This is a discussion draft that proposes a list of “signals” that national regulators could use to determine the quality of a company’s human rights due diligence (HRDD) practices under potential EU legislation. The document highlights critical features of HRDD that are often overlooked by companies, such as meaningful stakeholder engagement, and identifies key practices and behaviours that distinguish better from poorer quality HRDD. The proposed signals are grouped into six broad areas that include governance of human rights, meaningful engagement with affected stakeholders, identifying and prioritising risks, taking action on identified risks, monitoring and evaluating progress in addressing risks, and providing and enabling remedy.

Based on the recommendations proposed by the document, companies should update their policies and processes to include all levels of employees and supply chain partners to ensure comprehensive compliance and address critical “signals of seriousness” about their HRDD efforts. For example, companies should, at the governance of human rights level, ensure that their senior governing body regularly discusses progress and challenges in managing salient human rights risks and approves high-level targets for addressing those risks. Moreover, companies should also engage meaningfully and actively with affected stakeholders and their legitimate representatives to build trust and enable them to identify problems that might go unnoticed, including identifying customized responses to their individual needs. To ensure that risk identification is done comprehensively companies should identify risks inherent in their business model and strategy, include well-informed sources to identify relevant risks, and be iterative and responsive to changes in the risk environment.

The document provides an important blueprint for evaluating the quality of HRDD practices by regulators seeking to enforce proposed legislation at EU level. Companies should use these signals to create a deeper understanding of HRDD practices that go beyond the observable basics of policies and processes on paper to ensure that the proposed standards are met. The signals proposed not only help companies become more comprehensive about risk management but also create robust measures that will ultimately promote trust, sustainability and good reputations.