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New EU homework law needs amending to avoid tech sector abuse

European corporate homework directive wanting to transform how companies approach their human rights and environmental risk is welcome, but without further changes, it’ll neglect to effectively curb tech firms harmful practices, claims international non-profit

Sebastian Klovig Skelton

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Published: 03 Aug 2022 15: 11

The European Unions (EU) forthcoming Corporate Sustainability HOMEWORK Directive is really a step in the proper direction, but numerous improvements are essential to make sure technology companies usually do not escape accountability for his or her role in human rights or environmental abuses, says analysis by the business enterprise and Human Rights Resource Centre (BHRRC).

The risks posed by tech firms to human rights and the surroundings add the usage of forced labour and conflict minerals in supply chains, to the deployment of discriminatory and opaque algorithms in employment decisions, and the invasion of privacy via predictive analytics or technologies such as for example facial recognition.

The proposed directive may be the first try to mandate comprehensive human rights and environmental homework in the EU, and can force companies to recognize, prevent and mitigate any actual or potential risks that arise throughout their operations or value chains.

The BHRRC has said the directive will probably have broad global implications through the Brussels Effect whereby multinational corporations will most likely adopt European regulatory standards to be able to simplify their operations and offer chains, even though they’re not compelled to take action. This means it is advisable to ensure the directive is sufficiently smartly designed to boost responsible practice through the entire tech sector, said the organisation.

Although several international frameworks already exist to regulate the behaviour of multinationals like the US Guiding Principles on Business and Human Rights (UNGPs), the updated Organisation for Economic Co-operation and Developments (OECD) Guidelines for Multinational Companies, and the International Labour Organizations Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy all of them are voluntary and non-binding.

Even though directive uses the UNGPs as its foundation, and can include additional administrative penalties or civil liability where companies neglect to meet their obligations, the BHRRC said numerous changes are essential to effectively transform the tech sectors reaction to human rights abuses.

It said the sector has long evaded accountability and, frequently, the responsibility of proof about its abuses rests on the victims, as opposed to the companies perpetrating them. The responsibility of proof ought to be with the business to show it has acted lawfully on homework, instead of on the victim showing that the business have not, said the BHRRC.

To aid greater human rights and environmental protection in the market, and also shift the total amount towards victims, the BHRRC has identified numerous key areas where in fact the directive could be strengthened.

The foremost is to widen the scope where companies and sectors are caught by the regulation, because beneath the current draft, many high-risk tech companies, including the ones that provide surveillance or facial recognition software, will be omitted from the directives ambit.

Unfortunately, neither technology nor digital industries are contained in the set of high-impact sectors, that is a critical oversight, said the BHRRCs analysis. The directive will undoubtedly be a lot more effective if these sectors are included, which may ensure substantially more tech companies must perform at the very least some human rights and environmental homework.

However, even for all those sectors currently contained in the directives high-impact sectors, companies are just necessary to identify and address their severe impacts highly relevant to the respective sector, instead of to undertake an easy, risk-based method of homework contemplated by the UNGPs.

Another issue is that the directive will not encompass tech companies full value chain as the homework obligations are limited by established business relationships.

The BHRRC said this enables for impunity when confronted with harmful supply chains since it doesnt take account to the fact that business relationships in the tech sector, despite their often transient and sporadic nature, might have major human rights implications.

For example, a significant tech company could be contracted to build up codes at different points that may form section of a thorough worker surveillance tool, impacting gig and service workers, with implications because of their welfare, it said. However the developer company may not define this relationship with the customer, ultimately creating a comprehensive worker surveillance tool being an established method of trading.

Similarly, technology could be sold to a government by way of a single contract as the company continues to upgrade or troubleshoot said technology, without this qualifying being an established method of trading beneath the directive. Good UNGPs, the directive should concentrate on the principle of severity of risk, as opposed to the longevity of a small business relationship to steer the homework requirement.

Following on out of this, the BHRRC said the directive must also transition from characterising stakeholder engagement being an optional aspect in the procedure of identifying and addressing human rights risks, towards rendering it unequivocally required.

It added that human rights defenders, vulnerable or marginalised groups, and technical experts should all be explicitly included as key stakeholders, given the relevance of these experience and understanding of the tech sectors negative rights impacts.

The areas of improvement suggested by the BHRRC include amending the complaints procedure in order that a wider selection of actors may use it, and removing the wide range of exceptions and mitigating circumstances that allow reckless tech companies to sidestep their responsibilities.

Since it stands, for instance, tech companies will never be responsible for damages or harms due to the actions of an indirect partner with whom it comes with an established method of trading, so long as the firm has had contractual measures to cascade compliance in its value chain.

For tech companies, that have constantly changing impacts, this may function as ways to avoid consequences through superficial inclusion of contractual clauses and third-party verification, leaving harmed individuals and groups without redress, said the BHRRC.

In August 2021, Amnesty International claimed that major capital raising (VC) firms and accelerator programmes involved with funding and developing technology businesses have didn’t implement adequate human rights homework processes, this means their investments could possibly be adding to abuses all over the world.

Of the 50 VC firms and three accelerators surveyed, only 1 Atomico had homework processes set up which could potentially meet up with the standards lay out by the UNGPs.

Our research has revealed that almost all the worlds most influential venture capitalist firms operate with little to no consideration of the human rights impact of these decisions, said Michael Kleinman, Silicon Valley director of Amnesty Tech, at that time. The stakes cannot be higher these investment titans contain the purse strings for the technologies of tomorrow, sufficient reason for it, the near future form of our societies.

The EU can be taking forward another directive to boost gig economy working conditions, which, if passed, would reclassify thousands of people doing work for platforms such as for example Uber, Deliveroo and Amazon Mechanical Turk as workers, instead of self-employed, thus entitling them to a much wider selection of rights and workplace protections.

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