Japan Set to Launch Human Rights Due Diligence Guidelines, Urging Companies to Act

Last week, Japan's Ministry of Economy, Trade and Industry released draft guidelines for all companies operating in the country, encouraging human rights due diligence within their global supply chain. The guidelines, expected to be finalized in September, call for companies to publish relevant policies and measures. The goal is to close the gap with the U.S. and Europe on human rights issues and help Japanese companies stay with the trend.  

The new guidelines will urge companies to monitor their value chains for forced and child labor, as well as for discrimination based on race, disability, religion and gender. A four-step approach to detect and prevent potential violations is recommended: identify issues and the severity, mitigate the damage and prevent a recurrence, rate the effectiveness of the response, and communicate to the public. Additionally, affected parties should have access to remedies when the companies fail to prevent or resolve abuses.  Notably, the new guidelines allow businesses to consider suspending business ties where the authorities are involved in potential human rights abuses -- a clause aimed at China's alleged human rights violation towards Uyghur minority in the Xinjiang region. 

This move intends to benchmark the Uyghur Forced Labor Prevention Act by the U.S. and EU’s proposed directive for mandatory human rights due diligence. However, the guidelines will not be legally binding, so the enforcement remains uncertain.   

Further, the new guidelines also highlight the disadvantages faced by foreign nationals, women, children, disabled individuals and indigenous people and ethnic, religious and linguistic minorities in the workplace, and urge companies to rectify any discrimination against these groups. It comes at a time when large companies in Japan will soon be required to disclose gender pay gaps among their employees. HR Policy Global will host a discussion on this important topic.  

Outlook: The ministry's move comes amid concerns that Japanese products may be banned from overseas markets if companies do not take sufficient steps to protect human rights at a time when the United States and European nations are promoting respect for such rights. Depending on how companies abide, Japan might consider eventually enshrining it into law.