With election season heating up, we increasingly are asked for predictions regarding a potential Biden Administration’s approach to ESG (Environmental, Social, and Governance) and business and human rights. To some extent, that seems fairly clear. Former Vice President Biden has stated strongly that he sees climate change as an accelerating threat, and has released a detailed plan that sets a target of achieving net zero emissions by 2050. The campaign also has pledged to address diversity and inclusion, and when the former Vice President introduced his economic plan, he stated expressly that corporations have ESG responsibilities to their workers, community and country. In that vein, corporate governance requirements and mandated disclosures almost certainly would change.
But specific policy items involving business and human rights have received less attention, though it undoubtedly will have a pronounced focus under Democratic leadership in ways that impact numerous global companies. Some areas within the business and human rights field are obvious. For instance, the campaign has made clear that LBGTQ+ rights will be treated as human rights, and included within a larger foreign policy agenda. Other areas are somewhat less evident. We generally can separate these other areas into four categories.
First, business and human rights will increase in prominence in trade and foreign aid. Vice President Biden has pledged no further trade accords without enforceable labor and human rights standards, and we can expect the same of foreign aid agreements. In that vein, more aggressive use of trade preference programs to further human rights aims also is a safe bet, as is greater use by Customs and Border Protection of so-called “withhold release” orders under Section 307 of the Tariff Act of 1930 (prohibiting the importation of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured labor).
Second, a Biden Administration would likely support enhanced transparency measures related to human rights. That would include a renewed emphasis on the conflict mineral disclosures and the disclosure of resource extraction payments enacted in the Dodd-Frank Financial Reform Legislation under President Obama. Modern Slavery Act legislation building on the California Transparency in Supply Chains Act, the UK Modern Slavery Act, and the Australian Modern Slavery Act – requiring companies of a certain size to publicly disclose the measures they are taking to address modern slavery – also will find support.
Third, there likely will be an increase in the use of sanctions and prosecutions for human rights violations, and incentives for responsible business conduct. The Trump Administration has used sanctions, including under the Global Magnitsky Act, to target certain alleged human rights violators, and especially with respect to allegations of human rights abuses in the Xinjiang region of China. However, they would probably expand under a President Biden, who perhaps would apply them more aggressively against individuals from geographies, such as Russia, that currently have not been included by the Trump Administration. While criminal prosecutions for labor and sex trafficking would continue, they may be extended to companies under the Trafficking Victims Protection Reauthorization Act, which allows for prosecutions of entities who knowingly profit from participating in ventures that involve trafficking. We also could see, as exists in Canada, conditioning foreign embassy support for companies on acceptance of and adherence to human rights norms. Human rights requirements and preferences for government contractors, and in other public procurement activities, also are likely to expand beyond modern slavery.
Fourth, while many of the above initiatives would represent a reinstatement or natural extension of those pursued during the Obama presidency, or parity with human rights approaches of other countries in recent years, we can expect a new administration to engage more actively on pertinent business and human rights issues presently being debated around the world. That could include: legislation throughout Europe mandating that businesses conduct global human rights due diligence; the Draft UN Treaty on Business and Human Rights, which seems at least several years away; civil litigation against companies connected to alleged human rights abuses committed abroad; and regulation of Artificial Intelligence and privacy across a spectrum of issues.
In short, while the Trump Administration has pursued business and human rights objectives – particularly where they mesh with political and/or foreign policy objectives – a Biden Administration is likely to seek to build on the foundation built during the Obama era, catch up on issues that have progressed elsewhere over the past few years, and reassert the United States in a global leadership role. While the impacts will vary among companies and sectors if Biden is elected, for most multinational businesses it will be prudent during the transition to assess or reassess potential human rights risks and impacts in operations and supply chains, and evaluate the nature of how those risks and impacts are addressed. Of course, given the increased global focus on business and human rights, that is a good idea regardless