Ministry of Corporate Affairs is in the process of drawing up new requirements regarding the inclusion of human rights issues into the wider corporate responsibility framework. The proposed guidelines would call on companies operating in India to submit an annual report to the government documenting their record on human rights, alongside evidence of their efforts to minimize violations.
Companies operating in India will be encouraged to comply with the new guidelines despite the fact that they are likely to be voluntary. The Ministry of Corporate Affairs will require companies who do not submit their human rights records to explain their non-compliance under the strategy of “apply or explain”.
Disclosure of human rights violations will serve as a positive deterrent to companies failing to ensure basic human rights along their supply chain. Companies that report incidences of human rights violations will be faced with reputational risk, thus promoting efforts to ensure adherence and the inclusion of human right monitoring within wider corporate compliance practices.
Companies that fail to perform due diligence along their supply chain will risk complicity in abuses with potential legal and reputational implications. In the long-term, increased scrutiny of corporate practices may help to reduce the frequency of human rights violations, making the investment climate more favourable for responsible businesses.
Although risks are that corporates which do not conform, possibly would not report non-compliance, since their does not seem to be any counter-check mechanism, but of course as an initiative it is better than nothing.
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