Japan Publishes Human Rights Due Diligence Guidelines

Following a period of consultation, the Japanese Ministry of Economy, Trade and Industry (“METI”) has now released its finalised Guidelines on Respecting Human Rights in Responsible Supply Chains (the “HRDD Guidelines”).  This follows the global move towards codifying international soft law standards (such as the UN Guiding Principles on Business and Human Rights), including the EU’s draft Corporate Sustainability Due Diligence Directive (see our client briefing) and the European Commission’s proposal to ban products made with forced labour (see our blog post), as well as the German Supply Chain Due Diligence Act (see our client briefing, and an update on further guidelines) and the French Duty of Vigilance Law (see our client briefing).

The HRDD Guidelines (published on 13 September 2022) set out METI’s expectations for Japanese entities in promoting respect for international standards on human rights with a view to assisting entities to identify and prevent human rights related abuses in their global supply chains. As such, the HRDD Guidelines apply to every corporate entity in Japan regardless of size or sector.

The scope of the HRDD Guidelines is intentionally broad and covers internationally recognised human rights, including freedom from forced labour and child labour, freedom of association, the right to collective bargaining, freedom from discrimination in employment and occupation, freedom of movement and residence, freedom from discrimination on the ground of race, disability, religion, social origin, or gender.

The HRDD Guidelines

Japanese corporate entities would be well advised to consider the following three actions:

1. Implement a human rights policy.

• The policy should be approved at the most senior level of management; actively communicated internally and externally to all personnel, business partners, other relevant business parties and the public; and embedded throughout the entity’s business operations.
• The policy should define what is expected of personnel, business partners and other relevant parties, and should be appropriately tailored based on the entity’s assessment of potential impacts to human rights during the course of its business activities.

2. Implement a human rights due diligence process to identify, prioritise and address (potential) adverse impacts to human rights during the course of the entity’s business activity, as well as prevention or mitigation of adverse impacts throughout their supply chain.

• Due diligence should be carried out periodically as well as at other appropriate times, including (i) before embarking on a new business activity or business relationship; (ii) before any major decisions or changes in operations are implemented; and/or (iii) in response to, or in anticipation of, changes in the operating environment.
• The HRDD Guidelines highlight the leverage (or influence) an entity may have on its business partners, suppliers and other external parties, and that this comes with it the responsibility  to use this leverage or influence to mitigate or prevent adverse impacts (including by way of examples included in the HRDD Guidelines).

3. Remedies to address adverse impacts on human rights.  Remedies will vary depending on the nature and scope of the adverse impact, and a grievance mechanism will assist an entity in determining the appropriate remedy. The HRDD Guidelines provide an example of what this might look like.

Public Comments on the draft HRDD Guidelines

Public comments received on the draft HRDD Guidelines during the consultation period were, in the main, positive and supportive of the draft text.  There have also been recommendations for further expansion of the HRDD Guidelines, such as amending the definition of “human rights” to mirror the annex to the EU’s draft Corporate Sustainability Due Diligence Directive (see in particular Human Rights Watch and Amnesty International). METI has indicated that it will consider such public comments for future iterations of the HRDD Guidelines. There have also been requests for detailed manuals to assist entities in implementing measures in line with the HRDD Guidelines, to which METI has responded that it will release such guidance in due course.

Conclusion

The HRDD Guidelines are the first we have seen in the region and show Japan, in this context, in line with the global trend towards codifying soft law standards, and provide helpful guidance for entities considering and interpreting soft law standards in the business context, such as the OECD Due Diligence Guidance for Responsible Business Conduct, the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. Although the HRDD Guidelines are currently non-binding, they make clear that METI’s expectations of Japanese entities is that they have a process in place to identify, prevent and mitigate human rights related abuses across their global supply chains, and adds to the growing “international standards” expected of Japanese entities when conducting business (whether in or outside Japan).

In particular, for Japanese entities with global operations, the HRDD Guidelines will be helpful when considering what frameworks need to be put in place to ensure compliance with other laws mandating human rights or sustainability obligations which may have potential direct or indirect impact across an entity’s value chain, in particular the EU’s draft Corporate Sustainability Due Diligence Directive (see also our blog post).

For more information on business and human rights in general, see our series of podcasts and our cross-border summary of key human rights due diligence initiatives.

For further information on the HRDD Guidelines, see: “Business and Human Rights”: Towards a Responsible Value Chain / METI Ministry of Economy, Trade and Industry and Release of Japan's Guidelines on Respecting Human Rights in Responsible Supply Chains (meti.go.jp).