What would the business and human rights approach of a Biden administration look like?

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Jonathan C Drimmer

Paul Hastings, Washington, DC

jondrimmer@paulhastings.com

While the US presidential election will impact many areas of policy, one affected area will be environmental, social, and corporate governance (‘ESG’) generally, and business and human rights more specifically. While the Trump administration has pressed forward on some key areas, including the use of sanctions against alleged human rights violators, a Biden administration will almost elevate ESG and business and human rights as priority items. Indeed, Democrat candidate Biden has made clear that he sees climate change as an accelerating threat, and the campaign has released a plan that sets a target of achieving net zero emissions by 2050. Diversity and inclusion also feature prominently in the Biden campaign, and when – as Vice President – Biden introduced his economic plan, he specifically stated that corporations have ESG responsibilities to their workers, community and country. Corporate governance requirements and mandated disclosures are therefore predicted to change, in the event of a Biden win. 

While those seminal ESG areas – climate, diversity, corporate governance – are not a surprise, specific policy items involving business and human rights have received less attention. A few areas within the business and human rights field are apparent. For instance, the campaign has made clear that LGBTI rights will be treated as human rights, and included within a larger foreign policy agenda. But other less evident areas can generally be separated into four categories, each of which have impacts on many multinational companies.

Firstly, a Biden administration would likely support enhanced transparency measures related to human rights. That would include a renewed emphasis on conflict mineral disclosures and the disclosure of resource extraction payments – enacted in the Dodd-Frank Financial Reform Legislation under President Obama, but denounced during the early days of the Trump administration. ‘Modern Slavery Act’ legislation – building on the California Transparency in Supply Chains Act, the UK Modern Slavery Act, and the Australian Modern Slavery Act, which require companies to publicly disclose measures they take to address modern slavery – will also assuredly find support in a Democratic administration. 

Secondly, business and human rights will increase in prominence in trade and foreign aid. The former Vice President has promised not to pursue further trade accords without enforceable labour and human rights standards, and we can expect the same of foreign aid agreements. To that end, we note that the US-Mexico-Canada Agreement (the USMCA, aka the new NAFTA) – which just went into effect – contains provisions requiring the parties to take measures to prohibit the importation of goods produced by forced labour, as currently exists in the US under section 307 of the Tariff Act 1930 (prohibiting the importation of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured labor). Further, provisions require parties to address violence against workers exercising their labour rights, to address sex-based discrimination in the workplace, and to ensure that migrant workers are protected under labour laws. That same approach could be employed in future agreements. In a related vein, more aggressive use of trade preference programmes to further human rights aims is also a safe bet, as is greater use by Customs and Border Protection of so-called ‘withhold release’ orders under section 307. In other words, while the Trump administration has pursued each of these areas, a Biden administration would probably increase their usage. 

Thirdly, there will likely be an increase in the use of sanctions and prosecutions for human rights violations, and incentives for responsible business conduct. The Trump administration has used sanctions, including under the Global Magnitsky Act, to target certain alleged human rights violators, most recently with respect to allegations of human rights abuses in the Xinjiang region of China. However, their use can be expected to increase under a President Biden, who perhaps would apply them more aggressively against individuals from additional jurisdictions, such as Russia, that have not featured in the current administration’s targets. While criminal prosecutions against individuals for labour and sex trafficking would continue, they may be extended to companies under the Trafficking Victims Protection Reauthorization Act, which allows for prosecutions of entities who knowingly profit from participating in ventures that involve trafficking. The US could also see, as exists in Canada, conditioning foreign embassy support for companies on following human rights norms and engaging in responsible business conduct.  Also predictable is an expansion of human rights requirements and protections in the federal procurement framework. While some protections certainly exist – including in relation to modern slavery – advocates have identified a number of areas to strengthen, which likely will find favour. 

Fourthly, we can expect a Biden Administration to engage more actively on major business and human rights issues that are debated across the globe. This could include: legislation mandating that businesses conduct global human rights due diligence, as is being considered in the EU; the draft UN Treaty on Business and Human Rights, which could be ready for ratification by the end of the next administration; increased civil litigation against companies connected to alleged human rights abuses committed abroad, particularly where there are limited alternative forums; and how AI and privacy across a spectrum of issues should be regulated. Each of these issues will be actively debated within the next four years, and there is little doubt that a new administration would participate openly and energetically. 

In short, while the current administration has advanced business and human rights objectives – especially where those objectives dovetail with political ones – a new administration is likely to have a more pronounced ESG and business and human rights agenda that builds on activities from the Obama era, expands the tools currently being used, catches up on issues US allies have adopted over the past few years, and reasserts the US in a business and human rights leadership role. The impacts would be felt differently by different companies and sectors, but a safe recommendation for most multinational businesses would be to use the 78 days between the 3 November election and 20 January inauguration to assess or reassess potential human rights risks and impacts in their operations and supply chains, and evaluate how those risks and impacts are being addressed. Of course, given the increased global focus on business and human rights, it’s a safe recommendation regardless.

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