Compliance Latam | The importance of regulatory compliance on Human Rights in companies in Latin America and the United States

Compliance Latam | The importance of regulatory compliance on Human Rights in companies in Latin America and the United States

At present, respect for human rights in business has become an issue of increasing importance throughout the world and is already part of the central core of business activity that must be aligned with principles of environmental, social and governance standards. (IS G). Regulatory compliance plays a critical role in protecting human rights and promoting ethical business practices. This article focuses on analyzing the relevance of compliance in Latin America and the United States and its relationship with Human Rights.

Regulatory compliance in companies not only refers to compliance with laws and regulations, but also to respect for and promotion of Human Rights. Companies have a responsibility to carry out due diligence to ensure that their operations do not contribute to violations of fundamental rights, both within their own facilities and in their supply chain. This implies adopting measures to prevent and address cases of discrimination, forced labor and child exploitation, among others.

In Latin America, the relationship between compliance and human rights presents particular challenges. The region is characterized by the presence of industrial sectors that present greater risks both related to corruption and Human Rights. These risks exist in the extractive industries, which include mining and oil, and which are often associated with negative impacts on local communities and the environment or agriculture that features a greater presence of informal or child labor. In this context, Compliance plays a crucial role in ensuring that companies comply with environmental and social regulations, and respect the rights of neighboring communities, in response to the multiple considerations that have been adopted internationally by various countries.

There are certain factors that have contributed to the increase in importance of this topic. Several Latin American countries have enacted stricter laws and regulations to promote regulatory compliance with positive impacts on the promotion and respect of Human Rights, for example, in defense of the environment, decent wages and the protection of children. In this same context, civil society and non-governmental organizations have contributed to the surveillance and denunciation of irresponsible business practices, thus focusing on a greater commitment to Human Rights.

“In Chile, the promotion of Human Rights in the business context has been reinforced with regard to the work that different industries have carried out to achieve international compliance. This has not only meant an ethical commitment to the promotion of Human Rights, but also an improvement in the reputation and sustainability of companies”, explains Jaime Viveros, associate of the firm AZ de Chile.
Aligned with these trends, more and more countries have converted into law the United Nations Guiding Principles on Business and Human Rights, due diligence in the field of human rights (DDHR) and hold companies accountable for infringing human rights with their activity. abroad. In this context, one can mention France with its “loi sur le devoir de vigilance” or Germany with its recent law on due diligence in the value chain “LkSG”. The European Union, in turn, has its project for a Directive on due diligence of companies in terms of sustainability, which will unify the standards of all member countries in terms of human rights and the environment and will globally require suppliers of European companies, including those from Latin America and the US, to comply with the new legal requirements.

In the United States, Human Rights compliance has gained prominence in recent years, promoting its application in other jurisdictions. Indeed, the Law for the Protection of Human Rights Abroad and the Supply Chain Transparency Law require companies to report on their measures to prevent human trafficking and forced labor. Another important Law on import restriction is the Uighur Forced Labor Prevention Act (UFLPA), which has been in force since 2022 and prohibits the importation of goods extracted, produced, manufactured in whole or in part in the People’s Republic of China, especially in the Xinjiang Autonomous Region or by any other entity within the UFLPA List.

However, there are challenges in the effective implementation of these laws and in the supervision of business practices, since globalization and the complexity of supply chains make it difficult to identify and eradicate practices that violate Human Rights. In this regard, it is essential to strengthen compliance mechanisms and promote collaboration between the private sector, government, and civil society to address these challenges.
From a business perspective, while Human Rights due diligence has many similarities to traditional due diligence in business compliance programs, there are some important differences to consider. The main differences are: (i) the need to analyze the risks from the perspective of the rights holders (eg, the people affected by the negative impacts) and not only from the perspective of the company’s risks; and (ii) placing greater emphasis on stakeholder engagement and transparency, with the expectation that the company should share information with a broader range of stakeholders (eg, employees, community members), should seek their feedback. and reactions and publicly report the efforts made.

Regulatory compliance and the protection of Human Rights are interdependent aspects that must be addressed jointly in Latin America, the United States and throughout the world. Only through a comprehensive and committed approach can we ensure that companies act ethically, respect and promote with integrity the fundamental guarantees of people in all their business activities.