HRDD GUIDE

Practical guide for the implementation of human rights due diligence

This practical guide helps both SMEs and large companies to develop and implement pragmatic and effective human rights due diligence processes in line with the UN Guiding Principles and the OECD Guidelines. In addition, it outlines the first steps companies can take when setting up a due diligence system. The guide was created within the frame of the Swiss National Action Plan for Business and Human Rights (NAP) on behalf of the State Secretariat for Economic Affairs SECO and the Federal Department of Foreign Affairs FDFA. The UN Global Compact Network Switzerland & Liechtenstein is strategic partner.

The guide is available in German, French, Italian and English .

EXPLAINER VIDEOS

 PODCASTS

Implementing the UN Guiding Principles on Business and Human Rights: voices from the field

What is human rights due diligence all about? How do Swiss companies implement due diligence in accordance with the UN Guiding Principles? What have they learned, and what are the challenges? What regulatory developments are companies facing, and how can they best prepare?

What is the implementation timeline?

The Parliament’s indirect counter-proposal to the responsible business initiative has been implemented by the Federal Council. The implementing ordinance and its explanatory report, which clarify the open details of the new due diligence obligations, were published in December 2021. The new legal requirements entered into force in January 2022. After a one-year transition period, the new obligations will apply for the first time in the business year of 2023, with first reports being published in early 2024.

What is required of companies?

As part of their reporting obligations, companies are required to report annually on non-financial concerns in the areas of the environment (especially CO2-targets), social affairs, labour rights, human rights and corruption.

As part of the due diligence and reporting requirements on conflict minerals and child labour, companies are required to implement a comprehensive management system for due diligence and to report annually. In principle, the due diligence and reporting requirements cover the whole upstream supply chain, including own operations and the operations of all other economic actors involved from raw material production to the processing of the end product.

What are potential sanctions?

Failure to comply with the obligation to report non-financial information, conflict minerals and child labour may result in a fine of up to CHF 100’000.

What is the new non-financial reporting obligation?

The reporting obligation requires the company’s highest management or administrative body to account for and annually report on non-financial aspects of business activities. The following elements should be included:

• Description of the business model and value chain

• Information on the concepts pursued (strategies, measures, processes) including the due diligence applied

• Presentation of measures and evaluation of their effectiveness

• Description of material risks caused by own operations, business partners, products and services along the value chain

• Information on non-financial performance indicators

• A waiver to report on certain elements is permitted, but must be clearly explained and justified ("comply or explain")

Which companies are affected?

• The reporting obligation applies to public companies and large financial institutions with at least 500 employees and a balance sheet total of more than CHF 20 million or a turnover of CHF 40 million in two consecutive financial years.

• The due diligence and reporting requirements on conflict minerals apply to all companies above certain import or processing quantities of tin, tantalum, tungsten or gold (specified in appendix 1 of the implementing regulation).

• The due diligence and reporting requirements on child labour apply to all companies offering products and services with a "reasonable suspicion" that they have been produced or provided using child labour. Exemptions from the due diligence and reporting requirements on child labour apply to:

  • SMEs: companies below two of the following values during two consecutive financial years: balance sheet of a total of CHF 30 million, turnover of CHF 40 million, 250 employees.

  • Companies with a low risk, which according to the “made in” declaration only procure products and services from countries classified as “Basic” in UNICEF’s Children’s Rights in the Workplace Index.

  • The exceptions do not apply to companies offering products or services with an obvious (confirmed) use of child labour.

• Companies that fully implement international standards related to conflict minerals or child labour (specified in appendix 2 of the implementing regulation) are also exempt from the new legal requirements.

What about other companies?

In parallel to the legal developments, we also see increased pressure on companies by investors, consumers and business customers (b2b) to operate responsibly. As part of due diligence, companies directly covered by the new law will pass on duties through their supply chain. As a consequence, many companies will be indirectly affected by the increased requirements and should also prepare to deal with them.

What is child labour?

The law refers to the International Labour Organisation (ILO) definition of abusive child labour. In principle, the minimum age for the employment of minors must not be less than 15 years and work must not prevent the child from attending school. Special protective conditions apply to work which is dangerous and hazardous to health.

For more information, refer to our child labour Q&A.

What is due diligence?

In simple terms, due diligence is a six-step process to assess risks and impacts, take appropriate action and report on them. We recommend that companies ask themselves the following questions during implementation according to international standards:

Through due diligence, companies must systematically analyse their risks along the upstream supply chain and take appropriate measures to prevent, mitigate and end negative human rights impacts. Under the new law, the companies concerned are obliged to introduce an internal system to trace back the supply chain of the products and services that were found to be related to conflict minerals and child labour.

What are the first steps for a company?

Many companies have already taken various measures and processes in connection with the requirements, for example in occupational health and safety or in the prevention of child labour. A good starting point is therefore to carry out a gap analysis to evaluate the extent to which a company meets the new legal requirements on due diligence and reporting. Based on this analysis, an effective action plan can be developed. focusright has developed a tool to assist and support companies with our expertise and practical experience.

What are conflict minerals?

Analogous to the EU regulation on conflict minerals, the Swiss regulation defines tin, tantalum, tungsten or gold containing minerals or metals from conflict and high-risk areas as conflict minerals.

In politically unstable areas, mineral extraction and trade can finance armed groups, promote forced labour and other human rights violations, and support corruption and money laundering.

For more information, refer to our conflict minerals Q&A and the OECD Guidelines on Conflict Minerals .

In short – what are the key elements of the counterproposal?

Q&A CONFLICT-AFFECTED OR HIGH-RISK AREAS

Responsible business in conflict-affected or high-risk areas – Q&A for companies

This Q&A gives an overview of what companies need to know about conducting heightened human rights due diligence (HRDD) and operating in a conflict-sensitive manner. It is based on the UN Guiding Principles on Business and Human Rights (UNGPs) and was jointly developed by swisspeace and focusright within the frame of the Swiss National Action Plan for Business and Human Rights (NAP) on behalf of the Swiss Confederation. It provides practical advice for companies that are connected to conflict-affected or high-risk areas along their value chain. 

The Q&A is available in English, German, French and Italian.

What are conflict minerals, how are companies connected to them and how are they expected to address the risks and impacts of conflict minerals?

Well-documented links between extractive activities and conflicts in some regions of the world have sparked concerns about companies’ contribution to a vicious cycle of violence, instability, and human rights abuses. In this context, regulatory requirements for responsible business conduct are rising to ensure business respect for human rights and the environment. For adverse impacts related to minerals and metals from conflict-affected and high-risk areas (conflict minerals), an increasing number of laws are obliging companies to conduct due diligence.

focusright created a Q&A to answer the most important questions for companieslooking to get their conflict minerals due diligence started in line with international standards.

1. What are typical human rights risks and impacts of mining?

2. What are conflict minerals?

3. Where is the risk of negative impacts greatest?

4. How can I identify company links to conflict minerals ?

5. How can I address the risks and impacts of conflict minerals?

6. What obligations arise from the Swiss conflict minerals regulation?

What is child labour and what are the due diligence and supply chain management expectations to address child labour risks in their value chains?

Avoiding child labour and integrating respect for children’s rights in operational procedures were long considered a “best practice” rather than an integral component of business management. In recent years, however, regulatory requirements for corporate human rights due diligence have risen. Even more so for adverse impacts on child labour, as new laws obliging companies to conduct a due diligence for child labour are being adopted, e.g. in Switzerland and the Netherlands.

focusright created a Q&A to answer the most important questions for companies that strive to manage their child labour risks proactively and systematically in line with international standards.

1. What is child labour?

2. How can I know if my company’s goods and services are linked to child labour?

3. In what country or operational context is the risk for child labour greatest?

4. How does child labour look like in my industry or value chain?

5. What does the new Swiss due diligence requirement for child labour mean for my company?

6. What measures should my company take to address adverse impacts on child labour?

PUBLICATIONS & CONTRIBUTIONS

focusright practice Recommendations, Tools, Guidelines and Checklists for implementing human rights due diligence

Regulatory Developments & Policy Dialogue

focusright’s Q&A for companies about the two options to implement the new child labour due diligence requirements in Switzerland (August 2022)

focusright’s response to the Swiss Government on the draft implementing ordinance related to the indirect counterproposal to the Responsible Business Initiative, in German only (July 2021)

Blog post about upcoming due diligence requirements and their implications for Swiss companies: Neue Sorgfaltspflichten für Umwelt und Menschenrechte – Was kommt auf Schweizer Unternehmen zu? in German only (June 2021)

Final report: Monitoring of the National Action Plan for Business and Human Rights, German Federal Foreign Office & Ernst & Young with systain, adelphi und focusright, in German only (October 2020)

focusright’s commentary on the current political debate in Switzerland about mandatory due diligence: Unglückliche Vermischung zweier Vorlagen, in German only (Aug 2019)

Study: Bestandsaufnahme über die Umsetzung der UNO-Leitprinzipien für Wirtschaft und Menschenrechte durch den Bund und durch Schweizer Unternehmen, in German only with Executive Summary in English (Juli 2018)

Articles

Blog post/study: COVID-19 Impacts on the Thai Tourism Supply Chain, PATA and focusright (April 2021) (press release here)

Gastbeitrag öbu - Der Verband für nachhaltiges Wirtschaften: 70 Jahre Menschenrechte - auch für Unternehmen, in German only (Feb 2018)

Article in Organisations Entwicklung magazine: Menschenrechte: (K)ein Thema für Unternehmen, in German only (Oct 2017)

Reports, Guidance and Tools for Practitioners

focusright: explainer videos - introduction to human rights due diligence and introduction to human rights risk assessment (October 2023)

focusright & swisspeace: Responsible business in conflict-affected or high-risk areas – Q&A for companies (June 2023)

engageability & focusright: podcasts series on implementing human rights due diligence (January 2023)

focusright: Human Rights Due Diligence - Step-by-step practical guide for companies (October 2022)

focusright: Human Rights Due Diligence for Non-Governmental Organizations - Why it is needed and how it is done. Working Paper (May 2022)

focusright: Conflict Minerals - Q&A to support companies’ due diligence (January 2022)

Stiftung Arbeit und Umwelt der IG BCE: Die Umsetzung der menschenrechtlichen Sorgfalt – Handlungshilfe für Arbeitnehmervertretungen, in German only (October 2021)

focusright: Addressing Child Labour Risks - Q&A to support companies’ due diligence (June 2021)

UN Global Compact: focusright’s Communication on Progress 2021; Communication on Progress 2020; Letter of Commitment 2020

Contribution to HRIA Guidance & Toolbox, Danish Institute for Human Rights (2020)

Human Rights Impact Assessment Thailand & Myanmar, Roundtable Human Rights in Tourism (March 2020)

Chapter in the Handbook on Human Rights Impact Assessment, edited by Nora Götzmann, The Danish Institute for Human Rights: Travel and tourism: A comparative analysis of different HRIA approaches (November 2019)

Guidelines for the implementation of human rights-related due diligence in fragile contexts, Roundtable Human Rights in Tourism (Oct 2016)

Recommendations for implementation of labor and social standards for driving personnel in the tourism sector, Roundtable Human Rights in Tourism (Sep 2015)

Contribution to a set of tools on children’s rights due diligence for companies, UNICEF (2012-14)

Kuoni’s Human Rights Impact Assessments (HRIAs) in Kenia (2012) & India (2014) HRIA Guidance & Toolbox HRIA Guidance & Toolbox