What Is Human Rights Due Diligence?
Human rights due diligence (HRDD) is a proactive, ongoing process through which a business enterprise identifies, prevents, mitigates, and accounts for how it addresses its adverse human rights impacts. The concept was established by the UN Guiding Principles on Business and Human Rights (UNGPs) in 2011 and has since been operationalised through the OECD Due Diligence Guidance (2018) and embedded into mandatory legislation across jurisdictions.
Understanding what HRDD is, and equally what it is not, is essential before moving into the mechanics of how it works.
Scope of HRDD: What It Covers
UNGP Principle 17 defines human rights due diligence as a process that should:
- Cover a business enterprise's own activities and its business relationships, including entities in its value chain
- Vary in complexity with the size of the enterprise, the risk of severe human rights impacts, and the nature and context of operations
- Be an ongoing process rather than a one-time exercise, recognising that human rights risks change as operations, markets, and contexts evolve
- Address both actual impacts (harms that have already occurred) and potential impacts (risks that have not yet materialised)
Business relationships in this context include suppliers, subsidiaries, joint venture partners, customers, licensees, governments (in the case of joint ventures or contracts with state entities), and financial entities. The scope is not limited to a company's direct employees or contractors but extends through the entire value chain to the extent that the company has business relationships with actors in that chain.
HRDD Is Not an Audit
A common misconception is that HRDD is synonymous with supplier auditing. Audits are one tool within HRDD, but they are neither sufficient nor equivalent to the full process. Audits typically provide a snapshot of conditions at a single point in time, rely on pre-announced visits, and may miss systemic issues such as freely chosen worker representatives being unavailable or wage calculations being misrepresented. HRDD is a broader, ongoing management process that includes stakeholder engagement, policy integration, action planning, tracking, and communication - elements that go well beyond a checklist audit.
How HRDD Differs from Legal and Financial Due Diligence
Most business practitioners are familiar with legal and financial due diligence in the context of mergers, acquisitions, and investment decisions. HRDD shares certain structural similarities but differs in fundamental ways:
| Dimension | Legal / Financial Due Diligence | Human Rights Due Diligence |
|---|---|---|
| Purpose | Protect the company from financial and legal risk | Identify and prevent harm to people; manage risk as a secondary benefit |
| Focus | Risks to the investor / company | Risks to rightsholders (workers, communities, individuals) |
| Timing | Usually one-time, pre-transaction | Ongoing, continuous through the life of operations |
| Methodology | Document review, financial analysis | Stakeholder engagement, impact assessment, risk mapping |
| Standards | Financial reporting standards, contract law | International human rights standards (UDHR, ICCPR, ILO conventions) |
Salient Human Rights Issues
Because no enterprise can address every conceivable human rights risk simultaneously, HRDD requires prioritisation. The concept of "salient human rights issues" refers to those human rights that are most at risk of severe negative impact through the enterprise's activities or business relationships. Salience is determined by the severity of the potential impact (assessed by its scale, scope, and remediability) and, for potential impacts, also by their likelihood.
Severity is the primary factor. A human right impact is considered severe if it is: widespread in scale (affecting many people), grave in its nature (involving physical harm, significant psychological distress, or material harm), or difficult or impossible to remedy (such as loss of life, permanent disability, or destruction of cultural heritage). The concept of salience ensures that a company focuses its due diligence resources on where it can make the greatest difference for people.
Analogy: Triage in an Emergency Room
Identifying salient human rights issues is analogous to medical triage. An emergency room cannot treat every patient simultaneously with the same urgency. Triage protocols direct resources first to the most severe cases - those whose lives are at risk or whose conditions will deteriorate fastest without intervention. Similarly, HRDD prioritises the most severe, widespread, and irreversible potential harms. This does not mean ignoring lower-severity issues, but it does mean applying the most intensive due diligence resources where the stakes are highest for people.
The Ongoing Nature of HRDD
UNGP Principle 17 explicitly states that HRDD should be ongoing, recognising that human rights risks are dynamic rather than static. New risks emerge when:
- A company enters a new market or operating context
- A business relationship changes (new supplier, new investor, new joint venture partner)
- The operating context changes (conflict erupts, regulatory environment shifts, commodity prices collapse)
- A triggering event occurs (grievance received, media report, NGO alert, incident in the supply chain)
The OECD DDG emphasises that the frequency and depth of due diligence should be proportionate to the risk context. An enterprise operating in a stable, well-regulated market with a short, transparent supply chain may conduct periodic reviews. An enterprise operating in conflict-affected areas or with complex, multi-tier supply chains in high-risk jurisdictions should conduct more frequent, in-depth assessments.
Example: Salient Issues Vary by Industry
The Corporate Human Rights Benchmark (CHRB) assesses companies in five high-risk sectors. For extractive companies (oil, gas, mining), salient issues typically include land rights and displacement, security forces conduct, environmental contamination affecting communities, and freedom of association for workers. For apparel companies, salient issues include forced labour in raw material supply chains, child labour in cotton harvesting, wages below living wage levels, and workplace safety. For ICT manufacturers, salient issues include conflict minerals sourcing, labour conditions in electronics assembly, and digital rights. Identifying sector-specific salient issues is the starting point for meaningful HRDD.
Key Takeaways
- 1HRDD is a proactive, ongoing process defined by UNGP Principle 17 that covers a company's own activities and all business relationships in its value chain, addressing both actual and potential adverse human rights impacts
- 2HRDD is fundamentally different from legal or financial due diligence in its focus on risks to people (rightsholders) rather than risks to the company, and in its ongoing rather than one-time nature
- 3HRDD is not synonymous with supplier auditing; audits are one tool within a broader due diligence management process that includes stakeholder engagement, policy integration, action planning, and communication
- 4Salient human rights issues are those most at risk of severe negative impact; severity is determined by the scale, scope, and remediability of the harm, with severity taking primacy over likelihood
- 5Human rights risks are dynamic, meaning effective HRDD must be responsive to changes in operating context, business relationships, and triggering events