ESG 2.0: The New Perspectives for Human Rights Due Diligence

The concept of Environmental, Social, and Governance (ESG) has gained significant traction in recent years, with an increasing number of companies voluntarily adopting ESG principles. Often due to a vacuum left by the lack of regulation, companies measure ESG impacts based on financial risks vs. the opportunities posed to their business. This approach can limit ESG’s positive effect in the real world as companies may prioritize what is easier and what benefits more their brands. Also, there is limited transparency as companies do not disclose the more sensitive and controversial issues in their own operations and their value chain. However, the future of ESG is likely to be shaped by new laws and regulations that may constitute clearer Human Rights obligations to companies. Departing from academic research and business practices perspectives, this paper brings a deep and concise analysis of two approaches to incorporating mandatory Human Rights into business ESG frameworks: the recent European Commission directive on Corporate Sustainability Due Diligence and the Strategic Climate Change Litigation practices in international private law. These new regulatory developments have an imminent influence on private sector activities.