Stockholm Launch: When Soft Law Hardens: The Growing Focus on Lawyers’ Role in Business and Human Rights

Business and Human Rights Lawyers Association, Stockholm launch

The focus of the event was to introduce the BHRLA to a Swedish audience, highlight trends within business and human rights, and facilitate a panel discussion on the topic: “When soft law gets harder – the increasing focus on the role of the lawyer in business and human rights”.

Speakers were drawn from host firm Mannheimer Swartling, as well as important voices from within business and human rights in Sweden. Fredrik Svensson, Partner, Mannheimer Swartling introduced the event with an overview of key developments in business and human rights. Angela Evans, Senior Associate, Mannheimer Swartling then moderated a panel discussion with Christian Swartling - Acting General Counsel at Stora Enso, Ylva Stiller - Head of Social Impact and Transparency at Stora Enso, Emil Lindblad Kernell - Business and Human Rights Counsel at LM Ericsson, and Cecilia Ekholm - Ambassador for Sustainable Business at the Ministry for Foreign Affairs.

The event explored the shift within business and human rights from soft law to hard law, and what it means for companies and their advisors – legal and otherwise. The goal was to apply a practical lens to how this shift is being managed to avoid the transition being net negative for effectively upholding human rights and managing risk.

Introduction

Fredrik Svensson, Partner at Mannheimer Swartling, introduced the BHRLA and shared insights from projects, discussions, and broader horizon-gazing on the business and human rights trends emerging for 2023 and onwards. He highlighted several key issues, including:

• From soft law to hard law – the national and supranational proliferation of legislation in the field of business and human rights, how multinational companies are navigating these legislative developments, and how to put rights holders at the centre of that navigation;
• Reporting and the right to information – the increase in reporting obligations (for example, the Corporate Sustainability Reporting Directive in Europe), as well as the right in some jurisdictions for stakeholders to submit information requests on human rights impacts (e.g. Norway) – such requests are likely to be exercised by stakeholders in many jurisdictions with or without explicit legislation;
• Litigation with a business and human rights touchpoint – the increase in strategic litigation and heightened scrutiny, in particular as relates to the connection between human rights, the environment and the “just transition” (an issue explored recently at the BHRLA launch event in London, featured here). The evolving role of “enablers” such as lawyers and other advisors in such processes was also highlighted;
• Organisational and resource challenges – the importance of clear ownership, embedded controls, and genuine engagement from all levels;
• ESG backlash – the ripple effects of a push-back from some parts of the world on corporate efforts to manage negative externalities, including in relation to human rights and climate change.

Panel discussion: from soft law to hard law – the role of the lawyer

While many companies already work actively and with clarity as regards human rights issues in and connected to their business, others are at a much earlier stage in that journey. Organisational awareness can be patchy, capacity to make the right choices can be improved, and companies face increasingly legal questions and challenges in managing human rights impacts. Internal and external legal teams, therefore, must evolve in order to help companies fulfill their responsibility to respect human rights. The panel engaged in a lively discussion of the shifting role of law and lawyers in the business and human rights space, including on the following key themes:

Business and human rights work and the legal department: structure and interaction

The panellists shared insights into how their organisations were structured to take responsibility for business and human rights issues. It was particularly useful to have representation on the panel of two viewpoints from the same company – one from legal and the other from sustainability. This led to an interesting exchange around how their respective departments interact, including the importance of clarity around that set-up, reporting lines, mandates, and expectations.

Several panellists remarked that “soft” law, even before the more recent legislative wave, can still lead to very “hard” consequences, and many companies had learned this through experiencing their own challenges in managing human rights incidents appropriately, whether legally mandated to do so or otherwise.

While some companies situated human rights expertise within the legal department, others placed business and human rights experts in their own designated department with a dotted line to the legal department. Whilst increasing the importance of alignment and communication, this helped certain business and human rights experts operate with a longer time horizon for project planning and budgeting, which facilitated them retaining a welcome long-term perspective on managing human rights issues.

The overarching consensus was that there is no one-size-fits-all approach: each company and its challenges are different. The important thing is to make active choices around these issues in order to suit the structure and context of each individual organisation and its activities.

Evolution of soft law to hard law: balancing a compliance focus with wider considerations

All panellists spoke of the increasingly complex demands to comply with a wave of new legislation on managing and reporting on human rights issues, particularly in Europe. The Danish Institute for Human Right’s overview of EU regulatory initiatives (here) was highlighted as a particularly helpful tracking tool.

Frontrunner companies are, in general, positive about such developments, which may help to create a level playing field. There are however concerns as to the challenge of navigating an increasingly complex web of compliance requirements. These concerns are especially felt from companies with less developed systems in place to manage human rights impacts, small and medium-sized enterprises, and companies in the Global South. Even for those not in scope for the upcoming legislation, they will be indirectly affected as part of the value chain. Managing substantial information requests from their larger European business partners is an oft-repeated concern.

Recent legislative activity does not, however, mean that soft law instruments are diminishing in their relevance. Panellists spoke of recent changes to such international instruments, notably the forthcoming update of the OECD Guidelines on Multinational Enterprises. The UN Guiding Principles on Business and Human Rights and other international instruments remain a vital guiding light for companies planning their business and human rights activities. Instead of chasing compliance on a law-by-law basis – building similar but different systems for each – it is best to keep the UN Guiding Principles as the steering point and augment as needed with bolt-on adaptations for local and/or specific compliance. This helps companies to uphold both the letter and the spirit of the law, and promote a more proactive approach. It is otherwise very easy to be overwhelmed by the volume of change.

The role of external advisors: what does an ideal external commercial legal advisor look like now – and looking forward to 2030?

The panel explored what they are looking for from external commercial legal advisors, both now and looking forward to 2030. The panel agreed that business and human rights lawyers are increasingly becoming a standard essential advisor for business, which means that law firms must be prepared to be able to answer advanced questions from their clients.

There was discussion around the rarity – on a global basis – of proactive and constructive engagement from commercial law firms with respect to business and human rights issues of real import to companies, across traditional legal disciplines, e.g. in an M&A context. Given that context, the panel agreed on the value and relevance of an organisation like the BHRLA. Some panellists remarked that, in many respects, law firms are playing catch-up to in-house lawyers who have necessarily had to navigate this space for longer. There is a race to attract and retain top business and human rights graduate talent by big corporates who are also eager to house expertise internally.

The panel acknowledged progress has been made – for example in the creation of many more business and human rights roles, in companies and beyond – but that there remains much to do.