US Second National Action Plan on Responsible Business Conduct: What businesses need to know

Indicating a trend towards greater accountability for existing human rights standards, the US government has published its second National Action Plan (NAP) on Responsible Business Conduct (RBC).

The NAP outlines the government’s expectations for businesses to conduct human rights due diligence assessments. Although it serves as a policy guide to the US government’s position on responsible business conduct, setting out key priorities without creating immediate obligations for companies. However, despite the lack of immediate obligation, US companies aiming to navigate evolving business and human rights regulations should view the NAP in two ways: as a precursor to enhanced regulations and as a guide to the government’s enforcement priorities.

Background

The US government issued its first NAP on RBC in December 2016, five years after the endorsement of the UN Guiding Principles on Business and Human Rights (UNGPs) and the addition of human rights to the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines).

Marking the tenth anniversary of the UNGPs, on March 25, 2024, the Biden-Harris Administration released the United States’ second NAP, reflecting a whole-of-government commitment to strengthen RBC and improve respect for human rights and labor rights, expand the use of green energy, counter corruption, protect human rights defenders, advance gender equity and equality, and promote rights-respecting use of technology. While the NAP addresses a diverse range of RBC issues for US businesses, it focuses primarily on effective human rights due diligence.

Expectations for business and human rights due diligence

The second NAP sets out the Administration’s expectations for US businesses to conduct human rights due diligence not only in their immediate company operations, but across their value chains, grounded in international standards such UNGPs and the OECD Guidelines as well as in the International Labor Organization’s (ILOs) Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (the MNE Declaration).

Such due diligence should specifically include:

• Metrics to assess and address risks: The amount and depth of due diligence should be commensurate with the severity and likelihood of an adverse impact, and should prioritize more significant risks (eg, due to the type of product or service involved and/or the operating context).
• Ongoing assessment, monitoring, and evaluation: Iterative, responsive, and adaptable processes that include monitoring, evaluation, and feedback loops should verify whether adverse impacts are being effectively addressed and new potential impacts identified.
• Consistent stakeholder engagement: Ongoing communication with those whose rights could be affected by the business's activities and organizations that represent them should guide the due diligence process to shape the business’s understanding of the risks and strengthen access to remedies, including through effective grievance mechanisms.
• Public communication: On at least an annual basis, the business should communicate its commitment to a rigorous internal and external risk assessment, as well as adequate measures taken to address any identified risks.
• Grievance mechanism: A grievance mechanism to capture feedback on human rights impacts and risks from affected stakeholders should be secure, accessible, and responsive, and should include communication channels for internal and external reporting of possible misuse of a product or service. Businesses may also participate in third-party grievance mechanisms such as state or nonjudicial dispute resolution, procedures developed with an independent union or trade union federation, and/or localized grievance mechanisms. The mechanisms should be legitimate, accessible, predictable, equitable, rights compatible, and developed in consultation with those for whom it is intended.
• Alignment with human rights instruments: The human rights due diligence review process should be consistent with the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, the OECD Guidelines, the ILO MNE Declaration, and the UNGPs.
• Heightened human rights due diligence in conflict-affected contexts: In line with the UN Development Program Guide on Heightened Human Rights Due Diligence for Business in Conflict-Affected Contexts,[1] businesses should assess the impacts of their actions not only on people but also on the conflict itself.

The second NAP underscores that businesses should go further to implement sector-specific standards developed in collaboration with stakeholders. Such standards should provide credible metrics to meaningfully measure progress on business impact on people across value chains.

US government commitments: four priority areas for effective human rights due diligence

The US government also identified four priority areas for its commitments to promote and incentivize RBC and to accelerate business implementation of effective human rights due diligence practices. The four priority focus areas are:

1) Establishing a federal advisory committee on responsible business conduct

• The Department of State will use this committee to strengthen coordination with the private sector, affected communities, labor unions, civil society (including human rights defenders), academia, and other relevant stakeholders on RBC policies, programming, and initiatives and the advisory committee will continue progress on RBC issues and help track NAP implementation.

2) Strengthening respect for human rights in federal procurement policies and processes

• The US Government Hotlines Working Group, chaired by the Departments of Health and Human Services, Homeland Security, and Justice, will identify options for improving methods through which workers and civil society may inform the government of human trafficking violations by federal contractors and sub-contractors.
• The Department of State will pilot a human trafficking risk mapping process for high-risk and high-volume contracts to assist the acquisition workforce and federal contractors conduct due diligence during project design, solicitation, and monitoring.
• The Department of Homeland Security’s Customs and Border Protection (CBP) will draft guidance to direct proactive consideration on a case-by-case basis of suspending and debarring companies from doing business with the federal government whenever CBP issues a penalty under the customs laws for repeated violations or other laws CBP enforces to combat forced labor so that US taxpayer dollars are not going to businesses using forced labor in their supply chains.
• The Department of Defense will conduct a review to evaluate whether to encourage or require membership in the International Code of Conduct Association for Private Security Providers’ Association (ICoCA) – a multistakeholder initiative that provides oversight and certification of private security providers in line with international human rights and humanitarian law standards – for its private security vendors.

3) Strengthening access to remedy

• The Department of State will strengthen the US National Contact Point (NCP) for the OECD Guidelines through increased stakeholder engagement. Reforms to the NCP include the creation of a new advisory body for the NCP; proposing changes to the NCP’s confidentiality policy and updating its rules of procedure; developing one of the first NCP policies on reprisals; improving accessibility of the NCP website; and evaluating options to strengthen the NCP.
• The Department of Labor will develop innovative access-to-remedy systems by funding a US$2 million technical assistance project, to be implemented by the ILO, that promotes worker-driven social compliance and protects labor rights in global value chains.
• The US International Development Finance Corporation (DFC) will strengthen protections against reprisals for individuals and groups that use DFC grievance mechanisms by updating its policy commitment, developing internal guidance for responding to allegations of retaliation, and enabling anonymous complaints in DFC grievance mechanisms.
• The Department of the Treasury will advocate for effective remedy systems at multilateral development banks, including the International Finance Corporation and Multilateral Investment Guarantee Agency, for project-affected communities.
• The Export-Import Bank of the United States will engage with the Export Credit Agency on strengthening remedy procedures and in public outreach to solicit input on how to improve remedy access and the efficacy of project-based grievance mechanisms.

4) Providing resources to businesses

• The Department of State released US government guidance for online platforms,[2] – such as search engines, social media platforms, and other digital services – on protecting human rights defenders.
• The Department of Labor will establish the Responsible Business Conduct and Labor Rights InfoHub, an online repository to communicate an all-of-government point of view, approach, and suite of resources to advance labor rights outcomes in business operations and value chains.
• The US government will release guidance for businesses on best practices regarding Tribal consultation and engagement with indigenous and affected communities.
• The Department of State will lead the development of guidance to encourage investors to conduct human rights due diligence when considering investments in technologies that could enable or exacerbate human rights abuses.
• The US government will develop additional business advisories for companies, investors, and other stakeholders that do business in or engage in transactions involving specific countries and/or sectors.

Enhancing coordination between the US government and businesses to conduct human rights due diligence

Given the cross-cutting nature of RBC issues today, coordination and communication between US government agencies, the private sector, civil society, labor unions, and academia will be critical to advancing RBC and enabling businesses to conduct human rights due diligence. Several US agencies have committed to expand engagement and coordination on RBC and strengthen implementation of US prohibitions on human trafficking and child labor in federal supply chains and expand areas through which the US government may be able to promote and incentivize RBC by government contractors and subcontractors.

Next steps for US companies

Although the NAP does not create any immediate obligations on US companies, increasingly global regulations such as the Corporate Sustainability Due Diligence Directive and the modern slavery acts of Canada, California, Australia, and the UK, create an extraterritorial impact on US companies by, for example, requiring human rights due diligence assessments, including on their value chains, and mandating modern slavery disclosures. Therefore, it is advisable for companies to proactively:

• Conduct human rights due diligence assessments in line with sector-specific and international standards by identifying and assessing actual and potential value chain risk, implementing measures to prevent and mitigate risk, monitoring their effectiveness, and reporting on remediation
• Review their corporate human rights-related policies and supplier code of conduct, provide training to employees and Board members, and impose a grievance redress mechanism for potential victims of a human rights violation throughout the value chain, and
• Evaluate the impact of the company’s business operations on human rights, especially if the business conducts or plans to conduct business with the federal government. For a more detailed understanding of the NAP RBC expectation for federal contractors and the FAR Council, please see our alert, New US government guidance promotes human rights due diligence by contractors in federal supply chains.

Learn more about the implications of the Second NAP RBC by contacting any of the authors or your DLA Piper relationship lawyer, and visit our Environmental, Social, and Governance; Global Investigations; and National Security and Global Trade portals for the latest information on ESG developments.


[1] https://www.undp.org/publications/heightened-human-rights-due-diligence-business-conflict-affected-contexts-guide
[2] United States Guidance for Online Platforms on Protecting Human Rights Defenders Online