Başak Bağlayan from the University of Luxembourg is examining the feasibility of introducing human rights due diligence laws (Photo: Romain Gamba) 

The issue was put in the spotlight in 2018, when an Israeli spyware firm with a seat in Luxembourg was linked to the killing of Saudi Arabian journalist Jamal Khashoggi. The grand duchy never investigated the allegations.

But work by the government on due diligence practices had already started. Bağlayan is part of a working group that developed a national action plan on human rights due diligence. She now has been tasked with a survey to examine the option of introducing mandatory obligations.

“I’ve been given eight objectives to research,” she said. These range from analysing reporting requirements in existing laws and what other countries are doing to liability and sanctions regimes and estimating the resources needed to implement such laws.

“The Union des entreprises luxembourgeoises is helping me reach companies,” the researcher said, as she is also trying to measure the compliance impact on small- and medium-sized enterprises as well as larger businesses.

“Businesses want a level playing field and they want legal certainty,” said Bağlayan. “We’ve seen businesses come out in favour of legislation, because of pressure from investors but also consumer pressure.”

Action plan

“We’re seeing different levels of business and human rights progress in Europe,” said Bağlayan.  The UK in 2015 passed the Modern Slavery Act, France in 2017 adopted the landmark Duty of Vigilance law and the Netherlands followed in 2019 with child labour due diligence laws.

And although Switzerland in a November referendum voted down a Responsible Business Initiative, it is set to introduce due diligence reporting obligations on child labour and mining conflicts for public interest corporations.

All UN countries subscribe to the organisation’s 2011 guiding principles, Bağlayan explained. These say that “states must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises.”

As a result, “around 50 countries have adopted a national action plan or are in the process of doing so,” said Bağlayan. Luxembourg is one of them, but the action plan is based on a voluntary approach, awareness raising and capacity building.

Measures include offering training, more thorough checks of companies taking part in public calls for tender as well as establishing pilot projects in companies where the state is a majority shareholder. “There are some good action points,” Bağlayan said, “but it’s not a legal instrument.”

EU approach

Activists have been pressuring the government to introduce due diligence laws, finding 92% public support for such a measure in an October 2020 survey. Bağlayan’s feasibility study is part of the national action plan, but the government has been open about favouring an EU-wide solution.

“I don’t see domestic legislation and European-level harmonisation as incompatible,” said Bağlayan. “On the contrary, they can be mutually reinforcing.”

The European Commission has launched a consultation with member countries and stakeholders with a view to presenting a possible directive next year. “Directives set the standards member countries must achieve, but not how they should do this,” Bağlayan said.

A national law could anticipate the transposition of a directive. “And it can always go further,” Bağlayan said. For example, Luxembourg is in the process of transposing an EU directive on whistleblower protections into national law and in doing so is going beyond the EU minimum standards.

“There are also treaty negotiations happening at UN level,” Bağlayan said, “although that is very likely to take years and years.”

Luxembourg is vying for a temporary seat on the UN Human Rights Council for 2022 to 2024. “It could be an opportunity for Luxembourg to push this agenda forward at UN level,” Bağlayan said. “But it is also responsibility for it to address these issues.”