May 05, 2021 (Nikkei) - TOKYO -- Japan will add a provision on human rights to its corporate governance code for publicly traded companies when it is revised next month, as allegations of abuses by China in Xinjiang shine a spotlight on the issue.
"Respect for human rights" will be included in the section of the guidelines dealing with sustainability. The planned language will call on boards to view human rights as an important management issue and think more about how to tackle the matter "proactively." The code from the Financial Services Agency and the Tokyo Stock Exchange applies to companies on the TSE's first section.
The authorities aim to push companies to act voluntarily to root out potential abuses in their supply chains so as to limit the risk of boycotts from increasingly sensitive consumers and investors.
The government drew up a "national action plan" on business and human rights last year, but it is not legally binding. The hope is that incorporating the topic into the governance code will encourage a stronger response.
Human rights concerns, and how companies deal with them, have been the subject of growing international attention over the past several years. The United Nations' "Protect, Respect and Remedy" framework, developed in 2008, stresses the need for due diligence to spot, prevent and mitigate such risks.
Europe has led the way on legislation in this area, such as the U.K.'s Modern Slavery Act of 2015, which requires businesses to assess their supply chains for forced labor and human trafficking risks and report the results. Other European countries, including France, have enacted similar laws.
Yet the TSE says it has not confirmed any examples of the phrase "human rights" appearing directly in European corporate governance codes.
