with multiple requirements articulated in competing ways.”
He said that there is “limited” evidence that mandatory due diligence works, since a “small number of jurisdictions have enacted similar legislation” to the proposed bill. “But these pieces of legislation are relatively recent,” Offord said. “Their complexity can make them hard to implement partially due to the global nature of supply chains. Rather than introducing legislation to tackle both environmental harms and human rights abuses, the government intends instead to observe how new developments unfold while taking targeted due diligence measures in relation to forest-risk commodities and testing their effectiveness for implementation.”
Offord said he was worried that the bill’s civil liability provision, when applied in practice, would shift legal responsibilities to U.K. companies in U.K. courts when “it would be preferable” for claims to be brought against companies and individuals that are directly responsible for harms in the jurisdiction they occur. Gummer countered that the jurisdictions being spoken about are “very often complicit with what happened” and that if they can’t bring the cases to the United Kingdom, there won’t be cases at all. “Surely Britain ought to be the one who can stand up for what’s right,” he added.
Young had the last word. She said that whenever someone seeks to bring in something progressive, there’s always pushback about how it’s too complicated or aspirational, which is “not just frustrating, it’s actually incredibly annoying.” Meanwhile, she’s reading “sickening, depressing, distressing” reports about worker suicides, women who are forced to have hysterectomies so they don’t have children or periods, or children toiling in difficult conditions.
“And we’re going to sit here and say, ‘You know, it’s a bit complicated; it’s a complex piece of legislation, and there’s flaws in it,’” Young said. “Well, guess what, there’s flaws in every piece of legislation that comes before this House and the other House. And we work through them if we’ve got a will to do so. Think of the burden on those families, the people, the people who live in poverty because they’ve got no choice about the kind of employment they can seek so we can have cheap clothes and cheap food.”
