CYIL vol. 11 (2020)

CYIL 11 (2020)

INVESTORS’ RESPONSIBILITIES BEYOND INVESTMENT TREATIES…

5.2 Subject-focused regulation In the United Kingdom (UK), the Modern Slavery Act (2015) requires businesses which provide goods or services in the UK with a certain turnover to report each year on the steps they have taken during the past year to ensure that abuse of adults and children in form of slavery, forced labour and human trafficking are not occurring in their own business or in their supply chains. In this way, it has wide extraterritorial implications. However, the law does not contain a mechanism to directly sanction if companies fail to publish an anti-slavery statement according to the law. They could be only made subject to a court injunction, and persistent failure to comply this obligation could lead to company directors being found in contempt and fined. Not surprising that the Act has not been successful in meeting the key aim of providing adequate civil remedies to victims. 47 The Australian Modern Slavery Act (2018) imposes mandatory reporting obligations related to the steps taken to respond to the risk of modern slavery in the operations and supply chains of the reporting entity and its controlled entities. It covers only businesses (although it is not limited to commercial organisations) above a certain size and smaller enterprises can report voluntarily. As with the British Act, Australia’s one does not impose penalties for failing to lodge a statement or for lodging an incomplete statement. The Netherlands recently adopted the Child Labour Due Diligence Law (2019), which requires companies selling goods or services to Dutch consumers to determine whether child labour occurs in their supply chains and set out a plan of action on how to combat it. The action plan should be in line with international guidelines such as the UNGP or OECD instruments. Similar to other legislation, the law requires companies to report on conducted due diligence. In addition, the law introduces a variety of sanctions, from a fine to criminal sanction, including community service, 10% of annual turnover or up to four years of company director’s imprisonment. Other part of legislative developments around the globe which “harden” soft law as when voluntary international standards are converted into binding domestic laws and regulations is visible also in the EU. 48 The regulation laying down mineral supply chain due diligence (2017) introduces obligations for EU importers meet international responsible sourcing standards set by the OECD in the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. 49 Accordingly, the EU importers must identify, assess, audit and address the risks in their mineral supply chain. They shall also report annually on their policies and practices in this regard. The most recent example of EU legislation built on RBC standards is the regulation on disclosures relating to sustainable investments and sustainability risks (2019). The regulation introduces transparency rules for financial institutions on the integration of sustainability risks and impacts in their processes and financial products, including reporting on adherence 47 MANTOUVALOU, V. The UK Modern Slavery Act 2015 Three Years On. Modern Law Review , 2018, Vol. 81, No. 6, p. 1045. 48 NEWMAN, A., BACH, D. The European Union as Hardening Agent: Soft Law and the Diffusion of Global Financial Regulation. Journal of European Public Policy , 2014, Vol. 21, No. 3, p. 430. 49 OECD: Due Diligence Guidance for Responsible Supply Chains of Minerals. Paris: OECD Publishing, 2016; Regulation (EU) 2017/821 of the European Parliament and of the Council of 17 May 2017 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas.

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