US issues updated National Action Plan on Responsible Business Conduct

The release sends an important regulatory signal for businesses worldwide

On 25 March 2024, the US Federal Government released the second US National Action Plan on Responsible Business Conduct (Updated NAP) (available here). The Updated NAP "focuses principally on the business responsibility to respect human rights, including through effective due diligence". It builds on the first US National Action Plan on Responsible Business Conduct, released on 16 December 2016 (available here).

Although the Updated NAP does not itself create new legal obligations on businesses, it represents an important and globally relevant statement of US Government policy. The Updated NAP also provides an indication of planned changes to the US regulatory environment, including in relation to the application going forward of existing regulations relevant to responsible business conduct. This post summarises some of its key elements.

Background

The US Government's plans to produce the Updated NAP were first announced by US Secretary of State Antony Blinken on 16 June 2021 (available here). The statement marked the 10^th anniversary of the endorsement of the landmark UN Guiding Principles on Business and Human Rights (UNGPs) by the UN Human Rights Council and signalled the US Government's desire to participate in "shaping the business and human rights agenda".

The Updated NAP identifies "value chain opacity, traceability challenges, lack of guidance from governments, conflict, and weak rule of law" as some of the challenges facing businesses seeking to discharge their responsibility to respect human rights. The Updated NAP consists of three sections, which cover: (i) the US Government's approach to and expectations regarding human rights due diligence, (ii) priority policy areas selected following stakeholder consultation, and (iii) additional US Government policy commitments on responsible business conduct.

The US Government position on human rights due diligence

The first section of the Updated NAP recalls the US Government's work with and regulation of businesses to promote responsible business conduct. The Updated NAP goes on to set out the US Government's expectation that businesses will conduct human rights due diligence "throughout their value chains". This expectation is addressed to businesses generally.

The Updated NAP cites the UNGPs as well as the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines) and the International Labour Organization Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (ILO MNE Declaration) as setting a "floor rather than a ceiling for implementing responsible business practices".

According to the Updated NAP, a business conducting human rights due diligence "identifies, anticipates, prevents, mitigates, and accounts for how it addressees actual or potential adverse impacts on human rights". Reflecting the UNGPs' framework, relevant adverse human rights impacts include those which a business may cause, contribute to, or be directly linked with through a business relationship.

The Updated NAP also specifies that human rights due diligence should:

• constitute a continuous process, entailing a risk-based approach to the extent of human rights due diligence conducted;
• incorporate consistent stakeholder engagement including, at minimum, annual public communications regarding steps taken;
• be conducted in concert with a meaningful grievance mechanism for stakeholders affected by human rights impacts and risks; and
• be consistent with the Universal Declaration of Human Rights, International Covenant on Civil and Political Rights, UNGPs, OECD Guidelines, and ILO MNE Declaration.

The Updated NAP highlights that businesses conducting human rights due diligence should account for groups disproportionately impacted by business activity, and that introducing policies on the protection of human rights defenders is "[b]est practice". Additionally, businesses in "conflict-affected contexts" are specifically expected to conduct heightened human rights due diligence in line with UN Development Program guidance.

Priority policy areas

 Following stakeholder consultation, the Updated NAP explains that the US Government has designated four policy areas as particular priorities:

• the creation of a Federal Advisory Committee on Responsible Business Conduct;
• an improved response in US federal procurement policies and processes to human trafficking and related abuses;
• strengthened access to remedy for those affected by adverse human rights impacts; and
• the provision of guidance and information to businesses on human rights due diligence.

Notably, the US State Department intends to improve the operation of the US OECD National Contact Point (NCP), which (as in other adhering countries) may receive complaints from affected individuals or communities regarding business compliance with the OECD Guidelines.

Some of the planned changes are subject to a public comment process. One proposed change would see a relaxation of the US NCP's confidentiality policy. If implemented, the existence and status of pending cases before the US NCP, as well as summarised initial assessments of cases issued by the US NCP, would be made public, as is the case with NCPs in other countries. The publication of case details is likely to lead to an increase in the number of cases submitted to the US NCP given that publicity is frequently an objective of parties bringing complaints via the NCP procedure.

The Updated NAP also envisages that the US NCP would adopt a defined procedure for making specific recommendations to business respondents in its final statements on cases. More generally, the US State Department intends to update the US NCP's procedures in accordance with revisions to the OECD Guidelines adopted in 2023 (see our previous post here).

Additional policy commitments

The Updated NAP concludes with a wide-ranging set of additional policy commitments on responsible business conduct made by various parts of the US Government. These include a commitment from the US State Department to "deploy appropriate tools, including economic sanctions, visa restrictions, and export control measures" to pursue accountability for business and human rights-related abuses. The US Treasury Department is also to conduct a review of potential steps to "assess and address the illicit finance risks associated with key financial gatekeepers", including lawyers, accountants, and investment advisers.

Other commitments cover issues such as the responsible use of technology, workers' rights abuses, and impacts related to climate change.

Conclusion

The US Government's release of the Updated NAP represents an important regulatory signal for businesses worldwide, considering both the size of the US market, as well as the reach of US regulation. The Updated NAP's express references to the UNGPs and OECD Guidelines emphasise that businesses are expected to conduct human rights due diligence in a manner which meets and exceeds the standards set by these highly influential soft law instruments.

This is reinforced by the various commitments made by the US Government concerning access to remedy and the enforcement of responsible business conduct-related regulations. Businesses should ensure they are effectively assessing and addressing relevant human rights risks, particularly considering the planned strengthening of the US OECD NCP, and the US Government's willingness to consider measures such as economic sanctions as part of its approach to accountability. In that context, the Updated NAP supplements existing guidance emphasising the US Government's expectations regarding human rights due diligence in the context of export control and sanctions compliance (see our previous posts here and here).

Overall, the Updated NAP represents a continuation of the US Government's cautious and incremental approach to policy and regulation in the area of Business and Human Rights and is contrast to developments in the European Union and elsewhere where legally binding human rights due diligence obligations have been or may shortly be introduced.