The UN Guiding Principles on Business and Human Rights: what Australian businesses need to know

What the UNGPs are

The United Nations Guiding Principles on Business and Human Rights (UNGPs) were endorsed by the UN Human Rights Council in 2011. They provide a global framework intended to prevent and address potential adverse human-rights impacts arising from business activity.

The UNGPs are structured around three core pillars. The first pillar focuses on the State duty to protect human rights. The second pillar outlines the corporate responsibility to respect human rights. The third pillar concerns access to remedy for individuals who have experienced business-related abuses.

• State duty to protect human rights
• Corporate responsibility to respect human rights
• Access to remedy

What 'corporate responsibility to respect' requires

The ‘corporate responsibility to respect’ requires businesses to take proactive steps regarding human rights. This includes avoiding causing or contributing to adverse human-rights impacts that arise from a business’s own activities. Where such impacts do occur, businesses are also expected to address them.

Beyond direct operations, businesses have a responsibility to consider the human rights implications of their business relationships. This means seeking to prevent or mitigate adverse impacts that are directly linked to operations, products or services, even if the business itself did not contribute to those impacts.

Meeting this responsibility involves undertaking human-rights due diligence. This process entails identifying and assessing potential human-rights impacts, integrating the findings into business practices, acting on those findings, tracking responses, and communicating how impacts are addressed.

How the UNGPs intersect with Australian law

The UN Guiding Principles on Business and Human Rights (UNGPs) have a significant connection to Australian law. The Australian Modern Slavery Act 2018 (Cth) demonstrates this, with its seven mandatory criteria for reporting. These criteria require businesses to outline risks, actions taken, and the effectiveness of those actions in a manner that aligns with UNGP-based human-rights due diligence. Businesses can use a modern slavery statement scaffold to assist in meeting these requirements.

Beyond the Modern Slavery Act, the Australian Government’s procurement policy also incorporates considerations related to modern slavery, further reflecting the influence of the UNGPs. This means businesses seeking government contracts should be aware of and prepared to address human rights considerations.

Finally, broader expectations are emerging from investor frameworks. Initiatives such as the Principles for Responsible Investment and requirements for climate-related disclosures increasingly demand that businesses undertake human-rights due diligence consistent with the UNGPs as part of their environmental, social, and governance (ESG) processes.

Practical implementation

Australian businesses should implement practical steps to align with the UN Guiding Principles on Business and Human Rights. A key element is building a human-rights due-diligence process. This process should map operations, sectors, products and geographies to identify areas of potential human rights impact. The process should go beyond theoretical risk categories.

Meaningful engagement with workers, communities, and other stakeholders is essential. This engagement helps identify actual human rights impacts, rather than relying solely on pre-defined risk categories. Establishing or participating in grievance mechanisms that meet UNGP effectiveness criteria is also necessary to address identified issues. modern slavery threshold checker

Reporting on the outcomes of due diligence processes is a critical component of implementation. This reporting should occur under the Modern Slavery Act, as part of Environmental, Social and Governance (ESG) reporting, and for investor-facing entities, under broader sustainability reporting frameworks.