presented by

Brian Burkett and Christopher PigottFasken, IOE Partner Company

Retail Council of Canada:RCC STORESeptember 13-16, 2021

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I. Overarching Themes

Theme 1: Finding a Balance

Economic DevelopmentSocial Progress

Theme 2: The movement, throughout the 21st century, from “soft” to “hard” * law in the Business and HumanRights (BHR) field

* “Hard Law” = mandatory requirements imposed on corporations in terms of its human rights footprint wherever it maintains operations or activities … at home or abroad.

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II. Foundational Documents

The ILO Declaration on Fundamental Principles andRights at Work (the “Fundamental Declaration”): 1998

The UN Guiding Principles on Business and HumanRights (the “UNGP”): 2011

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III. A Short and Sweeping History

• 1945: New World Order POST WWII

• 1995: World Trade Organization (WTO)

• 1998: Fundamental Declaration (F.D.)

• 2011: UNGP

• 2020: UNWG: BHR= launch of “Business and Human

Rights – Towards a Decade of Global Implementation” (July 2020)

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IV. Globalization: Addressing the Social Deficit

A. Focal Point:

= The UNGP*

Pillar 1 = States: Duty toProtect Human Rights

Pillar 2 = Business: Duty toRespect Human Rights

Pillar 3 = Access to Remedy

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IV. Globalization: Addressing the Social Deficit

B. Agents of Change:

1. National Governments

2. Courts

3. Civil Society

4. Investors and Corporations

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National Governments (UNGP: Pillar 1)

1. Mandatory Human Rights Due Diligence (mHRDD)• Bottom-up Model

National Action Plans (NAPs)

• Europe Leading the Way: Great Britain (2015)France (2017)Germany (2021)EU

• The Canadian Experience: COREBill S-216

• Global Supply Chain (GSC)7

National Governments (UNGP: Pillar 1)

2. Trade Deals (FTAs)

• European vs American Approach

• Examples:

European: CETA

American: CUSMA *

* Rapid Response Labor Mechanism (RRLM)

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The Courts (UNGP: Pillar 3)

* Extraterritorial reach of domestic courts in connection with the human rights footprint of Canadian Multinational Corporations (MNCs) with operations and/or activities abroad.

The shift from “soft” to “hard” law:

New Principles: 1. Duty of Care

Vedanta Royal Dutch Shell

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The Courts (UNGP: Pillar 3)

2. Act of State Doctrine Nevsun (SCC: 2020)

3. Customary International Law Nevsun (SCC: 2020)

4. Other Canadian Developments

5. The Significant for Canadian Retailers

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Civil Society (UNGP: Pillar 3)

* MNCs, Trade Unions, NGOs, etc.

The Hague Project A set of mediation/arbitration rules and processes,

specifically designed to deal with unresolved human rights disputes arising out of international commerce

• Origins• Substance• Evaluation• The Future

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Investors and Corporations (UNGP: Pillar 2)

* The previous 3 categories (Governments, Courts, Civil Society)are external to Corporations.

But Is there some fundamental change afoot within the corporate world?

What is ESG, ESG Investing, Impact Investing?

A debate within the business community around the “social purpose” of the corporation.

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Capitalism:

Shareholder Modelvs

Stakeholder Model(or social entity model)

• Financial Capital • Social Capital• Human Capital • Natural Capital

Triple Bottom Line:Profit

PeoplePlanet

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The “S” (Social) in ESG is about:

The UNGP: Pillar 2 Business and Human Rights (BHR)

The “People” component inthe Triple Bottom Line

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Question: What groupings of “people” does a corporation interact with?1. Investors and Shareholders

2. Employees and Suppliers/Contractors (GSC)

3. Local Communities

4. Civil Society

5. Customers

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Note: All Roads Lead to the UNGP

The foundational document on the “S” (Social)component of corporate behaviour within the ESG field is

Pillar 2 of the UNGP:Businesses’ Duty to respect Human Rights (BHR)

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Corporate Requirements

A. A commitment to making respect for human rights a “core” part of the business

B. An ongoing process of “due diligence” as it pertains to the human rights footprint of the corporation:1. Assess its risks to human rights;

2. Take action to mitigate such risks;

3. Track the progress of the measures aimed at mitigating the human rights risks;

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Corporate Requirements

4. Communicate internally, and beyond, the measures taken and results achieved; and

5. Provide a remedy for those harmed by the corporation’s human rights footprint.

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Concluding Remarks

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Thank You

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Brian Burkett • Counsel • +1 416 865 4466• bburkett@fasken.com

Christopher Pigott • Partner• +1 416 865 5475• cpigott@fasken.com

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