Human rights are on everyone’s lips, and not just because of the political discussions surrounding the World Cup in Qatar. In recent weeks, there have been developments on the ESG Directive on Corporate Sustainability Reporting (CSRD), the amendment to the German Supply Chain Sourcing Obligations Act (LkSG) and then the Frankfurter Allgemeine Zeitung newspaper ran a leader on the topic of domestic violence (FAZ leading article from 25 November 2022 with the headline ‘He who strikes must leave’).
In parallel, numerous companies are currently appointing a ‘human rights officer’. In this article we examine the legal basis, the tasks and the role of HR in these appointments.
According to the new Supply Chain Due Diligence Act (LkSG), companies are obliged to take human rights and environmental due diligence obligations into account in an appropriate manner in their business activities as of 1 January 2023 (s3 LkSG). The Supply Chain Due Diligence Act has established concrete obligations, including the definition of an internal responsibility (s3 (1) 2 LkSG), which organisations must implement.
The legal basis for the ‘human rights officer’ role is found in s4 (3) of the Act, which reads:
‘The company shall ensure that it is defined who within the company is responsible for overseeing risk management, for example by appointing a human rights officer.’
Violations are punishable by a fine of up to EUR 500,000 for individuals and up to EUR 5,000,000 for companies.
This creates an obligation to establish responsibility for monitoring risk management. However, this does not mean that a single ‘human rights officer’ must be appointed, nor that s/he must be designated as such. A body consisting of several people can also assume the tasks of the Human Rights Officer (see s 4 (3) 2 LkSG, which refers to ‘the competent person or persons’).
Given the open wording, it is also possible to divide the monitoring of risk management thematically, for example between a human rights officer for human rights due diligence and an environmental officer for environmental due diligence. Likewise, an existing officer can be entrusted with the additional function of human rights officer. The prerequisite is that the different tasks must not lead to a conflict of interest and that the person has the necessary expertise in both areas.
A human rights officer has the task of monitoring the implementation and execution of risk management (s4 (3) 1 LkSG). This includes, among other things, reviewing the risk analysis (s5 LkSG) and remedial and preventive measures (s 6, 7 LkSG).
No comprehensive catalogue of duties for the Human Rights Officer is provided. However, this does not preclude the human rights officer from going beyond the wording of the Act and ensuring compliance with all due diligence obligations mentioned in s3 (1). This would include monitoring the functionality of the complaints mechanism. The complaints procedure (s8 LkSG) is intended to enable those affected by human rights violations within the supply chain to express their concerns and needs directly to the organisation.
The management has the duty to inform itself ‘regularly about the human rights officer’s activites within the framework of the Supply Chain Sourcing Obligations Act. ‘Regularly’ means at least once a year as well as on an ad hoc basis. For example, when new business areas or products are introduced.
It makes sense that the human rights officer also has a central role in fulfilling the documentation obligations (s10 (1) LkSG) as well as the annual preparation of the annual report (s10 (2) LkSG).
The usual duties of the Human Rights Officer can be summarised to the following key points:
The human rights officer’s duties are limited to the duty to monitor; there is no duty to carry out the necessary measures personally. In the absence of concrete legal requirements, the organisation should define and record in writing what the officer’s tasks and activities are. It can also determine to what extent employees or departments are to assist the human rights officer or whether the tasks are to be carried out by the officer personally.
As described above, the Supply Chain Sourcing Obligations Act does not assume that the office of Human Rights Officer must be held by a single person; the role can be delegated to different people or a committee. This seems to be more than necessary, especially in larger companies, due to the extent of monitoring and control tasks.
The explanatory memorandum to the law recommends distributing the tasks and placing the human rights officer directly under management. A distribution between sales, compliance and the board of directors would be appropriate. Given the lack of legal requirements, organisations have a certain amount of discretion to adapt risk management and the role of the human rights officer to the individual company.
What about HR? Even if it is correct to align the ‘S’ in ESG operationally with the Labour Director/Human Resources Manager, the human rights officer is nevertheless a cross-sectional function which, in the checks and balances of corporate tasks, should most likely be located in or with the compliance function.
Organisations should also provide the human rights officer with ’the necessary tools to ensure adequate monitoring’. This includes, in particular, ensuring that the officer has sufficient access to all relevant information. Any other activities must not hinder the human rights officer in the performance of his or her duties. That means s/he must be granted sufficient working time to carry out his or her functions.
Organisations should ensure that there are no conflicts of interest both with the officer’s own activities and with his or her hierarchical position. For this reason, it may be appropriate in individual cases to grant the human rights officer powers of decision and instruction. This is because the officer can only effectively fulfil his or her monitoring function if s/he is not subject to any instructions in the exercise of his or her activity that could make monitoring more difficult.
It is not mandatory that the human rights officer be able to act completely free of instructions. However, s/he does not enjoy any special protection against dismissal, discrimination or termination. Effective risk management should therefore only be possible if the human rights officer cannot be reprimanded or hin-dered in his or her tasks. He or she should therefore be granted a certain degree of freedom from disciplinary instructions. In addition, he or she must be able to act free of professional constraints.
Commentators have noted that the drafting of the Supply Chain Sourcing Obligations Act means the human rights officer has a ‘self-monitoring’ function. This means a two-tier system is therefore the best for practical implementation: a ‘Chief Human Rights Officer’ (CHRO) responsible for implementation, and the human rights officer retaining monitoring responsibilities.
Even if the provisions on the Human Rights Officer in the Supply Chain Sourcing Obligations Act are rather meagre, there are already a number of aspects that organisations can and should take to heart when structuring this position. Separation between the operational implementation of the Act (by the CHRO) and the monitoring function of the human rights officer is crucial.
The human rights officer is not a company officer in the labour law sense. The law does not specify a privileged position under labour law or impose further requirements for the independence of the human rights officer. However, effective monitoring of risk management will only be possible if the human rights officer can carry out his or her activities without having to anticipate employment sanctions or other measures might obstruct his or her work. This, too, must therefore be ensured through organisational measures as part of the implementation of effective risk management.
From an organisational point of view, it is recommended that the human rights officer be integrated into the organisation as a discrete staff unit. In this staff position, a prominent employee reports to management. Otherwise, s/he will need to coordinate and monitor the activities of other employees from other departments with sub-tasks in the fulfilment of due diligence obligations.
The many tasks and responsibilities involved suggest that only experienced, extensively qualified staff should hold this elevated position.
This can lead to a clearer responsibility for the human rights officer. At the same time, this creates a more direct and shorter communication channel between management and the representative to comply with the management’s legally imposed duty to inform.
However, the communication channel is not only improved for management. As a staff unit, the human rights officer can also monitor the delegation of sub-tasks to various business units more effectively. As a result, communication can be improved and better targeted at all levels.
It is recommended that management communicates the role and contact details of the human rights officer within the organisation and to suppliers. This increases awareness of the human rights officer within the organisation and among those affected.
In practice, organisations have so far found different ways to organise the responsibility for the Supply Chain Sourcing Obligations Act. Often the tasks involved are the direct responsibility of management or the compliance department or function. Quality assurance can also play an important role, depending on the extent to which it also takes care of OHS and compliance.
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